Court File and Parties

COURT FILE NO.: CV-20-00634668-00CP DATE: 20200707 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: TOM RALLIS, Plaintiff AND: APPROVAL TEAM INC., SERGEY BARANDICH, PATRICK JARDINE, and ALEXANDER SAVIC, Defendants

BEFORE: Justice Glustein

COUNSEL: Andrew Monkhouse and Alexandra Monkhouse, for the plaintiff Justin Jakubiak, for the defendants

HEARD: July 7, 2020

Reasons for Decision

[1] The plaintiff, Tom Rallis (“Rallis”) brings a motion to certify the proceedings as a class action under s. 5 of the Class Proceedings Act, 1992, S.O. 1992. At the hearing, the parties worked cooperatively to reach consent on almost all of the issues before the court, and I commend counsel for their common sense approach taken in this matter.

[2] Given that almost all of the issues proceeded on consent, I only briefly review the basis for certification and the issues addressed at the hearing.

[3] In Cass v. WesternOne Inc., 2018 ONSC 4794, I reviewed the applicable legal principles governing the test for certification on consent of the parties. I rely on those principles in these Reasons.

[4] The test under s. 5 is met for the purposes of consent certification. In particular:

(i) The pleadings disclose a cause of action under s. 5(1)(a). Rallis pleads that (a) he was an employee while both a salesperson and sales manager for the defendant Approval Team Inc. (“Approval Team”); (b) as an employee, he was entitled to certain minimum requirements under the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “ESA”) such as vacation pay, statutory vacation pay, overtime pay, and Canada Pension Plan (“CPP”) and Employment Insurance (“EI”) contributions; and (c) until he was converted to an employee position in May 2019, Approval Team treated him as an independent contractor and did not make the required payments or contributions;

(ii) There is an identifiable class under s. 5(1)(b). The revised proposed class consists of “all non-managerial salespersons and sales managers of Approval Team Inc. who, since 2018 to the date of notice to the class, worked or continue to work for Approval Team Inc. as independent contractors”.

The above class definition is set out in objective terms such that membership in the class proceeding is readily ascertainable, and is rationally linked to the common issues asserted by class members. Inclusion in the class does not depend on the merits of the claim or the outcome of the litigation (Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46 (“Dutton”), at para. 38).

The class definition is also consistent with the evidence presently before the court. There is a basis in fact that all salespersons and sales managers of Approval Team who were treated as independent contractors did not receive the ESA entitlements or CPP and EI contributions that employees would have received. Conversely, there is no basis in fact at this time that any other employees did not receive the impugned benefits, nor that salespersons or sales managers converted to employee status in May 2019 did not receive the impugned benefits after conversion. At present, the uncontested evidence is to the contrary. Consequently, the above class definition, agreed to by counsel at the hearing, is appropriate;

(iii) The claim raises common issues under s. 5(1)(c). The common issues include (a) whether the salespersons or sales managers who worked as independent contractors were, in fact, employees or independent contractors, and (b) entitlement to the benefits. There is a basis in fact for the commonality of these issues since Approval Team takes the position that all salespersons and sales managers classified as independent contractors had common working features to justify that classification (see paragraph 12 of the affidavit sworn by Sergey Barandich on May 19, 2020).

At the hearing, counsel agreed that a common issue for aggregate damages could proceed for claims for vacation pay, statutory vacation pay, and EI and CPP contributions based on records of income earned, without the need for individual evidence. Similarly, the method of determination is a common issue. The common issues trial judge will be able to exercise his or her discretion as to which of the claims can proceed by way of aggregate damages, as that approach was discussed in Omarali v. Just Energy, 2016 ONSC 4094, at para. 97.

At the hearing, I did not agree with Rallis that a punitive damage claim could proceed as a common issue, since there was no evidence to support such a claim, even on a minimal test of a basis in fact. At present, the uncontested evidence is that Approval Team had a rational belief for the distinction. An allegation that a defendant did not comply with ESA requirements does not establish the harsh or wanton conduct required for a claim for punitive damages.

These common issues avoid duplication of fact-finding or legal analysis (Rumley v. British Columbia, 2001 SCC 69, at para. 29). The resolution of each issue will determine the claims of the class members, with individual damage assessments being of a minor nature. The threshold issues in this action relating to misclassification would substantially advance the claims on the right of action asserted. The resolution of the proposed common issues is necessary for each class member’s claim (Dutton, at para. 39).

Consequently, the parties will provide a revised list of common issues incorporating these Reasons, and will also make minor changes to the list to (a) refer to the defendant as Approval Team, (b) set out a specific common issue for both salespersons and sales managers as to whether they were employees or independent contractors, and (c) remove common issues related to punitive damages;

(iv) A class proceeding is the preferable procedure under s. 5(1)(d). The goals of access to justice, judicial economy, and behaviour modification are all enhanced by a class proceeding. Individual claims for damages would be impractical, unmanageable, and prohibitively expensive; and

(v) Rallis is an adequate representative plaintiff under s. 5(1)(e). Rallis was both a salesperson and sales manager and is prepared to act for the proposed class and would fairly and adequately represent the interests of the proposed class. He has no ulterior motives nor collateral purpose for his initiation of the lawsuit and does not, on the common issues, have any interest in conflict with those of the other class members. If such a conflict arises subsequently in these proceedings between the interests of salespersons and sales managers, the court can address the conflict at that time.

[5] I also approve the litigation plan, which also proceeded on consent, including the following minor changes agreed to by the parties, which also I approve:

(i) Paragraph 8(h) is to be deleted since posting of the notice of certification on Approval Team’s website is not necessary;

(ii) Paragraph 8(i) is to be amended by removing reference to publication in the National Post, as the class is local and publication as proposed in the Toronto Star is sufficient;

(iii) Paragraph 15 is to be amended to provide that the statement of defence will be delivered “no later than 60 days following the date on which the plaintiff delivers an amended statement of claim”;

(iv) Paragraph 16 is to be amended to provide that all pleadings shall be served and filed “within 90 days following the date on which the plaintiff delivers an amended statement of claim”;

(v) Paragraph 17 is to be amended to provide for the exchange of an affidavit of documents “within 150 days following certification”;

(vi) Rallis will add a clause that provides that the parties will use best efforts to conduct a mediation at a date convenient to the parties; and

(vii) The opt-out form attached as “Schedule B” to the litigation plan will be amended to (a) remove the requirement that the form be commissioned before a commissioner of oaths, and instead have the form witnessed and (b) permit the opt-out form to be returned by e-mail as well as by registered mail (with consequent changes to clause 13 of the litigation plan).

[6] I also approve the form and method of disseminating the notice of certification attached to the litigation plan. That issue proceeded on consent, and I agree that both the form and method of dissemination comply with s. 17 of the CPA.

[7] As I noted at the outset, counsel acted with commendable respect to each other and the court and worked together to resolve many issues. On the few issues where submissions were required, there was mixed success. In these circumstances, I order costs in the cause as the steps before the court were necessary to move this matter forward but neither party could claim full success.

[8] Counsel will deliver to me an electronic copy of a revised certification order and litigation plan, as well as a hard copy to Judges’ Reception upon coordination with my assistant, Roxanne Johnson.

[9] I again thank counsel for their assistance to the court.

GLUSTEIN J. Date: 20200707