Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs brought an urgent motion after detecting indicators of potentially fraudulent claims being made against class action settlement funds.
• Approximately $3.7 million in approved settlement payments were identified as having been channelled into accounts receiving high volumes of deposits at three smaller Canadian financial institutions.
• Due to customer confidentiality obligations, the Settlement Administrator was limited in the information it could obtain regarding the affected accounts.
• Bank of Nova Scotia required an indemnity from the Settlement Administrator before it could assist in providing indemnities to the implicated financial institutions.
• Returned funds were to be first applied to re-issued payments for verified claimants, with any remainder forming part of the cy-près distribution under the Distribution Protocol.
• Defendants were notified of the motion and took no position on the relief sought.

Facts of the case

This class action arose from alleged price-fixing in the packaged bread industry. The action was commenced by Notice of Action issued on November 7, 2017, with a companion action commenced in Quebec. The plaintiffs are Marcy David, Brenda Brooks, and Andrew Balodis. The defendants include Loblaw Companies Limited, George Weston Limited, Weston Foods (Canada) Inc., Weston Bakeries Limited, Canada Bread Company, Limited, Grupo Bimbo, S.A.B. de C.V., Maple Leaf Foods Inc., Empire Company Limited, Sobeys Inc., Metro Inc., Wal-Mart Canada Corp., Wal-Mart Stores, Inc., and Giant Tiger Stores Limited.

A national settlement agreement between the plaintiffs and Loblaw Companies Limited, George Weston Limited, Weston Foods (Canada) Inc., Weston Bakeries Limited, Loblaws Inc., and Weston Food Distribution Inc. was approved by the Ontario Superior Court of Justice on May 7, 2025, and subsequently by the Quebec Superior Court. The Settlement Agreement provides total compensation of $500 million — composed of an all-inclusive settlement payment of $404 million plus $96 million in a card program previously paid by Loblaw to potential class members — for distribution by the Settlement Administrators in both actions.

Ontario Settlement Class Members were permitted to file secure online Consumer Claims on the Ontario Settlement Website between September 11, 2025 and December 12, 2025. Proof of purchase or identity was not required, as the claim requirements were designed to be short and simple to maximize claim rates given the modest expected payouts. Distribution of payments to eligible Ontario Settlement Class Members occurred between May 15 and May 27, 2026, by Interac e-transfer and cheque.

Settlement terms and fraud detection framework

The Distribution Protocol governing the settlement included fraud detection provisions. Specifically, section 27 of the Distribution Protocol required the Settlement Administrator to implement fraud detection procedures and assessments in administering the settlement. These procedures were in place when, on May 27, 2026, the Settlement Administrator was notified of possible fraudulent activity: seemingly authentic Consumer Claims that had been approved for payment appeared to have been aggregated and channelled through a small number of bank accounts at three smaller Canadian financial institutions. Interac informed the Settlement Administrator that approximately $3.7 million had landed in accounts receiving high volumes of deposits.

Court's reasoning and analysis

The court considered the Settlement Administrator's response to the suspected fraud and the practical constraints it faced. Because of customer confidentiality obligations, the Settlement Administrator could only obtain limited information about the number of deposits made into a single account. To investigate further, the Settlement Administrator worked with its banking partner, Bank of Nova Scotia (BNS), which required an indemnity from the Settlement Administrator before it could provide indemnities to the implicated financial institutions.

The court also considered the proposed mechanism for handling any funds returned as a result of the investigation. Under the proposed order, returned funds would be held in the same Ontario Consumer Fund bank account and separately accounted for. These funds would first be used to re-issue payments to individuals who could verify their identities through the official settlement call centre. Any returned funds remaining after re-issued payments could be drawn upon to cover claims made against the Settlement Administrator under its indemnity. Funds still remaining at the time of the cy-près distribution would form part of that distribution. The defendants were given notice of the motion and took no position on the relief sought.

Ruling and overall outcome

Justice E.M. Morgan granted the order sought by the plaintiffs, as submitted by plaintiffs' counsel. The order authorized the Settlement Administrator's proposed framework for managing returned funds, covering re-issued payments, the indemnity structure involving BNS and the affected financial institutions, and the ultimate cy-près distribution of any remainder. The plaintiffs were the successful party in this motion. No specific monetary amount was ordered or awarded by the court in this endorsement; the order was procedural in nature, authorizing the Settlement Administrator's fraud response mechanism within the existing $500 million settlement framework.