Supreme Court denies banks’ appeal in overtime class actions

by Bennett Jones LLP

Last week, the Supreme Court of Canada denied CIBC and Bank of Nova Scotia leave to appeal the decisions against them in the overtime class actions. In June 2012, the Court of Appeal for Ontario certified class actions against both banks by current and former employees alleging that the banks failed to pay them for overtime work. Though the Court of Appeal decisions were unanimous, the banks probably held out some hope for appellate review because, in Fresco v Canadian Imperial Bank of Commerce, the motion judge and the Divisional Court denied certification.

The Supreme Court Act provides that leave to appeal a judgment may be granted where the case gives rise to a matter of “public importance”. The Supreme Court of Canada does not provide reasons on leave decisions but extra-judicial commentary by judges and former judges suggests that the case has to raise an issue of “national or public importance”.

The overtime class action cases are the first of their kind in Canada. They involve claims made by federally-regulated employers, which seemingly raises national issues. The Court of Appeal’s decision deals with the intersection of Ontario’s Class Proceedings Act and the federal Canada Labour Code. There seems to be ample grounds to argue public and national importance. On the other hand, the Court of Appeal’s decisions are thorough. They are written by Chief Justice Warren Winkler, a leading expert in both class action law and labour law. And, ultimately, the issues in dispute are narrowly focused on private claims arising in a single jurisdiction under a provincial statute. So, maybe it wasn’t so surprising that the Supreme Court denied leave.

Despite the plethora of judicial decisions on these issues and the commentary those decisions of spawned, the more interesting issues may still be to come.

First, we are likely to see more overtime pay or employment class actions. The media coverage surrounding these decisions probably means that both plaintiff’s counsel and disgruntled employees have identified companies that may be vulnerable to a claim. The claims were probably gathering dust pending the disposition of these appeals as counsel waited for certainty on the legal issues. Employers should revisit their overtime policies and practices to ensure that they are compliant with the relevant legislation.

Second, there is still some uncertainty around the viability of misclassification cases. Both bank class actions are “off-the-clock” cases. McCracken v Canadian National Railway, which was a misclassification case, was denied certification by the Court of Appeal. The plaintiff did not seek leave to appeal. Another misclassification claim, Brown v CIBC, was denied certification in April 2012. So, it’s unclear whether misclassification cases are dead in Canada (unlike in the U.S., where they are more prevalent than off-the-clock cases) or whether plaintiff’s counsel will re-cast or re-characterize the cases.

Finally, liability and damages are still to be decided in the bank cases. The banks are well-funded defendants and may decide to force the plaintiffs on to trial rather than give them satisfaction of a quick settlement. The certification decisions still leave open a number of individual issues, which may have to be decided by individual trials after a (lengthy and costly) common issues trial. The banks have been relying on the K-Mart class action as a precedent for the dangers of individual trials in employment class actions and may do so again now.

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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