INTRODUCTION

On October 6, 2014, the Ontario Court of Appeal released its judgment in Brown v. Canadian Imperial Bank of Commerce (Brown). The Court of Appeal upheld the decisions of the motion judge and the Divisional Court, which denied the certification of the overtime action as a class proceeding.

The class proposed at the Divisional Court and considered by the Ontario Court of Appeal included employees whose employment was subject to the Ontario Employment Standards Act, 2000 (ESA). The ESA generally requires that overtime is paid to employees who work more than 44 hours per week. However, certain positions and types of work are exempt from the overtime requirements. For example, regulations under the ESA exempt individuals whose work is supervisory or managerial in character (and who perform non-supervisory or non-managerial tasks only on an irregular or exceptional basis) from the overtime requirements in the ESA.

In overtime class actions, plaintiffs typically struggle to satisfy the requirement under section 5(1) of the Class Proceedings Act, 1992, (CPA) that the claims give rise to sufficiently common issues. This requirement was the focus in Brown, and the condition to certification that the Court of Appeal found the plaintiffs ultimately failed to satisfy.

DECISIONS OF THE LOWER COURTS

The plaintiffs originally proposed a class including those employees who worked for Canadian Imperial Bank of Commerce and CIBC World Markets Inc. (collectively CIBC) after 1996 in the roles of analyst, investment adviser (IA) or associate investment adviser (AIA). The motion judge concluded that there was insufficient commonality to the overtime claims of the proposed class members and denied certification.

In response to the motion judge’s decision, before the Divisional Court, the plaintiffs amended the proposed class definition to exclude analysts and those IAs and AIAs with managerial duties. Nonetheless, the Divisional Court held that the determination of eligibility for overtime pay remained an employee-specific inquiry that could not be resolved on a common basis for all members of the class. Similarly, the Divisional Court found that the other common issues proposed by the representative plaintiffs did not satisfy the requirements for certification.

ONTARIO COURT OF APPEAL'S DECISION

The decision by the Court of Appeal focused mainly on whether the issue of the proposed class members’ eligibility for overtime pay raised a common issue within the meaning of section 5(1)(c) of the CPA. The Court of Appeal relied on the following four principles to determine whether this requirement was satisfied:

  1. The proposed common issue must be a substantial ingredient of each class member’s claim and its resolution must be necessary to the resolution of that claim.
  2. A common issue need not dispose of the litigation and can address only limited aspects of the liability question. It is sufficient if the issue is common to all claims and its resolution will advance the litigation for or against the class.
  3. Success for one member of the class must mean success for all. All members of the class must benefit from the successful prosecution of the action, although not necessarily to the same extent. The answer to the question raised by the common issue must be capable of extrapolation to each member of the class.
  4. A common issue cannot be dependent upon individual findings of fact that have to be made with respect to each claimant.

The Court of Appeal considered whether the evidence demonstrated that the job functions and duties of the proposed class members relevant to their eligibility for overtime pay were sufficiently similar across the proposed class to permit determination of eligibility, without addressing their individual circumstances.

The Court of Appeal ultimately dismissed the appeal on the basis that the lower courts did not materially misapprehend the evidence nor did they err in their legal analysis in concluding that eligibility for overtime pay could not be determined as a common issue. In reviewing the decisions of the motion judge and the Divisional Court, the Court of Appeal concluded that both decisions “properly focused the common issue inquiry on the degree of variability of those job characteristics, functions, duties and responsibilities that were germane to the characterization of the employee as managerial/supervisory for the purposes of overtime pay eligibility under the ESA and the CIBC overtime policy.”

The Court of Appeal also relied heavily on its earlier decision in McCracken v. Canadian National Railway Company (McCracken). The Court of Appeal noted that, similar to McCracken, there was a wide variability in the autonomy, duties and responsibilities of proposed class members having the same job title or classification.

The plaintiffs submitted alternative proposed common issues, in addition to determining eligibility for overtime pay. However, relying on McCracken, the Court of Appeal concluded that “[w]ithout a common issue of eligibility for overtime pay, certification based on proposed common issues involving the terms of the employment contract that relate to overtime pay would surely be a case of the tail wagging the dog.” The Court of Appeal upheld the motion judge’s conclusion that because eligibility for overtime pay could not be determined as a common issue, the plaintiffs had failed to demonstrate that a class proceeding was the preferable procedure for the resolution of the common issues, as required by section 5(1)(d) of the CPA.

CONCLUSION

In Brown, employees failed to obtain class action certification in respect of misclassification overtime claims, as they could not establish common issues as required. While the decision is therefore helpful to employers, there have also been other overtime claims where employees have successfully certified actions as class proceedings. As a result, it remains imperative that employers understand the legal requirements relating to overtime to ensure that their policies and procedures are implemented in accordance with applicable law.