Court File and Parties
DIVISIONAL COURT FILE NO.: 264/12
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN R.S.J., ASTON AND SWINTON JJ.
B E T W E E N:
MICHAEL BROWN and BRIAN SINGER Appellants
- and -
CANADIAN IMPERIAL BANK OF COMMERCE and CIBC WORLD MARKETS INC. Respondents
Counsel: Jonathan Ptak, Jody Brown and Eli Karp, for the Appellants Patricia Jackson, Linda Plumpton, Stuart Svonkin, Sarah Whitmore, John Field, Laurie Reesor and Elisha Jamieson, for the Respondents
HEARD AT TORONTO: February 27, 2013
Reasons for Judgment
Aston J.
Overview
1This is an appeal of the April 27, 2012 decision of Strathy J. which denied certification of a proposed class proceeding. The plaintiffs alleged that Canadian Imperial Bank of Commerce (“CIBC”) and CIBC World Markets (“CIBCWM”) misclassified the proposed class members, making them ineligible for overtime. The motions judge concluded that eligibility for overtime could only be determined on an individual, case by case basis.
2Although the appellants have narrowed their class definition for purposes of this appeal, the issue of eligibility for overtime for the proposed class members continues to be an issue that must be determined on an individual basis. Accordingly, I would dismiss the appeal.
Factual Background
3Justice Strathy’s decision predates the release of the Court of Appeal trilogy of class proceedings cases involving overtime pay: Fulawka v. Bank of Nova Scotia, 2012 ONCA 443; Fresco v. Canadian Imperial Bank of Commerce, 2012 ONCA 444; and McCracken v. Canadian National Railway Company, 2012 ONCA 445.
4The appellants had initially sought to certify this proceeding on behalf of a class comprised of “Analysts”, “Investment Advisors” (“IAs”) and “Associate Investment Advisors” (“AIAs”). In light of the Court of Appeal’s reasons in the overtime trilogy, and McCracken in particular, Analysts have been dropped from the proposed class definition. This means that Brian Singer, a former IA, is the only remaining plaintiff, and that CIBCWM is effectively the only remaining defendant. CIBCWM is a wholly owned subsidiary of CIBC. Its employees are provincially regulated. The governing legislation with respect to overtime is Ontario’s Employment Standards Act, 2000, S.O. 2000, c. 41 (“ESA”). As a result of the exclusion of Analysts from the proposed class definition, the overtime provisions of the Canada Labour Code, R.S.C., 1985, c. L-2 (which regulates CIBC employees) are no longer in play.
5The proposed representative plaintiff, Mr. Singer, was employed as an IA from 1998 to 2002. He claims substantial damages on the basis that he worked 65 to 70 hours a week and was never paid for overtime. He also seeks to represent AIAs, though he never worked in that capacity himself.
6Under the present provisions of the ESA, the overtime pay provisions do not apply to “a person whose work is supervisory or managerial in character and who may perform non-supervisory or non-managerial tasks on an irregular or exceptional basis” (O. Reg. 285/01, s. 8(b)). The previous provision, which was in effect from the outset of the class period until 2000, exempted a person “whose only work is supervisory or managerial in character”.
7The proposed amendment of the class definition is aimed at excluding some supervisory and/or managerial employees who would not be eligible for overtime compensation. The new class definition reads:
All Ontario current and former CIBC and CIBCWM employees, since 1996, who were classified by CIBC or CIBCWM as Level 6 or higher, who held the job title Investment Advisor (otherwise known as Financial Advisor) or Associate Investment Advisor, exclusive of any time period for which they:
a) held the position of Branch Manager; or
b) held the position of Assistant Branch Manager; or
c) had deductions taken from earned commissions which were attributed to an Associate Investment Advisor who was assigned to him/her.
The Decision of the Motions Judge
8The essence of Justice Strathy’s decision is articulated at paragraph 6 of his Reasons. He found that the proposed class members have little in common except for their job title. He determined:
The key issue of fact - namely, whether or not a person has managerial responsibilities – which is critical to the determination of overtime eligibility, cannot be determined on a common basis. There is no workable methodology to resolve that issue. The action simply will not work as a class action.
9Strathy J. went on to find that the class definition was overly broad and not suitable because “the lack of commonality in the functions of the class members means that conclusions on the central common issues proposed cannot be extrapolated to all members of the class” (at para. 114). He also concluded that there was not a common issue with respect to eligibility for overtime under the governing legislation, and the issue of eligibility was central to the case (at para. 126). He also concluded that a class proceeding was not the preferable procedure, and he expressed concerns both about Mr. Singer’s suitability as a representative plaintiff and the proposed litigation plan.
The Standard of Review
10The appellant, Mr. Singer, acknowledges that the standard of review is as set out in the oft-quoted decision in Housen v. Nikolaisen, 2002 SCC 33. However, he submits the appropriate standard of review is correctness because the motions judge erred in the application of the legal tests for certification and because the issues raised on the appeal are matters of general principle which are central to the proper application of s. 5 of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”). The respondent submits that the motions judge did not err at law or on any matter of general principle but rather relied upon the particular facts of this case to conclude, as a question of mixed fact and law, that it did not meet the s. 5 test. As such, a deferential standard is appropriate.
