NEW Partial Summary Judgement Requested

What does that mean?
We are asking the courts to make a "summary judgement" on 2 key aspects of the case, which could reduce the amount of time we would spend at trial.
You can read the actual motion here:
https://drive.google.com/file/d/0B8YiZD65CzjFODFPMWNreFRYTDg/view?usp=sharing

Just to prove our point, SEARS Canada sold it's distribution centers as well this year.

Wait for the dividend to be declared in Q4....

http://business.financialpost.com/news/property-post/sears-canadas-downsizing-deepens-as-it-sells-more-real-estate-including-100m-distribution-centre

NEW: Oppression Claim Against SEARS Directors Issued

I know many of you have been wondering how the Class Action case is progressing.

This is a slow process, and we have been patiently preparing and waiting for a court date to start arguing the case.

But there is now a significant development...as SEARS Canada continues to wind down it's operations by selling assets, we felt it necessary to make another stand.

On November 19, 2013, SEARS Canada declared an operating loss of $48.4 million for the 3rd quarter, but despite these losses the directors declared an extraordinary dividend of $5/share or a total of $509 million to shareholders.

We all know that the money was made available by selling SEARS' key real estate assets in and around Toronto (Eaton Center, Square One, Yorkdale,etc).  Rather than re-investing that money to support operations, the directors simply gave it to shareholders (of which Eddie Lampert controlled more than 70%).

This is not the first round of dividends, nor will it be the last, as SEARS Canada is stripped of it's remaining assets to the detriment of creditors, pensioners, and it's employees.

This has become a common practice among hedge fund dominated corporations, who use the funds for other investments while leaving a skeleton company behind ready for bankruptcy protection.

Therefore, we have filed a secondary suit naming SEARS Canada, ESL Investments, and all the Directors of SEARS Canada claiming Oppression under CBCA statutes.


Please follow this link to see the actual claim....

https://drive.google.com/file/d/0B8YiZD65CzjFa3JOYU5tQ0VmN1E/view?usp=sharing

How to Join the Class Action

All Hometown owners that are eligible to be part of the class will be contacted in writing in the coming months. 

You will have to respond in writing if you want to join the class.

This lawsuit applies to Canadian store owners only.

Please forward your current address and contact info directly to the lawyers at SOTOS

www.sotosllp.com

Please direct detailed questions to searswoodstock@gmail.com

SEARS Hometown Class Action is CERTIFIED!

We just received the judgement from the court on our class action certification, and the judge has ruled it meets all the requirements and can proceed to trial.

Read the full ruling here:

https://drive.google.com/file/d/0B8YiZD65CzjFcHlvaFB4QVdXY0E/edit?usp=sharing

It took a while but now we are officially "on the books".

This is a real lawsuit and it has teeth.

No News On Certification Yet

We are still waiting for a decision from the court about the class action certification.

Certification Hearing

We had our certification hearing yesterday to establish the lawsuit as a valid class action.

We had a strong turnout from many dealers to show support, and our lawyers did a great job of presenting our case.

We will have to wait for the judgement, which is an unknown amount of time but most likely a week or 2.

We will post the results when we get them.

Affidavit Exhibit P

Here is one of the more interesting Exhibits provided by SEARS to support their latest affidavit.  It explains the new commission structure, and clearly shows the disparity between what SEARS will gain and what the dealers will gain.  Have a look and try to understand the numbers.

Affidavit Exhibit P

Sears Canada exec salaries doubled while thousands laid off

And the good news just keeps on coming...read the whole story here:

http://www.torontosun.com/2014/03/19/sears-canada-exec-salaries-doubled-while-thousands-laid-off

If the link doesn't work, here are the highlights:

MONTREAL — Top Sears Canada executives saw their salaries nearly double last year as the chain laid off thousands of workers.
The top five executives at the retail chain earned $4.8 million last year, compared with about $2.4 million a year earlier.
The information appears in a circular released in advance of the April 24 shareholders' meeting in Toronto.
Sears Canada's new CEO, Douglas Campbell, got a major raise when he was promoted from COO in September. He got a 47% pay increase, bringing his base salary to $654,000 plus a $238,000 annual bonus.
If Campbell is fired without just cause, he gets a $3-million golden handshake, which includes a $2.2-million bonus.
Vice-presidents Klaudio Leshnjani and Salim Maherali got 85% and 86% raises, respectively. Leshnjani earned $775,000 in 2013 and Maherali received $581,000, with sharp increases to their base salaries and bonuses.
The company's five-year share price increased just 30% while the S&P/TSX index grew by 82% over the same period.
Sears Canada sales fell 8.2% to $4 billion during fiscal 2013, and store sales fell 6.4%. Profits increased more than fourfold, however, to $447 million.
The drop in sales led Sears Canada to give cut 1,600 jobs across Canada in mid-January, largely in call centres. The retailer cut another 624 positions in their stores at the end of January.

