Tuesday, December 11, 2012

Here's the scoop

In case you were wondering what Gray's lawyers are trying to hide behind a court sealing order, here it is in its entirety

Court File No. 37312/05

ONTARIO SUPERIOR COURT OF JUSTICE

PLANTIFF

SWEDA FARMS LTD., BEST CHOICE EGGS LTD. and TILIA TRANSPORT INC.

-and-

DEFENDANTS

EGG FARMERS OF ONTARIO, HARRY PELISSERO, BURNBRAE FARMS LIMITED, BURNBRAE HOLDINGS INC., MAPLE LYNN FOODS LIMITED, L.H.GRAY & SON LIMITED, WILLIAM HARDING GRAY, JOHN KLEI and THE ESTATE OFJOHANNES KLEI


FRESH STATEMENT OF CLAIM


TO THE DEFENDANT(S)

A LEGAL PROCEEDING HAS BEEN COMMENCED AGAINST YOU by the Plaintiff(s). The claim made against you is set out in the following pages.

      IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a statement of defense in Form 18A prescribed by the Rules of Civil Procedure, serve it on the Plaintiff(s) lawyer(s) or, where the Plaintiff(s) does not have a lawyer, serve it on the Plaintiff(s), and file it, with proof of service, in this court office, WITHIN TWENTY DAYS after this statement of claim is served on you, if you are served in Ontario.

    If you are served in another province or territory of Canada or in the United States of America, the period for serving and filing your statement of defense is forty days. If you are served outside Canada and the United States of America, the period is sixty days.

      Instead of serving and filing a statement of defense, you may serve and file a notice of intent to defend in Form 18B prescribed by the Rules of Civil Procedure. This will entitle you to ten more days within which to serve and file your statement of defense.
     
      IF YOU FAIL TO DEFEND TillS PROCEEDING, JUDGMENT  MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU.IF YOU WISH TO DEFEND TillS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL  AID OFFICE.


Date:  May 4, 2005

Issued By ì T. METCALFEî Local Registrar
Address of court office:
Durham Region Courthouse
150 Bond Street East Oshawa, Ontario L1GOA2


TO:  WILSON SPURR LLP
Barristers  & Solicitors
261 Martindale Road, Unit 16B St. Catharines,  ON, L2W 1A2
Geoffrey P. Spurr
LSUC No. 28669Q
Tel.: 905-682-2775
Fax.: 905-682-2357
Solicitors for the Defendants
Egg Farmers of Ontario  and Harry Pelissero

AND TO:  FRASER MILNER CASGRAIN LLP.
1 First Canadian Place
100 King Street West
Toronto, ON, M5X 1B2
P. David McCutcheon LSUC No. 16057P-1B Tel.: 416-863-4538
Fax.: 416-863-4592
Solicitor for the Defendants,
Burnbrae Farms Limited,  Burnbrae Holdings Inc. and Maple Lynn Foods Limited,

AND TO: HARRISON PENSA LLP
Barristers & Solicitors
450 Talbot Street
London, ON, N6A 5J6
David B. Williams LSUC No. 21482V Allison M. Webster LSUC No. 41405C Tel.: 519-679-9660
Fax.: 519-667-3362
Solicitors for the Defendants, L.H. Gray & Son Limited, William Harding Gray

AND TO: AITCHISON LAW OFFICE
Barristers and Solicitors
419 King Street West, Suite 185
Oshawa, ON, LlJ  8L8
Laurie L. Aitchison LSUC No. 47992W Tel.: 905-433-1174
Fax.: 905-433-1645
Solicitor for the Defendants,
Estate of Johannes Klei and John Klei



CLAIM

1. The Plaintiffs claim:

(a)    A declaration that the Defendants conspired and/or agreed with each other to fix, maintain, or stabilize the prices of eggs in Canada from at least January 31, 2000 to the present;

(b)    A  declaration  that  the  Defendants  conspired and/or  agreed  to  lessen  unduly, competition in the production, grading, sale and/or supply of eggs in Canada from at least January 31, 2000 to the present;

(c)    A  declaration against the Defendant EFO that the  invoice for  approximately
$45,000.00 is null and void and, in the alternative, if the Plaintiffs have to pay this levy invoice the amount plus interest be added to the Plaintiffs' damages under this action;

(d)    General damages on an aggregate basis or otherwise for conspiracy, intentional interference with economic relations, and conduct which is contrary to Part VI of the Competition Act, in an amount sufficient to compensate the Plaintiffs for the harm done to them as a result of the Defendants' illegal conduct;

(e)    Jointly and severally against the Defendants L.H. Gray & Son Limited, William Harding Gray, Bumbrae Farms Limited, and Bumbrae Holdings Inc. for breach of contract with respect to the purported purchase of the Plaintiffs egg   grading and retailing business and further breach of confidentiality agreements, such damages estimated at  twenty five  million  dollars ($25,000,000.00) or an  amount  to  be proven at trial;

(f)    Jointly and severally against the defendants L.H. Gray & Son Limited and William Harding Gray for the destruction of evidence and documents, damages in the amount of two million dollars ($2,000,000.00) or an amount to be proven at trial or accepted by the court to compensate the Plaintiffs for these Defendants' illegal activity;

(g)    Jointly and severally against the Defendants L.H. Gray & Son Limited and William Harding Gray for damages to the egg grading business operations of the Plaintiffs for their illegal exploiting their dominant position in the Ontario egg retailing business by carrying out the illegal practice of packing cracked and dirty eggs into Grade A packages and selling such eggs as grade A eggs contrary to the Food & Drug Act and the Agricultural Products Grading Act and  damages  shall  be  in accordance with sub paragraph (b) above;

(h)    Jointly and severally against all Defendants for libel in the amount of five million dollars ($5,000,000.00) or an amount to be proven at trial;

(i)     An accounting, restitution, disgorgement and the creation of a constructive trust for unjust enrichment, and the taking of inequitable profit by unlawful conduct;

(j)     Costs of investigation  and prosecution  of these proceedings  pursuant  to section 36(1) of the Competition Act;

(k)    In the alternative to any of the above claims, similar damages for negligence by the Defendants;

(l)    Jointly and severally  against each and every Defendant  aggravated  and punitive damages of three million dollars ($3,000,000.00)  or an amount determined at trial to be just and act as a deterrent  against the repeat of such illegal activity  in the future;

(m)   Prejudgment interest in an amount that is determined as fair or in accordance with the provisions of the Courts of Justice Act;

(n)    Post judgment interest in accordance with the provisions of the Courts of Justice
Act;

(o)    The Plaintiffs claim their costs of this action on a full indemnity basis; and

(p)    Such other relief as this Honourable Court deems just.


THE PARTIES

2.      SWEDA FARMS LTD. [Sweda Farms] is a corporation incorporated  under the laws of the Province  of  Ontario  whose  registered  office  is  located  in  Blackstock,  Ontario,  and is in the business of producing, grading and marketing eggs in Ontario.

3.      BEST CHOICE EGGS Ltd. is a corporation incorporated under the laws of Ontario with its head office located in Blackstock, Ontario, and is in the business of grading and marketing eggs in Ontario, and is the operator of an AAA rated federally licensed egg grading station.

4.     TILIA TRANSPORT INC. is a corporation incorporated under the laws of Ontario with its head office located in Blackstock, Ontario and in is in the business of grading and marketing eggs in Ontario.

5.      EGG FARMERS OF ONTARIO [EFO] is a corporation created under the Farm Products Marketing  Act, whose  office  is  located  at  7195  Millcreek  Drive,  Mississauga,  Ontario,  and operates as a marketing board with specific regulatory powers with respect to eggs produced in Ontario.   The EFO was formerly known as Ontario Egg Producers.

6.     HARRY  PELISSERO  [Pelissero]  resides  in  Grimsby,  Ontario,  and  has  acted  in  the capacity of General Manager of the EFO since 2003.

7.      BURNBRAE  FARMS  LIMITED    [Burnbrae]  is a wholly owned subsidiary of BURNBRAE HOLDINGS INC. Both are corporations incorporated under the laws of Ontario. Burnbrae is in the business of producing, grading and marketing eggs in Ontario and throughout Canada.

8.      MAPLE LYNN FOODS LIMITED  [Maple  Lynn]  is  incorporated  under  the  laws  of Ontario, is a wholly owned subsidiary of Burnbrae, and is in the business of grading and marketing of eggs in Ontario. Maple Lynn operates two ofBumbrae's grading stations located in Mississauga and Strathroy, Ontario.

9.      L.H. GRAY & SON LIMITED [L.H. Gray] is incorporated under the laws of Ontario and is in the business of producing, grading and marketing eggs in Ontario and throughout Canada.

10.     WILLIAM HARDING GRAY [Gray] resides in London, Ontario and is President of L.H. Gray.

11.     The Defendants Burnbrae and L.H. Gray are the two largest graders, marketers, processors and importers of eggs in Canada. These two companies collaborate on an ongoing basis in an effort to collectively monopolize all facets of the Canadian egg market.

12.    JOHANNES KLEI resided in Nestleton, Ontario and was, at the material time, the Sales Manager of Best Choice. His duties include certain aspects of sales, purchasing, and building and yard maintenance. Johannes Klei passed away after these proceedings began and as such this claim is brought against THE ESTATE OF JOHANNES KLEI.

13.    JOHN KLEI resides in Nestleton, Ontario and was, at the material time, the Barn Manager of Sweda Farms. His duties included certain aspects of egg production and bird management.

LITIGATION HISTORY

14.   The Plaintiffs Sweda Farms, commenced proceedings, Court File No. 37312/05, against the Defendants EFO, Pelissero and Mark Beaven by issuing a Statement of Claim dated May 4, 2005 (subsequently amended, dated January 8, 2010). Said Defendants collectively issued a Statement of Defense dated June 14, 2005 (subsequently amended, dated February 18, 2010). From the beginning of these proceedings, the Defendants L.H. Gray, Gray and Burnbrae have been made privy to details respecting this action, including settlement strategies of the EFO and Pelissero, through EFO statements to producers, representatives sitting on the EFO board, and relationships with the EFO board Chair, Carolynne Griffith, and other board members.

15.   The Defendant Mark Bevan by a Mary Carter Agreement between the Plaintiffs and the Defendants EFO and Pelissero has been withdrawn as a Defendant.

16.   The     Plaintiffs     Sweda     Farms     commenced    proceedings,     Court     File     No. CV-08-357570-0000, against Defendants Burnbrae, Burnbrae Holdings Inc., Hudson, Craig Hunter, L.H. Gray, Gray, Michael Walsh, Maple Lynn, Johannes Klei and John Klei by issuing a Notice of Action dated June 24, 2008. Said Plaintiffs issued a Statement of Claim dated July 23, 2008 (subsequently amended, dated December 5, 2008). The Defendants L.H. Gray, Gray and Michael Walsh issued a Statement of Defense dated January 29, 2009. The Defendants Johannes and John Klei issued a Statement of Defense dated February 9, 2009. The Defendants Burnbrae, Burnbrae Holdings Inc., Hudson, Craig Hunter, and Maple Lynn issued a Statement of Defense dated March 24, 2009.   This Fresh Statement of Claim combines all of the above previous claims, as well as adds additional claims for damages.

17.  The Plaintiffs Sweda Farms, Best Choice Eggs and Tilia Transport did not discover, and could not discover through the exercise of reasonable diligence, the existence of the claims sued upon until recently, because the Defendants and their co-conspirators actively, intentionally concealed the existence of the combination and conspiracy from the Plaintiffs and others and only the release of documents by a whistleblower related to the Defendant L.H. Gray allowed the Plaintiffs to become aware of the Defendants conduct.

THE FACTS: DESTRUCTION OF EVIDENCE

18.    On or around January 8, 2009, the Defendant Gray ordered Norman Bourdeau, Manager of Information Technology of the Defendant L.H. Gray, to destroy all electronic data and information from the business records of L.H. Gray which were relevant to litigation involving the Plaintiffs and L.H. Gray.

