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Class action for pandemic-related job losses in Canada

Written by
Mathews Dinsdale, Canada’s only national labour and employment law firm.
Authors
Paul D. McLean
Partner - Canada
Mathews Dinsdale
Eric Kroshus
Associate - Canada
Mathews Dinsdale
Canada
03.01.22
3
The British Columbia Supreme Court in Canada has ruled that former employees terminated as a result of the COVID-19 pandemic can bring a class action against the hotel that employed them.

The British Columbia Supreme Court has certified a class action lawsuit brought by former employees against the owners of the Pan Pacific Hotel, located in Vancouver, British Columbia.

Background

Romeul Escobar, a former concierge with the Pan Pacific Hotel, was one of a number of employees of the Pan Pacific Hotel whose employment was terminated as a result of the COVID-19 pandemic.

With the support of a trade union, Unite Here, Local 40 (the ‘Union’), he filed a class action lawsuit in the British Columbia Supreme Court, seeking damages on behalf of a class of hourly employees of the hotel.

Class actions

In British Columbia, a class action allows an individual (the ‘representative plaintiff’) to bring a lawsuit on behalf of a larger group of people who have a common claim. While historically rare, over the past decade, we have seen an increase in class actions arising from workplace law issues, most commonly mass terminations and systemic harassment complaints.

The British Columbia Class Proceedings Act sets out the legal threshold that a representative plaintiff must meet in order to certify a class action proceeding:

  • The pleadings disclose a cause of action.
  • There is an identifiable class of two or more persons.
  • The claims of the class members raise common issues.
  • A class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues.
  • There is a representative plaintiff who will fairly and adequately represent the issues of the class, has proposed a workable plan for the class proceeding and does not have a conflict with the other class members on the common issues.
Application for certification

As filed, Mr. Escobar’s class action sought damages for claims arising from wrongful dismissal, the breach of the group termination provisions of s64 of the Employment Standards Act, the breach of the duty of good faith and honest performance, unjust enrichment arising from the group termination benefits Mr. Escobar claimed his employer should have paid and punitive damages.

Pragmatically, as the class was comprised of hourly hotel employees, the claims for group termination pay and unjust enrichment were, in all likelihood, the ‘big ticket’ items identified by the Union in making the decision to pursue the class action. For many of the employees, their common law entitlement to damages for wrongful dismissal would be unlikely to be substantial.

Unfortunately for Mr. Escobar, the Supreme Court, relying on well-established legal precedence in British Columbia, concluded that rights granted by the Employment Standards Act are not enforceable in civil proceedings. As a result, any claim for group termination benefits, or claims for breach of the duty of good faith and honest performance arising from the group termination benefits, cannot form the basis of a civil claim.

The same rationale was applied to strike the claims relating to alleged unjust enrichment arising from the group termination pay which were not paid by the employer. Accordingly, those claims were also not certified by the Court.

With respect to damages for mental distress, as each employee would have a different reaction arising from the termination of their employment, the Court concluded it was not proper to certify that claim.

The Court then addressed the balance of the claims for damages sought in the class action. The Court accepted only the following common issues for certification:

  • whether the hotel had fundamentally changed a term of the class members’ employment contracts by cancelling their hours due to the impact of the COVID-19 pandemic (e.g. a constructive dismissal allegation);
  • whether the notice period should be increased because of a lack of alternative employment caused by the COVID-19 pandemic in the hospitality sector and labour market generally;
  • whether the hotel intentionally misled class members about their prospects for ongoing employment and, if so, did that conduct amount to a breach of the hotel’s duty of good faith and honest performance toward Class members and what damages arise from such breach; and
  • whether the employer’s conduct give rise to a claim for punitive damages.

 

The Court concluded that, in the face of these common issues, certification of the class action was appropriate. The claim will now proceed as a certified class action and marks one of the first class actions in Canada which deals with terminations arising from the COVID-19 pandemic to be certified. It is very unlikely that it will be the last.