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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.
Footnotes
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")
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
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