19.    Norman Bourdeau followed  his  instructions and  did  delete data  and  information as ordered; however, he kept the data storage medium where the data and information had been stored so that it might be recovered at a later date.   He also kept some hard drives and documents.

20.    On or around May 7, 2009, Norman Bourdeau approached the Plaintiffs and notified the Plaintiffs of the destruction of data and information, and that he had kept the data storage medium.

THE FACTS: EFO LETTERS  AND INVOICES OF FEBRUARY 2005

21.    The production of eggs in Ontario is regulated under a 'supply  management' system, which is largely managed by the Defendant EFO. Supply management involves a quota system which necessarily limits the number of eggs produced and the number of egg producers. As a result, egg supplies are relatively scarce and highly valued as a means to supply eggs to wholesale and retail markets.

22.     Grading of eggs is federally regulated and enforced by the Canadian Food Inspection Agency [CFIA]. The EFO does not have jurisdiction to establish or enforce egg grading standards.

23.        Prior to February 22, 2005, the Plaintiffs had supplier agreements with various egg producers, including:

(a) Casteels Poultry Farms Ltd.;
(b) Ritchie and Dawn Pilgrim, R J Steel Inc.;
(c) Donald Ross,
(d) Stonehill Farms Ltd.;
(e) Sweda Farms Ltd.;
(f) Alan Thomson;
(g) Joel and Lydia Bauman;
(h) Willem Bakker Enterprises Inc.;
(i) Michael Knuth;
(j) Sherry and Daryl Phoenix;
(k) Jacob Koster;
(l) Kamview Poultry Ltd.;
(m) Gold Crest Poultry Farm Ltd., and;
(n) Hatert Poultry Farms Ltd.,

who in turn supplied eggs to be graded by the Plaintiffs.

24.        Producers'  eggs which are graded by the Plaintiffs and subsequently marketed to retail and wholesale customers by the Plaintiffs. The Plaintiffs are also responsible for reporting producers' grading data and remitting levies on behalf of egg producers supplying them with eggs to the Defendant EFO.

25.        On or about February  22, 2005, the Defendants  EFO  and Pelissero  engaged  in issuing letters and invoices to the aforementioned egg producers who supplied eggs to the Plaintiffs  and who also used the Plaintiffs to grade their eggs. The invoices were for "under-reported marketing/levies".    The invoice sent to the Plaintiff Sweda Farms for its own egg production was in the amount of approximately $45,000.00.

26.        The decision to issue letters and invoices to egg suppliers of the Plaintiffs was solely that of the Defendant Pelissero, and without prior knowledge or approval of the Defendant EFO's  board of directors.

27.        The decision  to issue letters and invoices  to egg suppliers of the Plaintiffs  was initiated following suggestions from competitors of the Plaintiffs, namely the Defendants L.H. Gray, Gray, and Burnbrae, that the Plaintiff's  rates of 'cracks', 'rejects'  and 'short & broken' was probably too high.

28.        The Defendant Pelissero conducted the investigation under the pretence that the Plaintiffs were not properly reporting gradings and remitting levies on behalf of their egg suppliers, and the Plaintiffs were doing this as a means to withhold levy money owed to the Defendant EFO. In the course of their investigation,  the Defendant, Pelissero indicated to suppliers of the Plaintiffs  that there was something improper with respect to the Plaintiffs'  grading practices.

29.        Despite his suspicions with respect to the grading practices of the Plaintiffs, the Defendant Pelissero never reported the matter to the Canadian Food Inspection Agency (CFIA), nor did he order any random pre-grade inspections pursuant to the existing EFO Egg Quality Program,  nor did he contact any other relevant law enforcement agency.

30.       Despite the fact that his purported suspicions rested solely on the Plaintiffs' egg grading practices, the Defendant Pelissero elected to sanction egg suppliers of the Plaintiffs, which he knew or ought to have known would harm business relations between the Plaintiffs and its egg suppliers.

31.       Prior to the issuance of letters and invoices to suppliers of the Plaintiffs, the investigation conducted by the Defendant Pelissero involved visits and communications with suppliers of the Plaintiffs, at which times it was suggested that Plaintiffs may be improperly reporting grading data and remitting levies on their behalf. Prior to the issuance of letters and invoices to suppliers of the Plaintiffs, the Defendant Pelissero did not provide the Plaintiffs with an opportunity to comment or explain any purported irregularities with respect to their grading and reporting.

32.       The Defendants EFO and the Defendant, Pelissero sent egg suppliers of the Plaintiffs letters with enclosed invoices alleging the following:

"OEP, through years of experience, has determined industry averages for egg marketing's against which it measures license fee and levy remittances by grading stations. Where reported marketing's and the consequential license fee and levy remittances are below the industry average, OEP issues invoices to all producers involved for  the license fees and levies that should have been deducted and remitted by the Grading Station. These are identified as "Under-reported Marketing/Levies".

An analysis of your 2004 Egg Grading Summary Review and Levy Reconciliation as reported to OEP by your  grading  station(s)  has  been  completed. This  analysis  indicates  the  number  reported  for  your "non-leviable eggs" is higher than the industry average. Unless there is a valid explanation for the higher number we believe there was an under remittance of levy by your grading station. Attached please find the following:"

33.      The Defendants EFO and Pelissero specifically targeted egg producers who used the Plaintiffs as their grading station; namely:

(a)   Casteels Poultry Farms Ltd.;
(b)    Ritchie and Dawn Pilgrim;
(c)    R J Steel Inc.;
(d)    Donald Ross,
(e)    Stonehill Farms Ltd.;
(f)     Sweda Farms Ltd.;
(g)    Alan Thomson;
(h)    Joel and Lydia Bauman;
(i)     Willem Bakker Enterprises Inc.;
(j)    Michael Knuth;
(k)    Sherry and Daryl Phoenix;
(l)    Jacob Koster;
(m)   Kamview Poultry Ltd.;
(n)    Gold Crest Poultry Farm Ltd., and;
(o)   Hatert Poultry Farms Ltd.

34.       The letters and invoices were initially sent only to suppliers of the Plaintiffs, and not to suppliers of any other grading stations in Ontario. Approximately two weeks later, the Defendants EFO and Pelissero did send letters and invoices to other producers; however, unlike the suppliers of the Plaintiffs, all of these invoices were subsequently cancelled by the Defendants EFO and Pelissero. Additionally, the other producers were never visited by anyone from the Defendant EFO, nor did anyone from the Defendant EFO ever suggest that the sanctions initially imposed upon them were caused by their respective grading stations - which included grading stations of the Defendants L.H. Gray and Burnbrae.

35.       The invoices issued by the Defendants EFO and Pelissero are based on unfounded and arbitrary calculations designed to target and discriminate against the Plaintiffs and egg producers which supplied eggs to the Plaintiffs.

36.       After the letters and invoices were issued to suppliers of the Plaintiffs, the Defendant Pelissero advised the suppliers that if they failed to pay, the Defendant EFO would cancel their quota. The quotas owned by these producers are worth millions of dollars.

37.       The grading of the eggs is regulated by federal legislation and the Plaintiffs are required to comply with federal standards under the Canada Agricultural Products Act and the CFIA. As a result, any attempt by the Defendant EFO to regulate with respect to grading is ultra vires its powers.

38.        The issuance of the letters and invoices purports to affect Plaintiffs' grading practices. As a result, the conduct of the Defendants EFO and Pelissero was an illegal and improper exercise of the Defendant EFO's egg marketing jurisdiction.

39.      The conduct of the Defendant Pelissero is outside the scope of his duties as an employee of  the  Defendant  EFO  and  he  is,  therefore,  personally  liable for  the harm he caused the Plaintiffs.

40. In so far as the Defendants EFO and Pelissero act as the provincial body managing various aspects of the Ontario egg industry, the Defendants EFO and Pelissero owed the Plaintiffs a duty to act in a fair and unbiased manner with respect to how they treat Ontario egg graders, treat Ontario egg producers and conduct investigations.

41.      Prior to the issuance of letters and invoices, agents for the Defendants L.H. Gray and Burnbrae were made privy to the investigation involving the Plaintiffs, including details respecting the names of egg producers who would be sent letters and invoices.

42.        At the same time the Defendants  EFO and Pelissero  were engaged in investigating the Plaintiffs  and issuing letters and invoices to suppliers of the Plaintiffs,  the Defendants Burnbrae and  L.H.  Gray  were  engaged  in  soliciting  egg  supply  agreements  with  said  suppliers.  In  a coordinated effort, the Defendant Burnbrae contacted egg producers East of Toronto, and the Defendant L.H. Gray contacted egg producers West of Toronto.


THE FACTS: BROKERING  AND REPORTING SUPPLIES OF SURPLUS EGGS

43.        Pursuant  to the Order of J.C. Lack, dated January 8, 2010, the Plaintiffs  in this action amended  the Statement  of Claim  to  provide  additional  and  more  recent claims  of illegal and improper activities against the Defendants  EFO and Pelissero. The Defendants  L.H. Gray, Gray, Burnbrae, and Maple Lynn are also parties to said illegal and improper activities. These claims are described below.

44.        Because egg supplies in Ontario are limited according to supply management, a system is in place whereby the Defendant EFO will source eggs on behalf of Ontario egg graders when said graders are short of supply necessary to meet marketing obligations. Sources may come from other Ontario  egg  graders  who  report  having  surpluses.  If no Ontario  egg  graders  report  having  a surplus,  then the Defendant  EFO reports such circumstances  and the requesting egg grader may forward a further request to Egg Farmers of Canada in an effort to either source eggs from another province, or obtain an import permit to import eggs from outside Canada.

45. The Defendants EFO and Pelissero have purported to act as a broker of eggs on behalf of the Plaintiffs as a means to supply eggs to the Plaintiffs when the Plaintiffs were short of eggs from its usual suppliers.

46.        The Defendants EFO and Pelissero have, in executing duties as a broker of eggs on behalf of the Plaintiffs, knowingly and deliberately  overcharged the Plaintiffs for eggs and knowingly supplied the Plaintiffs with eggs from the Defendants Burnbrae and L.H. Gray which were eggs of poor  quality, unmarketable  eggs,  and eggs  not in compliance  with  the standards  requested  or required by the Plaintiffs [unmarketable eggs], thereby causing the Plaintiffs to be unable to supply eggs to its retail and wholesale customers.    Examples of this behaviour is evidenced by, but not limited to the following:

     (a)    Starting  in June of 2009, the Plaintiffs submitted  a request for 11 or more truck loads  comprised  of  1800  cases per truck  and 15  dozen  organic  small (white  or brown) eggs per case and 15 dozen of cage free small (white or brown) eggs per case to the Defendant, Pelissero.    In an email dated June 25, 2009, the Defendant Pelissero sent this request to the Defendants  Burnbrae and L.H. Gray. However, as opposed to complying with the request as is, the Defendant Pelissero  altered the request and advised that he would use medium size eggs to fill the request.

     (b)      In September of 2009, the Plaintiffs submitted a Table Request for a load of Grade A Small Brown.    In making this request, the Plaintiffs  specifically requested that there be no downgrades to medium.    After being told by the Defendant L.H. Gray that  in order  to fill  the request  there  would  be  some  medium  in the order,  the Defendant Pelissero advised in an email dated September 17, 2009: "Go ahead and grade with an inspector including some medium and label as small."

      (c)      In an email to the Defendant  L.H. Gray from the Plaintiffs  dated September  24, 2009,  the  Plaintiffs  advised  that  the  latest  shipment  received  did  not comply because the request had been for small but the eggs received by the Plaintiffs were 81% medium.    In response the Defendant  L.H. Gray forwarded  the email to the Defendant Pelissero who advised the Defendant L.H. Gray to make no comment on the medium issue thereby the Defendant EFO was condoning the illegal activities of the Defendant L.H. Gray.

47.   When a request for surplus eggs from the Plaintiffs  was received by the Defendants  L.H. Gray  and /or Burnbrae  these Defendants  and one or  more other egg graders, in a collaborated effort, reported available eggs and then proceeded to deliberately ship unmarketable eggs to the Plaintiff.

