Class Action Denied in CIBC Overtime Suit

Written by on October 7, 2009 in Published Articles

PDF version (Originally published in Canadian Employment Law Today, October 7, 2009)

The Ontario Superior Court of Justice may have put a damper on the recent spate of class action overtime suits when it dismissed a motion for certification of a class action in Fresco v. Canadian Imperial Bank of Commerce in June. This decision has not only provided further guidance as to what is required to meet the commonality aspect of certification requirements, but also offers insight for future actions involving unpaid overtime and the difficulties that may be encountered by employees trying to obtain such certification.

In Fresco, the Canadian Imperial Bank of Commerce (CIBC) overtime policy required employees to obtain approval from their manager prior to working any overtime, unless there were extenuating circumstances making pre-approval impossible. In those circumstances, the employees would then obtain approval after working the overtime hours.

CIBC employees claimed this policy violated the requirement in the Canada Labour Code that employees are to be paid for overtime at a rate not less than one and one-half times the employee’s regular wages when the employee is “required or permitted” to work in excess of standard hours of work. The employees said the pre-approval requirement in the policy “purports to excuse (the employer) from paying any overtime and does not allow for payment of overtime to (employees) who were routinely required or permitted to work overtime.”

Given the number of employees affected by the policy, one of the employees brought a motion for certification of the action as a class proceeding on behalf of all the current and former “front-line” service workers in CIBC’s retail branches, a number estimated by CIBC to include at least 31,000 employees, seeking compensation for unpaid overtime wages due to a breach of contract and unjust enrichment on the basis the employer’s overtime policy was illegal.

Individual Claims Too Different to be Lumped Together: Court

After hearing the arguments put forward by both parties, the Ontario Superior Court of Justice concluded the motion should be denied. Referring to the criteria that must be met in order to certify an action as a class proceeding, and focusing primarily on section 5(1)(c) of the Class Proceedings Act, which states that the claim of the class members must raise common issues, the court found there was a lack of the required commonality between the employees.

“It is my conclusion this is not a proper case for certification and a class proceeding is not the preferable procedure for resolving the claims of class members for unpaid overtime,” said Justice Joan Lax. “This is not a case where questions of systemic wrongdoing can be resolved without examining the individual claims, thereby defeating the purpose of a class action.”

Justice Lax went on to say it was not enough that there was “a common defendant” or “a common type of harm,” finding the harm must be the same to each member of the group for it to go forward as a class action.

CIBC Overtime Policy Not Illegal

In addition to rendering a decision on certification of the action as a class proceeding, Justice Lax also found CIBC’s overtime policy itself was not illegal, but rather the way it was applied was. The policy itself allowed overtime, but CIBC prevented employees from obtaining approval under the policy so they had to work unpaid overtime.

In general, the decision in Fresco has provided a further interpretation of the commonality requirement that must be fulfilled under the Class Proceedings Act in order to succeed in a motion for certification of the action as a class proceeding. As Justice Lax stated, the mere commonality of either defendants or harm committed is not sufficient in meeting the requirements under the Class Proceedings Act. Instead, the commonality must exist between all plaintiffs in regards to the actual wrong committed and in the evidence which supports the allegation.

Additionally, Fresco provides guidance to future actions involving unpaid overtime where certification as a class proceeding is contemplated. This decision should not be interpreted as indicating an action for unpaid overtime can never fulfill the commonality criteria referred to above. However, it does stand as a warning to such actions that the criteria for certification for a class proceeding is not a simple obstacle to clear. Despite the benefits of proceeding by way of a class action, such as it being economical and efficient for both the parties involved in the action and the courts, these benefits will not supersede or authorize the courts to ignore what is statutorily required to permit certification. Therefore, employees or other parties will have to give careful consideration on whether a case should be undertaken as a class action.

See Fresco v. Canadian Imperial Bank of Commerce, 2009 CarswellOnt 3481 (Ont. S.C.J.). CELT


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