Sears Canada Oppression Class Action - Sotos Class Actions

Sears Canada Oppression

This case alleges that the payment of a $509 million extraordinary dividend by Sears Canada on December 6, 2013 was oppressive and contrary to the Canada Business Corporations Act (the “CBCA”). The claim seeks damages against Sears Canada Inc., its directors and its corporate parents, ESL Investments Inc. and Sears Holding Corporation for conduct contrary to the CBCA on behalf of operators of Sears Hometown Stores.

On June 22, 2017, Sears Canada filed for creditor protection under the Companies’ Creditors Arrangement Act (the “CCAA”), staying the action against Sears Canada and its directors.  The stay against the directors has since been lifted by the CCAA judge.  Sears Holding Corporation filed for Chapter 11 bankruptcy protection in the US, staying the action against Sears Holding Corporation.  Accordingly, the claim against its directors and ESL Investments Inc. continues.

The claim is being advanced together with three other claims against the defendants brought by: (i) Sears’ Monitor in the CCAA; (ii) a Litigation Trustee appointed in the CCAA proceeding; and (iii) Sears’ pension plan administrator. Each of the claims relates to the payment of the extraordinary dividend in 2013 by Sears Canada.

The four actions are scheduled to be heard together at a joint trial scheduled for February 2020.

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  • November 23, 2020: The Court approved the Distribution Plan for eligible class members.  Class members entitled to an award will receive an equal share of the settlement funds.  Click here to see Notice of Distribution Plan.
  • September 18, 2020:  The Court approved the settlement with ESL Investments Inc. (“ESL”).  The class action has now been settled in full.  The next step will be to develop a Distribution Plan for the class members.  This will require Court approval and it is expected to be finalized in late-2020/early-2021.  The settlement funds will be distributed shortly thereafter amongst the class members.
  • September 9, 2020: Part I of the trial scheduled to begin today has been adjourned pending court approval of a settlement.
  • August 12, 2020: There will be a hearing before the Court on August 25, 2020 at 1:00 p.m. by video conference to approve a partial settlement reached with the Director Defendants. Notice of the settlement hearing is here.
  • April 1, 2020: The Court approved a partial settlement with the defendant, Sears Holdings Corporation on March 16, 2020. Please click here to read the Order.
  • February 26, 2020: There will be a hearing before the Court on March 16, 2020 at 10:00 a.m. to approve a partial settlement reached with one of the defendants, Sears Holdings Corporation. Notice of the settlement is here.
  • February 6, 2020: A Mediation was held February 4 and 5, 2020; the Mediation will resume on April 6 – 7, 2020. If not resolved the matter will proceed to trial in May 2020; the trial will be split into two parts with the Sears Hometown Dealers’ claim to be scheduled a few months later.
  • June 21, 2019: The court certified the action as a class proceeding. A copy of the Order can be found here.
  • January 25, 2019: The motion to certify the case as a class action will be heard April 17-18, 2019.
  • January 25, 2019: If certified, the common issues trial will be heard in February, 2020, together with three other claims against the defendants brought by: (i) Sears’ Monitor; (ii) a Litigation Trustee appointed in the CCAA proceeding; and (iii) Sears’ pension plan administrator.
  • December 3, 2018: The stay granted to the directors of Sears Canada has been lifted and the case can proceed against the directors.
  • January 29, 2018: 1291079 Ontario Limited’s motion to have MNP appointed as financial advisor to the Class was adjourned. A copy of the Endorsement can be viewed here.
  • January 25, 2018: Sotos LLP and Blaney McMurtry are appointed as representative counsel to represent the interests of the Class with respect to advancing a claim on behalf of the Class pursuant to the Claims Procedure Order dated December 8, 2017 in the CCAA filing. A copy of the Order can be viewed here.
  • January 25, 2018: See Notice to Class here.
  • January 19, 2018:  We are seeking a representative order in the CCAA to represent the Hometown Dealers.  We are also seeking to have MNP LLP appointed as financial advisors to the class. This motion will be heard January 29, 2018.  Our intent is to file a Proof of Claim on behalf of the class setting out the class’ damages.
  • June 22, 2017: Sears has filed for creditor protection under the Companies’ Creditors Arrangement Act (the “CCAA”).  This filing stays (puts on hold) the class action.  We are currently reviewing and assessing the class’ rights in the CCAA filing.
  • October 21, 2015: A statement of claim was issued alleging that Sears oppressed the class members when it paid out a $500 million dollar dividend to its shareholders in December 2013. A copy of the statement of claim can be viewed here.

David Sterns

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Karen Whibley

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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

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.