Bourque v. Cineflix , 2021 ONSC 8464

Court File and Parties

COURT FILE NO.: CV-18-00606489-00CP DATE: 2021-12-23 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ANNA BOURQUE, Plaintiff AND: CINEFLIX et al., Defendants

BEFORE: Justice Glustein

COUNSEL: Stephen J. Moreau and Kaley Duff for the plaintiff Paul-Erik Veel and Margaret Robbins, for the defendants

HEARD: December 21, 2021

Reasons for Decision

Overview

1The plaintiff, Anna Bourque (Bourque) brings this motion under the Class Proceedings Act, 1992, S.O. 1992, c. 6 (CPA) seeking: (i) approval of the settlement agreement dated September 21, 2021 (the Settlement Agreement), (ii) approval of (a) the retainer agreement between Bourque and Class Counsel¹ dated October 30, 2018 (the Retainer Agreement) and (b) Class Counsel's fees, disbursements, and HST, and (iii) an honorarium payment of $7,500 for Bourque.

2Cineflix² is a global media production company which creates and produces reality³ television programs as well as scripted programs.

3The class consists of any person who worked for Cineflix from October 6, 2016 to September 1, 2021 (the Class Period), excluding those who worked in (i) any job in respect of which an individual’s terms of work are covered by a collective agreement, (ii) any actors or other on-screen talent, (iii) any jobs of any sort relating to work on scripted productions, (iv) any corporate staff whose engagement does not arise in respect of only a specific production or specific productions, and (v) any job in which an individual held job titles of Executive Producer, Line Producer, Producer, Production Manager, or Series Producer, or substantially similar job titles, or primarily performed the job functions associated with such job titles.

4In summary, the class asserted several causes of action based on the following core concepts: (i) the defendants were common employers; (ii) all persons working for Cineflix in non-managerial roles, whether classified as employee or contractor, were legally employees; and (iii) Cineflix failed to pay holiday and vacation pay to the classified contractors and failed to pay overtime to all of its employees (regardless of how they were classified), in violation of the Employment Standards Act, 2000, S.O. 2000, c. 41 (ESA).

5Under the Settlement Agreement, Cineflix is to pay the sum of $1 million into the trust account of Class Counsel within 14 days of the “Effective Date”.⁴ The Settlement Agreement then provides for two options. By the deadline date:⁵

(i) If (a) Cineflix enters into a collective agreement as negotiated between the parties and set out as a schedule to the Settlement Agreement (the Proposed Collective Agreement)⁶, and (b) the Cineflix employees ratify the Proposed Collective Agreement, then Cineflix will make no further payment;

(ii) If (a) Cineflix does not enter into the Proposed Collective Agreement or (b) Cineflix enters into the Proposed Collective Agreement but the Cineflix employees do not ratify the Proposed Collective Agreement, then Cineflix will make a further payment of $1.5 million into the trust account of Class Counsel.

6For the reasons I discuss below, I find that the compensation under the Settlement Agreement of $1 million provides fair and reasonable compensation for the claims made in the action, without including the benefits of the Proposed Collective Agreement. On that basis alone I approve the Settlement Agreement. Consequently, payment of $2.5 million without a collective agreement is necessarily a fair and reasonable result.

7I also approve the Retainer Agreement, and conclude that the fees and disbursements sought are fair and reasonable. Bourque and Class Counsel entered into a retainer agreement which complied with s. 32 of the CPA, and the 30% contingency fee is presumptively valid and consistent with the risks undertaken by counsel and the fees actually incurred.

8Finally, I approve of the honorarium of $7,500 requested on behalf of Bourque for her extraordinary involvement in the litigation as a key member of the team negotiating the Proposed Collective Agreement.

Facts

Settlement negotiations

9I have described the parties and the nature of the action above. I now address the relevant facts concerning the settlement negotiations leading to the Settlement Agreement.

10Certification of the class action was vigorously contested. The defendants presented arguments on all elements of the certification test except s. 5(1)(a) of the CPA. Cineflix’s primary defence to the motion was that the common issues should not be certified.

11Given the focus on s. 5(1)(c) of the CPA, both parties prepared voluminous motion records including sample contracts spanning over a decade in time. A detailed review of the evidence was required to consider the defendants’ position that (i) a job title would not assist the court in determining whether a particular worker assumed managerial roles; and (ii) as such, there could be no common determination of which workers were entitled to overtime pay or other ESA entitlements.