SEARS Affidavit

Here is the current affidavit that we have received from SEARS pertaining to the class action lawsuit.

We welcome private comments from dealers across the country regarding the arguments and statements put forth in the document below.  Just click on the link...

SEARS Corporate Affidavit

Class Action Certification Hearing Date is Set!

The first step in a class action lawsuit is to have it certified as a legitimate class action by the courts.

We will be presenting our case on June 11, 2014 at the Milton, ON courthouse.

Any dealers or former dealers that would like to attend to show solidarity are welcome.

Termination

We are now joining the growing ranks of SEARS Dealer Stores that simply cannot continue, and have to close their doors.  

We have issued our termination, and the Woodstock store will close Dec 15.

This does not affect our standing as plaintiffs in the Class Action Lawsuit, and we will vigorously pursue the case for the benefit of all dealer stores.

Almost 30 stores have closed this year alone, and while SEARS will subsidize 100% of special advertising costs for new dealers, there is no offer of help or subsidy to keep existing store owners going.

Many stores have asked for help paying a few monthly bills, or for extra advertising subsidy until SEARS can fix the business, but to no avail.  

Instead there seems to be a  few secret, select stores that receive "golden handshakes", where SEARS takes the dealership back and pays the dealer to stay on as a manager.  

Why the double standard?  If they can afford to run the store corporately, then how is it fair to let an owner walk away after investing so much in the business?

The answer is that it is not fair.  Everything is done solely for the benefit of SEARS, with no regard for the people and families that are left holding the debt of a dubious venture.

It's All About the Kids: SNKCR 2013

SEARS NATIONAL KIDS CANCER RIDE

From September 5 -21, 23 riders will cycle across our great country in support of children and families living with and beyond cancer.

Sears is the national sponsor for this event, and your local Hometown stores are passionately supporting the effort as well.  Check the route on the SNKCR home-page listed below and please come out to an event, or sponsor a rider.

Its all about the kids and their families fighting the ravages of cancer, and we need to set aside our daily troubles and help carry them through a seemingly impossible time.

For those engaged in the fight, know that you are not alone.

http://searsnationalkidscancerride.com/html/index.html

A very personal account and a cold response from SEARS

You have to read this one...

http://www.osoyoostimes.com/sears-hometown-dealership-owners-in-osoyoos-join-national-class-action-lawsuit/

Martin and Andrea are the typical hard-working, salt of the earth people who make up the bulk of the dealer channel.  Like most of us, they go all-in and give it everything they've got, with the modest expectation of making an average living for their family.

Notice the cold-hearted reply from Vince Powers of SEARS at the end.

“We’re actively looking for new owners … Osoyoos has been a very good market for Sears,” he said.

We couldn't have said it any better, Vince....it's always good for SEARS.

CBC Radio Coverage

Listen to a Western Dealer's story here...

http://www.cbc.ca/player/Radio/Local+Shows/British+Columbia/ID/2397736008/

How We Feel

As you can see, there is no concern from SEARS management for the reality the dealers face.  There is only denial and more propaganda trying to pump up the dealer model as something it obviously is not.

None of our concerns were addressed, no thank you for our hard work, and no clear answer to our request for a meeting.

Instead we are admonished for the tone of our letter.  What do they expect?  We have every right to take them to task.  We are supposed to be partners.

We are not partners.  They treat us with disdain and contempt, as if we are all lazy and incompetent.  In fact, we are the exact opposite.  We are educated, dedicated entrepreneurs and good corporate citizens who serve our communities with passion and dedication.

SEARS' Response

Dear Mr. Kay 

It is with deep disappointment that I learned of the class action lawsuit you initiated. For almost 20 years we have worked cooperatively with our Hometown store owners in order to serve families in smaller communities across Canada. 

