The Ontario Court of Appeal recently decided whether a meat manufacturer owed a duty of care to restaurant franchisees who had purchased listeria-contaminated meat products and whether the franchisees could claim pure economic loss in a class action against the manufacturer over the product recall.

The Facts

In August 2008, certain Maple Leaf meat products became contaminated with listeria at dangerous levels. Some people fell seriously ill and some died after eating the meat. Maple Leaf recalled the meat that was produced at the affected plant, which was temporarily closed. The recall and plant closure affected the supply of two of the meat products used by the franchisees of Mr. Submarine Ltd. (“Mr. Sub”).

Mr. Sub franchisees began a class action against Maple Leaf, claiming damages on the basis that Maple Leaf:

(1) negligently manufactured and supplied potentially contaminated meat, and;

(2) negligently represented that the supplied meats were fit for human consumption.

While no Mr. Sub customers were directly harmed by the contaminated meat, the franchisees claimed economic losses arising from the reputational harm they say they experienced from being publicly associated with Maple Leaf in the aftermath of the listeria outbreak. They claimed damages for loss of past and future sales, past and future profits, and loss of capital value and goodwill, as well as damages for clean-up costs and other costs related to the disposal, destruction and replacement of meat products.

After the class action was certified, Maple Leaf brought a summary judgment motion seeking dismissal of certain claims on the basis that Maple Leaf owed no duty of care to the class, while the franchisees asked for summary judgment in their favour.

The motion judge concluded that Maple Leaf owed a duty of care to the franchisees for the production, processing, sale and distribution of meat products, as well as a duty of care with respect to representations made that the meat products were fit for human consumption and posed no risk of harm.

Maple Leaf appealed the decision.

The Decision

The court used the Anns/Cooper framework to examine the nature and scope of the duty of care owed by Maple Leaf to the franchisees.

On the first issue of negligent manufacturing and supply of contaminated meat, the court found that the motion judge had erred in failing to consider the scope of the proximate relationship or scope of any such duty arising from it. The court stated that, to the extent there may be a duty to supply meat fit for human consumption, it does not extend to the franchisees’ damages for pure economic loss. In the court’s opinion, Maple Leaf’s duty of care to supply meat fit for human consumption was a duty that was owed to the franchisees’ customers, not the franchisees themselves. The duty at issue was aimed at protecting human health; it was not a duty owed to franchisees to protect their reputation and pay for any consequent damages for pure economic losses.

As a result, the court concluded that the motion judge erred in finding that the duty to supply a product fit for human consumption encompassed a duty of care to protect against economic losses.

On the second issue of negligent representation that the supplied meats were fit for human consumption, the court had to consider whether the claim fell within the scope of the proximate relationship and whether the losses claimed were reasonably foreseeable. The court found that the motion judge erred in failing to consider the scope of the proximate relationship between the parties, which in turn affected the foreseeability analysis. The court instead found that it was not reasonably foreseeable that the media would connect Mr. Sub to Maple Leaf’s listeria outbreak, causing reputational harm. Therefore, the alleged injury was not reasonably foreseeable.

As a result, the court found that Maple Leaf did not owe the franchisees the duty of care claimed and allowed the appeal.

For Help

The manufacturers, designers and retailers of consumer goods are obligated to ensure that their products meet safety standards and will not cause harm to consumers when put to their intended use. If you have suffered an injury as a result of a faulty or defective product, it is important to seek legal guidance as soon as possible, in order to preserve evidence for a possible lawsuit.

At Petker Campbell Postnikoff, our lawyers are experienced and effective litigators who will work to represent your interests against the providers, creators and retailers of defective or faulty products. Call us today at 519-886-1204 or contact us online to arrange a no-obligation consultation with our knowledgeable and experienced personal injury lawyers.