For the second time in nine months, the Ontario Superior Court of Justice has certified a class action lawsuit involving allegations of unpaid overtime, this time involving over 1,550 first line supervisors (“FLS”) employed by CN Rail. With FLSs falling just outside the bargaining unit, the dispute centres around CN’s treatment of FLSs as managers, thereby excluding them from the overtime provisions of the Canada Labour Code (“the Code”).
A third class action involving similar allegations of unpaid overtime against the CIBC failed to receive certification in June of last year.
Certification is the first significant step in a class action suit. The advantage for plaintiffs of pursuing by way of a class action is that employees are not required to bear the burden of suing as individuals. Instead, one lawsuit can be brought on behalf of a class of people whose cases raise common issues.
As one objection to the certification of this action, CN Rail argued that the court lacked jurisdiction to handle this dispute because the claim is a purely statutory one and should therefore be dealt with through the enforcement procedures established under the Code. In an August 17, 2010 decision, Justice Perell ruled that courts have concurrent jurisdiction to enforce wage claims arising under the Code. This conclusion was drawn mainly from the fact that a reading of the Code does not reveal a Parliamentary intention for the administrative regime established by the Code to have exclusive jurisdiction. For example, various Code provisions expressly preserve an employee’s right to a civil remedy – a notion which would be unnecessary if courts lacked jurisdiction to enforce statutorily-granted rights.
CN Rail also contested the certification by arguing that a class proceeding would be inappropriate in the circumstances since overtime entitlement can only be established on a case-by-case basis, given that the particular duties carried out by each FLS is different. In rejecting this point, Justice Perell held that the internal administrative process established by the Code is subsumed by the “preferable procedure” requirement for certification under Ontario’s Class Proceedings Act. Absent class proceedings, the enforcement process under the Code for such a claim would involve inspectors and referees investigating claims beyond that of single employees, and would join additional employees as parties to the proceeding where they have substantially the same interest. In the alternative, if CN Rail made an error then proceeding as a class action “would provide access to justice and judicial economy for a mass mistake in an efficient and manageable way. The Class Proceedings Act, 1992 was designed precisely to address mass wrongdoing.”
Ultimately, the class action was certified but reduced in scope to only two of the grounds pled.
Given the court’s finding that minimum Code standards are incorporated by force of statute into the employment contract, the existence of an express or implied term of the employment contract requiring overtime to be paid to an FLS was a question of fact to be determined at trial. Also, in the event overtime pay is found owing, CN Rail would clearly have been unjustly enriched since there was no apparent juristic reason why CN Rail should be permitted to retain the benefit of any unpaid hours of work.
In the event this action makes it to trial, the heart of the dispute will likely focus on the meaning of “employees who are managers or superintendents or exercise management functions” under s. 167(2) of the Code in the context of what the minimum requirements are to be a managerial employee at CN Rail.
The certification has been appealed to the Ontario Court of Appeal and is expected to be heard in 2011.