Class Actions: Overtime “Off the Clock” Actions — Something in Common? by Tim Morgan

On June 26, 2012 the Ontario Court of Appeal released its decision in three class actions brought by employees alleging unpaid overtime: Fulawka v. Bank of Nova Scotia, Fresco v. Canadian Imperial Bank of Commerce and McCracken v. Canadian National Railroad.  The cases illustrate the ongoing tension between individual and common issues in class actions.

While each case involved different facts, the allegations in Fulawka and Fresco were similar: that the overtime policy of the banks imposed more restrictive conditions than under the Canadian Labour Code.  

The two cases had much different trajectories before reaching the Court of Appeal.  The certification judge in Fulawka had granted certification and this had been upheld by a unanimous Divisional Court. In contrast, certification was initially denied in Fresco and the Divisional Court upheld this decision (albeit in a split decision). 

The Court of Appeal found that based on the similar nature of both claims, Fresco and Fulawka should both fail or succeed on certification together.  Ultimately, the Court held that certification was appropriate in both cases, substantially agreeing with the lower courts’ decisions in Fulawka and rejecting the approach taken in Fresco.  

The heart of the Court’s decision turned on whether the proposed class actions raised common issues (and thereby met the criteria under 5(1)(c) of the Class Proceedings Act).  In Fulawka, the employer argued that the action was only artificially common and was actually an amalgam of individualized claims for overtime.  The Court rejected this submission, instead finding that even if there were individual issues, this did not undermine the utility of a class proceeding.  It concluded that given that the allegations involved policies and “systemic defects” that would apply to all classmembers, individual differences in class members’ experiences or specific working environment at different branches did not undercut the commonality.  It found this despite the fact that the resolution of the common issues would not necessarily decide the issue of liability.

By contrast, in McCracken, the Court of Appeal found that there was not the requisite commonality.  The allegation in McCracken was that CNR had misclassified a number of employees as managers and had thereby avoided its obligations in respect of overtime.

In that case, the Court found that the decision regarding whether a particular employee had been misclassified could not be determined on a class-wide basis as it was necessarily based on factors such as job responsibility, job functions or reporting structure which would vary from class member to class member.   While the Court concluded that it was theoretically possible for a misclassification case to meet the standard for certification (where there was evidence of sufficient commonality in job functions or duties), the evidence was found to be insufficient in that case.  In McCracken, the Court agreed with the employer that the commonalities were only superficial, and that this was at its heart a collection of individual claims.

These cases illustrate how Ontario Courts will approach the decision as to whether a proposed class action is sufficiently common to meet the requirements for certification.  Where the heart of the allegations to be certified appear to rest on facts that are sufficiently similar across the class by virtue of a common policy or procedure, this may be sufficient to meet the commonality requirement despite individual differences amongst the class members.

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