Midas - Sotos Class Actions


February 10, 2014: Sotos LLP has completed the administration of the settlement and the settlement cheques have been mailed out to all of the class members.

This class action is brought on behalf of all Canadian Midas dealers. The claim alleges that Midas Canada breached its duties of good faith and fair dealing to the dealers by eliminating a preferential purchasing system which was an integral part of the Midas franchise system.

In 1980, Midas Canada came to its dealers proposing a new royalty arrangement: the dealers would pay a higher royalty fee (10% of gross sales instead of the previous rate of 5%). In return, dealers would receive a discount on products purchased through Midas’ wholly-owned distribution network. The discount was equal to 14.5% off the wholesale price that Midas gave to its other customers. This gave the Midas dealers a significant competitive advantage. The discount directly offset the increased royalty rates under the new franchise agreement and was to the net benefit of the dealers.

Midas dealers enjoyed this advantageous discount for 20 years. In 2001, Midas announced that it would stop noting the discount on invoices but would continue to apply it behind the scenes. In 2003, Midas ceased its parts manufacturing and distribution network altogether. Dealers were then required to purchase products from other sources. With the elimination of the Midas network came the elimination of the 14.5% discount on products that the dealers had bargained for back in 1981. The 10% royalty rate, however, remained unchanged.

The plaintiff alleges that Midas Canada breached its duty to treat the dealers in good faith by keeping the royalty rate the same without providing an adequate replacement for the 14.5% discount when it exited manufacturing and distribution in 2003.

The Ontario Superior Court of Justice certified the action as a class proceeding in 2009. The class is defined as all “corporations, partnerships and individuals carrying on business in Canada as franchisees on both July 11, 2003 and May 31, 2007 under franchise agreements with the defendant, Midas Canada Inc”. The case is proceeding towards a trial of the common issues certified by the Court.

  • February 10, 2014:  Sotos LLP has completed the administration of the settlement and the settlement cheques have been mailed out to all of the class members.
  • September 12, 2013: The Ontario Superior Court of Justice approved the settlement of this class action. Click here to view the Notice of Settlement Approval.
  • July 9, 2013: The hearing to approve the settlement will take place on Thursday, September 12, 2013 at 10:00 a.m., at 361 University Avenue, Toronto, Ontario.  Click here to view the Notice of Settlement Approval Hearing.
  • April 7, 2013: The parties have reached a settlement of this action following a mediation which took place on April 3, 2013. The settlement is conditional upon court approval. Details about the proposed settlement and the date and time of the motion for court approval will be sent to class members and posted on this website in the coming weeks. If we do not have your most up-to-date contact information, please click on the
    Stay in Touch button or email it to dnunes@sotosllp.com.
  • June, 2012: If you a member of the class, click here to view the June 2012 Class Action Update
  • July 6, 2010: The Ontario Court of Appeal held that releases contained within some franchisees’ franchise renewals were unenforceable.
  • March 26, 2009: The Ontario Superior Court of Justice certified the action as a class proceeding. The class is defined as all “corporations, partnerships and individuals carrying on business in Canada as franchisees on both July 11, 2003 and May 31, 2007 under franchise agreements with the defendant, Midas Canada Inc”

David Sterns

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Have questions about this case?

What is a class action?

A class action is a special form of lawsuit in which one plaintiff brings a claim against one or more defendants based on allegations which are common to a group, or class, of people. In order for the action to become a class action, it must proceed through a stage known as “certification”.

Who brings a class action lawsuit forward?

A statement of claim is issued on behalf of a “representative plaintiff”. The representative plaintiff’s role is to work with class counsel to bring the action forward and to represent the class members in court.

What is certification?

In order for an action to proceed on behalf of the entire class, a judge must decide (among other things) whether the members of the proposed class have common issues, and whether a class action is the preferred way to resolve the issues. The process to decide these issues is known as the “certification motion”. If the judge is satisfied that the case meets all of the requirements for certification, he or she will issue an order which certifies the action as a class action.

Do I have to do anything to “join” the lawsuit?

No. If the lawsuit is certified, and you are included in the class as defined, you are automatically included in the lawsuit.

Once I am part of the class do I have to do anything?

No. We will work primarily with the class representative.

What if I do not want to be included in the lawsuit?

Those who do not wish to remain in the class will be given the option to opt-out by sending an opt-out form at the appropriate time to us.

What are the benefits of proceeding as a class action?

Certification as a class action will enable us to prove the facts in a single lawsuit rather than in numerous individual lawsuits. This has obvious benefits to the class members and to the courts.

How long does it take for a class action to be resolved?

There is no timeframe. We will move the case forward diligently but it can take a considerable period of time to reach trial.

Can a class action lawsuit be settled without going to trial?

Many class actions settle and thereby remove the need for a trial. However, we cannot predict with any certainty whether or not there will be a settlement in a given action.

What are the chances of winning the action?

The chances of “winning” can never be accurately predicted.

Will be liable for any costs or legal fees?

Class action lawsuits are typically brought on a contingency fee basis. This means that the lawyers will only be paid if the action is successful at trial or results in a settlement in favour of the plaintiffs. Legal fees would then be paid out of the settlement or judgment proceeds as approved by a judge.

Disbursements (i.e. out-of-pocket expenses, including expert reports) may be dealt with in one of two ways.

Most commonly, the lawyers will absorb the cost of disbursements. The lawyers may seek funding assistance from the Class Proceeding Fund, which may provide funding for disbursements if granted.

In some cases, disbursements may be funded by the class members, including the class representative. This typically occurs in smaller class actions brought on behalf of an organization or network of individuals where each member of the class is easily identifiable and known to the representative plaintiff. If the class action is successful, amounts advanced for disbursements are re-paid from the proceeds of any judgment or settlement to class members (and others).

Will I be liable for costs of the action if it is unsuccessful?

Only the class representative may be liable for costs of the common issues portion of the action if it is unsuccessful.

When can I expect to receive a payout from this class action?

A “payout” or an award for damages is never certain.

The action may settle or it may proceed to trial, at which time a judge will determine the amount of damages, if any, to which the class members are entitled to. Regardless, the amount of “payout” cannot be predicted, and we cannot predict when the action may settle or when the trial will conclude.

How will counsel keep me updated on the progress of the case?

If the lawsuit is certified as a class action, you will receive a formal notice from the court explaining the nature of the case and providing you with the opportunity to opt out if you wish. General information about the lawsuit will be posted on Sotos LLP’s website at https://www.sotosclassactions.com.

Where can I send any documents that I have that may be relevant to a class action?

We ask that you keep a copy of any documents, correspondences, records, invoices, receipts, etc. that you feel might be relevant to your individual claim in the class action. If there is a “payout,” this documentation may be required in order to support your claim for compensation.

It is not required that you send any documents to us at this time.