• About
  • Offices
  • Careers
  • News
  • Students
  • Alumni
  • Payments
  • EN | FR
Background Image
Bennett Jones Logo
  • People
  • Expertise
  • Knowledge
  • Search
  • FR Menu
  • Search Mobile
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
View all
Practices
Corporate Litigation Regulatory Tax View all
Industries
Energy Infrastructure Mining Private Equity & Investment Funds View all
Advisory
Crisis & Risk Management Public Policy
View Client Work
International Experience
Insights News Events Subscribe
Arbitration Angle Artificial Intelligence Insights Business Law Talks Podcast Class Actions: Looking Forward Class Action Quick Takes
Economic Outlook New Energy Economy Series Quarterly Fintech Insights Quarterly M&A Insights Sustainability & the CIO
People
Offices
About
Practices
Industries
Advisory Services
Client Work
Insights
News
Events
Careers
Law Students
Alumni
Payments
Search
Subscribe

Stay informed on the latest business and legal insights and events.

LinkedIn LinkedIn Twitter Twitter Vimeo Vimeo
 
Blog

'Tis the Reason: ABCA Considers Expanding Gatekeeping Role of Courts in Certification of Workplace Class Proceeding

December 13, 2022

Written By Christine Plante, Justin Lambert, Michael Eizenga and Hana Syed

Workplace class proceedings are on the rise in Canada. Recent class actions have involved employee claims for overtime, vacation time, damages for COVID-19 pandemic terminations, extended healthcare benefits, misclassification of workers and systemic discrimination and harassment. The Alberta Court of Appeal (ABCA) decision in Flesch v Apache Corporation, 2022 ABCA 374 [Flesch] now adds claims for long-term incentive compensation to this growing list. This decision also revisits the "gatekeeping" role the court has in certifying such class proceedings.

Decision Overview

In Flesch the appellants Paramount Resources (Paramount, formerly Apache Canada) and Apache Corporation, as well as members of its board of director's management development and compensation committee, appealed the chambers judge's decision certifying a class proceeding brought on behalf of approximately 347 employees. The employee group claims damages arising from the cancellation of awards under Apache's omnibus long-term compensation plan.

Through a series of amalgamations, Apache Canada was sold to the company which later became Paramount. As part of the transition, Apache cancelled all restricted stock units, stock options and performance awards grants, advising transferred employees that they would instead participate in Paramount's share option plan—one that the plaintiffs claim to be far less remunerative.

On application, the chambers judge certified the action as a class proceeding as against Apache Corporation (asserting that it was a common employer to the Apache Canada employees), Paramount (as the successor employer) and the individual management and board members of the management development and compensation committee. The class proceeding claimed damages in breach of contract, breach of duty of good faith, breach of fiduciary duty and unjust enrichment.

The ABCA upheld all certification issues determined by the chambers judge except one—the claim for unjust enrichment was not certified as a common issue as it had no reasonable prospect of success.

Argument to Evolve Certification Test—"Reasonable Cause of Action"

While the majority of the ABCA applied the standard test for certification of a class proceeding Justice Slatter (concurring in the result) suggested enhancing the gatekeeping role of the Court at the certification stage. For example, Justice Slatter argued in favour of not just determining whether there is a cause of action, but "to consider whether the pleadings disclose a reasonable cause of action." Justice Slatter asserted that the certifying judge should identify the "main" cause of action advised, and to apply a generous test to that portion of the pleadings. With respect to any collateral causes of action, the judge should ascertain whether those additional causes of action are "reasonable" and should be examined as to their prospect of success, and whether they will enhance the policy objectives of class proceedings. While Justice Slatter's opinion was not part of the majority decision, it will be interesting to observe whether his suggestion of an enhanced gatekeeping role gains any traction with judges hearing certification applications in Alberta.

Key Takeaways

  • Workplace class proceedings continue to increase in prevalence and subject matter, now including claims for long-term incentive compensation founded on breach of contract, breach of fiduciary duty and breach of the duty of good faith in contractual performance.
  • Employers with large workforces participating in incentive programs should be alert to legal risks when revising those programs, including claims for constructive dismissal and class proceedings.
  • Employers transitioning large workforces as part of corporate transactions should be alert to risks when comparable compensation is not "substantially similar in the aggregate".
  • As here, there is a risk that courts may certify class action claims relating to long-term incentive plans against individual committee and board members who participate in the management of those incentive plans. While these individual claims based on breach of fiduciary duties may have a low chance of success, the court may still apply the standard "cause of action" test" to a certification. This low evidentiary threshold would allow these claims against individual members of the board of directors and management to proceed through litigation.
  • The concept of good faith contractual performance as a general organizing principle of the common law of contract, as espoused in the Supreme Court of Canada in Bhasin v Hrynew, continues to be applied to employment claims.
  • The "common employer" doctrine may result in shared liability when incentive plans apply across an interrelated corporate group.
  • Successor employers may be added to class proceedings based on the conduct of prior employers.

Members of the national Bennett Jones Employment Services and Class Actions groups are available to discuss the impact of this decision and ways in which it can be incorporated into risk assessments.

Please note that this publication presents an overview of notable legal trends and related updates. It is intended for informational purposes and not as a replacement for detailed legal advice. If you need guidance tailored to your specific circumstances, please contact one of the authors to explore how we can help you navigate your legal needs.

For permission to republish this or any other publication, contact Amrita Kochhar at kochhara@bennettjones.com.

Download PDF

Authors

  • Christine  Plante Christine Plante, Partner
  • Justin R. Lambert Justin R. Lambert, Partner
  • Michael A. Eizenga L.S.M. Michael A. Eizenga L.S.M., Partner
  • Hana  Syed Hana Syed, Articling Student

Related Links

  • Insights
  • Media
  • Subscribe

Recent Posts

Blog

Upending the Ground Rules: Proposed Major Overhaul [...]

May 08, 2025
       

Blog

Government of Alberta Proposes Significant Changes [...]

May 06, 2025
       

Blog

What Does the SPAC IPO Rebound Mean for Cross-Border Deals?

May 05, 2025
       

Blog

Q&A on Protecting Family Enterprises Through Collaborative Family Law

April 29, 2025
       

Blog

CSA Announces Pause on Climate-Related and Diversity-Related [...]

April 28, 2025
       
Bennett Jones Centennial Footer
Bennett Jones Centennial Footer
About
  • Leadership
  • Diversity
  • Community
  • Innovation
  • Security
Offices
  • Calgary
  • Edmonton
  • Montréal
  • Ottawa
  • Toronto
  • Vancouver
  • New York
Connect
  • Insights
  • News
  • Events
  • Careers
  • Students
  • Alumni
Subscribe

Stay informed on the latest business and legal insights and events.

LinkedIn LinkedIn Twitter Twitter Vimeo Vimeo
© Bennett Jones LLP 2025. All rights reserved.
  • Privacy Policy
  • Disclaimer
  • Terms of Use
Logo Bennett Jones