No Just Desserts for the Doughnut Shop: A Class Action Claim for Unlawful Means Conspiracy Can’t Overcome Privity of Contract


In Latifi v TDL Group Corp., a recent class action certification decision from the British Columbia Supreme Court (“BCSC”), Sharma J. dismissed a class claim grounded in the tort of “unlawful means conspiracy” because the “means” in question was a term in a contract to which the class plaintiffs were strangers. (1)

The representative plaintiff, Samir Latifi, alleged that The TDL Group Corp. (“TDL”), the organization which owns the Tim Hortons brand in Canada and acts as a franchisor as well as operating its own corporate restaurants, caused him and other Tim Hortons restaurant employees to suffer reduced wages and other harm due to the anti-competitive effect of its standard franchise agreements. At issue was a specific clause in the standard Tim Hortons franchise agreements (the “No-hire clause”), under which franchisees agreed:

not to employ or seek to employ any person who is at the time employed by [TDL] or by any other licensee of the [TDL] operating the same or similar business, or otherwise directly or indirectly to induce such person to leave his or her employment thereat without the prior written consent of the [TDL]. (2)

Class counsel submitted that by insisting on and enforcing the No-hire clause, TDL had committed and carried out an unlawful means conspiracy and/or the tort of unlawful means against the class plaintiffs. (3) And that as a result, the class had suffered reduced wages, reduced employment benefits, loss of professional growth opportunities, and worsened working conditions. (4)

Clearly, the plaintiffs as employees of Tim Hortons restaurants were not parties to the franchise agreements containing the No-hire clauses. However, class counsel argued that the plaintiffs were not “strangers” to the No-hire clause, but rather, they were its “intended victims”, and that privity should therefore be no bar to the class claim. In support of this position, counsel submitted that a number of cases illustrated that the “necessity of contractual privity has weakened considerably in recent years, allowing its absence to be used as both a shield and a sword.” (5)

In response, Sharma J. concisely rejected the plaintiff’s argument, holding that, “While the doctrinal requirement for privity of contract may have been relaxed in some circumstances, the parties cited no authority where a stranger to a contract sought both to have a contractual term declared unenforceable, and to receive damages because the contracting parties agreed to the term in the first place.” (6) Conversely, she found the reasoning in the written submissions by the defendants to be persuasive:

71. In other words, the purpose of the contractual doctrine is to protect a contracting party’s ability to carry out its work to carry on its trade, to carry out its business; the doctrine is about a party voluntarily contracting to restrict its own business activities to its own detriment. The doctrine is not about a contractual restraint that impacts a stranger to the contract to the stranger’s detriment.

[Emphasis in original.] (7)

As a result, Sharma J. held that the plaintiff’s conspiracy claim based on an allegation of unlawful means was bound to fail. (8) With respect to the doctrine of privity, the decision is in one sense uncontroversial and straightforward. In short, it stands for the proposition that privity will not allow a plaintiff to rely on an alleged restraint of trade in a contract between two other parties to which the plaintiff is a stranger to make out a claim of civil conspiracy of the unlawful means variety, or an unlawful means tort. Nevertheless, the case sets an important precedent given that similar clauses are likely to exist in other franchise agreements, and that similar arguments may be considered by effected employees elsewhere.

(1) Latifi v TDL Group Corp., 2021 BCSC 2183 [Latifi].

(2) Ibid at para 6.

(3) Ibid at paras 102-121.

(4) Ibid at para 12.

(5) Ibid at para 108.

(6) Ibid at para 109.

(7) Ibid at para 114.

(8) Ibid at para 116.

By Brenden Drews – Supervised by Professor Maharaj

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