Common Ground? Class Action Updates
Ontario Court Approves Modest $62,000 Settlement in Employee Misclassification Class Action
Date: July 15, 2024
In Morris v. Solar Brokers Canada Corp., the Ontario Superior Court of Justice approved a negotiated settlement of $62,000 in a class action arising from the alleged misclassification of individuals as independent contractors. The Court also approved class counsel fees in the amount of $20,000, leaving $42,000 to be distributed amongst the class. As a result, individual class members can expect a payout of approximately $420 to $840 in settlement funds.
Background
In 2019, the plaintiff commenced a class action which arose out of the alleged misclassification of individuals working for the defendants. The defendants to the action consisted of the corporate defendant and two individual defendants who were its directors. The plaintiff alleged that non-managerial sales representatives who sold solar panels and related services to homeowners should have been classified as employees, but rather, were improperly characterized as independent contractors.
The plaintiff, on behalf of the class, sought damages resulting from the defendants’ alleged failure to compensate the non-managerial sales representatives for wages and other entitlements owed under the Employment Standards Act, 2000.
The corporate defendant was insolvent and one of the individual defendants couldn’t be located. Both were noted in default. The class action was defended by the remaining individual defendant.
The Settlement
In April 2020, the parties attended mediation and successfully agreed upon a total settlement valued at $62,000.
Pursuant to Ontario’s Class Proceedings Act, 1992 (Act), all settlements in class actions filed under the Act must be approved by a court. The settlement ought to be fair, reasonable and in the best interests of the class to be approved.
In considering the settlement in this case, the Court confirmed the most important features of a reasonable settlement include:
- the likelihood of recovery or likelihood of success
- the amount and nature of discovery, evidence or investigation
- the proposed settlement terms and conditions
- the recommendation and experience of counsel
- the future expense and likely duration of litigation and risk
- the recommendation of neutral parties, if any
- the number of objectors and nature of objections, if any
- the presence of good faith, arm’s length bargaining and the absence of collusion
- the degree and nature of communications by counsel and the representative parties with class members during the litigation
- information conveying to the court the dynamics of and the positions taken by the parties during the negotiation
After considering these relevant factors, the Court approved the settlement of $62,000, concluding that it was fair, reasonable and in the best interests of the class. The Court also granted approval for $20,000 in legal fees and disbursements, which brought the net amount to be distributed amongst class members to $42,000. This distribution will be done according to a predetermined formula based upon the dates each eligible class member worked for the defendants, the positions worked, and the amounts earned by each class member.
Notably, depending on how many class members apply for their share of the payment, individual class members are expected to receive between $420 and $840 each.
Key Takeaways
This case serves as an important reminder that class actions don’t always result in large settlements for individual class members and reminds litigants that strategic considerations are necessary when determining whether or not to proceed by way of class action litigation.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
