The hazards of employee class-action lawsuits
It’s workplace law’s newest, and biggest, phenomenon: lawyersspecializing in class-action lawsuits, joining together groups ofemployees with similar legal claims.
“Greatness lies not in being strong, but in the right use of strength."
- Henry Ward Beecher
It’s workplace law’s newest, and biggest, phenomenon: lawyers specializing in class-action lawsuits, joining together groups of employees with similar legal claims. However, in light of last week’s Ontario court decision that dismissed a class-action lawsuit filed against CIBC alleging that the bank failed to pay overtime to its customer service staff, class-action lawyers may no longer be sharpening their pens.
For Canadian employees with claims for overtime, unpaid wages or pensions, joining a class-action lawsuit had, until now, made sense. Proceeding individually is neither cost-effective nor does it garner the same attention from your employer as a multimillion-dollar lawsuit on behalf of thousands of employees. With the potential of recovering seven-figure damage awards and moving the case's coverage from this column to the front page of the news, the temptation to sue as a group is difficult to resist. But given the CIBC decision, are employees’ interests being subverted?
In the CIBC case, Justice Joan Lax ruled that the individual claims in the case lacked commonality, which is essential to certifying class action lawsuits.
“Proceeding as a class-action will not avoid duplication of fact-finding and legal analysis” and for this reason, the individual claims should be decided on a case-by-case basis, not in a group setting, the court ruled.
As a result, these employees must turn to provincial labour tribunals or the courts and bring their claims on an individual basis, if they still can – and if they still care to.
And it’s not just claims for unpaid overtime that shouldn’t necessarily be brought as class-actions. With large scale downsizing and mass layoffs, class-action lawyers have also taken aim at group wrongful dismissal claims.
But not so fast.
If a group claim for unpaid overtime doesn’t have enough commonality to gain certification, then group wrongful dismissal claims will surely be dismissed. In wrongful dismissal lawsuits, the individual facts of each ex-employee’s claim will ultimately determine its merit. Therefore, a class proceeding may be a big mistake.
As well, in dismissal cases where the plaintiffs are unemployed, there is a need for speedy settlements or quick summary judgments. Class-actions linger for years. Few gain certification; fewer prevail.
In a decision that was released last month, I represented five employees who sued their ex-employer for wrongful dismissal. It was not a class-action suit, but I advanced their claims as a group. Within 14 months from the date that my clients were fired, they were awarded one of the largest group wrongful dismissal judgments in Canadian history.
At the mediation for this case, the mediator, one of the best known in Ontario, remarked that my clients were smarter to fight as a group rather than to stand alone.
“There is strength in numbers,” he argued, while attempting to assure us that the employer could not ignore five simultaneous claims.
He was correct. If employees can sue individually but proceed as a group, what incentive do they have to join a class action?
Daniel A. Lublin is an employment lawyer focusing on the law of dismissal. He can be reached at email@example.com