Lia Sophia Canada, LP Plaintiff - v. -, 2013 ABQB 53

Court of Queen ’ s Bench of Alberta Citation: Lia Sophia Canada, LP v Parklane Jewelry Limited, 2013 ABQB 53 Date: 20130124 Docket: 1201 08348 Registry: Calgary Between: Lia Sophia Canada, LP Plaintiff - and - Parklane Jewelry Limited., Jewels by Parklane, Inc., Jean Lunt also known as Jean Waye- Lunt, Christina Spackman, and Arlene Whyte also known as Arlene Goldwater-Whyte Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice C.A.

Kent _______________________________________________________ [ 1 ] The plaintiff, lia sophia Canada, LP (lia sophia) sells fashion jewelry through in-home parties run by independent representatives, called advisors. lia sophia's sales network depends upon Leaders who earn from their own sales and from incentives based upon a percentage of earnings of downline advisors and other Leaders. [ 2 ] Parklane Jewelry Limited ( Parklane Canada) was incorporated federally on April 10, 2012. Jewels by Park Lane Inc. (Parklane U.S.) and Parklane Canada share common ownership and control.

Both Parklane Canada and Parklane U.S. are in the business of selling jewellery through direct sales in-home parties.

[3] lia sophia commenced this action against the corporate defendants and three individuals, two of whom were Leaders for liasophia and the third was an assistant to one of them. There have been a number of proceedings arising from the claim includingapplications for an interim injunction and an Anton Pillar order against the defendants. This application, however, is narrow. Theplaintiff served Parklane U.S. ex juris and Parklane U.S. disputes the validity of that service.

Parklane U.S. says that service is not validfirst because of a failure by lia sophia to attach a document or affidavit that sets out the grounds for service outside Canada (Rule11.25(2)(a)), and secondly and more fundamentally, because there is no good arguable case, the test for valid service ex juris. Withrespect to the technical argument about the attachment of a document as required by 11.25(2)(a), lia sophia argues that even if there is atechnical deficiency, it is still within time for service, so that ought not to be a bar.

The real issue is whether a good arguable case hasbeen made out. [4] The Amended Statement of Claim identifies Parklane U.S. and Parklane Canada separately, but then refers to themcollectively as Park Lane throughout the balance of the document. It alleges that there was an agreement amongst all of the defendantsto raid lia sophia's sales force, using the knowledge of Lunt, Spackman and Whyte.

That agreement was a conspiracy to induce breachof contract, interfere with contractual relations, induce breach of fiduciary and trust duties, misuse lia sophia's confidential informationand breach an injunction of this court. [5] There is no dispute that the test is a good arguable case. In Scott & Assoc. v.

Ghost Pine Windfarm (2011), 2011 ABQB 630, 520A.R. 190, Chief Justice Wittmann of this court said at para 34 that a good arguable case meant "...a case that was not fanciful or speculative but was grounded upon some evidence upon which an objective trier would say "well, onthe basis of the facts presented, the case is arguable and certainly not to be dismissed out of hand." [6] The plaintiff's argument is built upon the following facts. First, the individual defendants, and he points particularly to Lunt,signed agreements with lia sophia that they would not sell or promote products other than lia sophia products.

The plaintiff says thatLunt, in particular, breached her agreement by holding an event at the Sheraton Hotel in Calgary where representatives from Park Lanewere present. [7] Second Ms. Lunt, Ms. Whyte and Ms. Spackman met with Tom Judson and other Park Lane U.S. representatives onFebruary 12, 2012 in Las Vegas. Ms. Lunt understood that Mr. Judson was responsible for international development. In her affidavit,she says that she also met Lori Mirchell, Park Lane U.S.'s National Director of Executive Management, Arthur Levin and Scott Levin,two Park Lane U.S. executives. Ms.

Lunt also testifies to a meeting in May 2012 when she and Ms. Whyte went to Chicago to meet withMessrs Arthur, Scott and Mark Levin. There, she says, they "...discussed the history of the company, the possibility of Ms. Whyte and Ibecoming Park Lane franchisees in Canada, and Park Lanes structure in general terms on account of the fact that the terms of a Canadianlaunch had not yet been decided." [8] Third, a transcript of a recording of a June 12, 2012 presentation at the Sheraton Hotel reveals that Tom Judson and ShannonPell both have some connection to Park Lane U.S. Mr.

Judson talks about Park Lane U.S. and describes himself as the international VPof Sales. [9] Fourth, the plaintiff relies upon an email from Mr. Judson to the defendants Whyte and Lunt sent on June 16, 2012. Theemail attaches the powerpoint from the June 12 presentation. The first page of the powerpoint includes the following: "park*lane"Jewelry since 1955". One slide refers to Park Lane being founded by Shirley and Arthur in 1955. Arthur is Arthur Levin, the presidentof Park Lane U.S. [10] Park Lane U.S. argues that there is no good arguable case against the U.S. company.

Don Rischow is the Treasurer of ParkLane Canada and is also an executive of Park Lane U.S. There were no affidavits filed by any of the Park Lane personnel present at anyof the meetings described above. Park Lane U.S. says that it has no involvement with Park Lane Canada. It says that Mr. Judson andMs. Pell are independent contractors who were not taking their instructions from Park Lane U.S. at either the Las Vegas or Calgarymeeting. It says that whenever Park Lane executives were involved with the individual defendants it was as Park Lane Canadaexecutives and not Park Lane U.S. executives.

[ 11 ] Of significance to the Park Lane U.S. position is the fact that during the questioning of Mr. Rischow, counsel did not permit him to answer questions about Park Lane U.S. other than some very general questions. As a result, the lia sophia counsel was unable to test the position taken by Park Lane U.S. that it is completely unconnected to Park Lane Canada. [ 12 ] Park Lane US says that the questioning was done in relation to one of the other applications, not this application. That was why counsel was not permitted to question Mr. Rischow about Park Lane US. There was no request to question Mr.

Rischow specifically in relation to this application. As a result, the denials about any involvement by Park Lane US stand uncontradicted. [ 13 ] Park Lane U.S. also challenges the allegations in the claim about what occurred at the meetings in Las Vegas and Illinois. They also challenge the plaintiff about whether the plaintiffs arguments misapply the law of agency and rules regarding lifting the corporate veil. [ 14 ] That all may be relevant to the determination of liability. However, that is not the issue here. The issue is whether there is a good arguable case. In my view there is.

The plaintiff has provided evidence of a meeting in Las Vegas that included executives of Park Lane US well before Park Lane Canada came into being. What did or did not happen at that meeting will be sorted out by the trial judge. Likewise what happened in Illinois is a matter for the trial judge to determine. There is evidence that shows a relationship between executives of Park Lane US with other defendants that would allow a trial judge to draw inferences about what occurred. [ 15 ] The plaintiffs have a good arguable case. Given my findings, the issue about the technical service deficiency becomes moot.

Service of the claim on Parklane U.S. is valid. Heard on the 20 th day of December, 2012. Dated at the City of Calgary, Alberta this 24 th day of January, 2013. C.A. Kent J.C.Q.B.A. Appearances:

G. James Thorlakson Miller Thomson LLP for the Plaintiff Renee V. Reichelt McCarthy Tétrault LLP for the Defendant Jonathan Bourchier McCarthy Tétrault LLP for the Defendant