Aug 14, 2019

Quebec court authorizes $50 million class action against major junior hockey league and teams on behalf of players, alleging breach of employment standards legislation

Walter c. Quebec Major Junior Hockey League Inc., 2019 QCCS 2334 (CanLII)


Headlines August 14, 2019

A Quebec Superior Court judge authorized a class action on behalf of major junior hockey league players in Quebec, New Brunswick, Nova Scotia, and Prince Edward Island, alleging that the players were employees under applicable employment standards legislation. The claims against the league and its member teams sought $50 million in back wages and overtime, holiday, and vacation pay, as well as punitive damages. The judge rejected the defendants' argument that the class action should be limited to Quebec, holding that the applicable legislative regimes in the maritime provinces were sufficiently similar to Quebec's employment standards statute to permit the claims to be considered together. However, the class was limited to players who were in the league before legislation exempting athletes from employment standards legislation in each province came into effect. Similar actions on behalf of junior hockey players have also been brought in Ontario and Alberta.

The Facts:

Two former major junior hockey league players brought a class action on behalf of players in Quebec and three Atlantic provinces, alleging that players were employees entitled to the benefit of provincial minimum employment standards including the minimum wage.

The Quebec Major Junior Hockey League Inc. (QMJHL) operates a hockey league comprising 18 hockey teams in Quebec, New Brunswick, Nova Scotia, and Prince Edward Island for male players between the ages of 16 and 20.

Upon joining a QMJHL team, a player is required to sign a contract in a form approved by the league requiring the player to adhere to the team's practice and game schedule, which amounts to 35 to 40 hours per week on average during the hockey season. Each team provides tools and room and board for players. The QMJHL and the teams also use images of their players for commercial purposes including use in a video game.

Players are paid a weekly allowance that, when divided by the number of hours worked, is less than the provincial minimum wage in any of the jurisdictions in which the QMJHL operates. Players are also reimbursed for certain expenses. However, they do not receive vacation, holiday, or overtime pay. On behalf of the players, teams prepare T4 forms and remit income tax, Employment Insurance premiums, and Canada Pension Plan contributions.

The Quebec Act respecting labour standards (ARLS) sets out numerous minimum employment standards, including a requirement to pay employees the minimum wage, rules on hours of work and overtime pay, paid statutory general holidays, and annual leave with pay. Under s.3(5.1), which was added to the ARLS with effect from June 12, 2018, the ARLS does not apply "to an athlete whose membership in a sports team is conditional on his continued participation in an academic program." With effect from the same date, the QMJHL amended its rules to provide that its players are required to participate in an academic program. The employment standards statutes of the other provinces in which the QMJHL operates were also amended to provide similar exemptions in relation to the minimum wage and overtime, vacation, and holiday pay:

  • With effect from July 28, 2017, the relevant provisions of the New Brunswick Employment Standards Act do not apply to "athletes when participating in activities related to their sport" under ss.2, 3(1)(p), 3(2)(c), and 3.1 of the General Regulation made under that legislation.
  • With effect from July 4, 2016, the relevant provisions of the Nova Scotia Labour Standards Code do not apply to "[a]thletes while engaged in activities related to their athletic endeavour" under s.2(4A) of the General Labour Standards Code Regulations.
  • With effect from October 28, 2017, the relevant provisions of the P.E.I. Employment Standards Act do not apply to "[a]thletes while engaged in activities related to their athletic endeavours" under s.2 of the Exemption Regulations made under that legislation.

Under s.575 of the Quebec Code of Civil Procedure (CCP), a court is empowered to authorize a class action to proceed if four criteria are satisfied:

  1. the claims of the members of the class raise identical, similar or related issues of law or fact;
  2. the facts alleged appear to justify the conclusions sought;
  3. the composition of the class makes it difficult or impracticable to apply [other means] for consolidation of [claims]; and
  4. the class member appointed as representative plaintiff is in a position to properly represent the class members.

The Quebec Charter of Human Rights and Freedoms provides, in s.46, that: "Every person who works has a right, in accordance with the law, to fair and reasonable conditions of employment which have proper regard for his health, safety and physical well-being." Under s.49, punitive damages are available for "unlawful and intentional" breach of the Charter.

