The case Calgary Co-op v Federated Co-op, 2023 ABKB 735 involves a legal dispute between Calgary Co-operative Association Limited ("Calgary Co-op") and Federated Co-operatives Limited ("FCL"). The dispute arose after Calgary Co-op decided in 2019 to stop purchasing groceries from FCL, a long-time supplier, which led to changes in the way FCL distributed profits, particularly through a new Loyalty Program.
Key Points:
- Background:
- Calgary Co-op had sourced groceries, fuel, and other retail products from FCL for over 60 years. In 2019, it announced it would source groceries from a different supplier, Save-On-Foods.
- Calgary Co-op alleged that FCL's reaction to this decision was oppressive, as FCL altered its patronage return allocation practices, adversely affecting Calgary Co-op's financial interests.
- Claims:
- Calgary Co-op sought a partial summary judgment, claiming FCL acted oppressively by changing its Loyalty Program and withholding more than $160 million of Calgary Co-op's equity investment in FCL.
- FCL denied these claims, arguing that Calgary Co-op created its own issues by discontinuing grocery purchases and asserting the business judgment rule in its defense.
- Court's Findings:
- The court found that FCL's implementation of the 2019 Loyalty Program was oppressive, unfairly prejudicial to Calgary Co-op, and disregarded Calgary Co-op's interests.
- FCL's conduct could not be excused under the business judgment rule.
- As a remedy, the court ordered FCL to immediately pay Calgary Co-op what it would have received under the Loyalty Program based on its fuel purchases.
Outcome:
The court sided with Calgary Co-op on the partial summary judgment, ruling that FCL's actions were unfair and required correction regarding the loyalty payments. Other issues in the case will continue to be litigated. No specific amount for monetary award was provided in the decision.
