COURT OF APPEAL FOR ONTARIO

CITATION:  McCracken
    v. Canadian National Railway Company,
    2012 ONCA 445

DATE: 20120626

DOCKET: C52635

Winkler C.J.O., Laskin and Cronk JJ.A.

BETWEEN

Michael Ian McCracken

Plaintiff
    (Appellant/Respondent by
    Cross-Appeal)

and

Canadian National Railway Company

Defendant (Respondent/Appellant by Cross-Appeal)

Louis Sokolov, Peter L. Roy, Steven Barrett, David F.
    OConnor and Sean M. Grayson, for the appellant/respondent by cross-appeal

Guy J. Pratte, Morton G. Mitchnick, Sylvie Rodrigue,
    Jeremy J. Devereux and Michael Kotrly, for the respondent/appellant by
    cross-appeal

Heard: February 28 and 29, 2012

On appeal from the orders of Justice Paul M. Perell of
    the Superior Court of Justice, dated August 17, 2010, with reasons reported at
    2010 ONSC 4520, 3 C.P.C. (7th) 81, and on appeal from the costs order of
    Justice Paul M. Perell, dated November 2, 2010, with reasons reported at 2010
    ONSC 6026, 100 C.P.C. (6th) 334.

Table of
    Contents

A.

INTRODUCTION
.
3

B.

OVERVIEW
    OF THE PROCEEDINGS
.
4

C.

FACTUAL
    BACKGROUND
.
6

(1)

Overview
    of the Proposed Class Proceeding
.
6

(2)

The
    Role of FLSs at CN
.
8

(3)

CNs
    Overtime Policy
.
10

(4)

Hours
    Worked by FLSs
.
11

(5)

Relevant
Code
Provisions
.
12

(6)

Procedural
    History
.
13

D.

THE
    MOTION JUDGES REASONS
.
14

(1)

Section
    5(1)(a):  Do the Pleadings Disclose a Cause of Action?
.
16

(2)

Section
    5(1)(b): Identifiable Class
.
17

(3)

Section
    5(1)(c):  Common Issues
.
17

(4)

Section
    5(1)(d): Preferable Procedure
.
21

(5)

Section
    5(1)(e):  Representative Plaintiff and Litigation Plan
.
22

(6)

Costs
.
22

E.

THE
    MISCLASSIFICATION ISSUE
.
23

(1)

Misclassification
    is a Necessary Element for Establishing Liability
.
23

(2)

Plaintiffs
    Proposed Common Issues Concerning Misclassification
.
24

(3)

Plaintiffs
    Evidentiary Basis for Misclassification as a Common Issue
.
25

(4)

CNs
    Evidence on the Misclassification Issue
.
29

F.

ANALYSIS
.
33

(1)

Did
    the Motion Judge Err by Creating a New Test for Certification?
.
33

(2)

Did
    the Motion Judge Err by Rejecting the Plaintiffs Proposed Common Issue of
    Misclassification?
.
37

(3)

Did
    the Motion Judge Err by Reframing a Common Issue Concerning the Minimum
    Requirements to be a Managerial Employee at CN?
.
57

G.

ADDITIONAL
    ISSUES
.
60

H.

CONCLUSION
    AND DISPOSITION
.
65

APPENDIX A: Plaintiffs Revised List
    of Common Issues
.
66

APPENDIX B: Motion Judges Proposed
    Amended Revised List of Common Issues

68

APPENDIX C: Common Issues Approved By
    The Motion Judge
.
70

Winkler C.J.O.:

A.

INTRODUCTION

[1]

This is the third of a trilogy of class action cases against
    federally-regulated employers claiming unpaid overtime pay: see also
Fulawka
    v. Bank of Nova Scotia
, 2012 ONCA 443,
and
Fresco v. Canadian Imperial Bank of Commerce
, 2012 ONCA 444. The
    courts concurrently released reasons in
Fulawka
and
Fresco
explain why the two class actions against the defendant banks for unpaid
    overtime pay should be certified.

