Executive Summary: Key Legal and Evidentiary Issues

• Liel Ohayon sought authorization to bring a class action against the franchisors of Starbucks, Second Cup, and Tim Hortons for charging a disproportionate surcharge when consumers substituted cow's milk with plant-based alternatives.
• Central to the claim is whether the surcharge constitutes objective lesion under article 8 of the Consumer Protection Act, given that the defendants allegedly incurred far lower costs than the amount charged to consumers.
• Starbucks admitted to charging consumers $0.80 for a substitution that cost it only $0.12 — a ratio exceeding six to one — which the court found sufficient to raise a prima facie arguable claim.
• Because the applicant had no contractual relationship with the franchisor defendants, the court examined whether their extracontractual civil liability under article 1457 C.C.Q. was arguable.
• Claims for punitive damages under article 272 of the Consumer Protection Act were denied, as that remedy applies only between parties to a consumer contract.
• Authorization was granted against Starbucks Coffee Canada Inc., Foodtastic Inc., and The TDL Group Corp, but refused as against Restaurant Brands International Inc. and Restaurant Brands International Limited Partnership.

Facts of the case

Liel Ohayon, a vegan consumer, regularly purchased beverages at Second Cup on the Loyola University campus in Montreal and occasionally at Starbucks on Queen Mary Street, also in Montreal. Her preferred drink was a matcha latte made with approximately 280 ml of milk, which she consistently requested with soy or oat milk in place of cow's milk. Both Second Cup and Starbucks charged a surcharge of $0.80 for this substitution, while Tim Hortons charged $0.50. Ohayon thus paid $6.80 for a beverage she would have paid $6.00 for had it contained cow's milk. After conducting research with her counsel, she concluded that the retail price of plant-based milk alternatives was comparable to, or lower than, the retail price of cow's milk, leading her to allege that the defendants incurred no meaningful additional cost to justify the surcharge.

On this basis, Ohayon filed an application to authorize a class action against the franchisors of Starbucks, Second Cup, and Tim Hortons on behalf of three proposed groups: Quebec consumers who paid a non-dairy substitution surcharge at Starbucks between December 30, 2021 and November 7, 2024; those who paid the same at Second Cup between December 30, 2021 and February 27, 2025; and those who paid at Tim Hortons between December 30, 2021 and January 2, 2025.

Statutory provisions and clauses at issue

The applicant invoked article 8 of the Consumer Protection Act (L.p.c.), which allows a consumer to seek nullity of a contract or reduction of obligations where the disproportion between the parties' respective obligations is so considerable as to amount to exploitation of the consumer, or where the consumer's obligation is excessive, abusive, or exorbitant. She also invoked article 1437 of the Civil Code of Québec (C.C.Q.), which addresses abusive clauses in consumer contracts, arguing that the clauses permitting the surcharge were abusive. At the hearing, Ohayon further argued that the defendants were liable under article 1457 C.C.Q. governing extracontractual civil liability, on the basis that the franchisors committed a civil fault by directing their franchisees to charge lesionary prices.

Court's reasoning and analysis

The court applied the low authorization threshold under article 575 of the Code of Civil Procedure, which requires only a defensible cause of action — not proof on the merits. The parties did not contest that three of the four authorization criteria were met; the sole dispute was whether the alleged facts appeared to justify the conclusions sought.

On the evidentiary record, the applicant's own evidence — consisting primarily of a retail price comparison study from the Laboratory of Analytical Food Sciences at Dalhousie University — was found insufficient to support the inference that wholesale costs for plant-based milk were comparable to those for cow's milk. The court noted that retail prices for cow's milk are regulated in Quebec under the Regulation respecting consumer milk prices, while plant-based alternatives are not, making it impossible to draw reliable inferences from retail price parity to wholesale cost parity. The applicant's assumption that similar retail prices implied similar wholesale costs was treated as an unverifiable hypothesis rather than an averred fact.

However, sworn declarations filed by the defendants shifted the analysis. Starbucks Coffee Canada declared that during the relevant period it paid on average 16% more for dairy substitutes than for cow's milk, yet charged consumers $0.80 while its additional cost per substitution was only $0.12 — a ratio of more than six to one. The court found this disproportion sufficient to raise an arguable claim of objective lesion. Foodtastic's declaration showed that Second Cup paid on average 98% more for dairy substitutes than for cow's milk; applying this to the 280 ml serving yielded an average additional cost of approximately $0.43 per substitution, while consumers were charged $0.80 — nearly double the cost. TDL Group's declaration showed that Tim Hortons franchisees in eastern Quebec paid on average 67% more for dairy substitutes, resulting in an average additional cost of approximately $0.28 per substitution against a consumer charge of $0.50 — less than double the cost. The court acknowledged that the disproportion for Second Cup and Tim Hortons was not obviously exorbitant on its face, but held that a lesion analysis is not a purely mathematical exercise and that numerous factors — including product type, profit margins, market characteristics, and comparable pricing — must be weighed at the merits stage.

Since the applicant had no contractual relationship with any of the franchisor defendants, the court considered whether extracontractual liability under article 1457 C.C.Q. was arguable. It held that a franchisor who directs franchisees to charge lesionary prices may commit a civil fault and incur extracontractual liability to affected consumers, noting that a third party who induces a breach of contract or knowingly associates itself with a contractual fault commits an extracontractual fault. The court found all the necessary factual allegations present in the application to support this theory, even though the applicant had not explicitly pleaded article 1457 C.C.Q. in her written submissions. The claim for punitive damages under article 272 L.p.c. was rejected outright, as that provision applies only between parties to a consumer contract and the applicant had no such contractual relationship with the defendants. Likewise, contractual remedies — including reduction of obligations and nullity of clauses — were refused because such relief cannot be sought against parties who are strangers to the consumer contracts in question. The court also declined to authorize the action against Restaurant Brands International Inc. and Restaurant Brands International Limited Partnership, as the application contained no allegations establishing their role as franchisors or their involvement in setting the surcharge.

Ruling and overall outcome

The Superior Court of Quebec, presided over by the Honourable Catherine Martel, J.S.C., authorized the class action to proceed on June 10, 2026, on the basis of extracontractual civil liability for compensatory damages only. The applicant, Liel Ohayon, was designated as the representative of the three class groups and was the successful party at this authorization stage. The action was authorized against Starbucks Coffee Canada Inc., Foodtastic Inc., and The TDL Group Corp. The court convened the parties for a further hearing — to be held within 60 days of the judgment — to address the exclusion period and the content and manner of dissemination of the required notice to class members. No specific monetary amount was awarded or ordered at this stage; the authorization judgment resolves only the procedural question of whether the action may proceed, with the quantum of compensatory damages to be determined at the merits stage.