Mixed Success at the B.C. Supreme Court in Rare Common Issues Trial in Employment Class Action

Written By Katherine Booth and Edward Hulshof

While applications for certification of class proceedings are commonplace, trials to decide certified common issues on their merits are comparatively rare. The decision in one such common issues trial was recently released in Escobar v Ocean Pacific Hotels Ltd., 2024 BCSC 1575, in a class action brought on behalf of hourly employees of a Vancouver hotel who stopped receiving regular shifts after the outbreak of COVID-19. Success was split between class members and the defendant.

On one common issue, the Court found that all class members whose hours were reduced to zero indefinitely had been constructively dismissed, despite that most class members' employment contracts provided that their hours of work would fluctuate based on the business demands of the hotel. The Court found that, on the facts of this case, this term could not be interpreted to mean that class members' hours could be reduced to zero indefinitely, and that "[t]he unprecedented nature of the pandemic does not provide a rationale to interpret the contracts in a manner that places the financial burden of the pandemic on the employees and softens the financial impact experienced by the employer when that interpretation is not compelling generally".

On another common issue, however, the Court rejected the plaintiff's argument that the hotel breached any duty of good faith and honest performance of the employment contracts by misleading employees about their future employment. The hotel had distributed messages of unity and support without disclosing its evolving plans to move to a reduced model under which some employees would be terminated. The Court found these communications were not actively misleading. The hotel indicated the class members' prospects of employment were uncertain and, per C.M. Callow Inc. v Zollinger, 2020 SCC 45, the hotel had no positive duty of disclosure and was entitled to keep its business strategies to itself as long as it did not actively mislead.

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• Various issues remain for individual determination after the common issues trial, such as the notice periods for class members entitled to common law notice, whether the terms imposing the statutory minimum notice period in some class members' employment contracts were binding, and the amount of each class member's damages.
• The Court directed that certain facts found at the common issues trial about the challenges of finding employment during the pandemic should be considered when determining the length of the common law notice period to which any class member was entitled.
• The Court found that class members whose contracts contained a binding clause imposing a statutory minimum notice period were not entitled to a longer notice period.
• The Court found that the terms of the employment contracts should be interpreted in a manner which recognizes that "employment contracts are characterized by an inherent power imbalance in favour of the employer".

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