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Law Times • sepTember 7, 2010 FOCUS PAGE 9 Overtime class actions: an endless maze of rulings and appeals T BY JULIUS MELNITZER For Law Times he release of Ontario Su- perior Court Justice Paul Perell's 102-page deci- sion in McCracken v. Canadian National Railway Co. on Aug. 17 is nothing less than a welcome path through the maze of wage and overtime class actions. The difficulty is that in this case, the maze is like an under- ground labyrinth composed of many chambers. When the ex- plorer finally arrives at the end of one chamber having careful- ly mapped the route, a gateway to a new chamber, perhaps as puzzling as the previous one, awaits. The extent to which the map of the first chamber will be of real assistance in the overall journey won't be evident until the journey is complete. It all started when Ontario Superior Court Justice Joan Lax refused to certify the class in Fres- co v. Canadian Imperial Bank of Commerce in 2009. Fears of an onslaught of wage and overtime class actions against Canadian employers abated. But on Feb. 19, Lax's col- league Justice George Strathy gave new life to the genre when he certified the class in Fulawka v. The Bank of Nova Scotia. About a month after the decision in Fulawka, the Divi- sional Court heard the plain- tiff's appeal in Fresco, but at press time the decision was still on reserve. In May, Superior Court Justice Susan Greer add- ed another layer of complexity to the issues by granting leave to appeal in Fulawka. Greer granted leave on both permitted grounds. She accept- ed the arguments made by the bank's defence team of Robert Armstrong, Mary Gleason, and Jeremy Devereux of Ogilvy Re- nault LLP that the decisions were conflicting and that there was "good reason to doubt the correctness of the decision of the judge and the proposed ap- peal involves matters of such importance that leave to appeal should be granted." The plaintiff's lawyers, David O'Connor and Adam Dewar of Toronto's Roy Elliott O'Connor LLP and Louis Sokolov of To- ronto's Sack Goldblatt Mitchell LLP, had argued the decisions weren't conflicting in principle but merely a case of different judges exercising their discre- tion on different facts and com- ing to different conclusions. O'Connor also asked Greer not to rule on the conflict issue until the full Divisional Court had rendered its decision in Fresco. But Greer rejected that argument. "I disagree with that propo- sition," she wrote. "Each case moves through our legal sys- tem at its own pace." The Divisional Court has scheduled a date this Decem- ber for the Fulawka appeal. To be sure, the suits had strik- ing similarities. In both cases, the representative plaintiffs argue class members were routinely required to work overtime with- out pay in order to fulfil the demands of their jobs, which violated employees' contracts of employment and breached the Canada Labour Code. Lax, however, ruled against certification in the suit brought by CIBC employee Dara Fres- co because a class proceeding wasn't the preferable procedure for resolving the claims of class members for unpaid overtime. "In my opinion, there is no asserted common issue capable of being determined on a class- wide basis that would suffi- ciently advance this litigation to justify certification," she wrote. Mort Mitchnick of Borden Ladner Gervais LLP says the motion for certification against CIBC failed largely over lack of evidence and an adequate record. "The case started with some very serious allegations about being forced to work extra hours, but Lax found no sup- port for that in the evidence," he says. "And each of the nine affi- ants who were cross-examined about their testimony regarding massive systemic wrongdoing came up with different grounds for their assertions." But as Strathy saw it, the case against the Bank of Nova Scotia was stronger. He con- cluded there was an evidentiary basis for systemic wrongs that gave rise to common issues. "The systemic wrongs flow from a policy that failed to reflect the realities of the workplace be- cause it put the onus on the em- ployee to obtain prior approval for overtime rather than requir- ing the employer to ensure that employees were paid for over- time that they were permitted or required to work," Strathy wrote. "The systemic wrongs included the failure of Scotiabank to es- tablish a system-wide procedure to record overtime, making it all the more difficult for employees to obtain fair compensation for their overtime work." Strathy acknowledged his conclusions differed from those reached by Lax in Fresco but ruled "there is evidence in this case that the failure to pay overtime oc- curred because of the policy, not independent of the policy." As well, there was evidence that the failure to pay overtime was at- tributable to systemic conditions as opposed to purely individual circumstances. But Mitchnick says Strathy's reasoning was skewed. "The judge got caught up in the case, decid- ed his sympathies were with the plaintiff, and pushed everything their way. The upshot is a deci- sion that imposes a reverse onus on the employer on just about every issue in the case." According to Jeff Goodman of Heenan Blaikie LLP, the two cases represent a fundamental split in judicial thinking. "There's a serious philosophi- cal divide here," Goodman says. "Lax sees the question of wheth- er employees work overtime or not as an individual issue, but Strathy says that even if that is true, the underlying common issue is whether Scotiabank's system inhibited individuals from recording their overtime and seeking compensation." Indeed, employees at the Bank of Nova Scotia were in a difficult situation. "As Strathy saw it, it was very difficult to predict when overtime was required and when it was, there wasn't enough time for the pre-approval that the sys- tem required," Goodman notes. Complicating the issue is the fact that there are two main genres of overtime cases. The proceedings against the banks are so-called off-the- clock cases. "The defendants don't really dispute the eligibility for over- time but offer various defenc- es, such as that no claims were made," Goodman says. "In reply, the plaintiffs are saying in part that there was systemic pressure against them not to make claims." But CN involves supervi- sory personnel, and eligibil- ity is in issue. There's no real dispute that the class in CN worked overtime. Instead, the plaintiffs allege class members were misclassified as managers The judge found no support for allegations that employ- ees were forced to work extra hours, Mort Mitchnick says of the decision in Fresco. exempt from the provisions of the labour code. Legal observers tended to the view that the eligibility cases were more amenable to certifica- tion than the off-the-clock cases in the sense that common issues were more readily apparent. To the extent that Perell ac- tually certified the class in CN, they were right, at least in com- parison to Fresco. Trust [ "But even Justice Lax felt that misclassification cases were more appropriate to certi- fication," Goodman says. The difficulty is that Perell certified CN, although he dif- fered with Strathy on funda- mental issues. Strathy concluded that by enacting an admnistrative recov- ery process for overtime claims in the labour code, Parliament didn't intend to confer jurisdic- tion to enforce it on the courts. Nevertheless, he granted certifi- cation on the basis that the code's requirements could be implied terms of employee contracts and could therefore inform an em- ployer's duty of good faith. For his part, Perell reasoned that the labour code allowed for concurrent jurisdiction and was enforceable as a claim for breach of contract. All of this suggests that a relentless stream of appeals awaits observers of wage and overtime class actions. There's certainly enough at stake: the CIBC employees are claiming $500 million in damages; the Bank of Nova Scotia plaintiffs are claiming $300 million; and the CN class is seeking $250 million. LT Every time you refer a client to our firm, you're putting your reputation on the line. It's all about trust well placed. Stacey L. Stevens | David F.MacDonald | Michael L. Bennett For over 70 years Thomson, Rogers has built a strong, trusting, and collegial relationship with hundreds of lawyers across the province. As a law firm specializing in civil litigation, we have a record of accomplishment second to none.With a group of 30 litigators and a support staff of over 100 people,we have the resources to achieve the best possible result for your client. Moreover, we are exceptionally fair when it comes to referral fees. We welcome the chance to speak ormeet with you about any potential referral.We look forward to creating a solid relationship with you that will benefit the clients we serve. THOMSON, ROGERS Barristers and Solicitors 416-868-3100 Toll free 1-888-223-0448 www.thomsonrogers.com YOUR ADVANTAGE, in and out of the courtroom Untitled-3 1www.lawtimesnews.com 4/6/10 10:00:06 AM