48.   The Defendants L.H. Gray, Gray, Bumbrae,  and Maple Lynn have deliberately  shipped eggs to the Plaintiff which were not suitable for the consumer market. Said shipments have been detained  by the  CFIA  and  some  were  subsequently  destroyed.    Evidence  of  the  Defendants engaging in this behaviour is evidence by, but not limited to, the following:

        (a)  Canadian  Food   Inspections  Detention  under  Section  23  of  the  Canadian Agricultural Products Act, Detention Orders 273351, 273552, 273354, 273355, 190802, 190804, 190803, 190806, 190807, 190810, 190811,and 190812.

        (b)  The Defendant Gray after being advised that certain eggs are being returned with problems, Scott Brookshaw (Vice President of Processing for the Defendant L.H.Gray) states of sending eggs to Best Choice (Email sent June 8, 2009 to Gray: "I told Nellie that if or when we do this again to use good product for  him."

49.    TheDefendant L.H. Gray has deliberately adjusted settings on its grading machine to
intentionally pack cracked, leaking, dirty, and under-grade eggs into egg cartons shipped to the Plaintiffs.   Some of the evidence that the Defendant L.H. Gray engages in this behaviour in general as well as some of the evidence that the Defendant L.H. Gray engages in this behaviour specific to the Plaintiffs is evidenced by, but not limited to, the following:

      (a)   In an email to Scott Brookshaw Vice President of Operation for the Defendant L.H. Gray dated November 23, 2009, the question is put to him by a Ron Haasnoot, a maintenance employee of the Defendant L.H. Gray, whether adjustments should be made to the crack packer and what he should do with cracks as he does not know  what they are worth.   In response, Scott Brookshaw advises: "The  more that can go in the pack the better.   Good revenue."

      (b)  In an email exchange dated December 2, 2009 between Scott Brookshaw Vice President of Operation for the Defendant L.H. Gray and Ross Snider, Scott Brookshaw advises Ross Snider to "...make  sure we are leaving small cracks and slight dirts in the packs."

       (c)   After filling  an  order  that was  sent  to  the  Plaintiffs  in  December 2009,  the Defendant Gray asks Nellie Grigg, Plant Manager at the Defendant L.H. Gray, in a  December 31, 2009 email who forgot to reset the large scales after doing the Best Choice load.    He also asks that the settings be checked and returned to their original positions.

50.    By knowingly brokering unmarketable eggs to the Plaintiffs, the Defendants EFO and Pelissero have caused the Plaintiffs to be unable to supply eggs to its retail and wholesale customers.

51.    By knowingly shipping unmarketable eggs to the Plaintiffs, the Defendants L.H. Gray, Burnbrae, and Maple Lynn have caused the Plaintiffs to be unable to supply eggs to its retail and wholesale customers.

52.    In addition to causing the Plaintiffs to be unable to supply eggs to its retail and wholesale customers by brokering unmarketable eggs, the Defendants EFO and Pelissero have prevented the Plaintiffs from obtaining Federal Import permits. By failing to properly and accurately report to Federal authorities the availability of domestically produced marketable eggs in Ontario, the Plaintiffs did not qualify for Federal Import Permits at times when domestic eggs were unavailable.

53.    By failing to properly and accurately report to Federal authorities the availability of domestically produced eggs in Ontario, the Defendant EFO has improperly and illegally restricted the Plaintiffs' access to supplies of imported eggs, which purports to intrude upon federal jurisdiction, and has further damaged the Plaintiffs to be unable to fully supply eggs to its retail store customers.

54.    In a coordinated effort, the Defendants L.H. Gray, Gray, Burnbrae, and Maple Lynn have conspired with each other and reported marketable eggs to be available, when in fact no eggs were available, for the sole purpose of blocking the Plaintiffs from obtaining Federal Import Permits. These actions deliberately caused the Plaintiffs to be unable to fully supply eggs to its retail store customers. Evidence of the fact that there were occasions upon which the Defendants were unable to meet egg requests from the Plaintiffs is evidenced by the following:

      (a)    On July 22, 2009, the Defendant Pelissero advised that the Plaintiffs were looking for 300 cases of brown organic large, 1980 cases of brown large and 600 cases of  white Omega 3 large.   The Defendant Gray advised the Defendant Pelissero that he could possibly do the Organic and Omega but that the Organic Large would contain some extra large.   Rich Baechler, a Plant Manager at the Defendant L.H. Gray, went on to advise that they did not have 600 cases of white Omega 3 large and expressed concern that a lot of extra large were placed into their organic large.

     (b)   In an email dated September 1, 2009, the Defendant Gray indicates that they do not have any small brown loose that could be sold to the Plaintiff.

     (c)  In an email from the Defendant Burnbrae to the Defendant Gray dated September 28, 2009, Burnbrae advises that the Plaintiff is looking for 360 Organic Large and a full load of Large Brown.   Bumbrae asks whether they would be in a position to supply the Organic plus half the brown as it would be nice to block the Plaintiff from getting a permit. The Defendant L.H. Gray could not meet the request.

55.   In so far as the Defendants EFO and Pelissero act as brokers of eggs on behalf of the Plaintiffs, and in the course of their duties to report the availability of domestically produced eggs in Ontario, the Defendants EFO and Pelissero owed the Plaintiffs a duty to act fairly and impartially, as well as in the best interests of the Plaintiffs.

56.   The Plaintiff submitted requests to the Defendant EFO for supplementary egg imports and the Defendant Pelissero would personally intervene with respect to these Applications and keep the Applications on his desk for several days making the Applications useless to the Plaintiffs to meet its egg requirements.   The Defendant Pelissero did not hold up the other Defendant party Applications thereby favoring the other Defendants and interfering with the ability of the Plaintiffs to compete against the Defendants.

57.    In so far as the Defendants L.H. Gray, Gray, Burnbrae, and Maple Lynn supplied the Plaintiffs with eggs, the Defendants L.H. Gray, Gray and Burnbrae owed the Plaintiffs a duty to supply the Plaintiffs with eggs of sufficient quality, marketability and conformity.

58.    In a letter dated November 8, 2009, the Defendant EFO's board director, of nine years, Bryan Durst resigned, citing as reasons the Defendant Pelissero's  "impulsive" management of EFO, and also the EFO Chair Carolynne Griffith's failure to appropriately "harness" Pelissero.

59.    At all materials times, all or some of the Defendants L.H. Gray, Gray, Bumbrae, and Maple Lynn have been made privy to details pertaining to the EFO litigation, including settlement strategies of the Defendants EFO and/or Pelissero.   Evidence of some and/or all of the Defendants being privy to settlement issues is evidenced by, but not limited to, the following:

     (a)    In a series of emails exchanged between October 10-14, 2008, Scott Brookshaw V.P. Operation at the Defendant L.H. Gray and the Defendant Gray discussed the Plaintiffs' desire to obtain organic, free range eggs as well as quota issues.   During this exchange, Scott Brookshaw indicates to the Defendant Gray that the Defendant EFO will not allow a sale of quota by the Plaintiff to go through unless it settles the lawsuit.   There would be no way for the Defendant L.H. Gray to be privy to this unless it was advised of same.


THE FACTS:SUPPOSED OFFER TO PURCHASE SWEDA FARMS

60.        The Defendants L.H. Gray, Gray, and Burnbrae under the guise of purporting to purchase the Plaintiff Sweda Fanns,  by way of a share purchase from the owner Svante Lind, entered into certain contract and confidentiality agreements with the Plaintiffs, then conspired with one another to acquire and misuse confidential  information  belonging to the Plaintiffs. With the help of the Defendants Johannes and/or John Klei, the plan involved actions to infiltrate, sabotage and harm the Plaintiffs'  businesses, thus causing the business to be susceptible to failure and/or acquisition, and causing it to suffer significant loss and damage.

61.        In particular, in or about December, 2005, the Plaintiffs and the Defendants Burnbrae and Hudson entered into negotiations respecting the sale of the Plaintiff Sweda Farms to the Defendant Burnbrae, by way of a share purchase from the owner Svante Lind. At that time, the Defendants Burnbrae entered into a confidentiality agreement with the Plaintiff Sweda Farms.

62.        Throughout the months of December, 2005, and January and February, 2006, the parties continued  to  negotiate  the  sale  of  the  Plaintiff  Sweda  Farms  shares.  During  that  time,  the Defendant  Burnbrae  was  made  privy  to  sensitive  confidential  information  belonging  to  the Plaintiffs including their business records and producer and customer lists.

63.        At least as early as February 2, 2006, the Defendant Burnbrae breached the confidentiality agreement by sharing confidential information with the Defendants L.H. Gray and Gray, including the letter of intent signed between the Plaintiff Sweda Fanns and the Defendant Burnbrae.

64.        On or  about April  16, 2006, the Defendant  Burnbrae  requested  that it be permitted  to introduce to the negotiations a co-purchaser, later revealed to be the Defendant L.H. Gray. On Apri125, 2006, the Defendants L.H. Gray and Gray entered into a confidentiality  agreement with the Plaintiff Sweda Fanns. Negotiations between the said Plaintiff and the Defendants L.H. Gray, Gray, and Burnbrae continued until on or around June 25, 2006.

65.       At all material times, the Defendants L.H. Gray, Gray, and Bumbrae never had any good faith intentions to purchase the Plaintiff Sweda Farms, nor did L.H. Gray, Gray, and Bumbrae negotiate in good faith with respect to the supposed purchase.

66.         The Defendants L.H. Gray, Gray, and Burnbrae's primary purpose of entering into negotiations with the Plaintiff Sweda Farms was to acquire sensitive confidential information, including producer and customer lists, as well as corporate and financial records, for the purpose of harming the Plaintiffs, including a joint effort to destroy the Plaintiffs, to prevent competition in the Ontario egg market place.

67.       In so far as the Defendants L.H. Gray, Gray, Bumbrae entered into negotiations with the Plaintiff Sweda farms to purportedly purchase Sweda Farms, the Defendants L.H. Gray, Gray, and Bumbrae owed the said Plaintiff a duty respecting confidentiality of the negotiations, use of confidential information acquired by way of the negotiations, and an expectation to negotiate in good faith and not for the purpose of destroying the Plaintiffs.


THE  FACTS: ACTIVITIES  OF THE  DEFENDANTS KLEIS, BURNBRAE AND L.H.
GRAY

68.       During the time period when the Defendants L.H. Gray, Gray, and Bumbrae purported to negotiate the purchase of the Plaintiff Sweda Farms, and while the Defendant Johannes Klei was still an employee of the Plaintiffs, the Defendants L.H. Gray, and/or Bumbrae entered into a clandestine relationship with the Defendants Johannes and/or John Klei.

69.       On or around June 19, 2006, the Defendants Johannes and/or John Klei met with the Defendants L.H. Gray, Gray, Burnbrae to discuss a proposed egg contract between the Plaintiffs and Longo's Brothers Fruit Markets Inc. [Longo's]. Longo's is a large Ontario grocery retailer, and was one of the Plaintiffs' largest and most valuable customers.

70.       The sole intent of the above described meeting was for the Defendants L.H. Gray, Gray, Bumbrae, Johannes and/or John Klei to conspire to injure the Plaintiffs.

71.       Shortly thereafter, and just prior to the Plaintiff's submissions of its tender to Longo's, the Defendant Johannes Klei, while still an employee of the Plaintiffs, and/or the Defendant John Klei, and without the knowledge and /or consent of the Plaintiffs, met with various principals of Longo's,  ostensibly to present to them the terms of an egg contract. Instead, the Defendants Johannes and/or John Klei advised one of Longo's senior employees that, in the near future, he would be assisting the CFIA in shutting down the Plaintiffs' egg business operations. The Defendants Johannes and/or John Klei offered to assist Longo's in locating other sources of eggs. At that meeting, the Defendant Johannes Klei held himself out to be one of the principals of the Plaintiffs.

72.       In late June, 2006, the Defendants Johannes and/or John Klei delivered to Longo's, in an envelope, an egg contract. Also inside the envelope was a copy of an undated letter, authored by the Defendants Johannes and/or John Klei [the "Longo's  Letter"], which was apparently directed to the Defendant L.H. Gray and /or Gray.

