Ontario Superior Court Refuses to Certify Proposed Misclassification Overtime Class Action

by Bennett Jones LLP

Justice George Strathy of the Ontario Superior Court has refused to certify a proposed class action commenced against the Canadian Imperial Bank of Commerce and CIBC World Markets on behalf of a class of employees alleging that their jobs were misclassified in a way that wrongfully defeated their entitlement to be paid overtime.

The decision, Brown v. Canadian Imperial Bank of Commerce, follows two other relatively recent overtime cases in the financial services sector – Fulawka v. Bank of Nova Scotia and Fresco v. Canadian Imperial Bank of Commerce. Certification was granted in Fulawaka but denied in Fresco. Appeals in respect of both decisions, which were off-the-clock overtime cases, are currently under reserve by the Ontario Court of Appeal. Another recent misclassification overtime case in the transportation sector, McCracken v. Canadian National Railway, is also under reserve at the Ontario Court of Appeal.

In Brown, the plaintiffs alleged a number of causes of action, including breach of contract, unjust enrichment and violations of the Employment Standards Act, 2000. On behalf of the proposed class of analysts and investment advisors, the representative plaintiffs sought $350 million in general damages on the basis that employees of CIBC above certain classification levels or with specific job descriptions were deemed ineligible for overtime pay. This group specifically included Analysts and Investment Advisors whom, among others, the plaintiffs alleged had been misclassified.

Issuing his decision in the midst of this uncertain legal landscape in Ontario, Justice Strathy reiterated the sentiment he had earlier expressed in Fulawka, stating that misclassification cases are appropriate for certification (and perhaps more suitable than off-the-clock cases) as a result of the commonality of employment functions involved and the existence of common treatment by the employer.

Notwithstanding the comments about the general suitability of misclassification cases for certification, Justice Strathy declined to certify the action, finding that the question of whether an individual had management responsibilities that “troubled the court in Fresco and McCracken is an insurmountable stumbling block in this case for certification”. Using a series of baseball analogies, Justice Strathy attacked the plaintiffs’ purported common issues as being unworkable, broad, and lacking in commonality. Given the evidence presented with respect to CIBC’s complex job classification system, Justice Strathy noted it was unclear how a judge could ever make a fair determination as to whether a position had managerial duties, the critical issue of fact required for a determination of eligibility for overtime on a class-wide basis.

Ultimately, Justice Strathy concluded that the proposed class members had little in common except for their job titles. In order to advance a misclassification overtime claim, plaintiffs must, at a minimum, have a class with identical or similar job duties. The decision notes that the plaintiffs, apparently alive to this issue, had conceded in submissions that the determination of whether each particular position had managerial responsibilities might have to be made after the common issues trial.

Justice Strathy also rejected the proposed use of statistical evidence to either circumvent the issue of commonality or to provide a workable methodology to resolve key factual issues. In doing so, he reiterated what he described as a well-established principle of law in Ontario. Specifically, he noted that the Class Proceedings Act cannot interfere with the substantive rights of a defendant to have liability established through evidence and not statistical probability. While statistical evidence may be admissible and appropriate in many circumstances, it could not be used to resolve a lack of commonality in the context of overtime class actions.

The Impact of Brown

Although certification was denied on the facts of this case, Justice Strathy’s decision continues to leave the door open for future misclassification cases. The viability of these and other overtime class actions will be more clearly determined once the Court of Appeal issues its reasons in Fulawka, McCracken and Fresco.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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