Fulawka v. Bank of Nova Scotia, ([2010] O.J. No. 716, Ontario Superior Court of Justice, 07-CV-345166 CP, 19 February 2010)  

Justice Strathy recently certified a class action claiming that overtime wages were owed to a class of more than 5,000 employees of retail branches of the Bank of Nova Scotia (BNS), in contrast to Justice Lax's refusal to certify a similar class in Fresco v CIBC (see Class Action Update, July 2009).

The proposed class members were defined as full-time sales staff that held the positions of Personal Banking Officers, Senior Personal Banking Officers, Financial Advisors and Account Managers-Small Business, from the year 2000 to the time of the motion (the Class Members). The overtime policy at BNS required that overtime be requested in advance and there was no policy that permitted approval of overtime after the fact. The plaintiff, Cindy Fulawka, alleged that class members frequently worked overtime in order to carry out the usual functions of their positions and that the culture at BNS discouraged employees from requesting payment for their overtime hours. In addition, Ms. Fulawka claimed that when overtime payments were requested it was customary for BNS to refuse such payments. Ms. Fulawka further submitted that the class members were expected to work overtime hours without pay and that this expectation was evident in their performance reviews. BNS replied by stating that there was no policy that encouraged employees to work extended hours and that there was no systematic practice of employees doing so. BNS further submitted that there was no common issue in this matter because overtime was a highly individualistic issue that was based on a person's experience, and varied from branch to branch in the over 1,000 BNS branches across the country. In this case the record-keeping system used by BNS was also relevant because specific time sheets were not maintained for full-time staff and the exact overtime hours worked were therefore not recorded. The standard practice was to have staff initial "staff plans," prepared in advance, that outlined their work hours and pre-approved overtime.

The plaintiff claimed that the routine of unpaid overtime was a breach of the Class Members' employment contracts and that it also breached provisions of the Canada Labour Code R.S.C. 1985, c. L.2, pertaining to the maximum allowable hours of work and the employer's duty to retain records. The plaintiff further claimed for unjust enrichment, breach of duty of good faith and negligence.

In granting certification, Justice Strathy applied the test for certification set out in s. 5(1) of the CPA, in a purposive and generous manner. However, not surprisingly, he did note that the critical aspect of this case centered on the commonality requirements.

After determining that the first two steps of the test had been satisfied - that the pleadings disclosed a cause of action and that there was an identifiable class - Justice Strathy embarked on an in-depth analysis of the requirement that that the facts raise issues common to all Class Members. As part of this discussion, the Court considered at length, and distinguished, the June 2009 decision of Fresco v. Canadian Imperial Bank of Commerce [2009] O.J. No. 2531 [Fresco], where Justice Lax denied certification on similar facts involving overtime payments. Not surprisingly, Justice Strathy placed emphasis on the "systemic" nature of the wrongs alleged in this case. In that regard, Justice Strathy pointed out that CIBC's policies in the Fresco decision were distinguishable from those of BNS, in that CIBC explicitly allowed for approval of overtime hours after the fact if there were extenuating circumstances. Taking this factor into consideration, Justice Strathy noted that in Fresco the evidence showed that the overtime pay was rejected for a variety of reasons that were particular to the individual and not common to the class as a whole. In this case, Justice Strathy found that the failure to pay overtime arose as a result of a policy, and not independently of it. In considering this divergent fact, Justice Strathy admitted that the plaintiff's claims in Fulawka may be framed similarly to those in Fresco; however, the Court ultimately held that despite the ability to frame a claim in an individual-specific manner, the plaintiff is still "entitled to advance her case in a way that makes it amenable to determination on a class-wide basis." Justice Strathy accepted the plaintiff's argument that the issues in this case may be framed "based on a contract common to the Class and systematic breaches of duties owed to Class Members."

In determining that the matters in Fulawka met the threshold required for common issues, Justice Strathy stated that

The evidence before me, therefore, provides a basis in fact to ask whether Scotiabank owed duties to the Class to put policies and procedures in place to prevent overtime from being worked without compensation and to properly record all hours of overtime worked, whether pre-approved or not. There is also a basis to ask whether those duties were breached. The answers to these common issues do not depend on individual findings that have to be made with respect to each individual claimant.

Justice Strathy went on to classify each individual issue claimed by the plaintiff into six subgroups that were each held to raise issues common to all Class Members. These groups fell under the headings of (i) breach of contract, (ii) systematic defects in overtime policies and practices, (iii) misclassification of employee positions, (iv) unjust enrichment and (vi) remedy and damages. The Court applied well-established case law to determine that each of these headings may be framed as common issues and are therefore certifiable, while placing particular emphasis on the headings of breach of contract and remedy and damages.

In discussing the breach-of-contract claims, Justice Strathy held that both express and implied contractual terms may raise common issues. The Court distinguished this case from the numerous judgements that have found implied terms to be an individual matter by stating that

In this case, however, the existence of implied terms is based on an overtime policy that is common to all Class Members and duties, both contractual and statutory, that are owed to all Class Members. This is a case like Glover v. Toronto (City) (2009).in which Law J. concluded, at para. 52, that the issue of both express and implied terms did not depend on the individual knowledge, understanding or circumstances of each class member.

In response to BNS's argument that its record-keeping system made it impossible to assess the overtime hours that were worked by the Class Members, Justice Strathy concluded that even with the limited records maintained by BNS, an aggregate assessment of damages could be determined, using statistical and sampling methods, that could result in fair compensation for the Class Members.

Justice Strathy did strike out the claims arising under the Canada Labour Code, as the Code contains its own enforcement mechanisms. However, he noted that the statutory obligations could be taken to inform the common-law duties owed.

Clearly, employers will have to navigate between these two apparently divergent decisions, in ensuring any policies applicable to employees permit for individual application and assessment.