73.      The Longo's Letter proposes the following:

      (a)   "Phase 1", to cause Best Choice to be "force(d) to sell or quit grading" by:

       i.  While still an employee of Best Choice, the Defendant Johannes Klei would "target" listed suppliers and customers of Best Choice;

       ii.  Both Defendants Johannes and John Klei would terminate their respective employment at Best Choice, purportedly as a means to leave Best Choice severely                 compromised with respect to operations;

      (b)   "Phase 2", the Defendants Johannes and/or John Klei would cause Best Choice to have problems with its lenders by interfering with business and contractual relations with its customers;

      (c)   "Phase 3", the Defendants Johannes and/or John Klei would cause Best Choice to have a surplus of eggs with no market, and cause Best Choice to have further problems with its lenders by interfering with business and contractual relations with its producers.

      (d)   In exchange for execution of "Phase 1", the Defendant L.H. Gray would pay the Defendants Johannes and /or John Klei $175,000.00;

      (e)   In exchange for execution of "Phase 2", the Defendant L.H. Gray would pay the Defendants Johannes and /or John Klei $50,000.00;

      (f)    In exchange for execution of "Phase 3", the Defendant L.H. Gray would pay the Defendants Johannes and /or John Klei $50,000.00.

74.         The Longo's Letter was published by the Defendants Johannes and/or John Klei with dishonestly, malice, reckless disregard for the truth of its contents, and the intent to harm the Plaintiffs'  business interests. The contents of the letter proposed to interfere with the business and contractual relations of the Plaintiffs, and delivery of the letter to Longo's did in fact interfere with the business and contractual relations of the Plaintiffs

75.       The words complained of in the Longo's Letter are also defamatory of the Plaintiffs.

76.       The Plaintiffs specifically complain of the following words in the Longo's Letter:


Scenario of Events:

         As I already have verbally explained, the situation at BCE can be summarized as follows:

         1.  Big financial loss in 2005. BCE is under accounting investigation as order [sic] by the lender

         2.  FCC [Farm Credit Canada] has not yet released the funds that were to be released in December 2005 to pay for the Quota purchase, and for the building expansion              (carton and supply storage) which has already been build [sic]. This is temporary [sic] financed by Wallenstein.

             Since Svante is much occupied with EggsacTrace  and has no one else that is involved in the daily management of the grading station. Svante himself does not get              involved in sales or contracting producers.

          ... Presently Svante cannot [sic] pay high wages to get the help that he needs.

Phase 2:

I  have  knowledge  of  certain  business  practices,  in  dealing  and  selling  products  on  a continuous base  [sic] to BCE customers. They  are not always getting what they pay for with the specialty eggs and some customers never get what they pay for. Some of these are BCE's biggest customers for specialty eggs.

I will reveal and prove to these customers that they are not getting the proper products. This will create further problems that BCE has with its lender.

Phase 3:

After phase 2, BCE will lose [sic] a very large part of its retail market. This will leave BCE in a situation where they have lots of specialty eggs but no market for it. This will affect the producers BCE has under contract to produce specialty eggs. Already some producers are note pleased with Svante because of the lawsuit against OEP [Ontario Egg Producers] and this will get worse when producers find out that I have left the company. I have recruited all of our producers. Also, I have knowledge of certain things that Svante has done to some of the producers which will cause some of the producers to leave BCE. Again, this will put more pressure on BCE from their lender.

BCE is not in very good standing with the OEP due to the ongoing court case, and when it becomes public knowledge that BCE cannot live up to its obligations it has with the specialty eggs producers and with Luke van Aert for 16,000 organic and 20,000 free range hens, it will have a very negative effect on BCE's plans to form a coop with involvement from Nutrioef [sic], as. well as a negative impact on the development of Eggsactrace [sic] .

In Summary

I predict that when my son John and I continue our employment at BCE, Svante will most likely continue to struggle and work out his problems...

77. Taken in their plain and ordinary meaning, the  words published by the Defendants Johannes and/or John Klei may be interpreted as follows:

     (a)   The Plaintiffs were in financial trouble;

     (b)    Best Choice was being investigated by certain governmental bodies;

     (c)    The owner Svante Lind was failing to supervise Best Choice's business operations;
     (d)    Best Choice could not fulfill its obligations owed to its specialty egg producers;

     (e)    Best Choice was fraudulently misrepresenting to its customers the nature of the eggs that the customers were receiving;

     (f)    The owner Svante Lind was unpopular in the egg community;

     (g)   Best Choice and/or Lind has partaken in shady practices, and that their conduct is unethical and/or fraudulent;

     (h)   Best Choice will soon have to sell or quit grading;

     (i)    Johannes Klei has recruited all of Best Choice's producers;

     (j)    Johannes Klei has knowledge of the commission of certain acts by Lind towards Best Choice's producers, which would cause some of those producers to no longer deal with Best Choice;

     (k)   Once it  becomes public knowledge that  Best Coice could not live  up  to  its obligations to its specialty egg producers, some of Best Choice's business  relations, as well as the development of the EggsacTrace system, will be negatively impacted; and

     (l)   Johannes  K.lei, himself, will further  develop  and  implement the EggsacTrace system.

78.      The Longo's  Letter was published by the Defendants Johannes and/or John  Klei to Longo's and various other third parties who will be identified prior to trial.

79.       On or about June 30, 2006, Longo's advised the Plaintiffs that, as a direct result of the publication of the Longo's Letter, it was considering not renewing its contract   with the Plaintiffs.

80.       As of November 18, 2008, Longo's has stopped buying product from the Plaintiffs, and is now buying product from the Defendants L.H. Gray and /or Burnbrae.

81.       On or around March 5, 2006, the Defendants Johannes Klei, while still an employee of the Plaintiffs, and/or the Defendant John  Klei approached certain employees of the Plaintiffs and informed them that the Defendant Gray had advised him that the Defendants L.H. Gray and Burnbrae were going to buy and shut down the Plaintiffs.  He /they further informed the employees that, as of September, 2006, the Plaintiffs would lose their contracts with many of its producers and customers, as the Defendants Johannes and/or John  Klei had convinced those producers and customers to breach their contracts with the Plaintiffs or to not renew them. The result was that the Defendants Johannes and/or John 'poisoned'  the Plaintiffs' workplace, thus reducing the productivity of the Plaintiffs, and endangering the viability of its business.

82.    On June 26, 2006, while still an employee of the Plaintiffs, the Defendant Johannes Klei attempted to sabotage a delivery of the Plaintiffs' eggs by forcing certain employees of the Plaintiffs to mislabel a load of jumbo brown eggs as Omega-3 eggs just before shipping. The Defendant Johannes Klei's sole purpose for mislabeling the eggs was to interfere with the business relations between one or more of the Plaintiffs'  customers. On the same day, the Defendant Johannes tendered his resignation to the Plaintiffs, and left the Plaintiffs' premises.

83.    The Defendants Johannes and/or John Klei have interfered with business and contractual relations of the Plaintiffs by attempting to coerce some or all of the Plaintiffs' suppliers and customers  to  terminate  their  respective  contracts,  and  business  relations  generally,  with  the Plaintiffs. The details include the following:

      (a)    On or about August 3, 2006, the Defendants Johannes and/or John Klei informed Roger Harley, the principal of Rowe Farm Meats Limited [Rowe Farm], one of the Plaintiffs'  customers, of alleged fraudulent practices that he had witnessed at the Plaintiffs' premises.

      (b)   On or about August 9, 2006, the Defendants Johannes and /or John Klei, and Walsh of the Defendant  L.H. Gray met with Mr. Harley, at which time, the Defendants Johannes and/or John Klei advised Mr. Harley that he would be filing a complaint with  the  CFIA   which   would  facilitate  the  shutting   down   of  the Plaintiffs' operations. Johannes and /or John Klei offered to assist Rowe Farm in locating an alternate source of eggs. On August 18, 2006, the Defendant Johannes and/or John Klei again urged Rowe Farm to breach its contract with the Plaintiffs.

      (c)    On or about October 4, 2006, the Defendant Johannes and /or John Klei met with the owner of Oriental Markets, another customer of the Plaintiffs, and identified himself as a representative of the Defendant L.H. Gray. He urged Oriental Markets to breach its contract with the Plaintiffs, and offered Oriental Markets an alternate supply of eggs.

      (d)    On or about September 18,2006, the Defendants Johannes and/or John Klei visited Mr. Riar, the owner of Gold Crest Farms, Mr. Ritchie Pilgrim owner of Pilgrims Poultry  Farm,  Peter  Hatert  owner  of Hatert Poultry  Farms  Ltd. and Buck  Ross owner of Ross Enterprises Inc., supplier of the Plaintiffs, and urged them to trigger the six month termination of contract clause in his contract with the Plaintiffs.

      (e)   The Defendants Johannes  and/or John Klei provided Gold Crest Farms, Pilgrims Poultry Farm, Hatert Poultry Farms Ltd. and Ross Enterprises Inc. with a copy of a letter; signed by Janine Jackson (Plant Manager at the Plaintiffs), Ron Mitchell (Quality Control Officer at the Plaintiffs) and himself dated June 20, 2006 (the  "Jackson  Letter").

84.   The Jackson Letter contained the following words:

... eggs have been purposely packed into incorrect packaging in order to misrepresent the eggs to the customers as value added eggs...the above marketing misrepresentation was done under direct orders of Svante Lind, owner and General Manager of Best Choice Eggs and that Svante Lind ordered the undersigned to do whatever it took to keep the eggs customers.....

85.   The Jackson Letter was written dishonestly, with malice, with reckless disregard for the truth of the contents, and with the intent to harm the Plaintiffs' business interests. Publication of the Jackson letter caused interference with the business and contractual relations of the Plaintiffs.

86.        The Defendants Johannes and/or John Klei and/or representatives of the Defendants Burnbrae and/or L.H. Gray visited the following farmers who were supplying egg to the Plaintiffs:

(a) R. J. Steel Inc.
(b) Phoenix Poultry Farms
(c)  Kamview Poultry Ltd.
(d)  Hughbert E. Haverkamp
(e) Hatert Poultry Farms Ltd.
(f) Ritchie and Dawn Pilgrim
(g) Alan Thomson
(h) Donald Ross

87.       During those visits, the Defendants Johannes and/or John Klei and/or representatives of the Defendants Burnbrae and/or L.H. Gray republished the Jackson Letter and /or summarized the contents of the Jackson Letter, and attempted to coerce the producers to breach their respective contracts with the Plaintiffs.

88.   In response to the Defendant Johannes Klei's egregious conduct, on or about September 25, 2006, the Plaintiffs served the Defendant Johannes Klei with a 'ceased              and desist' letter, advising him to stop libeling of the Plaintiffs.

89.   None of the Defendants took any steps, prior to the publication of the words complained of, to contact the Plaintiffs to provide them with an opportunity to respond to their allegations. None of the Defendants have published a retraction or an apology relating to the Jackson Letter and/or the Longo's Letter.

90.    Given his senior position at the Plaintiffs, the Defendant Johannes Klei knew, or ought to have known, of the existence of contracts between the Plaintiffs and its numerous producers and customers. He also knew, or ought to have known, that his unlawful conduct would cause adverse interference with  the  Plaintiffs'  business  and  contractual  relations  with  its  producers  and customers.Inthat regard, the Defendant Johannes Klei breached his fiduciary duties, as well as the terms of his employment contract with the Plaintiffs.

91.     In so far as the Defendants Johannes and/or John Klei were employees of the Plaintiffs, the Defendants Johannes and/or John Klei owed the Plaintiffs a duty to act in the best interests of the Plaintiffs  while still an employee of the Plaintiffs, and not improperly  use confidential  sensitive information of the Plaintiffs following their employment with the Plaintiffs.

92.       In or  around  September,  2006,  Mr.  Walsh,  who  was  then  a  senior  employee  of  the Defendant  L.H.  Gray  and  while  acting  within  the  scope  of  his  employment,  republished  the Jackson Letter to.Loblaw Companies Limited. At the time, Rowe Farm was supplying Loblaw's with eggs. As a result of the publication, Rowe Farm's  relationship  with Loblaw's  was damaged, which  in  turn,  adversely  interfered  with  the  business  and  contractual  relations  between   the Plaintiffs and Rowe Farm.

