Summary

Keywords

Torts - Duty of care - Negligence - Duty to supply a product fit for human consumption - Listeria outbreak requiring recall of meat products produced by Maple Leaf respondents and causing product shortage to Mr. Sub franchisees bound to purchase meat supply exclusively from Maple Leaf respondents - Franchisees seeking damages for reputational harm and pure economic loss - What is the appropriate standard of review to be applied by an appellate court reviewing a finding of a prima facie duty of care, having regard to the fact-specific nature of findings of proximity between the parties and the reasonable foreseeability of the harm that occurred? - Whether the Court should give effect to the Maple Leaf respondents’ undertaking to supply safe meat products by permitting the franchisees to recover economic losses arising from their reasonable reliance on that undertaking? - Whether the Maple Leaf respondents may be held liable to the franchisees, as a proximate class of intermediary suppliers of the recalled meats, for reasonably foreseeable economic losses arising out of negligent supply of dangerous products?

Summary

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The case concerns a listeria outbreak in certain meat products supplied by Mr. Submarine Limited (“Mr. Sub”) and produced by the Maple Leaf respondents (collectively, “Maple Leaf”) which led to a national recall in 2008. The appellant, 1688782 Ontario Inc. (“782 Inc.”), is the class representative of Mr. Sub franchisees who were affected by a product shortage for 6-8 weeks as a result of the recall. The franchisees were publicly associated with the contaminated products and claim reputational injury and economic losses as a result of Maple Leaf’s negligence. There was no direct relationship between the franchisees and Maple Leaf, as the franchisees were supplied through a distributor. However, the franchisees were bound by an exclusive supply arrangement to purchase meat products through Maple Leaf, and Maple Leaf took steps during the recall to assist franchisees with product shortages and the recovery of contaminated meats. After certification of the class, Maple Leaf moved for summary judgment seeking dismissal of 782 Inc.’s claims to the effect that Maple Leaf owed the franchisees a duty of care. For its part, 782 Inc. brought a cross-motion to have the duty of care questions decided summarily. The motion judge ruled largely in 782 Inc.’s favour. It concluded that Maple Leaf owed a duty of care to the franchisees on the basis of a previously recognized duty of care category, being that of supplying a product fit for human consumption. It also made findings regarding proximity between the parties and reasonable foreseeability of the harm suffered. The Court of Appeal allowed Maple Leaf’s appeal, having found that the circumstances of the cases relied upon by the motion judge for recognizing the existence of a duty of care were distinguishable from the facts before it. In conducting its own duty of care analysis, the Court of Appeal found that the scope of the duties arising under the relationship between the parties did not require Maple Leaf to take special care regarding 782 Inc.’s reputational interests. In so deciding, the Court of Appeal held that the duty to supply a product fit for human consumption - a duty ultimately aimed at protecting human health - is owed to the franchisees’ customers, and not to the franchisees’ themselves. From a policy perspective, the Court of Appeal determined that extending liability for reputational harm in the circumstances would deter manufacturers of products from recalling potentially defective products in a timely fashion.

Lower Court Rulings