Workplace Wire

Maureen Quinlan recently posted on an important Ontario decision, Kafka v. Allstate Insurance Company of Canada (“Kafka”), where the court refused to certify a class action on behalf of a number of employees alleging constructive dismissal.

The court refused to certify the class action in Kafka primarily because it found that the question of whether an employee has been constructively dismissed is a highly individualized exercise and not appropriate to a class action. Another decision of the Ontario court, Brown v. Canadian Imperial Bank of Commerce (“Brown”), has just been released, and like in Kafka, the court refused to certify it as a class action because the primary issues in the action were individual to each potential class member. In Brown the claim was for overtime pay on behalf of allegedly misclassified Investment Advisors and Analysts working for and previously employed by the Bank.

Brown was decided by Mr. Justice Strathy who several years ago certified an overtime class action by bank clerks against the Bank of Nova Scotia (at around the same time that another Ontario judge refused to certify a similar class action on behalf of non-management employees at the Canadian Imperial Bank of Commerce.

The decision in Brown is well written and well reasoned. The primary reason given by the court in refusing to certify the class action is similar to that given by the court in Kafka, commonality. Mr. Justice Strathy held that the question of whether an individual is a “manager” is an individualized question and a class action would not advance the litigation process.

Over the coming weeks and months there will be many articles and postings written about this case describing in detail the legal reasoning behind this decision. But for me, this decision is significant because it underlines an important but unspoken message in Canadian employment litigation and, in particular, employment class actions – that being that perceived fairness and equity are the most important factors for ultimately determining whether a matter will be certified as a class action.

I believe that the underlying reason behind the court’s refusal to certify this class action, at least for the Investment Advisors, is that the representative plaintiff was suing for statutory overtime pay on behalf of a group of employees who, on average, earn hundreds of thousands of dollars —and in some cases, millions of dollars a year.

The plaintiff argued that these individuals were not “management” employees within the bank and were, therefore, entitled under minimum employment standards legislation to statutory overtime wages in addition to their “executive” compensation packages.

Equally important was the court’s finding that the representative plaintiffs seemed to be the only individuals complaining about the situation and the Bank was able to produce multiple affidavits from active Investment Advisors speaking to how much influence and independence they exercised within the Bank and how much money they earned annually. Further to this point, the Court noted with some emphasis that the representative plaintiffs themselves seemly largely unengaged in the process, had not met each other, and one of them had not even bothered to attend at the certification motion.

I believe that judges – especially in the class action context — want to be seen as doing something important, righting wrongs on behalf of individuals who do not have the financial resources to right those wrongs themselves.

Cases that make technical legal arguments on behalf of a group of highly paid executives will likely in the future meet with little judicial sympathy. This is important because the Ontario Employment Standards Act, 2000 (“Act”) does not reflect today’s global economy and contains a number of technical flaws of the type that the representative plaintiffs in Brown tried to exploit.

For example, while doctors and lawyers are exempt from the overtime provisions of the Act, actuaries, investment bankers, business consultants and other types of business executives are not — not for public policy reasons but because the Act has not been amended by the government to bring the statute into line with the current Canadian and global economy.

Plaintiffs who attempt in the future to take advantages of these flaws in employment standards legislation to bring class actions on behalf of high earning employees in allegedly non-exempt categories are very likely to meet the same fate as the plaintiffs in Brown – and for a simple reason: they don’t really need the courts’ help.

Fairness, I submit, is ultimately the most important motive and objective in Canadian employment law and employment class actions.