We are actively looking for ways to grow, improve and invest in our Hometown network to better serve our customers. In late 2012 we worked with six Hometown store owners to help refresh their stores; we have identified 11 markets where we would like to open new stores and are actively recruiting owners; and we have identified more than 20 stores we believe would greatly benefit from a refresh, expansion or relocation. 

It was with great pride that we opened our new 25,000 square foot store in Orillia in June, and I can tell you personally that the grand opening was warmly received by the community. 

In response to your letter dated July 17, 2013, let me say that I have always taken pride in how open and accessible I am to our partners in business, including our Hometown store owners. 

You must now understand that your actions, including the filing of the claim and the subsequent issuance of a press release as well as the tone of your letter make individual conversations between us much more difficult. It did not go unnoticed that you copied your legal counsel on your recent correspondence and referenced the threat of increased negative publicity. 

Unless I see a sincere desire to have a sit down and discuss matters, without any kind of threats on your part, be it legal or otherwise, I do not believe it will be a productive meeting. 
    
Sincerely, 

Calvin McDonald 


Calvin McDonald
President & CEO 
Sears Canada Inc. 
290 Yonge Street, Suite 700  | Toronto, ON  |  M5B 2C3 

We Reach Out to SEARS

Last week we sent a letter to SEARS CEO Calvin McDonald offering a chance for us to sit down and discuss a resolution to the financial and personal struggle that dealers face every day.  This is the letter we sent:

1291079 Ontario Limited

o/a Sears Woodstock

July 17, 2013

Sears Canada Inc.

290 Yonge St, Suite 700
Toronto, ON

M5B 2C3

ATTENTION:                        Calvin McDonald, CEO

Dear Mr. McDonald:

My wife Linda and I own the Sears Woodstock Hometown Store.  We are the plaintiffs in a class action lawsuit on behalf of 260 Hometown Stores across Canada that alleges unfair dealing by Sears.

I am writing to explain in my own words how desperate the situation affecting the Sears Hometown Stores is and to request that we meet in person to discuss a resolution.  It is my sincere hope that you will carefully consider everything that follows.

First, let me say that I am proud to represent Sears.  When we entered the Sears Dealer Program 6 years ago, we were excited to be part of a brand that was rated #1 in trust among consumers.  We were new to retail (a common trait among dealers) and we trusted your claims in the Ownership Program Brochure that:

·         “This business model is brilliant.   You partner with Sears and own one of our prestigious community stores.”

·         “Sears wants you, our partner, to succeed.  In fact, we take a personal and financial interest in your success.”

We met a lot of great people within the Sears organization.  We were honored to represent the company in our community.  During this time we worked very hard and made an average middle class income.

However, this is no longer possible for us or for the vast majority of Sears Hometown dealers. 

The business model is heavily skewed to favour Sears, placing the bulk of the expense on Dealers.

This spring, under the direction of Hometown Stores V.P. Terri Lowe, things got even worse.  I attended our regional cluster meeting in Kitchener and was shocked by the attitude I saw and heard.  The highlights of the meeting:

·         Advertising subsidies would be cut off to 116 stores in Tier 4.  How do we sell if we don’t advertise?

July 17, 2013

Page 2

·         A new group of corporate trainers was presented to help improve our “poor management skills” and provide “on-boarding” for new dealers.  We were told that under the new contracts being released in July, we would all be re-evaluated as dealers before our contract was renewed.  We were told that the ideal candidate for a dealer store is now modeled after a corporate store manager.  This is deeply offensive to us as we bring skill sets and perform tasks that corporate store managers would never consider part of their job.  Nor would any corporate store manager accept our paltry compensation and heavy debt load.

·         We heard from Ian Lam who explained our financial picture in great detail.  In this package was a chart showing that 169 stores did not make an average household income.  The average income of a dealer store was revealed to be $33,000/year.  Given the 50-60 hours per week that owner managers put in, this amounts to less than minimum wage for the average dealer.  In fact, many dealers I have spoken to pay themselves nothing. 

·         A chart was also included showing an average decline in commission from 2009-12 of 15%, while our NET income has declined a whopping 45%.  Notice the disparity here…our costs are rising, and commissions are falling at the same time.  However, Sears still makes money on our stores, without offering a single cent to help with rising costs.