[2]

The present class action against the defendant, Canadian National
    Railway Company (defendant or CN), is premised on a different theory of
    liability than in the overtime class actions against the banks. The overtime
    actions against the banks are brought on behalf of class members who were
    classified as non-managerial employees.
[1]
Their right to be paid overtime wages at 1.5 times their normal hourly rate is
    provided for in their employment contracts and by the provisions of Part III of
    the
Canada Labour Code
, R.S.C. 1985, c. L-2 (
Code
). The
    central issue is not whether the class members are eligible for overtime pay
    but, rather, whether the policies, practices or systems of the defendant banks
    have effectively and routinely denied payment of overtime compensation to class
    members, contrary to the express or implied terms of their employment
    contracts.

[3]

In contrast, in the present case, CN has classified the class members as
    managerial employees. The class consists of First Line Supervisors (FLSs)
    employed by CN. The effect of s.167(2)(a) of the
Code
is that
    employers are not required to pay overtime compensation as provided in Part III
    of the
Code
to employees who are managers or superintendents or
    exercise management functions. CNs overtime policy explicitly excludes FLSs
    from eligibility for overtime pay. The success of the proposed class action for
    unpaid overtime pay thus depends on the threshold issue whether CN has
    misclassified FLSs as managerial employees.

B.

OVERVIEW OF THE PROCEEDINGS

[4]

The motion to certify the class action against CN under s. 5(1) of the
Class
    Proceedings Act, 1992
, S.O. 1992, c. C.6, s. 30 (
CPA
), was
    heard together with CNs motion under Rule 21 of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194, to dismiss the action. On the Rule 21
    motion, CN argued that the Superior Court of Justice lacks jurisdiction to hear
    the proposed action. The motion judge rejected this argument. However, he
    struck, dismissed and stayed various elements of the plaintiffs claims in
    negligence and breach of contract. The motion judge granted the motion for
    certification, but in doing so, he significantly re-drafted the common issues.

[5]

Both parties have appealed different elements of the motion judges
    orders. The plaintiff appeals from the Rule 21 order and the certification
    order, while CN appeals and cross-appeals from the Rule 21 order and appeals
    from the certification order. CN also appeals from the order awarding the
    plaintiff his costs of both motions. All the appeals that would otherwise lie
    in the Divisional Court have been traversed to this court.
[2]

[6]

The parties raise a matrix of issues before this court. However, it is
    not necessary to decide most of these issues to dispose of the various appeals
    and cross-appeals.

[7]

For the reasons that follow, I would allow CNs appeal from the
    certification order and set aside that order. I conclude that the motion judge
    was correct in rejecting the plaintiffs proposed common issues concerning
    whether CN misclassified FLSs as managerial employees. The evidence on the
    motion did not support a finding that a common issues trial judge would be able
    to resolve the fundamental issue of misclassification on a class-wide basis.
    Rather, the evidence indicated that individualized assessments of the job
    duties and responsibilities of class members would be needed to determine if
    they were properly classified.

[8]

However, the motion judge fell into reversible error in recasting as a
    common issue the question of what the minimum requirements are to be a
    managerial employee at CN. The same evidentiary deficiency  the lack of
    evidence supporting a finding of a core of commonality concerning FLSs job
    duties and responsibilities  still remained.

[9]

These conclusions on the absence of a core of commonality make it
    unnecessary to decide the correctness of the motion judges rulings on the Rule
    21 motion, or to review his rulings on the other proposed common issues and
    preferable procedure. At the end of these reasons, I comment briefly on a few
    practice points that arise out of some of these rulings.

C.

FACTUAL BACKGROUND

(1)

Overview
    of the Proposed Class Proceeding

[10]

The
    putative representative plaintiff, Michael McCracken (plaintiff), is a former
    CN employee. He started this action on behalf of approximately 1,550 current
    and former non-unionized CN employees across Canada who have held the position
    of FLS since July 5, 2002.

