Judge rejects former Tim Hortons baker's proposed class action

A B.C. judge has rejected a years-long effort by a former Tim Hortons employee to certify a class action lawsuit, which alleged that "secret" agreements between the fast food giant and its franchisees suppressed workers' wages.

Samir Latifi claimed that so called "no-poach" clauses in licence agreements barred Tim Hortons franchise owners from hiring or seeking to hire each other's employees, intentionally causing economic harm to them in the process.

He argued that the clauses prevented workers from being able to move to other stores within Canada's largest fast food chain which has more than 4,000 locations across the country for better pay or working conditions.

Last week, B.C. Supreme Court Justice Neena Sharma dismissed Latifi's proposed class-action lawsuit, finding that the clauses were meant to increase profits and not necessarily to harm workers.

"He's disappointed," said David Klein, a lawyer representing Latifi. "He feels that it's an important case, that it should be allowed to move forward."

Over 100 Tim Hortons workers have also expressed interest in participating in the case since its launch in 2019, Klein added.

Latifi worked the graveyard shift as a baker at a Surrey, B.C., Tim Hortons in 2012. The Tim Hortons brand is owned by a holding company called the TDL Group.

According to court documents, the no-poach clause had existed in Tim Hortons' licence agreements since at least 2003.

But TDL Group executivessaid the fast food chain stopped enforcing existing clauses or mandating them for new franchisees as of September 2018, according to the court decision, and complaints related to them happened "extremely rarely."

In her judgment, Sharma acceptedthat its no-poach agreement's primary goal was to benefit the franchisees and earn a profit for the company not to injure workers.

In addition, the judge found that the expert evidence from Latifi's side, regarding the effects of no-poach clauses,didn't do enough to show TDL intended to harm its workers. She also said that he relied too much on U.S. studies and other types of similar employment restrictions.

Latifi's lawyers have already filed notice to appeal Sharma's decision as of May 21. TDL's lawyers declined to comment for this story.

Klein disputed the company's arguments, saying motivation for profit and the intention to harm workers were "two sides of the same coin." He argued that in order to retain workers, Tim Hortons franchisees could have instead provided better working conditions, higher wages or more opportunities for advancement.

"What they chose to do instead was to limit the other employment opportunities for employees," he said. "You can have a carrot or a stick, and they chose the stick."

Klein added that because workers often weren't aware of the clause, it's difficult to know the full scope of how often people were simply not hired because of it. They wouldn't also have known to complain. Latifi himself firstlearned about Tim Hortons' no-poach agreements from a U.S. news report, according to the lawyer.

No-poach clauses now illegal

Outside of the courts, the fight against no-poach clauses now has the support of public policy.

Since June 2023, such agreements between unaffiliated employers like Tim Hortons franchisees are illegal under Canada's updated Competition Act. Violationscould result in up to 14 years in prison as well as a fine based on the court's discretion.

For Latifi, however, it was too late. In 2021, Sharma threw out a significant portion of his claim because the previous version of the law didn't criminalize no-poach agreements.

"It wasn't meant to be," Klein said."But it would have been a strong case."

Jennifer Quaid, who teaches competition law at the University of Ottawa, cautioned that the change is unlikely to spell the end of no-poach clauses.

Because of the high bar of a criminal prosecution, she said it would be difficult to go after every single offender.

"The biggest impact that this could have is symbolic," said Quaid. "The criminal law is used to signal things that are truly reprehensible.

"But for both legal and economic reasons, I don't think this provision changes much."