The figures are from Sears’ own documents.  The information was generated from extensive store audits on selected stores (we were forced to participate) performed by an independent accounting firm. 

We were told that anyone who didn’t like the program could leave. There was no thank you for investing hundreds of thousands of dollars.  No thank you for running the most efficient channel in the company with the lowest returns, lowest shrinkage, and pure profit margin (as you well know from your P&L’s).  After hearing this and more, I assumed there was no other recourse than to seek legal counsel, because Terri was speaking on your behalf.

This is not how partners talk. This is not how partners treat each other.

Sears has re-defined our relationship without our consent and has taken away the profit that we need to survive.

I can only assume that you are fully aware that the dealers are not financially viable.  You watch dealer after dealer throw their life savings into these stores and then walk away with nothing, only to hand it to the next one and repeat the cycle.  There have been 5 such stores in Eastern Ontario alone in the last 12 months, all of which are still open for business.  If the channel is not profitable for Sears, why is it opening new stores and continuing to pursue new dealers?  We know there is profit to be shared.  You know this, and yet refuse to offer anything of consequence to help us.  You refuse to share the pie.

As soon as the lawsuit became public, I was inundated with support from the dealers. I heard from a person who was using his retirement pension to fund his Hometown store.  I heard from parents of young children who must bring them to the store because the store does not generate enough money for them to pay for a babysitter.  I heard from one individual who told me that he wept with relief when he saw that the claim had been started.

July 17, 2013

Page 3

They have told me such things as:

·         “We are fighting a losing battle trying to use our personal monies to keep the business afloat hoping things would turn around.”

·          “The Sears business has never generated enough income for me to make a living. I feel Sears has profited while I have tried to “stick it out” in hope of better days ahead, but instead I have gone further into debt with less and less support from Sears.”

·         “Not only have we suffered financially, but our family has suffered as well. With the amount of hours we have had to put in to just make ends meet, it has been hard to maintain a healthy family life. I understand that when you get into business that you have to expect to put in lots of hours and that’s fine, but I expect to be fairly compensated for the hours I am putting in.”

How long will you sit and watch people lose everything to support your bottom line?  Do you really believe this is “just business”? 

Although you ignored our initial requests to talk before involving the courts, we would like to offer you this opportunity to sit down with us to explore solutions to these problems.  Although your public statement is that Sears will vigorously defend this lawsuit, we both know that this is hardly an option for the long-term.  Many dealers are hanging on in the hopes that positive change will come about.  Every month, dealers are exiting the system with crushing debt.  Attempts to find new dealers willing to take their place will be hampered by the publicity surrounding the lawsuit and the forthcoming efforts to bring our situation to the attention of the public.  It is not realistic to expect that the Hometown dealers will sit back quietly while they are being starved of funds.

The lawsuit is a response to a dire problem.  How Sears Canada chooses to handle that problem is up to you.  We ask that you contact us or our legal counsel by no later than 5 PM on July 24 if you wish to meet. 

Sincerely,

1291079 ONTARIO LIMITED

Jim Kay, President

JK/ldk

cc:        David Sterns, Sotos LLP

Overwhelming Response

The past 3 days we have seen an overwhelming response to our suit.  We have been contacted by dozens of past dealers who have lost everything and walked away, only to have their store given over to another owner.  New owners are being wooed by Sears and given mis-information as to the potential their investment holds.   The story repeats over and over.  We have support.  Big time.

We have also been overwhelmed by media interest in this.  It is a David vs. Goliath story.  For those of you familiar with the account in the Bible, Goliath doesn't take David seriously.  He mocks him and laughs.  He doesn't see him as a threat.  He is then taken by surprise by a shot between the eyes that ends the battle. The interesting part of the story is that David never feared.  He had every reason to fear, but he felt he had nothing to lose.  He had the hopes and future of an entire nation behind him.

Will you stand behind us?

http://kitchener.ctvnews.ca/video?clipId=961464

Affirmation of the Cause

Despite our early reservations about this suit, we know we have done the right thing.

I have heard from many dealers now, the most poignant being the dealer who said they cried when they read the press release.  They have been so depressed about losing their savings and pension earnings, and like most dealers felt alone and powerless.

Those days are over....