12The parties conducted thorough cross-examinations based on the motion records.

13The parties attended two mediations. The first mediation took place on June 5, 2020 with former Associate Chief Justice Douglas Cunningham. The second mediation took place on June 20, 2020 with Mr. William (Bill) Kaplan. Both mediators are well-respected and experienced.

14The mediations were at arm’s length, with the parties exchanging extensive documents and briefs, as well as spreadsheets of calculations designed to try and find a mutually agreeable resolution. While the action did not settle at mediation, it laid the groundwork for subsequent settlement discussions, which resulted in the Settlement Agreement on the eve of the certification motion.

15By order dated September 29, 2021 (the First Approval Order), the court certified the class action on consent, approved the form, content and distribution of the notice, and approved the discontinuance of the action for class members who only worked for Cineflix before October 6, 2016.

16The court issued a further order on October 27, 2021 upon the parties entering into an Amending Agreement to the Minutes of Settlement made on October 22, 2021.

The Settlement Agreement

17The parties have structured the settlement by a points system, which allocates points between the 870 members of the class on the basis of three categories: (i) the number of days worked for Cineflix during the Class Period, (ii) the average daily amounts earned at Cineflix during the Class Period, and (iii) whether the class member worked on a “First Season Program”.⁷

18On the basis of the points system, the average worker in each class would be entitled to a range for overtime payment of between 1.65 hours per week⁸ to 8.69 hours per week,⁹ on the basis of (i) payment of $2.5 million and (ii) full take-up of the settlement by the Class Members. Based on a take-up rate of 70%, the weekly equivalency of the points on payment of $2.5 million would range from 2.357 to 12.414 hours, while on a take-up rate of 50%, the weekly equivalency of the points would range from 3.30 to 17.38 hours.

19Applying the above range to a payment of $1 million (if Cineflix enters into the Proposed Collective Agreement and it is ratified), the average worker in each class would be entitled to a range for overtime payment of between 0.66 hours per week to 3.476 hours per week, on the basis of full take-up of the settlement by the Class Members. Based on a take-up rate of 70%, the weekly equivalency of the points on payment of $1 million would range from 0.942 to 4.965 hours, while on a take-up rate of 50%, the weekly equivalency of the points would range from 1.32 to 6.852 hours.

20If Cineflix enters into the Proposed Collective Agreement and it is ratified by Cineflix workers, then not only will Cineflix employees going forward be guaranteed rights for hours of work and overtime, vacation pay, and public holidays, but they will also be entitled to benefits set out in the Proposed Collective Agreement which include (i) meal breaks, (ii) minimum hours pay, (iii) travel pay, (iv) cancellation pay, (v) termination pay, (vi) sick pay, (vii) family medical leave, (viii) just cause protection, (ix) union representation, (x) an arbitration process, (xi) minimum wage rates, (xii) benefits, and (xiii) training.

21Many of the class members would benefit from the Proposed Collective Agreement as the class includes all non-managerial workers for Cineflix from October 6, 2016 until September 1, 2021.

22Under the Settlement Agreement, Cineflix will administer the payments, with Class Counsel having strict rights of supervision. Such administration will be at no cost to the class members.

23The payment of settlement funds is non-reversionary. If there are any limited funds remaining due to cheques which are not cashed or the accrual of a small amount of interest at the end of the administration, those remaining funds are to be paid on a cy-près basis to Humber College’s Faculty of Media and Creative Arts, which educates students interested in a career in television, film, or other media arts, with programs focused on post production, radio and media production, television writing, and producing.

24Only one member of the class opted out of the settlement.

25One member of the class sent an email to Class Counsel asking “why the class action only applies to work after 2016”, as the class action was discontinued under the First Approval Order for those class members who were only employed prior to October 6, 2016, due to limitation period concerns. However, the objector’s comments that “I’m so disappointed that I never fought harder to protect my rights” prior to October 6, 2016 reflect the very concern that a limitation period challenge by the defendants could have successfully barred claims by those workers who believed at the time that they were not being treated fairly by Cineflix.