93.        For a period spanning at least 2006 to 2009, the Defendant L.H. Gray paid one or both of the Defendant Kleis at least $123,842.44  in consideration for carrying out various improper  acts, the nature of which were in the spirit of the proposals contained in the Longo's  letter. At least some of the improper acts, for which the Defendant L.H. Gray paid one or both of the Defendant  Kleis, included interfering with the business and contractual relations of the Plaintiffs, and persuading producers and customers of the Plaintiffs to stop dealing with the Plaintiffs.    Evidence  of these payments and this relationship is evidence by, but not limited to, the following:

      (a)   In a document entitled to "Payments to Johannes Klei" that was in the possession of the Defendant L.H. Gray, it details payments made to the Defendant Johannes Klei in the amount of $118.842.44 as of December 18, 2008.

      (b)   In an email from  John  Leitch, the Chief  Financial  Officer  of L.H. Gray,  dated December 15, 2009, he instructs that a $5,000.00 cheque be processed to the Defendant Joe Klei for a December 24th release.

      (c)   In a Summary of Account issued by the solicitors of the Defendant L.H. Gray that spans a period from March 13, 2006 to August 4, 2006, several conversations regarding the Defendant J oe Klei are outlined as well as a meeting that took place between the Defendants  Bill Gray and Joe Klei and the Defendant L.H. Gray's  solicitors.

       (d) In a document entitled "Joe Klei" that was in the possession of the Defendant L.H. Gray, it discusses the business/financial advantages and disadvantages of accepting the Defendant Joe Klei's  proposal from the perspective of the Defendant L.H. Gray.


THE  FACTS: OTHER  INTERFERENCE WITH    BUSINESS  AND CONTRACTUAL RELATIONS OF THE PLAINTIFFS

94.       One or more of the Defendants L.H. Gray, Gray, and Burnbrae have also interfered with the business and contractual relations between the Plaintiffs and Eggland's Best Inc. [Eggland's Best]. Eggland's Best is major player in the American egg industry, and has been involved in a proposed partnership and /or joint venture and /or dealings with the Plaintiffs respecting marketing, supplying and /or producing specialty eggs for the Ontario egg industry. The Ontario egg industry is, and was at all material times, short of specialty egg supply. Due to the conduct of the Defendants L.H. Gray, Gray, and Burnbrae, any proposed partnership and /or joint venture and/or dealings between the Plaintiffs and Eggland's Best has been impaired.   Evidence of the Defendants knowledge of and/or interference in the relations of the Plaintiffs with Eggland's Best is evidenced by the following:

        (a)   In an email exchanged between Michael Walsh V.P. of Sales & Marketing at the Defendant L.H. Gray and the Defendant Gray dated March 10, 2009, Michael Walsh indicates that it is a cause for concern that the Plaintiffs could potentially be involved with Eggland's Best as it would give him (meaning Svante Lind) a "second wind"  and potentially a major chain entrance.

         (b)   In an email exchanged between Michael Walsh V.P. of Sales & Marketing at the Defendant L.H. Gray and the Defendant Gray dated March 13, 2009, Gray indicates that he spoke with Herb Herbruk of Eggland's Best and that he had been advised that he should do his due diligence on any company in Canada that they become involved with (meaning the Plaintiffs).

         (c)   In an email from Ron at Hartman Canada Inc. [Hartman] to the Defendant Gray dated March 10, 2009, Ron passes along information to the Defendant  Gray about some  egg  cartons  and  advises  the Defendant  Gray  that  a senior  official  from Eggland's Best asked Hartman's  to send to the Plaintiffs samples of the cartons that they provide to several Eggland's  Best franchisees in the United States.

95.        One or more of the Defendants L.H. Gray, Gray, and Burnbrae have also interfered  with the business  and contractual  relations  between  the Plaintiffs  and Hartman.    Hartman  is in the business of producing and supplying egg cartons, and is the only company in Ontario capable  of providing egg cartons to the Plaintiffs. Directly as a result of undue influence by one or more of the Defendants L.H. Gray, Gray, and Burnbrae, Hartman temporarily stopped supplying the Plaintiffs with cartons, thus causing the Plaintiffs to be unable to supply eggs to its various customers.


THE FACTS: CIVIL CONSPIRACY

96.        The Defendants have all, to varying degrees, conspired to harm the Plaintiffs. The basic plan of the Defendants has been to:

      (a) Interfere with the Plaintiffs access to a reliable supply of eggs;
     
      (b) Damage the reputation of the Plaintiffs generally;

       (c)  Cause harm to the business and contractual relationships between the Plaintiffs and its producers, and between the Plaintiffs and its retail store customers;

       (d)  Cause harm to the Plaintiffs profitability, and;

       (e) Cause harm to various business initiatives of the Plaintiffs.

97.        Conspiracy to interfere with the Plaintiffs access to a reliable supply of eggs is evidenced by the fact that:

       (a)    The  Defendants  EFO  and  Pelissero  conspired  with  the  Defendants  L.H. Gray, Gray,  and Bumbrae  with  respect  to their investigation  into the Plaintiffs' 2004 grading practices; namely by the EFO and /or Pelissero initiating the investigation at the behest of L.H. Gray and /or Burnbrae, and then communicating the details of the investigation to L.H. Gray and Burnbrae with intent to cause the Plaintiffs  to lose egg suppliers and ultimately lose its supply of domestically produced eggs.

       (b) The  Defendants  EFO  and  Pelissero  conspired  with  the Defendants  L.H.  Gray, Gray, and Burnbrae to improperly supply eggs to the Plaintiffs and report supplies of available domestic eggs; namely the Defendants L.H. Gray, Gray, and Burnbrae reported  available  egg  supplies,  and  then  supplied unmarketable  eggs  to  the Plaintiffs, while the Defendants EFO and Pelissero acted only in the interests of the Defendants L.H. Gray and Burnbrae and to the detriment of the Plaintiffs, for the purpose  of choking  off the Plaintiffs'  supply of eggs from  the domestic  surplus market and /or import market. In an email  between the Defendants L.H. Gray and Burnbrae,  dated  September  9,  2009,  the  Defendants  discussed  particulars  of  a shipment of eggs, being sent to the Plaintiffs, whereby the Defendant Pelissero was collaborating with the Defendants L.H. Gray and Burnbrae to deceive the Plaintiffs with respect to the origins of the shipment.

        (c)   The Defendants L.H. Gray and Gray conspired with the Defendant Burnbrae in interfering with the Plaintiffs'  business and contractual relations respecting its egg suppliers, and then ultimately dividing up the Plaintiffs'  former suppliers for the purpose  of  solidifying  L.H.  Gray and  Burnbrae's  collective  monopoly in the industry.

        (d) The Defendants  L.H. Gray  and Gray conspired  with the Defendant  Burnbrae  in causing the Plaintiffs to be unable to supply its customers, thus interfering with the business and contractual  relations of its customers, and ultimately dividing up the Plaintiffs' former customers, all for the purpose of solidifying the Defendants L.H. Gray and Burnbrae's  collective monopoly in the industry.

        (e)   The Defendants L.H. Gray and Gray conspired with the Defendant Burnbrae to fix prices in the egg market. They did so by intentionally shorting the market, trading customers,   and   also   trading   customers   in  exchange   for   volume   and   price concessions,  all to the detriment  of the Plaintiffs. The parties conspired knowing their conduct was illegal pursuant to the Competition Act. Their effort to push the Plaintiffs out of the industry was also done as a means to affect prices and market share to their benefit.   Some  examples of the behaviours exhibited  by the Defendants are evidence by, but not limited to, the following:

               i.   In  an  email  exchange  between  various  individuals  employed  by  the Defendant L.H. Gray in July 2008, including V.P. Sales & Marketing Michael Walsh,                      V.P. of Operation Scott Brookshaw and the Defendant Gray, they discuss a recent conversation that took place wherein some conduct was discussed including trading customers, increasing prices, and the like. Michael Walsh acknowledges that what is being discussed is illegal.

               ii.  In an email dated September 23, 2008, a buyer from Costco indicates that they need better prices.   This email is eventually sent to V.P. Sales & Marketing Michael Walsh at the Defendant L.H. Gray who exchanges it with the Defendant Gray on September 24, 2008.   He states that "Egg suppliers need to be on the same page these days. No time for the weak kneed."    They then go on to discuss whether there have been increases at Sam's and what the Defendant, Burnbrae is doing with Wal-Mart in terms of increases.

                iii. In an email exchange between V.P. of Operation Scott Brookshaw at the Defendant L.H. Gray and the Defendant Gray on February 9, 2009, a discussion takes place in. terms of shorting the market. Brookshaw stated "I wouldn't be able to guess at this, as it hard to predict these things when you have been shorting the market like we have".

                iv.  In an email exchange between V.P. of Operation Scott Brookshaw at the Defendant L.H. Gray and the Defendant Gray over April 28-29, 2009, a discussion takes place in terms of changing . the premiums on extra large eggs as the premiums are too good for producers and that this is causing a problem. By dropping the premium this could   purposefully keep producers in the large category.

                 v.  In an email between V.P. of Sales and Marketing Michael Walsh at the Defendant L.H. Gray and the Defendant Gray dated July 9, 2009, the parties discuss that the Defendant Burnbrae has acquired the Rowe Farm account. As Rowe Farm was a contract of the Plaintiff, the question is posed as to whether this means the end of the Plaintiffs. It goes on to state if the Plaintiffs go out of business, this would allow for them to raise prices and reduce rebates.

                vi.  In an August 28, 2009 email, the Defendant Gray discusses lowering their prices to all their large customers to tie others up.

                vii. In an email from the Defendant Gray to Michal Walsh, V.P. of Sales and Marketing and C.c. to Scott Brookshaw V.P. of Operation at the Defendant L.H. Gray on August 28, 2009. Bill Gray stated "I think it is time to tell BBF & N/0  (Nutri-Oeuf) that either Monkland comes up or we go down. Which way would you like it & give them 48 hours to decide?"

               viii.  In a November 27, 2009 email from the Defendant Gray to Aaron Kwinter President of Global Egg Corporation I EggSolutions, the Defendant Gray advises of a telephone conversation he had with the Defendant Burnbrae wherein co-conspirator Burnbrae requested support for price increases on eggs.

      (f)    The Defendants Johannes and John Klei conspired with the Defendants L.H. Gray, Gray, and Burnbrae in an effort to harm the reputation, business and contractual relations of the Plaintiffs. The Defendants L.H. Gray, Gray, and Burnbrae entered into a clandestine relationship with one or both of the Defendants Kleis and an agreement was entered into whereby the Defendants Kleis would do various acts to harm the Plaintiffs in exchange for certain sums of money. For a period spanning at least 2006 to 2009, the Defendants L.H. Gray paid one or both of the Defendants Kleis at least $123,842.44 for various acts, at least some of which included persuading producers and customers of the Plaintiffs to stop dealing with the Plaintiffs, and instead deal with the Defendants L.H. Gray and /or Bumbrae.

98.         The Defendants have, in the process of conspiring with one another, acted illegally pursuant to the various claims in this Statement of Claim and also breached various parts of sections 45,74 and 78 of the Competition Act, R.S.C. 1985, c. C-34 and render the Defendants and their co-conspirators liable to  pay damages to  the  plaintiffs pursuant to section 36  of  the Competition Act.

99.         In conspiring with one another, each of the Defendants  knew or should have known that injury to the Plaintiffs was likely to result and did in fact result.

100.       With respect to damages suffered specifically as a result of the Defendants'  conspiracy with  one another,  the Plaintiffs  plead special  damages  in  the amount  representing  lost  quota, suppliers and customer sales of the Plaintiffs - the particulars of which will be determined prior to trial.