11We agree with the respondent that the motions judge’s findings of fact or mixed fact and law are reviewable only for palpable and overriding error.
Analysis
12McCracken, above, is the key case for purposes of this appeal, as it, too, dealt with the alleged misclassification of a group of employees who had been treated as managerial employees and, therefore, ineligible for overtime pay. The Court of Appeal rejected the general proposition that misclassification cases are appropriate for certification, stating that misclassification cases are suitable for certification “where the similarity of job duties performed by class members provides the essential element of commonality” (at para. 91). Winkler C.J.O. went on to say (at para. 104):
For these legal principles to be satisfied in the context of a proposed common issue of misclassification, the plaintiff’s evidence must establish some basis in fact to find that the job functions and duties of class members are sufficiently similar that the misclassification element of the claim against CN could be resolved without considering the individual circumstances of class members.
13The appellant argues that the proposed class definition satisfies the requirements of s. 5(1)(b) of the CPA because the class is limited to two positions, each with a single job title and job code. He asserts that the primary duties of the class members are similar - that is, providing investment services to clients. With the exclusions in the new definition, those who manage other employees are said to be removed from the class. In addition, the appellant identifies a number of common issues, including the issue of eligibility of class members for overtime pay pursuant to the ESA, which he argues can be determined as a common issue.
14The respondent submits that the proposed amended class exhibits the same individuality as the class definition considered by the motions judge and consequently, the alleged misclassification for overtime cannot be determined as a common issue.
15We agree with the respondent. With the proposed amendment to the class definition, the appellant sought to exclude those exercising supervisory and managerial responsibilities over other employees. However, the exclusion in clause (c) does not meet its goal of excluding those IAs exercising supervisory and managerial functions. When the proposed class definition is read as a whole, clause (c) excludes an IA who pays an assigned AIA. That must mean an AIA classified at job level 6, as set out earlier in the proposed definition, since one would logically read the definition as a whole.
16If that is the exclusion, the members in the class would continue to include an individual like Christine Timms, who clearly falls within the category of an individual exercising supervisory and managerial functions and who is, therefore, ineligible for overtime. Ms. Timms is an IA whose book of business exceeds $300 million in assets, generating more than $2 million in annual commissions. She has a team of six people supporting her and pays them hundreds of thousands of dollars per year in salaries, bonuses, benefits and expenses. However, none of these people are categorized as AIAs according to CIBCWM. While three use the business title of Assistant Investment Advisor, they are not ranked at job level 6 by the employer. Instead they are at job level 4. Accordingly, Ms. Timms would not be excluded by the class definition now proposed, even though she has significant supervisory responsibilities. Given her circumstances it cannot be seriously suggested she is not acting in a supervisory and managerial capacity and that she would be entitled to overtime compensation under the ESA. Her circumstances underscore the ongoing problem the appellant has in coming up with a suitable class definition that satisfies s. 5(1)(b) of the CPA.
17As explained in Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46 at para. 38, the proposed class must be capable of clear definition. Not only should it bear a rational relationship to the common issues asserted, “it is necessary that any particular person’s claim to membership in the class be determinable by stated objective criteria”. In this case, the amended class definition would not meet that requirement. It would still be necessary to go beyond the “objective criteria” to consider evidence on a case by case basis of whether the person was otherwise in a supervisory or managerial role within the meaning of the ESA. The proposed class definition as amended would serve to exclude some Investment Advisors and Associate Investment Advisors, but it does not provide a definition that could include any person in the class without the need for further evidence.
18More importantly, the appellant has failed to show that there is a basis in fact to conclude that eligibility for overtime for members of this proposed class can be determined as a common issue, and, therefore, he has not met the requirement of s. 5(1)(c) of the CPA. As in McCracken, above, the success of this class proceeding requires a determination of the threshold issue that CIBCWM misclassified the IAs and AIAs as managerial employees.
19A common issue is one whose answer does not depend on individual findings of fact that must be made with respect to individual claimants. As well, “the answer to a question raised by a common issue for the plaintiff must be capable of extrapolation, in the same manner, to each member of the class” (McCracken at para. 83).
20The onus is on the plaintiff to show there is some basis in fact showing that the eligibility issue can be determined as a common issue. In the present case, the appellant has not met that onus. The issue of eligibility for overtime cannot be determined on a class-wide basis, even with the revised class definition.
21The appellant submits that the revised class definition is sufficiently narrow and objectively defined to cure this problem and it connects the proposed class to common issues. In particular, the appellant argues there are similarities in the work done by all IAs. For example, they all research, advise on and buy and sell securities on behalf of clients.