Fees and the retainer agreement

26The Retainer Agreement provides for (i) a contingency fee of 25% “if this matter is resolved within one year of the date on which a class action is filed and if the resolution does not require that a contested motion for summary judgment or certification be heard by the Court”, and (ii) a contingency fee of 30% “after one year has elapsed, and following a settlement or judgment for the class”.

27Given that the Settlement Agreement is dated almost three years after the Retainer Agreement, the 30% contingency fee applies.

28Disbursements in the present action total $27,798.48¹⁰ plus applicable taxes of $2,112.30.

29Under the Retainer Agreement, Class Counsel funded the disbursements in the action. Class Counsel did not apply to the Class Proceedings Fund, and as such, none of the settlement funds will go towards funding the litigation.

30If Cineflix enters into the Proposed Collective Agreement and it is ratified by the Cineflix employees, the unions involved in the Proposed Collective Agreement, IATSE and the CAW/SCA Canadian Media Guild, have agreed to separately contribute a total of $100,000 towards Class Counsel’s fees.

31Until November 30, 2021, Class Counsel docketed more than 1,800 hours of time with a total docketed value of $790,011, with anticipated additional costs of $30,000 including costs to address settlement issues and to prepare for this hearing.

Participation of Bourque

32In addition to being very involved in all aspects of the class action as a representative plaintiff, Bourque participated in the extensive collective bargaining that led to the Proposed Collective Agreement which forms part of the Settlement Agreement.

33Bourque was not promised an honorarium at any time. Prior to the settlement negotiations which led to the Settlement Agreement, she was unaware that there was a possibility that she could be compensated over and above the amounts she anticipated receiving as part of the Settlement Agreement.

Analysis

Settlement Agreement

(i) The applicable law

34Pursuant to s. 29 of the CPA,¹¹ a class action may only be settled with the approval of a judge. The test for approving a class action settlement is whether, in all of the circumstances, the settlement is fair, reasonable and in the best interests of the class as a whole, taking into account the claims and defences in the litigation and any objections to the settlement. A settlement need not be perfect. It need only fall "within a zone or range of reasonableness": Dabbs v. Sun Life Assurance Co. of Canada, 1998 CanLII 14855 (ON SC), [1998] O.J. No. 2811 (Gen. Div.), at para. 30; Parsons v. Canadian Red Cross Society, [1999] O.J. No. 3572 (S.C.), at para. 69.

35In determining whether to approve a settlement, the court will take into account factors such as: (i) the likelihood of recovery or likelihood of success, (ii) the amount and nature of discovery evidence, (iii) the terms and conditions of the proposed settlement, (iv) the future expense and likely duration of litigation, (v) the recommendation of neutral parties, if any, (vi) the number of objectors and nature of objections, (vii) the presence of arm's length bargaining and the absence of collusion, (viii) the degree and nature of communications by counsel and the representative plaintiff(s) with class members during the litigation, and (ix) the information conveying to the court the dynamics of, and the positions taken, by the parties during the negotiations. In a particular case, some criteria may be given more weight than others, some criteria may not be satisfied, and other criteria may be irrelevant: Parsons, at paras. 71-73.

(ii) Application of the law to the present case

36As I discuss above, the range of weekly overtime hours based on a 70% take-up rate¹² and a payment of $1 million is between approximately 1 to 5 hours per class member, based on the categories developed by counsel. I find that such a range falls within a zone of reasonableness.

37In particular, the lowest end of the range is based on workers who worked 61 days or more at Cineflix during the Class Period, without having worked on a First Season Program. It is within the zone of reasonableness that such experienced workers would not require significant overtime to accomplish their tasks, particularly as they did not face any of the additional work required in a First Season Program. Consequently, even though that same class member might receive 2.4 weekly hours (based on a 70% take-up rate) if Cineflix paid $2.5 million (instead of 1 hour if Cineflix paid $1 million), any of those amounts would fall into a zone of reasonableness.

38Similarly, the highest end of the range is based on workers who worked 15 days to 60 days at Cineflix during the Class Period, and who worked on a First Season Program. It is within the zone of reasonableness that such workers would be in a higher category than those who worked 5 days to 14 days, since the latter group would be more likely to be called upon for small projects, which might have some overtime, but not as much as for those who still had low experience, but were tasked with larger roles requiring 15 to 60 days. Even though that same class member might receive 12.4 weekly hours if Cineflix paid $2.5 million (instead of 5 hours if Cineflix paid $1 million),¹³ any of those amounts would fall into a zone of reasonableness.