THE FACTS: MOTIVE OF THE DEFENDANTS

101.     The motive of the Defendant EFO stems from it being opposed to the Plaintiffs'  business practices,  promotion  and  support  respecting  unconventional  egg  production;  namely  organic, cage-free, free-range, brown and other specialty egg production. The Defendant EFO board of directors is, by law, comprised exclusively of quota holding egg producers who are elected by egg producers, the majority of which are overwhelmingly conventional (non-specialty) egg producers. The Defendant EFO views the marketing practices and initiatives of the Plaintiffs as a threat to their interests; namely threatening to conventional egg production in Ontario. In addition, the Defendant  EFO  Board  Chair,  Carolynne  Griffith,  has  a  deep  personal  relationship  with  the Defendant Gray of L.H. Gray which causes her to perform her duties in a biased and preferential manner. Evidence  of  this  close  personal  relationship  is  evidenced  by, but  not  limited  to, the following:

     (a)  In an email dated August 22, 2009 from Carolynne Griffith to the Defendant  Gray she states  that  she would  be willing  to  meet  with  local  MPs  on  behalf  of the Defendant to advise them of the "truth" in this matter.

      (b)  In an email exchange dated November  24,  2009, Carolynne Griffith and the Defendant Gray comment to each other on the value placed on their friendship and that they look forward to many more times together.

      (c)  In  an email  dated  November  25,  2009,  Carolynne Griffith in an email to the Defendant  Gray  refers  to the letter  of Bryan  Durst  (see  par. 60).   Ms. Griffith shares her intentions for the next Board meeting with Gray, namely her intention to have a motion passed stating that the allegations made by Mr. Durst are not the  opinion of the Board.

102.     The motive of the Defendant Pelissero stems from his personal issues with the Plaintiff Lind.  Past actions which exemplify his issues with Svante Lind include lobbying and manipulation of EFO policy to prevent Svante Lind from being elected to the EFO board of directors.

103.    The motive of the Defendant Pelissero also stems from his preferential relationship with the  Defendants L.H. Gray  and  Burnbrae.  Past  actions  which  exemplify  his  preferential relationship with the Defendants L.H. Gray and Bumbrae include the fact that he, on an ongoing basis, either ignores or does not act upon complaints against L.H. Gray and Burnbrae, while also aggressively  and  recklessly pursuing  complaints  by  L.H.  Gray  and  Burnbrae  against  the Plaintiffs, including  those  complained  of  in  this  Statement  of  Claim.  Evidence  of  this preferential relationship is evidenced by, but not limited to the following:

      (a)  In an email dated October 10, 2008 exchanged between V.P. of Operation Scott Brookshaw at the Defendant L.H. Gray and the Defendant Gray, Brookshaw comments "Neil (an employee of Egg Farmers of Canada) has got involved and told Kelty (an employee at EICB) that is his problem and to stop allowing him (The Plaintiff) to bring in eggs duty free. He (The Plaintiffl would then be unable to supply customer. Any thoughts! This is confidential right now. I am in  a Nest meeting with Harry (The Defendant Harry Pelissero) and Neil right now. Scott"

      (b)  In an email dated March 19, 2009 exchanged between Neil Newlands and the Defendant Gray, Pelissero and Hank Lammers an employee of the Defendant Burnbrae, Neil comments "Other points in my conversation with Keltie today so reckons she can implement some of the points we discussed already"

      (c)  In  an email  dated March 19,  2009 exchanged between Sharon  Barber  Plant Manager of the Plaintiff and the Defendant Pelissero, and Hank Lammers an employee of the Defendant Burnbrae, Sharon comments Organic Detention "In regards to our conversation with you earlier today. There are 2 products that are under detention by CFIA. Please advise when the eggs will be picked up."

       (d)  In an email dated April 3, 2009 exchanged between Robin Horel the President and CEO at Canadian Poultry and  Egg  Processors  Council (CPEPC) and the Defendant Gray, Robin  comments  "Hi again Bill;  Tony & I finally made contact. Tony has asked me for a quick, bullet point email that explains who these Best Choice/ Verified Eggs are..."

        (e)   In an email dated April 3, 2009 exchanged between Andre Patry Manager  of Egg Sectors at CPEPC,  and Robin  Horel ∑the President  and CEO  at CPEPC and the Defendant Gray, Andre comments "Hi Bill; as Robin pointed out, --I don't  know much about these guys other than what I heard in the discussions last week  with yourself (The Defendant Gray) and Hank Lammers (an employee of the Defendant Burnbrae) and EICB."

         (f) In an email dated April 4, 2009 exchanged  between Mike Walsh V.P. Sales  and marketing at Defendant: .H. Gray and Defendant Gray. Mike comments "...Regarding Best Choice buying from the US. There are things happening that will hopefully stop that. To  long of a story to put into an email and things are being put into place to stop that."

          (g)  In an email dated April 6, 2009 exchanged between Steve Esterbrook and Donald Ress both executive of SunOpta. Steve comments  "Don, I have already looked into it with Best Choice's  management. Everything is being done according to Holye.  These are industry rumors' initiated by competitors."

          (h)  In an email dated April 6, 2009 exchanged between Steve Esterbrook the President of SunOpta and Svante Lind of the Plaintiff. Steve comments "I am forward the below co"espondence  to you so that you are aware this character is attempting to put out-misinformation about your activities. I seriously question what authority this individual has to make slanderous Statements without facts. He show his title as President of Canadian Egg Processor's Council. To my knowledge this is an industry association. Under what authority is he receiving information about your import activities? He is acting outside the scope of his responsibilities and making allegations that could damage your (The Plaintiffs) company."

           (i)  In an email dated April 6, 2009 exchanged between the defendant Gray and Robin Horel the President and CEO at CPEPC. The Defendant Gray comments "Thanks Robin; Please convey to Tony there is a more than adequate supply of Organic eggs in Canada. Gray"

            (j) In an email between June 8 and November 23, 2009 exchanged between several employee of the Defendant  L.H. Gray, Defendant  Gray, Defendant Pelissero and                 Stores. With comments of   "Hi  Carlo- Just to let you know we are shorting Organic Eggs today. Rick"

"Where do we stand on this supply issue? Carlos" "Burlook was shorted today. Rick"

ìRick we are getting some PC in from Burnbrae but that doesn't make a difference. Kathy"

"Is  there  any  PC  organic large coming  to  Strathroy this  week  from Burnbrae. Scott"

"How can we help Harry. Bill"

"Please find attached copies of the Shortage Reports. Sean" "It would appear that we are very short of organic. Bill"

        (k)  In an email dated April 7, 2009 exchanged between Robin Horel the President and CEO at CPEPC. and the Defendant Gray. Robin comments "Bill- I will do that ... but by telephone. I'm getting nervous about what is going into email and was a bit surprised by how freely Tony shared the emails."

        (l)  In an email dated April28, 2009 exchanged between Keltie Findlay-EICB and the Plaintiff Best Choice.    Keltie comments "It is my understanding that The Plaintiff BCE refused delivery of these eggs. Also in keeping with the supplementary policy the EICB will not consider application for import from (The Plaintiff BCE) for 90 days from April 13, 2009."

       (m)  In an email dated May 8, 2009 exchanged between Robin Horel the President and CEO at CPEPC. and the Defendant Gray and Hank Lammers (an employee of the Defendant Bumbrae) Robin comments "Susan- Thanks for the update. I think you handled it very well. If it was Best Choice we will have to be very careful., Robin"

       (n) In an email dated May 8, 2009 exchanged between The Defendant Harry Pelissero and the Defendant Gray. Harry comments on notice of Detention "I just recovered this from Best Choice. We need to talk."

       (o) In an  email  dated  June  9,  2009  exchanged  between  V.P.  of  Operation  Scott Brookshaw  at the Defendant  L.H. and the Defendant  Gray, Brookshaw comments how  the Defendant  Pelissero  provides them  with  information. In response, the Defendant  Gray advises that it is good to spend time with those guys as they are really good to the Defendant L.H. Gray.

       (p)  In an email dated July 20,2009 exchanged between The Defendant Gray and Mike Walsh and Scott Brookshaw (both employees of the Defendant L.H. Gray. The Defendant  Gray  comments  on TQAC  - Attack  BCE  "We  need  to  attack  (The Plaintiff Best Choice) BC markets. Bill"

       (q)  In an email dated July 21, 2009 exchanged between Mike Walsh V.P. of Sales and Marketing at the Defendant L.H. Gray and the Defendant Gray. Walsh comments on  Best Choice  Customers "Bill  we have started a hit list. More info to come. Mike"

       (r) In an email dated July 22, 2009 exchanged between The Defendant Gray and Mike Walsh V.P. of Sales and Scott Brookshaw V. P. of Operation at the Defendant L.H. Gray. The Defendant Gray comments on Best Choice Customers "Let's go for it Mike, Scott, can we pick up Pilgrim's other barn?

       (s)  In an  email dated  August 31,  2009  exchanged between Brookshaw  and  the Defendant Gray, Brookshaw makes several statements which show the preferential  treatment bestowed upon  the Defendant L.H. Gray  by the Defendant  Pelissero. First, Brookshaw was advised that the Defendant Pelissero would give L.H. Gray $1,000.00 per week and will tell them how to invoice the Egg Board, implying that normal  invoice  practices  would  not  be utilized. It is  further indicated that the Defendant Pelissero indicated to Brookshaw that he would pay for one load and that he was going to try and hide this and that the Defendant L.H. Gray was to keep this quiet.

        (t)  In an email dated October 29, 2009, Brookshaw  indicates to the Defendant Gray that he will be golfmg with the Defendant Pelissero the following day and states the following: "It is important I spend this time with Harry as we are both weary about cell phones and email and we have a lot to discuss.  If there is anything you would like me to discuss with Harry just email me or call me in the morning and I will do that.  I have lots on my agenda for him. "

      (u)  In an email dated December 24, 2009 discussing  a Table Load request made by Best  Choice  Eggs,  the Defendant Pelissero  indicates  to Brookshaw that  "I  will ensure the  Defendant L.H. Gray does not  lose out  financially because of the transaction."

104.     The actions of the Defendants L.H. Gray, Gray, Burnbrae, and Maple Lynn complained of in this statement of claim, are motivated by intent to collectively monopolize Ontario egg industry and  control  prices.  The  Defendants  L.H.  Gray  and  Burnbrae  are  by  far  the  two  dominant companies in the Ontario egg industry. The only company besides L.H. Gray and Burnbrae which stands to measurably  impact upon the prices paid to Ontario egg producers, and prices paid by Ontario retailers and wholesalers, was the Plaintiffs. By eliminating the Plaintiffs, the Defendants L.H. Gray and Burnbrae stand to collectively monopolize all facets of the Ontario egg industry.

105.     The  actions  of  the  Defendants   Johannes  Klei  and  John  Klei  complained  of  in  this Sstatement  of Claim are financially  motivated; namely with respect to financial payoff from the Defendants L.H. Gray of at least $123,842.44.


THE  FACTS: CUSTOMERS &  PRODUCERS OF  THE   PLAINTIFFS LOST  DUE  TO THE  COLLECTIVE IMPROPER ACTIVITIES & CONDUCT OF THE  DEFENDANTS

106.     The following are former retail and wholesale customers of the Plaintiffs, which were lost due to the collective improper activities and conduct of the Defendants, as complained of in this Statement of Claim:

(a) AM delivery
(b) Bamford
(c) Bondi
(d) Bracaccio
(e) Brunos
(f) Central Ontario dairy
(g) Comergate
(h) Cosentino
(i) Jasons Dairy
(j) Dans Produce
(k) Disley
(l) TonyEmm
(m) Garden Foods
(n) Garden Valley
(o) Golden Produce
(p) 4 Star
(q) Gallatti
(r) Grand Valley
(s)          Hilite Fine Food
(t)           Kawartha  Dairy
(u)          Kronos
(v) Joyce Fruit Market
(w) Longo's  - 16 locations
(x) Mike&Mike
(y) Milkman
(z) Primo Jardin
(aa) Reids
(bb) Rowe
(cc) Lumsden
(dd) Ontario Eggmaster
(ee) RI's
(ff) Sheng Noon
(gg) SkorC&C
(hh)  Strangs
(ii) Tantangelo
(jj) Wing Lung
(kk) SunOpta fuc.

