Mar 20, 2014

Employment Law;Class Proceedings; Commonality

Fresco v. Canadian Imperial Bank of Commerce, 2012 ONCA 444 (CanLII)
Trilogy of prospective class actions for overtime pay provides guidelines for assessing commonality in class proceeding
BACKGROUNDS:
Fulawka: The respondent Cindy Fulawka ('Fulawka') was an employee of the appellant The Bank of Nova Scotia ('Scotiabank'). Fulawka brought class proceeding against Scotiabank, alleging that the overtime policy of Scotiabank contravened s. 174 of the Canada Labour Code, R.S.C. 1985, c. L-2 ('Code'). The action was commenced on behalf of more than 5,000 current and former full-time, front-line sales staff who held positions in Scotiabank's retail branches from January 1, 2000, to the present. Scotiabank's overtime policy required proposed class members to obtain prior approval from a manager before claiming overtime pay. The proposed plaintiffs alleged that s. 174 of the Code did not provide for a pre-approval requirement, and that Scotiabank's policies unlawfully avoided the bank's duty to pay overtime pursuant to the Code. The proposed plaintiffs also contended that Scotiabank failed to keep accurate records of all hours worked by employees, in contravention of ss. 252(2) and 264(a) of the Code. The motion court in Fulawka's certification motion held that the certification criteria were met, finding that Scotiabank's pre-approval requirement constituted a systemic policy affecting all proposed class members and that a class proceeding was the preferable procedure for resolving the claims. The decision of the motion court was upheld by the Divisional Court. Scotiabank appealed.
Fresco: The appellant Dara Fresco ('Fresco'), an employee with the respondent Canadian Imperial Bank of Commerce ('CIBC'), brought a class action against the CIBC on behalf of approximately 31,000 customer service employees. The claim contended that the CIBC breached its duty to pay the proposed class members for overtime work, in contravention of s. 174 of the Canada Labour Code, R.S.C. 1985, c. L-2 ('Code'). The impugned CIBC policy required employees to obtain management approval before commencing overtime hours, a requirement not specifically provided for in s. 174 of the Code. The motion judge denied the motion for certification, holding that it was plain and obvious that the pre-approval requirement was not illegal. The motion judge also held that Fresco failed to establish a commonality of issues pursuant to s. 5(1)(c) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 ('CPA'). A majority of the Divisional Court affirmed the motion court's ruling. Fresco appealed to the Court of Appeal.
McCracken: RespondentMichael McCracken ('McCracken') was a former employee of appellant Canadian National Railway Company ('CN'). McCracken held the position of senior manager, corridor operations, until March 26, 2008, the day after he served the statement of claim in the present action for overtime pay. CN had classified McCracken and the other members of the proposed class action as managerial employees, specifically, First Line Supervisors ('FLS'). Under s. 167(2)(a) of the Canada Labour Code, R.S.C. 1985, c. L-2 ('Code'), employers were not obligated to pay overtime to managerial staff. McCracken pleaded in the proposed class action that CN had purposely mischaracterized FLS as managerial employees, thus denying the proposed class members entitlement to overtime pay. McCracken's motion to certify the class action under s. 5(1) of the Class Proceedings Act, 1992, S.O. 1992, c. C.6, s. 30 ('CPA'), was countered by CN's motion under Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 ('Rule 21'), to dismiss the action on the ground that the Ontario court had no jurisdiction to hear the matter. The motion court judge dismissed the Rule 21 motion, but granted the motion for certification, significantly redrafting the common issues. McCracken appealed the certification order, seeking to reinstitute the former pleadings; CN appealed and cross-appealed from the Rule 21 order and appealed from the certification order. The appeals bypassed the Divisional Court for the purpose of being heard by the Court of Appeal, together with Fulawka and Fresco.
APPELLATE DECISIONS:
Fulawka: Scotiabank's appeal was allowed in part to the extent that an aggregate assessment of damages was not available to the proposed plaintiffs; the remainder of the appeal was dismissed. Section 1 of the CPA defines common issues as issues that are: (a) common but not necessarily identical issues of fact, or (b) common but not necessarily identical issues of law that arise from common but not necessarily identical facts. The proposed plaintiffs' claims did not consist merely of individual allegations of owed overtime; the pleadings alleged a systemic failure on the part of Scotiabank to adhere to the terms of the Code and to properly account for the hours worked by the class members. Determining the relevant express and implied terms of the employment contract of class members, in particular the terms concerning Scotiabank's obligations for compensating and recording overtime hours, was a necessary and substantial ingredient of the class members' claims. The proposed common issue concerning whether Scotiabank was unjustly enriched by failing to appropriately compensate class members for all hours worked raised issues of fact and law that related to all members of the class. An aggregate assessment of damages was not appropriate as each class member must prove damages on an individual basis. However, s. 25(3)(b) of the CPA permitted the trial judge to consider statistical information derived from random sampling and like methods in assessing the quantum of damages.
Fresco: Fresco's appeal was allowed.In ruling on the common issues analysis under s. 5(1)(c) of the CPA, the motion judge misconceived Fresco's action as being, in essence, a collection of individual claims for unpaid overtime, disregarding Fresco's evidence supporting the existence of common issues. The evidentiary inquiry under s. 5(1)(c) of the CPA should not be centred on whether individual class members actually worked overtime for which they were not compensated. The correct approach under s. 5(1)(c) involved determining whether there was some basis in fact for Fresco's allegations that the CIBC's bank-wide practices and policies prevented class members from receiving overtime compensation in accordance with the express or implied terms of their employment contracts. There was some basis in fact to support Fresco's allegation that the CIBC's pre-approval policy acted to disentitle employees solely on the basis that they had not sought or obtained approval. The terms and conditions in CIBC's overtime policies governing overtime compensation, and the accompanying standard forms that class members submitted when requesting such compensation, applied to all class members regardless of their own particular job responsibilities or job titles. To the extent that the policies and record-keeping systems of CIBC were alleged to fall short of CIBC's duties to class members, or to constitute a breach of class members' contracts of employment, these elements of liability can be determined on a class-wide basis and did not depend on individual findings of fact.
McCracken: CN's appeal and cross-appeal from the certification order were allowed and the certification order was set aside. McCracken's appeal from the certification order was dismissed; the appeals with respect to the Rule 21 order were dismissed. McCracken's threshold issue as to whether CN mischaracterized FLS as managerial employees did not raise a certifiable common issue under s. 5(1)(c) of the CPA. The motion judge correctly held that the misclassification issue required individual assessments of the class members. The evidence adduced in the motion indicated different job responsibilities and functions of class members who held many different job titles and who worked in a variety of workplaces with different reporting structures and different sizes of workforce. The case precedents relied upon by McCracken in the appeal on certification failed to establish that misclassification cases were inherently resolvable by means of class proceedings. The onus was on McCracken to establish some basis in fact to find that the job functions and duties of class members were sufficiently similar such that the misclassification element of the claim against CN could be determined without considering the individual circumstances of class members. On the certification motion, there was no evidence in the form of job descriptions for the various FLS positions. McCracken erred in alleging that a trial judge would substantially advance the case for all class members by making a class-wide determination of the various indicia of management that were relevant within the organizational and operational context of CN. The plaintiff, not the trial judge, had the burden of establishing common issues for trial.