39All of the above calculations avoid the risks of the matter proceeding to certification or trial.

40It cannot be said with any certainty that certification would have been ordered, particularly as the defendants raised serious defences on certification of the proposed common issue based on mischaracterization. A court could have accepted the defendants’ submission and concluded that the distinction between managerial and non-managerial roles could not be determined on a common basis.

41Further, even if the action had been certified, the class members would also have faced the risk of a court requiring them to establish damages on an individual basis. In such circumstances, there could have been difficulties of proof arising under the ESA.

42In a recent decision of the Ontario Labour Relations Board, the Board set aside the decision of the Employment Standards Officer who had awarded the claimant $164,885.34 in unpaid overtime based on a finding that the employee insurance agent worked an average of eight overtime hours per week in 2017 and an average of ten overtime hours per week in 2018 and 2019: RBC Insurance Agency Ltd. v. Ali, 2021 CanLII 44090 (OLRB). The Board reduced the employee’s claimed overtime of 24 hours per week to 8 hours per week, based on a lack of evidence: at para. 93.

43Similar difficulties of proof could have arisen in the present case, as the class members have no records of overtime hours worked, and often have only a general recollection of overtime being required without any specifics to assist a trier of fact.

44Consequently, not only would class members face a significant risk of reduction of hours when determining overtime pay, they could also face an argument for nominal damages, as was submitted in Ali, although the latter argument was not accepted by the Board in Ali since the employee had some documentary proof such as text messages: at para. 92. In the present case, many of the class members have no documentation or text messages to support an overtime claim.

45In addition to avoiding the risks described above, I rely on the following additional factors to find that the Settlement Agreement is fair and reasonable:

(i) Payment of funds without lengthy litigation ensures the recovery of funds for the class members, particularly as Cineflex’s business suffered greatly because of the COVID-19 pandemic: Aps v. Flight Centre Travel Group, 2020 ONSC 6779, at paras. 35-37. Such a prompt resolution avoids the risk of corporate insolvency, as in the Just Energy class action in which the corporation was recently placed in receivership;

(ii) The use of average numbers and providing variable amounts based on categories of employment is a fair and reasonable approach to overtime claims, since it avoids a costly claims process, individual adjudications and related appeals: Eklund v. Goodlife Fitness Centres Inc., 2018 ONSC 4146, at para. 34; Rosen v. BMO Nesbitt Burns Inc., 2016 ONSC 4752, 133 O.R. (3d) 73, at para. 20;

(iii) If the Proposed Collective Agreement is entered into and ratified, it will provide benefits to Cineflix’s employees, many of whom will have been class members as the class includes all non-managerial workers from October 6, 2016 until September 1, 2021: Eklund, at para. 4;

(iv) Class Counsel was able to properly assess the risk based on payroll records from Cineflix’s payroll company, Entertainment Partners;

(v) Cineflix is paying for all administration and appeals by class members;

(vi) Class Counsel has extensive rights and a monitoring role;

(vii) The simplified claims process allows class members either to verify the information contained on an individualized form provided by Cineflix, or to send a general form indicating that they are a class member and then be advised by Cineflix of the proposed category for compensation so that the class member can verify that information;

(vii) Counsel vigorously advocated for their parties’ interests throughout the arm’s length mediation and settlement negotiations, with significant disclosure to permit informed discussions, before experienced mediators who helped resolve the action;

(viii) Class members have overwhelmingly supported the settlement, through emails and voice mails, with 846 unique views of Class Counsel’s webpage since June 24, 2021;

(ix) Class Counsel are experienced class action litigators with particular expertise in overtime and ESA clams. They recommend the Settlement Agreement; and

(x) Bourque, who was briefed regularly throughout the litigation, recommends the Settlement Agreement.

46At the hearing, counsel also submitted that the settlement was fair and reasonable on the basis of the average overtime payment for each class member, which would range between $3,000 to $4,000 per class member (assuming a take-up rate of 70% to 100%) based on a $2.5 million payment and between $1,200 to $1,600 (assuming a take-up rate of 70% to 100%) based on a $1 million payment. While some courts have considered overall payment as a comparative factor to approve overtime class actions, I prefer the approach proposed in the record before me based on weekly overtime hours. An approach based on monetary payment does not take into account differences in compensation, job functions and responsibilities, or education or professional experience which can significantly affect monetary comparisons.

