BC Court of Appeal Tosses Case Alleging Tim Hortons Wage Suppression Conspiracy

The B.C. Court of Appeal has dismissed a bid to revive a class-action lawsuit against Tim Hortons parent company TDL Group Corp. over an alleged wage suppression conspiracy with its franchisees.

The B.C. Supreme Court dismissed the case last year, finding a “no-hire clause” in franchise contracts was meant to protect Tim Hortons franchisees’ investments in employee training, rather than suppress wages by preventing employee poaching between restaurants.

Lead plaintiff Samir Latifi alleged that the primary purpose of the clause in franchise contracts was to increase profits and keep labour costs down through anticompetitive means.

Latifi’s lawsuit alleged the term was contained in TDL’s franchise agreements from 2003 to 2018, and constituted a wage suppression conspiracy between the company and franchisees aimed at fixing or controlling the price of labour in breach of the Competition Act.

But the three-judge panel of the Appeal Court found no errors in the lower court’s ruling that dismissed the claims because the “no-hire clause” had a “valid business purpose” of protecting franchisees’ investments in employee training.

The Appeal Court says the lower court judge found wage suppression may have been an effect of the no-hire clause, but not its intent, which was “fatal” to the plaintiffs’ claim that the main purpose of the clause was to harm employees by limiting their mobility.

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