107.     The following are former egg farmer suppliers of the Plaintiffs, which were lost due to the collective improper activities and conduct of the Defendants, as complained of in this Statement of Claim:

(a) R.J. Steel Inc. (Ralph Haverkamp)
(b) River Valley Poultry Farm Ltd. (Mr. Embury)
(c) Lennart Wideman
(d) Hughbert E. Haverkamp
(e) Bakker Whelhman
(t) Kamview Poultry Ltd. (Robert & Tamara Haverkamp)
(g) Phoenix Poultry Farms (Sherry & Daryl Phoenix)
(h) Hatert Poultry Farms Ltd.
(i) Micheael Knut (j) Keith Thomson (k) Alan Thomson
(l) Ritchie and Dawn Pilgrim
(m) Stonehill Farms Ltd. (Van Steenbergen)
(n) Sanlu Family Poultry Farms Limited (Luke & Sandra Van Aert)

108. Evidence  of  the  Defendants  intention  to  obtain  and/or  interfere  with  the  Plaintiffs relationship with its customers and suppliers is evidenced by, but not limited to, the following:

       (a)   In an email  dated  June  14,  2009  exchanged  between  the  Defendant  Gray  and Brookshaw  (an  employee  of  the  Defendant  L.H.  Gray),  Gray  makes several statements which show " We discussed the VanAert deal with Bumbrae when they moved (The Plaintiff in August 2008) Best Choice Eggs out. It was to be kept quiet & we also agreed to help with the surplus from VanAerts whenever possible."

       (b) In an email dated July 21, 2009 from Michael Walsh to the Defendant Gray, Walsh indicates that they have assembled a list of the Plaintiffs Customers and labels it a "hit list".   In response,  on July  22, 2009,  the Defendant  Gray  advises  Michael Walsh "Let's go for it Mike."   The email goes on to reference Pilgrim's, which is one of the suppliers that was ultimately lost by the Plaintiffs.


"CRACK IN THE PACK" ILLEGAL ACTIVITIES OF THE DEFENDANTS L.H. GRAY AND GRAY

109.       The Defendant L. H. Gray has been and is involved  in the illegal activity of crack/dirt detector settings by placing a certain percentage of cracks and dirty eggs into the grade category of Canada grade A (Which category is strictly regulated   and   does not allow cracks or dirty eggs) and  by  selling  these  adulterated  grade  A  eggs  into  the  consumer  and  institutional  market  is evidenced from, but not limited to, the following:

      (a)  The Defendant L.H. Gray and Gray has at all time been aware that the Canadian Grading Regulations for the grade of Canada A, does not allow for any cracks or dirt on the eggs.  Further the Defendant L.H. Gray's  web site and the Egg Farmers of Canada website explains "that a Grade A eggs is an egg with a clean shell with normal shape and no cracks; a well centered yolk and a small air cell. Sold for use at home and in restaurants"

      (b) In an email dated June 23, 2009 exchanged between Scott Brookshaw and Wally Green of  the Defendant L.H. Gray, Brookshaw makes several statements re. Sunfresh Lg Carts/Mice which show:

       ª   "We had our order sent to Best Choice two weeks ago detained by CFIA and it is causing major problems and now again today we have 48 boxes detained due to dirt."

       ª "This has been an awful scar on our reputation!"

       ª "The  pictures of the detained eggs that were delivered to Best Choice have been sent to the Prime Minister calling in question our company's ability to grade. Very scary if this gets any more momentum like it did today with another lot of brown eggs detained."

      (c)   In an email da!ed August 13, 2009 exchanged between Scott Brookshaw V.P. of Operation and Nellie Grigg (Plant Manager at the Defendant L.H. Gray) and Defendant Gray, Brookshaw makes several statements re: Brown Eggs and CFIA Inspector Bob Armstrong and Dirt Detector.

       ª   "I  just met Bob Armstrong around grading of brown eggs and he is very frustrated with everything going on " "He is tired of defending Ontario grading stations. "

       ª   "He is very frustrated just to let everyone know. He says it has put too much stress on his inspection staff as he is already short on people."

       (d)   In an email dated February 16,2007  exchanged between Scott Brookshaw V.P. of Operation and Nellie Grigg Plant Manager at the Defendant L.H. Gray and the Defendant Gray, comments about "Could  we send Sanga to the breakers  as free run? Rich (An employee of the Defendant) is worried about the name Sanga on the tags in case Lindsay ( CFIA Inspector) is there. Can I have him put Gray #34 on the tags?"

       (e) In an email dated July 19, 2007 exchanged between Scott Brookshaw V.P. of Operation and Frank Curtis Plant Manager at the Defendant L.H. Gray and the Defendant Gray, comments about placing 5-7% cracks back in the pack and that they will not inform the Canadian Food Inspection Agency.

       (f) In an email dated February 16, 2008 exchanged between Scott Brookshaw V.P. of Operation and Nellie Grigg Plant Manager at the Defendant L.H. Gray, Brookshaw makes several statements which show "Is this a grade without final grading done by Bill (Defendant Gray) if so he will not be pleased. Don't give out any raw information on grades through machine please"

      (g) In an email  dated October 1, 2008 exchanged between Scott Brookshaw  V.P. of Operation and Sharon Noecker HACCP and Health & Safety at the Defendant L.H. Gray, Brookshaw  makes several statements which show "Nothing on paper" "I didn't want anything in regards to the crack detector documented".

      (h) In an email  dated September  30, 2009 exchanged  between  Defendant  Gray and Scott  Brookshaw  V.P.  of  Operation  at  the  Defendant  L.H.  Gray,  Gray  makes several statements  which  show  "Is  there a way where the grade would not be available? I notice CIP (cracks in the pack) is working only on some lots. The CIP does not seem accurate as there is only a very few. The CIP should not be on any printed material"

      (i)   In an email between November 16 to December 1, 2009 exchanged between Scott Brookshaw  V.P. of Operation  and Maintenance  Ron Hassnoot  at the Defendant L.H. Gray,   makes several statements which show

       ª "They were grading 57 week old birds, this is why you need someone to change the setting, not every producer is the same and the more cracks in the lot, the more cracks in the pack" Brookshaw makes the statement re: leakers "The more that can go in the pack the better, Good Revenue." Brookshaw  makes  the statement "Leave  cracks  and dirt in this lot only remove shitballs and leakers"

      (j) In an email dated December 31, 2009 exchanged between Scott Brookshaw V.P. of Operation at the Defendant  Gray, Brookshaw makes the statement "I instructed Jim to change back as he had to change the crack setting as we put the large packers on premium and he had to change the dirt detector as well"

      (k)  The Defendant L.H. Gray's Master Grading Database has columns that store the number of cracks per grade that the illegal crack detector settings calculates back into the Canada Grade A. The Defendant's machine database file name drsh_I.dbf includes actual grade-out and the Defendant Gray manipulated grade-outs which the Defendant used to reports as the official grading statement to the Producers and Egg Farmers of Ontario.

       (l)        In a Report dated February 5, 2010 the Mr. Norm Bourdeau (an employee of the Defendant L.H. Gray) prepared from data stored in database system at the Defendant a data analysis of crack in pack report from October 23, 2009 to January
27, 2010. The report showing the dozens of eggs and dollars from Crack-In Packs.

110. During the period this illegal practice has occurred, the estimated profit from selling adulterated grade A eggs into the Canadian market is in the range of $150,000,000.00.

111.      The packing and sale of cracked and dirty eggs is illegal under the Canadian Agriculture Products Act and Food & Drug Act.

112.      In addition to being illegal, the sale of cracked and dirty eggs is contrary to the public interest in that contamination of the eggs by injurious organism entering the eggs through the cracks in the shells can cause sickness to the consumers of eggs and affect the industry as a whole.

113.      The Defendant L.H. Gray and Gray's systematic and deliberated manipulation of actual machine and reported grading data has had the following results:

       (a) Costing consumers millions of dollars annually.

       (b) The Defendant L.H. Gray and Gray's creation of fictitious egg grading data not only harm the Plaintiff's ability to compete but also does serious economic harm to the Plaintiff's producers flock performance and management practices..

       (c)   The Defendant L.H. Gray and Gray's false grading data making Egg Farmer of Ontario benchmarking and other regulatory oversight impossible and also effects the levy and EFP payment.

       (d)  The Defendants L.H. Gray and Gray's Food Safety violations risk to the Plaintiff and public at large is serious and inconsistent with a Hazard Analysis Critical Control Points (HACCP) environment.

       (e)   The Defendant L.H. Gray and Gray's manipulated difference between actual grade and grade reported is primarily the cracks added back into table market.

       (f)  The Defendant L.H. Gray and Gray's failure to report actual short and broken eggs demonstrates that this process is pure deliberated manipulation, illegal and also demonstrates a failure of the Egg Farmers of Ontario.

      (g)   Example- This lot of eggs was graded on November 11, 2009 at 21:29 by L.H. Gray.


114.        The Defendant L.H. Gray is a dominant player in the retail egg business, accounting for about 40% of the Canadian market, and the additional illegal profit from selling adulterated eggs allows the Defendant L.H. Gray to undercut the prices of other graders and retailers.

      (a)       The Defendant using some of the illegal profit to pay major retail outlets such as Loblaws, Sobeys, Metro, Wal-Mart, Costco and Longo's  millions of dollars for exclusivity contracts.

      (b)       The Defendant also uses some of the ∑illegal profit to adjust other producers for a slush fund to over-grade producers that they want to maintain or take away from other graders such as the Plaintiff.

115.       The Plaintiffs state that the illegal profits from crack in the pack eggs by the Defendant L.H. Gray allowed the Defendant L. H. Gray to reduce and/or eliminate profit and supply  and market share for the Plaintiffs and eventually forcing the Plaintiffs out of business.

116.         The Plaintiffs state that The Defendant L. H. Gray and Gray practice of placing cracks in the grade A pack is an illegal practice under the Competitions Act and the Defendant L. H. Gray has violated the Competitions Act.

117.         The Plaintiffs state that in addition to damages suffered by the Plaintiffs as a result of the Defendant L. H. Gray's illegal practice of placing cracks and under-grade in the pack the Plaintiffs have been denied the opportunity to grow their egg supply, grading and retail business in Ontario and the Defendant L. H. Gray should be ordered to disgorge such illegal profits to the extent they said Defendant has caused a loss to the Plaintiffs.


THE DEFENDANTS SHOULD NOT PROFIT FROM THEIR UNLAWFUL CONDUCT

118.     The  Defendants  reaped  substantial fmancial  benefits  due  to their illegal  conduct.  The Plaintiff pleads that it is contrary to equity and good conscience that the Defendants should retain any benefit obtained in respective of illegal conduct.

119.     The practice of delivering eggs to breaking plants, controlled by the defendant that do not conform  with  egg  regulations,  allows excessive  profits  from  eggs  that  should  be  considered inedible, and further denying access by the Plaintiff to legitimate surplus declarations.


LIABILITY  OF THE DEFENDANTS & DAMAGES SUFFERED BY THE PLAINTIFFS

120.     The Defendants, both individually and collectively, owed the Plaintiffs certain obligations in law and in equity, and those obligations were breached by the Defendants. The particulars of which include the following:


A. With respect to the issuance of letters and invoices in February 2005:

121.     As a result of the numerous breaches of duties, interference with contractual and business relations, negligence, and civil conspiracy on behalf of the Defendants EFO, Pelissero, L.H. Gray, Gray, and Burnbrae, the Plaintiffs have suffered significant damages, including special damages, the particulars of which will be revealed prior to trial.

124.     The conduct of the Defendants EFO, Pelissero, L.H. Gray, Gray, and   Burnbrae, also warrants aggravated damages because the Defendants have caused continuing damages as a result of never retracting allegations that the Plaintiffs was improper!y reporting the grading data of their producers, continuing to interfere with business and contractual relations of the Plaintiffs and continuing to conspire to the detriment of the Plaintiffs.

