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Judges need to be careful in class action certifications

Eliminating causes of action is ‘substantive decision’
|Written By Shannon Kari
Judges need to be careful in class action certifications
Ted Charney says that, in a recent ruling, a panel of judges ‘accepted the argument that it is not up to the court to determine how a case should be litigated.’

Judges presiding over class action proceedings should be cautious about using the principles set out by the Supreme Court in Hryniak to narrow litigation at the certification stage, the Divisional Court stated in a case about compensation for junior hockey players.

The three-judge panel made the comments in Berg et al. v. Canadian Hockey League et al., a ruling that overturned the decision by Justice Paul Perell to refuse to certify some of the plaintiffs’ claims in the class action over whether the players are employees of their teams.

“In Hryniak, the cry for proportionality is directed at coming up with efficient and fair procedures for resolving disputes. It is not a direction to use what is essentially a procedural motion such as certification to make decisions of substance about what properly pleaded causes of action parties are entitled to advance,” wrote justices Harriet Sachs, Julie Thorburn and Robert Reid in a joint decision of the court.

“A decision to eliminate causes of action is a substantive decision, not a procedural one,” the court explained in its decision released on April 3.

Ted Charney, co-counsel for the plaintiffs along with Steven Barrett at Goldblatt Partners LLP, says they are pleased that the Divisional Court certified all of the claims including breach of contract, negligence and conspiracy, as well the causes of action accepted by Perell.

“They are all essential to the plaintiffs’ theory of the case. The Divisional Court accepted the argument that it is not up to the court to determine how a case should be litigated. Let the lawyers decide on strategy,” says Charney, who heads Charney Lawyers in Toronto.

Lauren Tomasich, a partner at Oslers LLP in Toronto, notes that, unlike a summary judgment motion, there will not be a full record before a judge at the certification stage in a class action. “The Divisional Court is saying that this is not an opportunity to re-craft the pleadings,” notes Tomasich, whose practice focuses on class action defence.

If a defendant is alleging over-pleading, then there will need to be evidence presented “from a procedural perspective” about why certain causes of action should not be allowed to go forward, says Tomasich, who is not involved in the junior hockey player litigation.

The class action is one of three parallel proceedings in Alberta, Quebec and Ontario involving former “major junior league” players. In the Ontario action, one of the main claims is that the players did not receive the minimum employment benefits they were entitled to under the Employment Standards Act. In a notice explaining who may be eligible to the join the class, the plaintiffs’ lawyer states that if the action is ultimately successful, former players may receive as much as $10,000 per season plus overtime.

Since the 2013-14 season, the standard player agreement in the Ontario Hockey League has stated that it is not a contract of employment and any compensation is referred to as a reimbursement or honorarium. For every full season, a player is entitled to a one-year “scholarship” to attend a post-secondary institution. The court heard that the three major junior leagues in Canada paid out a total of $6.2 million in scholarships in 2014-15.

Regardless of the outcome of the class action, the proceeding will not have an impact on current and future junior hockey players in the province. At the request of the OHL, the Ontario government enacted regulations last fall that explicitly exempt players on a “major junior ice hockey team” from the protections of the provincial employment provisions. Other exempted groups under the statute include adults in provincial jails and young offenders on some form of work release program as part of their sentence.

Patricia Jackson, a senior partner at Torys LLP in Toronto and lead counsel for the defendant hockey leagues, declined to comment as the legal proceedings are ongoing.

In his decision to exclude some of the causes of action, Perell found that they were redundant and already addressed by the core question in the litigation. The Divisional Court disagreed and found that he overstepped his role at this stage of the litigation.

As well, it found that Perell’s analysis on whether a class action is a preferable procedure did not use a comparative analysis as outlined by the Supreme Court in AIC Limited v. Fischer and focused instead on proportionality and redundancy. “This is not the inquiry that AIC Limited mandates,” the Divisional Court said.

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