Trillium’s $750M-class action against GM will not proceed to Supreme Court of Canada


Jackson Hayes

While the legal battle is technically not over, the former General Motors dealers in the Trillium class action feel justice has been denied.

Following the July 4 ruling from the Court of Appeal for Ontario that rejected the appeal launched by the dealers and dismissed GM of Canada’s (GMCL) cross appeal, both parties were given 60 days to seek leave to appeal to the Supreme Court of Canada.

According to lawyers from Sotos LLP, one of the two firms (together with WeirFoulds LLP) representing the dealers from the beginning, the class decided not to pursue the case to the higher court. With GMCL making the same decision, it draws to close a long and winding legal battle that could have held major implications for franchise agreements in Canada.

“The Supreme Court of Canada generally only grants leave to appeal on a question of public importance or an important issue of law,” explained Andy Seretis, a lawyer with Sotos LLP and member of the Trillium case team.

“The way the Court of Appeal decided the GMCL appeal – on the validity of the release in the wind-down agreement – our view was that the test for leave could not be met.”

Despite ending the fight against GMCL, the dealer class still has at least one more day in court. The law firm Cassels Brock and Blackwell LLP (CBB) was found by the original trial judge to have breached its contractual and fiduciary duty to the dealers because it represented both the affected dealers and the federal government in its handling of the GM bailout.

Superior Court of Justice Thomas McEwen had ordered the law firm to pay $45 million to the dealer class, though that number was reduced to $36.9 million by the appeal court after it noted a calculation error by the trial judge.

Seretis said CBB has sought leave to appeal to the Supreme Court and that a decision is expected within a few months. If the court decides to hear the appeal, final resolution will likely be another six to 12-months away.

If the Supreme Court rules in favour of the dealer class, Justice McEwen will determine which class members can share in the $36.9 million based on which dealers specifically retained CBB.

That means nearly a decade after losing their franchises and after seven years of courtroom back-and-forth, there could be members of the dealer class that still win but walk away with nothing.

The Original Trial
The legal saga started back in early 2011 when the Ontario Superior Court of Justice certified the action as a class proceeding (the plaintiff Trillium Motor World was named as the representative plaintiff).

The class consisted of approximately 180 dealers that signed the wind-down agreements (WDA) terminating their franchises in May 2009. Of the 240 dealers who were offered the WDAs, 202 signed and accepted the payment offered. Trillium represented about 180 of those dealers.

They were seeking $750 million in damages from GMCL.

The trial began on Sept. 9, 2014 and ran until mid-December. Trillium had argued GMCL breached the rights provided to franchisees under the Arthur Wishart Act (Franchise Disclosure), 2000; specifically, the dealers said the six days they were given to sign the WDAs and everything communicated to them up to that point by the automaker was not in accordance with fair dealing set out by the act.

GMCL said it complied with the act and that any legal proceedings were barred by releases in the WDAs as they contained a promise by the signing dealer not to sue GMCL.

GMCL had launched a counterclaim for damages arguing dealers participating in the class claim breached the covenants laid out in the WDA.

The dealer class was also suing CBB. After learning the brand would be axed, Canadian Saturn dealers, and later GM dealers, with the help of the Canadian Automobile Dealers’ Association (CADA), had retained

Peter Harris, then a partner at CBB, to advise them through the transition.

The federal government had also retained CBB to counsel Industry Canada regarding the financial bailout of both GMCL and Chrysler Canada.

The dealers argued there was inherent conflict in having the same firm advise the deleted dealers while simultaneously helping the government save the automaker.

Though CBB argued at trial it was only offering legal information at the request of the CADA, Justice McEwen ruled the firm had breached its contractual and fiduciary duty and ordered the firm to pay $45 million.

Justice McEwen also dismissed both the GMCL and Trillium cases.

All three parties appealed the original decisions to the Court of Appeal for Ontario last January.

The appeal panel – made up of Justices Eleanore Cronk, Katherine van Rensburg and Gladys Pardu – rejected the Trillium appeal and dismissed GMCL’s cross appeal, upholding the ruling against CBB with a special notation related to the mathematical error.

Seretis said the parties had 60 days to seek leave to the Supreme Court but, after consulting with the representative plaintiff supported by class members and when considering the way the Court of Appeal ruled on the arguments presented on behalf of the dealers, it was determined to not pursue the matter further.

One of the deleted dealers who attended virtually every day of the original trial and the appeals process was Jerry Gazarek. Prior to May 2009, he was the dealer principal of Sheraton Chevrolet Cadillac and its sister Saturn Saab store in Pickering, Ont., both of which were shuttered by the automaker.

He said the Trillium dealer class was “terribly disappointed” with how things turned out concerning the case against GMLC, but that ending the legal battle was the most logical decision.

“They found nothing in the appeal process to support our argument. Sometimes you have to accept what happens in life. With no support on our stance by the appeals court, how long do you keep going?” he said.

“I certainly couldn’t ask dealers to continue funding it when we didn’t have enough on our side, not without having some positive signs that there would have been success at the Supreme Court.”

He maintained throughout the entire seven years that the dealers would see some sort of vindication from the legal system with regards to how the automaker treated them. Now with no hope of that happening, he said the affected dealers would have to hope for the best with the CBB appeal.

“We have to go on.”