On June 26, 2012, the Ontario Court of Appeal released three key rulings on overtime class actions1. In the three unanimous decisions, the Court of Appeal gave the go ahead for class action proceedings against two Canadian banks, CIBC and Scotiabank. The certification of a third class proceeding, against Canadian National Railway, was dismissed.
Fresco and Fulawka are two class proceedings which arose from claims that bank employees were not being compensated for overtime hours. Both cases raise similar allegations that the employer's policies for receiving overtime compensation were more restrictive than the statutory requirements.
In Fresco, which was a claim was brought by Dana Fresco, a former CIBC customer service representative on behalf of approximately 31,000 CIBC employees, the Court of Appeal overturned the decision of the lower court and granted certification. Whereas the lower court ruling denied certification based on a perceived lack of common issues, the Court of Appeal held that on a plain reading of the requirements for overtime pay under the Canada Labour Code, the employer's overtime policy was insufficient. Therefore, according to the Court the plaintiff met the threshold under the Ontario Class Proceedings Act by demonstrating that "it is not plain and obvious that its action will fail."
The same result was reached in Fulawka, a case brought by Cindy Fulawka on behalf of more than 5,000 Scotiabank sales employees. As was the case in Fresco, the Court of Appeal was prepared to grant certification on grounds that there were allegedly systemic issues, shared by all class members, with Scotiabank's overtime policies. In this regard, the Court of Appeal held that, although all of the allegations were as yet unproven, determining the terms of the employment contract of class members was a common issue.
In both decisions, the plaintiffs were able to demonstrate that sufficient common issues existed within the class, which is likely the biggest hurdle in class action proceedings. Where there are individual issues within the class that require extensive individual determinations, class proceedings no longer become the most efficient way for resolving these disputes.
The proliferation of individual issues was the very reason that certification was denied in the Court's third decision in McCracken which was released at the same time. McCracken was brought by former CN employee, Michael McCracken, and was a "misclassification case" where the plaintiff alleged that more than 1,500 employees were wrongly classified as exercising management functions when they did not. Misclassification cases have traditionally been thought of as being more amenable to a class proceeding. According to the Court of Appeal in McCracken, this is only true where the similarity of job duties performed by class members provides the element of commonality. The extent to which this prevents employee class actions involving workers from a number of different jobs remains uncertain.
The required level of commonality was not met in McCracken, with the Court of Appeal determining that more is required than simply showing that some members of the class have similar claims. The Court of Appeal was not convinced that class members had the same job functions and duties. For example, there was evidence that some class members did in fact exercise managerial functions, such as hiring and firing, and thus were rightfully categorized as management. Therefore, a class action proceeding would fail to overcome the substantial individual issues within the class.
When taken together, these decisions make significant inroads on clarifying the required elements on overtime class action certification and the strategies for employers responding to such claims.
by George Waggott, Jennifer Bond and Samia Hussein, summer law student
1 Fulawka v Bank of Nova Scotia, 2012 ONCA 443, ("Fulawka"); McCracken v Canadian National Railway Company, 2012 ONCA 445 ("McCracken"); Fresco v Canadian Imperial Bank of Commerce, 2012 ONCA 444 ("Fresco")
a cautionary note
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2012