22However, as found by the motions judge, the IAs all enjoy a high degree of autonomy and independence, subject only to regulatory and risk management constraints. Beneath the superficial similarities, they differ significantly in the size and nature of their books of business, compensation, work hours, day-to-day activities and responsibilities. The motions judge concluded that “the duties and responsibilities of Investment Advisors range from what might be described as administrative at one end of the spectrum to managerial and even entrepreneurial and independent at the other end” (para. 193).
23In the case of AIAs, there is clear evidence their job function is significantly different from IAs, yet the appellant would lump the two job classifications together on the basis of some similarities.
24Eligibility for overtime at CIBCWM is not determined on the basis of job levels, job codes, job titles or job descriptions, as the motions judge found on the basis of the evidence. As pointed out at paragraph 80 of the Reasons “what counts is what the employee actually does, how they do it, and how much independence and authority they exercise in the environment in which they work”.
25The revised class may include fewer individuals and only two job titles, but the proposed amendment of the class does not resolve the fundamental difficulty identified by the motions judge. The employees still included within the scope of the amended class definition continue to have different and highly individualized job duties. In the context of overtime entitlement under the ESA there are many factors to consider in determining whether a person is performing managerial or supervisory functions. The inquiry is much broader than simply looking at whether the person supervises or controls the work of others. The determination of the issue for any individual must take into account the employee’s authority, autonomy, level of responsibility, degree of control over his or her hours of work and where and how that work is done. Consideration needs to be given to whether, how and to what extent the employee is accountable to anyone else for the manner in which the work is done or the hours devoted to it. The inquiry will be fact specific and cannot be determined by abstract definition. Eligibility of IAS and AIAs for overtime compensation can only be determined on an individual case by case basis. Without a determination on the key issue of eligibility at the common issues trial, the rest of the action collapses as a class proceeding.
26As the result in McCracken shows, it is not good enough for a plaintiff to identify and seize upon apparently significant similarities if there are substantial differences which will inevitably require resorting to the evidence of individual class members. In this particular case, the appellant has failed to prove any basis in fact to show that the proposed class members’ job functions (even using the amended definition) are sufficiently similar that eligibility could be decided on a class-wide basis. The only supporting evidence is Mr. Singer’s affidavit, which is not only overwhelmed by the evidence to the contrary but insufficient in and of itself to establish a basis in fact to support a common issue of eligibility.
27This case is distinguishable from Fulawka and Fresco. Those were not misclassification cases. There was no problem with a class definition in those cases, and common issues were identified that advanced the litigation.
28The defendant does not dispute that it is “possible” that some IAs may be entitled to overtime. Mr. Singer might even be one of them. However, that begs the question of whether entitlement to overtime can possibly be determined on a collective basis. It cannot. One of the principles for common issues is that success for one member must mean success for all, even if not necessarily to the same extent. However, in this case, the answer to any common issue with respect to Mr. Singer is not capable of extrapolation to each member of the proposed class. The class is not homogeneous, and the plaintiffs have been unable to articulate any workable methodology for determining eligibility for overtime as a common issue across a diverse class of employees who happen to share a job title.
29In reaching his conclusion, the motions judge had to consider the evidence. In our view he did not err by crossing the line and engaging in a “merits-based” inquiry, nor are we engaging in a merits-based inquiry on this appeal. The onus is on the plaintiff to define a viable class and establish some basis in fact for the common issues. In the end, the plaintiff here simply failed to prove sufficient commonality in the way IAs or AIAs worked.
30The problem with the class definition and the lack of a common issue of eligibility further affects the determination as to whether a class proceeding would be the preferable procedure. In considering the preferable procedure aspect of the test in s. 5(1)(d), the motions judge concluded,
The insurmountable impediment in this case, and the reason why the preferable procedure requirement has not been met, is that the issue of CIBC’s liability to pay overtime to every class member is an individual issue. It will require individual fact-finding concerning the circumstances of every class member and the individual application of the relevant legal principles to those circumstances. A class action would not, therefore, be a fair, efficient and manageable way of advancing the claims of class members and it would not promote either access to justice or judicial economy.
31We see no error in his conclusion on the issue of the preferable procedure.
Conclusion
32The motions judge correctly concluded that the motion for certification could not succeed because it did not meet the requirements in s. 5(1)(b) and (c) of the CPA. Despite the change in the class definition, eligibility for overtime still cannot be determined on a class-wide basis. Accordingly, the appeal is dismissed. Counsel have advised that it is not necessary for the court to address the issue of costs.
Aston J.
Then R.S.J.
Swinton J.
Released: April 23, 2013
CITATION: Brown v. Canadian Imperial Bank of Commerce, 2013 ONSC 1284
DIVISIONAL COURT FILE NO.: 264/12
DATE: 20130423
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
then r.s.j., aston and swinton JJ.
B E T W E E N:
MICHAEL BROWN and BRIAN SINGER Appellants
- and -
CANADIAN IMPERIAL BANK OF COMMERCE and CIBC WORLD MARKETS INC. Respondents
REASONS FOR JUDGMENT
Aston J.
Released: April 23, 2013