Two former QMJHL players, Lukas Walter and Thomas Gobeil, applied to the Quebec Superior Court for authorization of a class action against the QMJHL and its 18 constituent hockey teams, on behalf of themselves and other current and former hockey players in the league. The action alleged that the players were employees within the meaning of applicable employment standards legislation in Quebec, New Brunswick, Nova Scotia, and P.E.I. and sought back pay up to the minimum wage, along with overtime, holiday, and vacation pay, totalling $50 million. They also alleged that the QMJHL and the teams had conspired to require the players to enter into contracts that they knew contravened employment standards legislation. As well, the plaintiffs sought punitive damages and an order disgorging profits generated as a result of their unlawful conduct.

The Arguments:

The plaintiffs argued that their proposed action satisfied the requirements for authorization under the CCP. They conceded that in New Brunswick, Nova Scotia, and P.E.I., the classes were limited to those who were players before the exemptions in employment standards legislation came into effect. However, they maintained that because the exemption for athletes in the ARLS was conditional on participation in an academic program, it did not apply to QMJHL players in Quebec. In support of their claim for punitive damages, the plaintiffs argued that the defendants had knowingly breached the players' statutory rights, including the right to fair working conditions under s.46 of the Quebec Charter. The plaintiffs also submitted that given the similarities in the applicable legislation, it was desirable for the claim in respect of all four provinces to be heard in Quebec.

The QMJHL and its participating teams argued that certain aspects of the proposed class action did not satisfy the requirements of the CCP. They conceded that the claims of class members raised similar issues and that the facts alleged appeared to justify the conclusions sought. However, the defendants objected to the proposed scope of the class, arguing that the Quebec class should be closed to individuals who were not players before June 12, 2018, as players were exempt from the ARLS with effect from that date. They also took the view that certain claims were time-barred under the ARLS. Turning to the conspiracy claim, the defendants maintained that no such claim existed in the civil law of Quebec and that the only appropriate issue for determination was breach of the applicable employment standards legislation. Finally, the defendants challenged the suitability of Walter as a representative plaintiff, on the basis that he had not demonstrated sufficient knowledge of the proceedings during his oral evidence.

The Decision:

Quebec Superior Court judge François Duprat authorized the class action, subject to modifications to the proposed class and the common issues.

Justice Duprat held that the first two criteria for authorization of a class action under s.575 of the CCP were satisfied, as the claims raised similar or related issues of law and the facts as alleged appeared to justify the conclusions sought.

However, Duprat ruled that the membership of the class in each province was to be restricted to the period before that province adopted amendments exempting athletes from its employment standards legislation. Duprat rejected the plaintiffs' argument that the position in Quebec was distinguishable from that in the Atlantic provinces, insofar as an athlete in Quebec is exempt from the ARLS only where membership in a team is conditional on participation in an academic program. Although in the past QMJHL players were not required to participate in education during their involvement in the league, that situation no longer applied as of June 12, 2018, which was the date on which the amended ARLS came into force.

Regarding the defendants' argument that the class should be limited to members whose claims were not time-barred, Duprat accepted that under the ARLS, limitation periods applied to the claims contemplated in the class action. However, Duprat held that it would be inappropriate to address the question of the timeliness of the claims in the context of determining class membership. Rather, such issues should be considered by the trial judge.

Turning to the question of whether the class should be limited to members covered by the Quebec ARLS, Duprat noted that as the Quebec Court of Appeal held in Union des consommateurs c. Bell Canada, 2012 QCCA 1287 (CanLII), leave to appeal refused 2013 CanLII 1181 (SCC), a multi-jurisdictional class action may be rejected only if the divergence between jurisdictions would undermine the collective character of the action. On the facts of this case, the relevant provisions of the employment standards legislation in the maritime provinces were not significantly different from those in the ARLS. In such circumstances, it was appropriate to include those provinces in the class action as a means of facilitating access to justice.

As for the component of the class action relating to conspiracy, Duprat observed that the plaintiffs alleged that the QMJHL and the teams knew or ought to have known that the contractual arrangements with players were contrary to employment standards legislation. Duprat rejected the defendants' argument that because there was no tort of conspiracy in Quebec law, these allegations were irrelevant and should be excluded from the action:

With respect, the Court does not accept this argument. The allegations … are sufficiently precise to support the idea that the League and the teams knowingly acted as they did precisely in order to avoid the consequences flowing from an employer-employee relationship. At trial, the judge will be able to assess the evidence on this aspect.

