Divisional Court Dismisses Appeal of Overtime Class Action Certification in Fulawka

Ontario's Divisional Court has dismissed the Bank of Nova Scotia's appeal from the order granting certification in an overtime class action against the bank.

The Certification Motion

The plaintiff alleges that Scotiabank failed to pay overtime to a class of employees in breach of the Canada Labour Code. The plaintiff class claims $250 million in damages. As of September 2008, there were over 5,000 employees and former employees in the class.

In February 2010, Justice George Strathy certified the class action. The plaintiff's claim alleged a number of causes of action, including breach of contract, breach of the duty of good faith, unjust enrichment and negligence. Scotiabank moved to strike all of these claims but Justice Strathy declined to do so, finding that it was not plain and obvious that the claims could not succeed. Justice Strathy found that the class could benefit from a common determination of at least three issues: whether the bank had a system to ensure that employees were paid for overtime hours; whether the bank breached its duties to its employees by requiring employees to get pre-approval for overtime; and whether the employees' employment contracts had an implied term that overtime would be paid. Finally, Justice Strathy found that a class proceeding was the preferable procedure, based in part on the fact that an aggregate assessment of the class's damages might be possible. Justice Strathy did refuse to certify one common issue: whether Scotiabank's overtime policy breached the Canada Labour Code.

The Appeal

The Divisional Court dismissed Scotiabank's appeal. The bank's arguments were divided into two broad categories: the causes of action asserted by the plaintiff were bound to fail and the claims did not raise common issues. The Divisional Court concluded that Justice Strathy was correct in finding that the causes of action asserted by the plaintiff met the plain-and-obvious test. In the court's view, Justice Strathy's reasons were “appropriately anchored in the evidentiary record, keeping in mind that the ultimate question of weight of such evidence is appropriately left to the trial judge.”

Similarly, the Divisional Court concluded that Justice Strathy was correct in finding these to be common issues which could be adjudicated on a class-wide basis. Scotiabank attempted to cast the plaintiff's claim as individual in nature. Justice Strathy found that the claims must be assessed in the systematic terms advanced by the plaintiff, and the Divisional Court agreed.

Finally, the Divisional Court took no issue with Justice Strathy's finding that a class proceeding was the preferable procedure for the determination of the common issues.

The plaintiff cross-appealed Justice Strathy's decision to strike part of its claim. The Divisional Court quashed the appeal on the grounds that Justice Strathy's decision on this issue was a final order and, as such, any appeal should have been brought to the Court of Appeal.

The Impact of Fresco

Given that CIBC was successful in having the plaintiff's motion for certification and the subsequent appeal in Fresco v. Canadian Imperial Bank of Commerce dismissed, Scotiabank attempted to rely on those decisions in support of its argument. The Divisional Court made clear that it is “neither possible nor appropriate” for it to assess the merits of Scotiabank's appeal with reference to the evidence and decisions in Fresco.

Next Up

The appeals in Fresco and McCracken v. Canadian National Railway Co. are to be heard later this year. It seems very likely that Scotiabank will seek leave to appeal this decision to the Court of Appeal. Though the appeals will not be heard together, the differing opinions of the judges that have heard these cases, and what may be different opinions from different panels of the Court of Appeal, may mean that these cases will ultimately be decided by the Supreme Court of Canada.