Certification denied in CIBC eligibility case

Even as the Ontario Court of Appeal ponders the fate of overtime class actions, Justice George Strathy of the Ontario Superior Court of Justice has handed the plaintiffs’ bar a major setback with his recent decision denying certification in Brown v. Canadian Imperial Bank of Commerce.

The setback is particularly acute because Brown is an eligibility case, a category that many legal observers regarded as more amenable to certification than so-called off-the-clock cases such as Fulawka v. Bank of Nova Scotia and Fresco v. Canadian Imperial Bank of Commerce. Both are currently on reserve by the Ontario Court of Appeal.

Eligibility or misclassification cases are ones in which the class alleges the employer wrongly classified it as ineligible for overtime. In off-the-clock cases, the primary issue isn’t whether the employee is eligible for overtime but whether the employer recognized or paid for it.

The conventional thinking has been that it’s easier to establish commonality, the primary battlefield of class action certification, in eligibility cases. In 2010, Justice Paul Perell of the Ontario Superior Court certified such a case, McCracken v. Canadian National Railway Co.

That matter involved supervisory personnel at the railroad.
But Strathy had little use for the conventional thinking in Brown. The test of whether employees were eligible for overtime, he noted, hinged on whether they were managers or supervisors.

“The authorities support the conclusion that the determination of whether a person exercises supervisory or managerial functions requires a fact-based analysis of the work actually performed by the employee,” wrote Strathy in his April 27 ruling.

“The employee’s job title and position in the management chain are not relevant considerations. What counts is what the employee actually does, how they do it, and how much independence and authority they exercise in the environment in which they work.”

In other words, commonality didn’t necessarily exist merely because the employees shared similar titles.

“Class members have little in common but their names,” he wrote. “The key issue of fact — namely, whether or not a person has managerial responsibilities — which is critical to the determination of overtime eligibility, cannot be determined on a common basis.

There is no suitable methodology to resolve that issue. The action simply will not work as a class action.”

Torys LLP’s Patricia Jackson, who represented CIBC in Brown, says the decision is important because it debunks the notion that overtime class actions can be readily categorized in terms of their suitability for certification.

“Even though some courts have stated that the eligibility actions are classic cases for certification, Brown demonstrates that this is true only where class members have the necessary degree of commonality,” she says.

“Strathy went beyond the labels and job descriptions to the evidence and found that the commonality wasn’t there.”

Brown involved a proposed class of analysts, investment advisers, and associate investment advisers employed by CIBC and CIBC World Markets who claimed to be eligible for overtime.

But as Strathy saw it, determining whether the individuals in these categories had managerial responsibility required an examination of each employee’s particular circumstances.

The evidence simply didn’t support the allegation that all members of the proposed class performed similar duties.

Louis Sokolov of Toronto’s Sack Goldblatt Mitchell LLP, who’s co-lead counsel in Fulawka, Fresco, and McCracken, says Brown emphasizes just how heavily fact-dependent all overtime class actions are.

“The evidence on the certification motion will drive the result, which is entirely appropriate,” he says. “Canadian courts, including the Supreme Court of Canada, have all made it clear that categorical determinations of types of class proceedings should not be made in individual cases.”

As it turns out, Strathy also found that the case didn’t meet the preferable procedure requirement for certification.

“The insurmountable impediment in this case, and the reason why the preferable procedure requirement has not been met, is that the issue of CIBC’s liability to pay overtime to every class member is an individual issue,” he wrote.

“It will require individual fact-finding concerning the circumstances of every class member and the individual application of the relevant legal principles to those circumstances.”

Nor would case management resolve the shortcoming in the plaintiffs’ litigation plan.

“I agree with the defendants’ submission that the plan provides no feasible method for dealing with the individual nature of the eligibility determinations that must be made for every member of the class,” wrote Strathy.

“The plaintiffs have failed to establish a realistic, efficient, and workable procedure for the resolution of the central common issue of eligibility and the individual issues that will necessarily remain.”

But lawyer Kirk Baert, who acted for the plaintiffs, says the ruling doesn’t represent the last word on Brown.
“We will be appealing this decision on a number of grounds and have no further comment,” he says.

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