Canada: Certification Granted In Proposed eHealth Ontario Performance Awards Class Action

The plaintiff employees in the high-profile eHealth Ontario ("eHealth") class action Perrenoud v. eHealth Ontario have cleared the certification hurdle for three of four claims brought against eHealth and Her Majesty the Queen in Right of Ontario ("Ontario") as a result of eHealth's decision last year to suspend its Performance Incentive Policy and cancel the employees' performance awards and merit increases for fiscal years 2010/11 and 2011/12. In a decision released on November 26, 2012, Justice Perell of the Ontario Superior Court of Justice certified the plaintiffs' claims against eHealth for breach of contract, but refused to certify the claim against Ontario for the tort of inducing breach of contract.

Background

In mid-2011, eHealth came under media scrutiny for its decision to award performance awards and merit increases to its employees despite the Minister of Finance's call for a province-wide public-sector wage freeze. Following several newspaper articles criticizing eHealth's policy, the Minister requested that eHealth review its decision, and eHealth responded by not only cancelling performance awards for the fiscal year 2011/12, but also cancelling performance awards and merit increases that it had already calculated and promised to its employees for the fiscal year 2010/11. In response, the employees brought a proposed class action against eHealth for three claims of breach of contract (including a breach of the duty of good faith) and against Ontario for inducing breach of contract. The plaintiffs also claimed declaratory relief with respect to the allocation of their performance awards to their pension plans, and punitive damages in the amount of $1 million.

The Plaintiffs' proposed class definition included all past and current full time employees for whom eHealth had (a) completed a statement setting out their performance awards and merit increases for the 2010/11 fiscal year; and/or (b) completed an evaluation that made the employees eligible under the Performance Incentive Policy for a performance award for the 2011/12 fiscal year.

The defendants opposed certification, arguing that the claims put forward by the plaintiffs in their Statement of Claim were legally untenable as eHealth had no binding contractual obligation to pay performance awards under both the Performance Incentive Policy and the law of contract. Furthermore, the defendants argued that Ontario had no duty of good faith towards the plaintiffs and that there could be no liability for inducing breach of contract because (1) there was no breach of contract and (2) because the constituent elements of that tort had not been pleaded.

The Decision

Justice Perell applied the five-part test for certification set out in s. 5(1) of the Class Proceedings Act, 1992(the "CPA"). With respect to the first criterion, whether the pleadings disclosed a cause of action, Justice Perell found that the plaintiffs' claims for breach of contract met the "plain and obvious test". With respect to the claim against Ontario for inducing breach of contract, however, Justice Perell agreed with the defendants' arguments that the constituent elements of the tort had not been pleaded. He held that there was nothing illegal about a principal telling its agent that she is disappointed with its decision and asking it to rethink the decision. Furthermore, His Honour found the claim for inducing breach of contract to be redundant, as Ontario would be liable as a principal for the actions of its agent if eHealth breached its employment contracts.

With respect to the second criterion in the test, Justice Perell agreed with the defendants' argument that the proposed class definition was slightly over-inclusive as it ignored certain prerequisites laid out in the Performance Incentive Policy, such as the requirement that an employee be actively employed at the time the award is paid. Rather than finding that the flaws defeated the plaintiffs' motion for certification, Justice Perell found that amendments to the proposed class definition would be sufficient to satisfy this criterion.

Justice Perell also agreed with technical objections raised by the defendants to the common issues as phrased by the plaintiffs, but found that none of the objections were fatal or irremediable. He certified an amended set of common issues, removing language that presupposed or assumed liability or that presumed that the defendants' legal position could not be defended. He further certified the plaintiffs' claim for punitive damages, finding that it was appropriate as a common issue and did not depend upon the outcome of individual issues trials.

Finally, Justice Perell held that the proposed action met the fourth and fifth criteria for certification – it was both the preferable procedure, and the representative plaintiffs had produced a litigation plan that, though imperfect, was "workable" enough to meet the test.

This case is a further example of the "purposive and generous manner" in which the court will apply the s. 5(1) test: it will permit amendments to technical flaws in order to grant certification where doing so would achieve the purposes of the CPA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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