Ontario Court Refuses Confidentiality Order Regarding Competitively Sensitive Information

In an action in Ontario Superior Court (Court), Tim Hortons Inc and a corporate affiliate (collectively, TH Inc) sought a confidentiality order to protect documents in their motion record asserted to contain competitive and highly sensitive information. The Court refused to grant the order, ruling that disclosure of the information was unlikely to cause any serious harm or injustice. The motion was brought in the context of a class action against TH Inc launched by its franchise licensees. The franchisees were unhappy with TH Inc’s switch from on-site baking to an “Always Fresh” system in which frozen products are shipped to each retail store, together with a new requirement that franchisees provide a lunch menu. The representative plaintiffs argued that the changes will lead to increased costs and lower profit margins for them. Four kinds of confidential information were at issue: personal information of Tim Hortons’ franchisees; financial information, including operating margins, sales, and profit-and-loss information; competitively sensitive commercial data; and trade secrets, including confidential product preparation methods and procedures. Justice Strathy applied the test from the 2002 Supreme Court of Canada case, Sierra Club of Canada v Canada, to determine whether a confidentiality order should be granted, and assessing whether a confidentiality order would prevent a serious risk to an important interest, including a commercial interest. He held that such a risk must be “real, substantial, and well-grounded in evidence, and disclosure must pose a serious threat to the interest in question,” and he went on to consider whether reasonable alternative measures were available. The Court found that the risk of commercial harm resulting from the disclosure of financial and commercial information was neither real and substantial, nor was it well-grounded in evidence and that it was speculative and lacked specifics. Furthermore, the information described as “trade secrets,” was at the lowest level of “secrecy”. Justice Strathy found that the par baking system which was at issue was not unique, and there was no evidence that competitors were in a position to take advantage of the information. Competitors “would not likely need to know that you must bake a frozen lump of ingredients for a particular length of time at a particular temperature in order to make a muffin.” The full text of the decision (2010 ONSC 789) is found here: Fairview Donut Inc v TDL Group Corp Summary by: Lea Epstein