47Finally, I note that any cy-près distribution of a limited non-reversionary amount arising from uncashed cheques or accrued interest at the end of administration of the settlement funds is appropriate. Humber College’s Faculty of Media and Creative Arts educates students interested in a career in television, film, or other media arts, with programs focused on post production, radio and media production, television writing, and producing.

48Consequently, such a distribution meets the requirements that (i) “it is not practical to distribute the benefits in any other manner”; (ii) “[a] direct distribution to the Settlement Class would be uneconomic considering the modest damages and the fact that there is no cost effective way of locating the Settlement Class Members, determining if they suffered damage and, if so, establishing their loss”; and (iii) “the cy-près distribution is directly related to the issues in the lawsuit” and will “‘directly benefit’ people in similar circumstances to the class members”: Cass v. WesternOne Inc., 2018 ONSC 4794, at para. 91, citing Serhan (Trustee of) v. Johnson & Johnson, 2011 ONSC 128, at paras. 58-59).

49For the above reasons, I approve the Settlement Agreement, regardless of whether the Proposed Collective Agreement is signed. Given my conclusion that the $1 million settlement is fair and reasonable on its own terms, it necessarily follows that a $2.5 million settlement would be reasonable.

Fees and retainer agreement approval

(i) The Retainer Agreement

50The Retainer Agreement meets the requirements of s. 32 of the CPA. It (a) states the terms under which fees and disbursements shall be paid, (b) gives an estimate of the expected fee contingent on success in the proceeding, and, (c) states the method by which payment is to be made.

51Bourque understood the terms of the Retainer Agreement and approved the contingency fee arrangements, both at the time of signing the Retainer Agreement and at present.

52Consequently, I approve the Retainer Agreement.

(ii) Fees and disbursements

53Class Counsel seeks fees based on 30% of either settlement option.

54If the Proposed Collective Agreement is entered into and ratified, Class Counsel seek court approval of payment for fees of 30% of the $1 million settlement fund. Consequently, under this option, Class Counsel seek approval for payment of $300,000 in legal fees, plus HST of $39,000, plus $29,910.78 (including taxes) for disbursements, for a total of $368,910.78. Under this option, Class Counsel will also receive an additional $100,000 for their fees, collectively from the two unions involved in the Proposed Collective Agreement.

55If the Proposed Collective Agreement is not entered into or not ratified, Class Counsel seek court approval of payment for fees of 30% of the $2.5 million settlement fund. Consequently, under this option, Class Counsel seek approval for payment of $750,000 in legal fees, plus HST of $97,500, plus $29,910.78 (including taxes) for disbursements, for a total of $877,410.78.

56The fees sought under either option are fair and reasonable. I rely on the following facts and applicable law:

(i) A contingency fee of 30% is presumptively valid: Cannon v. Funds for Canada Foundation, 2013 ONSC 7686, at paras. 3, 7, and 8;

(ii) There is no basis to rebut the presumption of validity. On the evidence: (a) Bourque has a full understanding of the Retainer Agreement and the contingency fee; (b) the agreed-to contingency amount is not excessive; and (c) the application of the presumptively valid contingency fee does not result in an “unseemly” amount: Cannon, at para. 9;

(iii) Class Counsel incurred more actual docketed time than would be paid under either option;

(iv) Class Counsel assumed all of the risk of the litigation, including funding all disbursements and the potential of significant adverse costs awards. As I discuss above, there were risks which could have resulted in the certification motion being dismissed with Class Counsel recovering nothing for the significant investment put into the file; and

(v) Class Counsel obtained a successful result for the class members.

57For the above reasons, I approve the fees sought under either of the settlement options.

58With respect to the disbursements, I find that they are fair and reasonable. Nearly half of the disbursements arise from mediation fees that Class Counsel paid over a year ago, and all of the disbursements are reasonable and modest given the scope of the litigation and the fact that it has lasted more than three years.