[11]

The
    plaintiff began working at CN in 1998 as a unionized employee. In October 2005,
    he was promoted to the non-unionized position of manager of corridor operations,
    which is a FLS position. In January 2008, he was promoted to the position of senior
    manager, corridor operations. The plaintiff alleges in his statement of claim
[3]
that the senior manager position is a FLS position, while according to CN, it is
    a higher-ranking managerial position rather than a FLS position. The plaintiff
    held the position of senior manager, corridor operations until March 26, 2008,
    the day after he served the statement of claim in this action. He deposed that
    he was informed that he was being demoted to the unionized position of dispatcher
    because he had started the action and not for performance deficiencies. The
    plaintiff resigned from CN in 2010.

[12]

The
    plaintiff pleads causes of action against CN based on CNs alleged violation of
    the
Code
, breach of contract, breach of a duty of good faith,
    negligence and unjust enrichment. The central allegation driving the proposed
    class action is that, since July 5, 2002, CN has uniformly, deliberately,
    improperly, negligently, and illegally misclassified FLSs as managers. As a
    result of this misclassification, CN is said to have unlawfully deprived the
    class members of their entitlement to receive overtime pay and holiday wages as
    stipulated by the
Code
. The statement of claim alleges that all class
    members have been regularly scheduled, as a matter of uniform company policy,
    to work in excess of 40 hours per work week or 8 hours per day without
    receiving overtime pay, contrary to law and in violation of various provisions
    of Part III of the
Code
, as will
    be discussed below
.

[13]

The
    plaintiff claims $250 million in general damages, $50 million in special
    damages and an order pursuant to s. 24 of the
CPA
directing an
    aggregate assessment of damages. The plaintiff also seeks an order requiring CN
    to disgorge amounts wrongly withheld from the class in respect of unpaid
    overtime and holiday pay. In addition, the plaintiff requests various forms of
    declaratory and injunctive relief, including a declaration that CN has been
    unjustly enriched, and a declaration that CN has breached the
Code
and
    the express or implied terms of the employment contracts with class members by
    misclassifying these employees and by failing to pay them overtime pay.

(2)

The Role
    of FLSs at CN

[14]

In
    CNs employment hierarchy, FLSs are immediately above unionized workers and
    immediately below the non-unionized managerial positions of assistant superintendant
    and superintendant. FLSs are the primary point of contact between the
    non-unionized and unionized workforce.

[15]

Approximately
    82 percent of CNs Canadian employees are unionized. This element of CNs
    workforce is represented by five major unions and is divided into over 30
    different bargaining units, each of which is governed by a different collective
    agreement. The collective agreements regulate such matters as the length of the
    work week, overtime, vacation pay, and contracting out of work. FLSs are
    required to know and enforce the rules found in the various collective
    agreements that apply to the unionized employees under their supervision.

[16]

CNs
    recruiting materials describe the duties of FLSs as follows:

The First Line Supervisor manages the day-to-day operation of
    their territory through their unionized staff; ensures the on-time performance
    of trains, delivering on our commitments to our customers; the efficient
    utilization of locomotives and repair of cars (Mechanical); repair and
    maintenance of trackage and signals (Engineering); and safe haulage of
    merchandise to their destination (Transportation); as well as interacting with
    customers (Marketing).

[17]

CN
    identified 70 different job positions held by FLSs. More than 90 percent of
    FLSs are responsible for duties associated with train operations, which
    encompasses the movement of trains, the repair and maintenance of tracks and
    signals, and the repair and maintenance of train cars and engines. There are
    also FLS positions in finance and accounting, customer service, corporate
    facilities, and various other miscellaneous positions.

[18]

The
    salary range for FLSs is from $55,600 to $109,200. FLSs are eligible for
    bonuses equivalent to 15 to 30 percent of their base pay. They are also entitled
    to benefits, including a defined benefit pension plan and a share purchase
    plan.

