BC Supreme Court dismisses class action in Tim Hortons 'no-hire' clause case

The BC Supreme Court has dismissed a proposed class action lawsuit against Tim Hortons, ruling that there are no genuine issues for trial concerning the “no-hire” clause in its franchise agreements.

The plaintiff, a former employee, sought to certify a class of all current and former employees of Tim Hortons in Canada, alleging that the clause unlawfully suppressed wages and restricted employment mobility.

The plaintiff, Samir Latifi, worked at a Tim Hortons restaurant in Surrey, BC, in 2012 and filed the lawsuit on behalf of all Tim Hortons employees in Canada. The defendant, The TDL Group Corp. (TDL), owns the Tim Hortons brand and acts as the franchisor for Tim Hortons restaurants in Canada. The “no-hire” clause in question prevents franchisees from employing individuals from other Tim Hortons franchises without written approval from TDL.

The lawsuit claimed that the “no-hire” clause violated the Competition Act by suppressing wages and limiting job mobility, thus benefiting Tim Hortons' bottom line. However, most of these claims were struck down in a previous judgment, leaving only the claims of civil conspiracy based on predominant purpose and the tort of unlawful means.

The Supreme Court found that the plaintiff's case lacked evidence to support the claims of civil conspiracy and unlawful means. Specifically, the court determined that there was no genuine issue for trial regarding whether TDL and its franchisees conspired to harm employees. The court emphasized that the predominant purpose of the “no-hire” clause was to protect the investment in training employees, not to injure them.

James Gregoire, TDL’s vice president of franchise operations, testified that the primary purpose of the “no-hire” clause was to ensure franchisees did not lose trained employees to other Tim Hortons franchisees, which would protect their investment in training staff. Gregoire's testimony was deemed credible and uncontradicted by any evidence from the plaintiff.

The plaintiff relied on expert reports from economist Rafael Gomez, who argued that “no-hire” and similar clauses generally suppress wages and reduce job mobility. However, the court found that Gomez's evidence, based primarily on US studies and non-compete clauses in different industries, did not directly address the intent of TDL and its franchisees when agreeing to the “no-hire” clause.

The court noted that proving civil conspiracy requires evidence of a predominant purpose to injure the plaintiff, which was not established. The court also highlighted that even if wage suppression was an effect of the “no-hire” clause, it did not prove that the primary intent of the clause was to harm employees.

Additionally, the court pointed out that the “no-hire” clause was no longer enforced by TDL as of September 2018, which further weakened the plaintiff's case. The plaintiff's allegations were based on the effects of the clause, but there was insufficient evidence to show that these effects were intended to harm employees.

Ultimately, the BC Supreme Court granted summary judgment in favour of TDL, dismissing the plaintiff's claims of civil conspiracy and unlawful means of tort. As a result, the court did not consider the plaintiff's application for class certification, as there was no remaining action to certify.