It is not true that these facts do not add anything to the debate: if the teams and the League do not respect the applicable legislation, that would be one thing, but if in addition the non-respect was carried out intentionally and knowingly, this would constitute another aspect that could, for example, influence the outcome of the claim and the assessment of punitive damages. Acting in a way that avoids the application of legislation, in this case legislation [enacted to further public policy], is a civil wrong and at this stage the Court must only consider the facts as alleged on this subject. [translated by Lancaster House]

There was, however, no factual basis to support the plaintiffs' request for an order disgorging the profits earned by the QMJHL and the teams as a result of their breaches of the applicable legislation. Duprat removed that element of the claim and identified three common issues for determination at trial:

  • Were the class members employees within the meaning of the applicable employment standards legislation?
  • Did the defendants knowingly conspire to require class members to enter into illegal contracts?
  • Are the class members entitled to punitive damages?

Finally, there was no basis for concluding that Walter was not a suitable representative plaintiff. Duprat accepted that during the hearing Walter was confused about certain aspects of the proceedings. Nevertheless, he understood the essential nature of the claim and therefore satisfied the "minimalist" requirement of competence that applied to a prospective representative plaintiff.

Comment:

In a wide-ranging interview with the Montreal newspaper La Presse in July 2019, QMJHL Commissioner Gilles Courteau was asked to explain why the league objected to paying the minimum wage to its players. He offered the following explanation:

Being a junior hockey player is not a profession. That is not why the league was created. This has never been a league in which the players are employees. The league is recognized as the best training league for players between the ages of 16 and 20. [translated by Lancaster House]

Courteau also speculated that paying players the minimum wage would permit players to move away from home and that their studies would suffer as a result.

The QMJHL, like the Ontario Hockey League (OHL) and the Western Hockey League (WHL), forms part of the Canadian Hockey League (CHL), a network of amateur hockey teams across Canada. As Justice Duprat observed in this decision, the Quebec class action is one of several proceedings launched across the country advancing similar claims on behalf of junior hockey players. As reported in Lancaster's Employment Standards Law, July 23, 2019, eAlert No. 130, in Berg v. Canadian Hockey League, 2019 ONSC 2106 (CanLII), the Ontario Divisional Court upheld a judge's decision to certify a class action against the CHL, OHL, QMJHL, and WHL, along with numerous junior league hockey teams, alleging breach of employment standards legislation and unjust enrichment. The Divisional Court has since expanded the scope of that action to include five additional claims: breach of contract; breach of the duty of honesty, good faith, and fair dealing; negligence; conspiracy; and waiver of tort. The Ontario action seeks $180 million in back pay, holiday pay, vacation pay, and overtime pay dating back to 2012, as well as punitive damages. It is estimated that players could receive as much as $10,000 per season, plus overtime pay.

In Walter v. Western Hockey League, 2018 ABCA 188 (CanLII), reported in Lancaster's Employment Standards Law, December 17, 2018, eAlert No. 123, certification of a class action brought by Walter and two other representative plaintiffs against the CHL, WHL, and constituent teams was affirmed by the Alberta Court of Appeal.

The certification decisions in the Quebec, Ontario, and Alberta cases follow a high-profile dispute in the U.S. over what Justice Paul Perell, in the Ontario certification decision at first instance, called the "critical question" of when amateur athletes become employees subject to employment standards legislation. On December 5, 2016, the U.S. Court of Appeals for the Seventh Circuit ruled, in Berger v. National Collegiate Athletic Association, 843 F.3d 285 (2016), that college track and field athletes "are not employees and are not entitled to a minimum wage under the American FLSA [Fair Labor Standards Act]." Following the decision in Berger, in Dawson v. National Collegiate Athletic Association, No. 16-cv-05487-RS (N.D. Ca. April 25, 2017), a class action against an American university on behalf of U.S. college football players was dismissed by a U.S. District Court after the plaintiff unsuccessfully attempted to distinguish his claim from Berger by pointing out that college football teams generated considerable revenues for their institutions.

While these decisions suggest that a student athlete would not be considered an employee under American law, the question remains open with respect to non-student amateur athletes, in the U.S. as well as in Canada. Indeed, two expert witnesses in the Ontario action testified that U.S. law remains unsettled on the question of whether amateur athletes in general are considered employees. The plaintiffs have hinted that they may attempt to emphasize the distinction between student athletes and non-student amateurs, as they argued that CHL players do not fall under any exception for interns or trainees because, unlike National Collegiate Athletic Association (NCAA) athletes, they are not student athletes representing any school or college.