(3)

CNs
    Overtime Policy

[19]

CNs
    overtime policy, titled Compensation Management  Time Management (Policy),
    came into effect on January 1, 2006. The Policy put into writing the policy and
    practice that had existed at CN since July 5, 2002.

[20]

The
    Policy states that it is intended for non-unionized, professional and
    administrative support employees working in Canada.
For greater clarity,
    this policy does not apply to managers, supervisors or anyone who exercise[s]
    management functions
 (emphasis added). The Policy entitles non-unionized
    and non-managerial employees of CN to receive compensation at a rate of 1.5
    times the employees regular rate for pre-authorized or directed overtime hours
    worked.

[21]

FLSs
    are not eligible for such overtime pay under the Policy.  However, the Policy
    provides that FLSs may be paid discretionary lump sum amounts in extraordinary
    circumstances where extensive hours are required:

In the spirit of the FLS compensation package, First Line
    Supervisors may receive payments under the Service Response/Emergency program,
    in case of extraordinary circumstances where extensive hours are required e.g.
    derailments, severe winter conditions etc. Under these special circumstances, a
    Vice-President, General Manager or equivalent may authorize a special lump sum
    payment to be paid in increments of $500. In cases involving payments in excess
    of $2,500, the authorizing officer will review the circumstances with the appropriate
    Vice-President.

[22]

The
    Policy also provides that FLSs who are required to work on a general holiday
    will receive time off at the regular rate.

[23]

The
    plaintiff refers to the Policy several times in his statement of claim. He
    asserts that the Policy forms part of each class members contract of
    employment. He alleges that FLSs had been entitled to receive overtime wages
    until July 5, 2002, when the Policy came into effect. The plaintiff requests a
    declaration that the Policy is unlawful, void and unenforceable.

[24]

On
    the certification motion, CN led evidence that conflicted with the plaintiffs
    allegation that FLSs received overtime wages up until July 5, 2002. CN pointed
    to its 1998 policy on overtime applicable to FLSs working in the Operations
    Division,
[4]
which announced that CN was adopt[ing] the CP [Canadian Pacific] method of not
paying overtime or
    shift premiums and instead create[d] an allowance for these FLSs.

(4)

Hours
    Worked by FLSs

[25]

The
    plaintiff pleads that FLSs regularly work in excess of 40 hours per week or
    eight hours per day and they regularly work on statutory holidays. He also
    pleads that FLSs are frequently called for unscheduled work and to substitute
    for unionized and non-unionized employees: see the motion judges reasons, at
    para. 48.

[26]

The
    plaintiff pleads, and the defendant does not dispute, that CN does not keep
    records of the hours worked by FLSs.

(5)

Relevant
Code
Provisions

[27]

The
    provision of the
Code
of most
    significance in
this case is s. 167(2), which states:

167. (2) Division I does not apply to or in
    respect of employees who

(
a
) are
    managers or superintendents or exercise management functions

[28]

The
    plaintiff also pleads and relies on provisions in Division I of Part III of the
Code
regulating the standard hours of work and payment of overtime for
    employees who are subject to Part III: see ss. 169(1) and 174.  As explained in
Fulawka
, at para. 33, the
combined
effect
of ss. 169(1) and 174 of the
Code

is
that an
employer
    must pay an employee overtime wages at the rate of 1.5 times the regular rate
    of wages when the employee
works more than eight
    hours in a day or more than 40 hours in a week. However, s. 167(2)(a) exempts
    employees who are managers, superintendents or who exercise management
    functions from entitlement to overtime pay under these provisions.

[29]

The
    plaintiff further pleads and relies on the provisions in Division XVI of the
Code
,
and in the accompanying regulation,
    which impose obligations on employers to accurately record and maintain records
    of employees hours of work: see ss. 252(2) and 264(a) of the
Code
and
    s. 24 of the
Canada Labour Standards Regulations
, C.R.C., c. 986.
[5]
He also pleads and relies on the provisions in ss. 191, 196, 198 and 199 of
    Division V of the
Code
governing compensation for general holidays,
    including the entitlement of managerial employees to be compensated for work
    performed on a general holiday.

