Supreme Court ruling rejects Mr. Sub franchisees’ claim to manufacturers liability

In a “novel” class action claim, the Supreme Court of Canada (SCC) has ruled that Maple Leaf Foods cannot be held legally accountable for any economic losses suffered by Mr. Sub franchise owners due to a listeria outbreak at a Maple Leaf meat processing plant.

The Globe and Mail wrote about the decision in which the court ruled that Maple Leaf owed a “duty of care” to the customers who consumed the tainted meat and not the Mr. Sub franchisees.

As the franchisees’ contract was with Mr. Submarine Ltd., and not Maple Leaf Foods, the broad principle of the decision is that manufacturers like Maple Leaf cannot be held liable for negligence that causes “pure economic losses”—which can include profits, sales or reputational harm—to businesses that they don’t have a contract with.

Speaking on the decision, Andrew Bernstein told the Globe that the case has the possibility to be a game-changer for future manufacturers’ liability disputes.

He compared this decision to the famous 1932 British “snail in the bottle” case (Donoghue v Stevenson) which permitted consumers to take legal action against manufacturers for negligence over unsafe goods.

While current Canadian law allows manufacturers to be sued for negligence that harms persons or damages property, because the issue in this case was whether manufacturers’ liability extended to the franchisees, the 5-4 majority decision rejected Mr. Sub franchisees’ claim of pure economic loss.

You can find more insights from our Appeals team on the practice page.