Executive Summary: Key Legal and Evidentiary Issues

• Shoppers previously breached franchise agreements by retaining $1.084 billion in Professional Allowances that should have been allocated to franchisees.

• Plaintiffs sought pre-hearing production of store-level financial and operational records to support a bottom-up damages assessment under s. 25 of the Class Proceedings Act, 1992.

• The court found that expert evidence is not required at the production stage if the documents are relevant to developing a potential damages methodology.

• Shoppers’ objections on the grounds of burden, cost, and timing were dismissed due to speculative and unsupported evidence.

• Document production was deemed proportionate and necessary given Shoppers’ control over the automated systems housing the data.

• The court limited the production order to franchisees who signed the 2002 Associate Agreement between 2008 and 2013.

Background and contractual dispute

This case arises from a longstanding class action between Shoppers Drug Mart Inc. and a group of its Ontario franchisees—referred to as “Associates”—represented by Giovanni Spina and Romeo Vandenburg, among others. The dispute centers around Shoppers' handling of Professional Allowances, which are payments made by drug manufacturers and wholesalers. Under the 2002 Associate Agreement, these payments were largely considered to be revenue of the individual stores. However, Shoppers retained all $1.084 billion in Professional Allowances received from 2008 to 2013 without passing them on to the Associates. The Ontario Court of Appeal previously ruled that this conduct breached both the Associate Agreement and Shoppers’ duties of good faith and fair dealing under the Arthur Wishart Act (Franchise Disclosure), 2000.

The motion for document production

Following the Court of Appeal’s ruling, the parties moved into the damages assessment phase. The plaintiffs proposed a bottom-up approach to calculate individual damages under section 25 of the Class Proceedings Act, 1992. They brought a motion to compel Shoppers to produce financial and operational data from its internal systems. These records were necessary to allocate Professional Allowance revenues to individual stores and calculate the corresponding impact on Associates’ earnings. Shoppers opposed the motion on multiple grounds: they claimed that the request was premature, overly broad, lacking expert support, and burdensome to fulfill.

Court’s analysis and findings

Justice Glustein rejected all of Shoppers’ objections. He emphasized that the threshold for ordering production at this stage is low and does not require expert confirmation that the proposed damages methodology will ultimately succeed. He found the requested documents relevant to assessing whether the proposed method could meet the requirements of section 25. The court also noted that Shoppers already used the same categories of data in its ordinary business operations and had produced similar data in prior stages of the litigation.

Shoppers’ claim that the production request was unduly burdensome was undermined by the lack of evidence from anyone directly involved with the company’s data systems. In contrast, the plaintiffs' expert, a digital forensic consultant, credibly testified that the data could be retrieved through automated queries within a reasonable timeframe and at moderate cost. Speculative concerns about paper documents or legacy software were not sufficient to deny the motion.

Outcome and scope of the order

The court ordered Shoppers to produce the requested documents but limited the scope to only those Associates who signed the 2002 Associate Agreement between 2008 and 2013. This restriction aligned the order with the group affected by the breaches previously found by the Court of Appeal. The court did not set a fixed production timeline but directed the parties to agree on one or return for further directions. Costs of the motion were reserved for the upcoming section 25 hearing scheduled for August 2025. This decision clears the way for the plaintiffs to develop and test their damages methodology using actual store data, which will be evaluated at the next phase of the proceedings.