Class action lawsuits on the rise: But mass proceedings may be mass mistake
Author: Daniel A. Lublin
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. But mass justice may come with a price: employees, excited by the prospects of multi-million dollar settlements, unaware that their interests may not be aligned.
Don’t misunderstand. If you are one of the thousands of Canadian employees with claims for overtime, unpaid wages or pensions, joining a class action lawsuit makes sense. Pursuing the matter on an individual basis is neither cost-effective nor does it garner the same attention from your ex-employer as a $600-million lawsuit on behalf of 10,000 employees would, such as the suit the CIBC currently faces for unpaid overtime. With the potential of recovering seven-figure damage awards and moving their case’s coverage from this column to the front page of the news, the temptation to sue as a group is difficult to resist.
However, with recent workplace class action lawsuits for overtime and unpaid wages sharing national headlines with large scale downsizing and layoffs, class action lawyers have been sharpening their pens, taking aim at mass wrongful dismissal actions. But not so fast. In wrongful dismissal suits, where the individual facts of each ex-employee’s claim determines its ultimate merit, a class proceeding may be a mass mistake. Here are some of my concerns:
- Not all class action lawsuits actually proceed. Class action firms spend great time and expense attempting to have the case certified by a judge. Some linger uncertified for years. For overtime claims, such as the CIBC case, which is still pending, most employees remain at their jobs or have found others. But in wrongful dismissal cases where the plaintiffs are unemployed, there is a need for speedy settlements or quick summary judgments.
- How will settlement monies in class action wrongful dismissal suits be appropriately distributed? As the Supreme Court recently confirmed in the Keays case, damages for wrongful dismissal should be adjusted upwards or downwards based on the unique individual circumstances of each plaintiff, such as any particular reason that would cause one person to take longer to find another job. Mass lawsuits for wrongful dismissal may also create conflicting interests within the members of the class. There will be instances where some ex-employees should settle their claims, such as where re-employment is certain, while others should hold out for a better deal.
- How will legal fees be equitably distributed? Class action lawsuits pay lawyers based on a percentage of recovery. However, in a class action setting, the work performed for each claimant is, in part, a duplication of the work performed for the group. Further, if the lawyers are paid based on a percentage of recovery for the group, what incentive do they then have to really consider the unique circumstances facing each plaintiff?
In a mediation that I did last week, I represented five employees who are suing their ex-employer for wrongful dismissal. It is not a class action suit, but I have advanced their claims as a group, though each employee has a separate claim. 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.
Although the case did not settle, we made our point. If we could sue individually but proceed as a group, what incentive do we have to join a class action?