Case In Point

Ontario Superior Court Refuses to Certify Proposed Employment Class Action

Case In Point

Ontario Superior Court Refuses to Certify Proposed Employment Class Action

Date: July 12, 2021

In Curtis v Medcan Health Management Inc., Justice Perell of the Ontario Superior Court refused to certify a proposed class action related to vacation and statutory holiday pay, finding that a class proceeding would not be the preferable procedure for the resolution of common issues.

The Ontario Employment Standards Act (ESA) requires that employees receive vacation and public holiday pay not only on their base salary, but also on certain bonuses and commissions.

In 2019, an employee of the defendant Medcan Health Management Inc. (Medcan) informed the company that it had not paid him vacation pay and public holiday pay as required by the ESA. Medcan investigated. The company discovered that, due to a payroll error, while employees had received vacation and public holiday on their base pay, certain employees had not received these amounts on their “variable compensation” (i.e., bonuses and commissions). To remedy its error, Medcan paid impacted employees outstanding vacation and public holiday pay amounts for the two prior years, based on the applicable limitations period.

Three former Medcan employees commenced a proposed class action against the company and its directors. On behalf of the proposed class – which included all variable compensation employees going back to 2005 – the representative plaintiff sought payment of vacation and public holiday pay based on the ultimate 15 year limitations period in the Limitations Act, 2002. In response to the plaintiff’s certification motion, the defendants brought a cross-motion for summary judgment on the basis that the individual plaintiffs’ claims were barred due to the limitations period or by releases they had signed in favor of the defendants.

Justice Perell dismissed the plaintiff’s motion for certification. He considered whether the applicable test for certification set out in section 5 the Class Proceedings Act, 1992 was met, namely whether: (1) the pleadings disclosed a cause of action, (2) there was an identifiable class of two or more persons that would be represented by the representative plaintiff, (3) the claims of the class members raised common issues, (4) a class proceeding would be the preferable procedure for the resolution of the common issues, and (5) there was a representative plaintiff who, among other things, would fairly and adequately represent the interests of the class.

With respect to the common issues criterion, the defendants argued that the action did not give rise to common issues because of inevitable individual limitations period issues and the individual nature of employees’ vacation and public holiday pay. While Justice Perell did find the action gave rise to common issues, he found that the defendants’ argument was relevant to the preferability of the action as a class proceeding.

For a class proceeding to be the preferable procedure for the resolution of the claims of a given class, it must represent a fair, efficient, and manageable procedure that is preferable to any alternative method of resolving the claims. Given the inevitability of individual issues trials in this case, Justice Perell found that a “class proceeding is not preferable to just getting on with an individual actions.” As the plaintiffs did not satisfy the preferable procedure requirement, their motion for certification was dismissed. Justice Perell also dismissed the defendant’s motion for summary judgment against the individual plaintiffs, finding he had an inadequate record to decide the issue on a summary basis.

This decision is a welcome result for employers facing potential or proposed class actions. It underscores the central importance of individual issues in driving the certification analysis.

The defendants in this matter were represented by Hicks Morley’s Elisha Jamieson-Davies and Eleanor Vaughan.

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