59Consequently, I approve the fees and disbursements sought of either (i) $300,000 in legal fees, plus HST of $39,000, plus $29,910.78 (including taxes) for disbursements, for a total of $368,910.78 (if the Proposed Collective Agreement is entered into and ratified), or (ii) $750,000 in legal fees, plus HST of $97,500, plus $29,910.78 (including taxes) for disbursements, for a total of $877,410.78 (if the Proposed Collective Agreement is either not entered into or is not ratified).

Honorarium

60Class Counsel seeks an honorarium for Bourque in the amount of $7,500 as provided in the Settlement Agreement, to be paid by Cineflix in addition to the settlement funds, for her contributions as a representative plaintiff. For the reasons that follow, I agree and make the order requested.

61In Park v. Nongshim Co., 2019 ONSC 1997, I reviewed the case law on the issue of the court’s discretion in awarding an honorarium to a representative plaintiff. I held that such a payment is “exceptional and rarely done”: at para. 84.

62Bourque was directly involved in the negotiation of the Proposed Collective Agreement which, if entered into by Cineflix and ratified by its employees, will be of significant importance to those class members who continue to work for Cineflix, which will include many of the class members as they were non-managerial employees who worked for Cineflix from October 6, 2016 to September 1, 2021. Such a contribution by Bourque to the settlement of the litigation surpasses the role of a typical representative plaintiff and merits the honorarium sought.

63Further, the honorarium sought by Bourque is consistent with other misclassification cases which were settled early in the proceedings: Eklund, at paras. 49-50; Aps, at para. 46.

64For the above reasons, I approve the honorarium sought by Class Counsel for Bourque in the amount of $7,500, to be paid by Cineflix in addition to the settlement amount.

Order and costs

65I grant the orders sought. Class Counsel shall provide me with a draft order for my review forthwith.

66I thank all counsel for their thorough preparation and assistance to the court. The case is a model example of how counsel can vigorously represent their clients while at the same time acting at all time with courtesy and cooperation to each other and to the court.

GLUSTEIN J.

Date: 2021-12-23

COURT FILE NO.: CV-18-00606489-00CP DATE: 2021-12-23

ONTARIO SUPERIOR COURT OF JUSTICE

ANNA BOURQUE Plaintiff

AND:

CINEFLIX et al. Defendants

REASONS FOR DECISION Glustein J.

Footnotes

1. 1Class Counsel is Cavalluzzo LLP.
2. 2Cineflix established a separate corporate entity for each production in which the class members were employed. Consequently, there are over 100 corporate defendants named who I refer to collectively as Cineflix.
3. 3(also referred to as “factual” programs)
4. 4The Effective Date is the next calendar day after the day on which (i) all appellate rights with respect to the settlement approval order arising from these reasons (the Final Approval Order) have expired or (ii) the Final Approval Order is affirmed upon final disposition of all appeals.
5. 5The deadline date is the later of March 29, 2022 or the Effective Date.
6. 6The Proposed Collective Agreement is between Cineflix Media Inc. and Factual Television Joint Council (whose constituent unions are CWA/SCA Canada and the International Alliance of Theatrical Stage Employees, Moving Pictures Technicians Artists and Allied Crafts of the United States, its Territories and Canada (IATSE).
7. 7Working on a program in its first season often required significant more overtime than an ongoing production, as many more editing and production changes would frequently be required.
8. 8(for those workers with the most days worked (61 or more days), and who did not work on a First Season Program, who would have less overtime based on their work experience and no extra work arising from a First Season Program)
9. 9(for those workers who worked 15 to 60 days and on a First Season Program, reflecting a reasonable assessment that those workers would have incurred much more overtime than the group who worked 61 or more days, and somewhat more than workers on small jobs who worked 5 to 14 days, although that group also would have worked considerable overtime)
10. 10(nearly half of the disbursements are comprised of mediation fees paid to Messrs. Cunningham and Kaplan)
11. 11The present action was commenced before the late 2020 amendments to the CPA came into force. Pursuant to s. 39 of the CPA, the version of this statute as it read before the late 2020 amendments applies to the present claim.
12. 12It may be that a 50% take-up rate is more realistic, but there is no way to determine the issue with any certainty. I use a 70% take-up rate in my analysis as that rate is at the higher end of a realistic take-up range and would provide a lesser amount of overtime hours if it applied.
13. 13(again, all figures are based on a 70% take-up rate)