On June 26, 2012, the Ontario Court of Appeal released its decision in McCracken v Canadian National Railway Company1 (at the same time as its decisions in Fresco v CIBC and Fulawka v The Bank of Nova Scotia). The appeal court overturned a lower court decision that had certified a “misclassification” overtime class action against Canadian National Railway Company (“CN”).
In reasons written by Ontario Chief Justice Warren Winkler, the Court offered some much needed guidance on how courts should approach evidence at the certification stage. The Court also made some important statements regarding the role of the motion judge, the common issue criteria and the need for a proper litigation plan.
The Plaintiff argued that CN had systemically misclassified its First Line Supervisors as managers in order to avoid its obligations to pay overtime. The Court of Appeal overturned the lower court decision certifying the action. The Court found that the motion judge had correctly ruled that the issue regarding the misclassification of CN’s employees could not be resolved on a class-wide basis, but had erred in designing himself, and then certifying, a common issue relating to the minimum requirements to be a manager at CN, stating that it would advance the litigation.
In reaching its conclusion, the Court of Appeal engaged in a detailed analysis of the evidence led by both parties. While upholding the principle that a plaintiff must only provide “some basis in fact” to establish that there are common issues to be adjudicated at trial, the Court made it clear that the evidence must go further than mere statements based on hearsay or conclusions reached by affiants regarding how similarly situated the class members may be. The Court found that the Plaintiff had not led sufficient evidence to demonstrate a basis in fact for the claim that class members’ jobs, duties and responsibilities across all of CN’s workplaces were similar, noting that the evidence provided by the Plaintiff was “vague and unhelpful” and failed to adhere to the minimum requirements for such evidence. Likewise, the appeal court relied on the evidence led by CN to demonstrate that the First Line Supervisors were far from exercising the same functions or level of authority across the country and that whether or not they were properly classified as managers could therefore not be decided in a common issues trial. The Court noted that the lack of commonality of this threshold issue was fatal to the class action.
The Court also stated that a motion judge should exercise caution before redrafting the common issues proposed by the Plaintiff and that proceeding in this manner should be the exception rather than the norm. Finally, the Court indicated that the 5(1)(e) Class Proceedings Act requirement for a litigation plan was not a mere afterthought and should be complied with at the certification stage.
Given its conclusion on the lack of commonality, the Court did not rule on CN’s Rule 21 motion, which included arguments challenging the jurisdiction of the Superior Court to deal with overtime cases filed pursuant to the Canada Labour Code.
The decision is likely to be of great significance to class actions practice in Canada. The successful defence team in the CN class action included Norton Rose Canada’s Sylvie Rodrigue, Jeremy Devereux and Michael Kotrly.
1 2012 ONCA 445
Download Ontario Court of Appeal denies certification in the first contested overtime misclassification class action in Canada (pdf 91kb)
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