125. The Defendants have, in the process of conspiring with one another, acted illegally and breached various parts of sections 45, 74 and 78 of the Competition Act, R.S.C. 1985, c. C-34.


B.        With respect to brokering and reporting supplies of surplus eggs

126.    As a result of the numerous breaches of duties, interference with contractual and business relations, negligence, and civil conspiracy on behalf of the Defendants EFO, Pelissero, L.H. Gray, Gray, Bumbrae, and Maple Lynn, the Plaintiffs have suffered significant damages, including special damages, the particulars of which will be revealed prior to trial.

127.    With respect to the Defendants EFO and Pelissero:

      (a)       One or more of them breached a fiduciary duty owed to the Plaintiffs with respect to acting as agent /broker of eggs on the Plaintiffs' behalf.

      (b)        One or more of them breached a fiduciary duty owed to the Plaintiffs with respect to accurately reporting to federal authorities the availability of domestic eggs.

      (c)       One or more of them conspired, and continue to conspire, with one or more of the Defendants or others for the purpose of injuring the Plaintiffs to the benefit of the Plaintiffs' competitors.

     (d)       One or more of them intentionally interfered with the Plaintiffs'  business and contractual relationships between the Plaintiffs and its retail store customers.

     (e) In the alternative, one or more of them was negligent with respect to acting as agent /broker of  eggs  on  the Plaintiffs'  behalf and accurately reporting to  federal authorities the availability of domestic eggs.

128.    With respect to the Defendants L.H. Gray, Gray, Burnbrae, and Maple Lynn :

      (a) One or more of them breached a duty owed to the Plaintiffs with respect to
supplying eggs which were of sufficient quality, marketability and conformity;


      (b)  One or more of them and/or their respective agent(s) conspired, and continue to conspire, with one or more of the Defendants or others for the purposes of injuring the Plaintiffs, solidifying their collective monopoly in the egg industry and fixing
prices;

      (c)   One or more of them and/or their respective agent(s) intentionally interfered with the Plaintiffs'  business and contractual relationships  between the Plaintiffs and its producers, and between the Plaintiffs and its retail store customers, for the purposes of injuring the Plaintiffs, solidifying their collective  monopoly in the egg industry and fixing prices.

129.  The Defendants have, in the process of conspiring with one another, acted illegally and breached various parts of sections 45,74 and 78 of the Competition Act, R.S.C. 1985, c. C-34. and render the Defendants and their co-conspirators liable to pay damages to the plaintiffs pursuant to section 36 of the Competition Act.

130.       The conduct of the Defendants  EFO, Pelissero, L.H. Gray, Gray, Burnbrae, and Maple Lynn, also warrants aggravated damages because the Defendants have caused continuing damages as a result of continuing to impede the Plaintiffs access to supplies of eggs, continuing to interfere with business and contractual relations of the Plaintiffs and continuing to conspire to the detriment of the Plaintiffs.


C.       With respect to the purported offer to purchase Sweda Farms

131.      As a result of the numerous breaches of contract, breaches of duties, interference with contractual  and business relations, and civil conspiracy on behalf  of the Defendants L.H. Gray, Gray, and Burnbrae, the Plaintiffs have suffered significant damages, including special damages, the particulars of which will be revealed prior to trial.

132.     In particular,  as a direct  result of one or more of the Defendants  interfering  with  the Plaintiffs'  relationship  with its producers, the Plaintiffs  have lost egg supplies  totaling at least 2,590,000 eggs per week. As a direct result of not having a sufficient supply of eggs, the Plaintiffs have lost numerous accounts with many of their customers (mainly retail grocery stores), which has directly resulted in additional economic loss.

133. With respect to the Defendant Burnbrae:

      (a)   One or more of them and/or their respective agent(s) breached the Burnbrae Confidentiality Agreement, their duties of good faith and confidentiality, and their fiduciary duty owed to the Plaintiffs by disseminating the Plaintiffs' confidential information, and by misusing it;

      (b)   One or more of them and/or their respective agent(s) conspired, and continue to conspire, with one or more of the Defendants or others for the purposes of injuring the Plaintiffs, solidifying their collective monopoly in the egg industry and fixing prices;

      (c)  One or more of them and/or their respective agent(s) misused the confidential information to intentionally interfere with the Plaintiffs' business and contractual relationships between the Plaintiffs and its producers, and between the Plaintiffs and its retail store customers;

      (d)    One or more of them and/or their respective agent(s) intentionally interfered with the Plaintiffs' business and contractual relationships between the Plaintiffs and its producers,  and  between  the  Plaintiffs  and  its  retail  store  customers,  for  the purposes of injuring the Plaintiffs, solidifying their collective monopoly in the egg industry and fixing prices.

134. With respect to the Defendants L.H. Gray and Gray:

      (a)   One or more of them and/or their respective agent(s) breached the Gray Confidentiality Agreement, their duties of good faith and confidentiality, and their fiduciary duty owed to the Plaintiffs by disseminating and misusing the Plaintiffs' confidential information;

      (b)   One or more of them and/or their respective agent(s) conspired, and continue to conspire, with one or more of the Defendants or others for the purposes of injuring the Plaintiffs, solidifying their collective monopoly in the egg industry and fixing prices;
     
      (c)   One or more of them and/or their respective agent(s) misused the confidential information to intentionally interfere with the Plaintiffs' business and contractual relationships between the Plaintiffs and its producers, and between the Plaintiffs and its retail store customers;

      (d)    One or more of them and/or their respective agent(s) intentionally interfered with  the  Plaintiffs'  business  and  contractual  relationships  between  the Plaintiffs and its producers, and between the Plaintiffs and its retail store customers,  for  the  purposes  of  injuring  the  Plaintiffs,  solidifying  their collective monopoly in the egg industry and fixing prices;
    
      (e)   Gray intentionally caused the destruction of evidence which was knowingly relevant to this litigation. Gray caused said evidence to be destroyed for the sole purpose of withholding disclosure to the Plaintiffs, and impairing this Court's ability to properly assess the merits of Plaintiffs' claims.135.TheDefendants have, in the process of conspiring with one another, acted illegally and
breached various parts of sections 45, 74 and 78 of the Competition Act, R.S.C. 1985, c. C-34.

136.    The conduct of the Defendants L.H. Gray, Gray, and Burnbrae, also warrants aggravated damages as a result of continuing to use confidential information of the Plaintiffs, continuing to interfere with contractual and business relations of the Plaintiffs, continuing to conspire to the detriment of  the Plaintiffs and having destroyed the Plaintiffs' egg grading and retail egg marketing business.


D.    With respect to the activities of the L.H.Gray, Gray, Bumbrae, John Klei and Estate of Johannes Klei

137.    As  a  result of  the  numerous breaches of  contract, breaches of  duties, intentional interference with contractual and business relations, negligence, civil conspiracy and libel on behalf of the Defendants Johannes Klei, John Klei, L.H. Gray, Gray, and Burnbrae, the Plaintiffs have suffered significant damages, including special damages and the loss of the egg grading and retail marketing business, the particulars of which will be revealed prior to trial.


138.    In particular, as a direct result of one or more of the Defendants interfering with the
Plaintiffs' relationship with its producers, the Plaintiffs have lost egg supplies totaling at least 2,590,000 eggs per week. As a direct result of not having a sufficient supply of eggs, combined with one or more of the Defendants interfering with the Plaintiffs' relationship with its customers, the Plaintiffs have lost numerous accounts with many of their customers, which have directly resulted in additional economic loss including the loss of the business.

139.    With respect to the Defendants John Klei and the Estate of Johannes Klei:

     (a)   One or both of them breached an express or implied term of his /their employment contract requiring him /them to, at all material times, act in the best interests of the Plaintiffs.

     (b)   One or both of them interfered with the Plaintiffs' business and contractual relationships between the Plaintiffs and its producers, and between the Plaintiffs and its customers, by meeting with the Plaintiffs' various suppliers and customers and attempting to coerce them into breaching their respective contracts with the Plaintiffs.

     (c)    One or both of them conspired with one or more of the Defendants or others for the purpose of injuring the Plaintiffs.

     (d)   The Defendant Johannes Klei defamed the Plaintiffs by publishing the Longo's
Letter in the presence of the Plaintiffs' customers and producers.

     (e) In the alternative, the Defendant Johannes Klei was negligent by publishing the
Longo's Letter in the presence of the Plaintiffs' customers and producers.

     (f)        As a senior employee of the Plaintiffs, and in a position of trust, the Defendants Johannes and John Klei breached their contract of employment, as well as their fiduciary duty and duty of good faith to the Plaintiffs.

140.    With respect to the Defendant Bumbrae:

     (a)    It and/or its respective agent(s) conspired, and continue to conspire, with one or more of the Defendants or others for the purposes of injuring the Plaintiffs, solidifying their collective monopoly in the egg industry and fixing prices;

     (b)    It and/or its respective agent(s) intentionally interfered with the Plaintiffs' business
and  contractual  relationships  between  the  Plaintiffs  and  its  producers,  and between the Plaintiffs and its retail store customers for the purposes of injuring the Plaintiffs,  solidifying  their  collective  monopoly  in  the  egg  industry  and fixing prices.

141.    With respect to the Defendant L.H. Gray and Gray:

     (a)   One or more of them and/or their respective agent(s) conspired, and continue to conspire, with one or more of the Defendants or others for the purposes of injuring the Plaintiffs, solidifying their collective monopoly in the egg industry and fixing prices;

     (b)    One or more of them and/or their respective agent(s) intentionally interfered with the Plaintiffs' business and contractual relationships between the Plaintiffs and its producers, and between the Plaintiffs and its retail store customers for the purposes of injuring the Plaintiffs, solidifying their collective monopoly in the egg industry and fixing prices.

142.  The Plaintiffs plead and rely upon the Libel and Slander Act, R.S.O. 1990, c. L.12, as amended.

143.     The Defendants have, in the process of conspiring with one another, acted illegally and breached various parts of sections 45, 74 and 78 of the Competition Act, R.S.C. 1985, c. C-34.

144.     The conduct of the Defendants L.H. Gray, Gray, Burnbrae, and Johannes and John Klei, jointly and severally, also warrants aggravated damages because the Defendants have refused to print an apology and/or retraction, continue to interfere with contractual and business relations of the Plaintiffs and continue to conspire to the detriment of the Plaintiffs.


E.       Crack in the Pack

145.     The conduct of the Defendant in selling adulterated eggs to the public, generating illegal profits and using those profits to damage the Plaintiffs requires the Defendant L.H. Gray to be responsible for the losses suffered by the Plaintiffs as described herein as well disgorgement of illegal profits used to damage the Plaintiffs.

F.        Punitive Damages

146.     The  aforementioned conduct of the Defendants has been callous, willful, intentional, vindictive, harsh, malicious and high handed. Accordingly, the Defendants' conduct, jointly and severally, entitles the Plaintiffs to an award of punitive damages.

147.      The practice by the Defendant L.H. Gray of selling adulterated eggs to the public, earning illegal profits there from, endangering the lives and health of the public, and using the illegal profits to damage the Plaintiffs warrants a high award of punitive damages.

G.       Negligence

148.     In the alternative to the above tort claims, negligence is claimed with respect to the above described conduct of the Defendants, the various duties owed to the Plaintiffs, and the damages suffered by the Plaintiffs.


Jurisdiction

149.    The Plaintiffs propose that that this action be tried in the City of Toronto, as per the Order of Justice Lauwers dated November 1, 2011, which provided that this action be consolidated with Toronto Court File No. CV-08-357570 and transferred from Oshawa to Toronto.



ONTARIO SUPERIOR COURT OF JUSTICE

PROCEEDING COMMENCE OSHAWA, ONTARIO



FRESH STATEMENT OF CLAIM

DONALD R. GOOD A PROFESSIONAL CORPORATION Barristers & Solicitors
43 Roydon Place, Suite 207
Ottawa, Ontario K2E 1A3

Donald R.Good, P.Ag., LSUC No. 212531

Tel:  613-228-9676
Fax:  613-228-7404
e-mail fannlaw@on.aibn.com

Solicitors for the Plaintiffs