[30]

The
    plaintiff pleads that the duties and obligations found in these provisions of
    the
Code
and the
Regulations
are implied by fact or law into the contracts of employment of class members.

(6)

Procedural
    History

[31]

The
    plaintiff moved to certify the action as a class proceeding. He submitted that
    a misclassification case such as his is inherently amenable to resolution by
    way of class proceeding. CN argued that none of the criteria for certification
    was satisfied.

[32]

CN
    moved under rule 21.01(3)(a) for an order dismissing the action on the basis
    that the Superior Court of Justice has no jurisdiction to directly enforce the
Code
.
CN also moved under rule 21.01(1)(b) to strike portions of the claim for
    failing to disclose a reasonable cause of action. The certification and Rule 21
    motions were argued together in July 2011.

D.

THE MOTION JUDGES REASONS

[33]

The
    motion judge granted CNs Rule 21 motion in part and granted the plaintiffs
    certification motion with qualifications and conditions. His reasons on the
    Rule 21 motion may be summarized as follows:

·

The language of the
Code
reveals that Parliament
    intended that courts have a subject matter jurisdiction to enforce wage claims
    for overtime and thus the statutory rights in the
Code

are
    terms of the contract of FLSs by force of statute: see paras. 114-85.

·

The plaintiffs claim for breach of the express or implied terms
    of the employment contract discloses a reasonable cause of action: see paras.
    199-227.

·

However, the plaintiffs claim for breach of contract based on
    CNs alleged failure to pay holiday pay should be dismissed on the merits
    because CN provided class members with time
in lieu
of holiday pay,
    which is permitted by ss. 198 and 199 of the
Code
: see paras. 204-13.

·

The plaintiffs claims for breach of an express or implied term
    of the contract should be stayed because these causes of action are academic or
    moot, the court having concluded that the terms of the
Code
are terms
    of the contract by force of statute: see paras. 228-34.

·

The plaintiff has actually proven on the Rule 21 motion that he
    has a cause of action for breach of a statutory implied term, which is an issue
    that might otherwise have been decided at the common issues trial: see paras.
    224-27.

·

The court on a certification motion has jurisdiction to decide or
    stay what would otherwise be a common issue based on rule 37.13(2)(a) of the
Rules
    of Civil Procedure
,
and
    this jurisdiction is augmented and enhanced by ss. 12 and 13 of the
CPA
:
    see paras. 228-32.

·

The asserted cause of action for breach of a free-standing duty
    of good faith should be struck because no such independent duty exists. However,
    the pleading of the material facts alleging a breach of duty of good faith may
    remain in support of the cause of action for breach of contract: see paras.
    235-45.

·

The plaintiff has shown a cause of action for unjust enrichment:
    see para. 246-48.

·

The plaintiffs proposed cause of action for negligence should be
    struck from the statement of claim for failing to disclose a reasonable cause
    of action:  see paras. 249-72.

·

CNs limitation period argument is limited to the claims and
    causes of action for negligence and breach of a free-standing duty of good
    faith based on CN allegedly improperly classifying its FLSs as managers. These
    claims are not proceeding so the limitation period issue is moot:  see paras.
    273-76.

[34]

The
    motion judge then turned to the certification motion. Before assessing the five
    criteria for certification under s. 5(1) of the
CPA
,
[6]
the motion judge addressed CNs argument that the evidentiary threshold that a
    plaintiff must meet to prove the certification criteria should be higher than
    the some basis in fact test described in
Hollick v. City of Toronto
,
    [2001] 3 S.C.R. 158, at paras. 16-26. At paras. 291-92, the motion judge
    described a festering point of complaint by defendants that a plaintiff need
    only show some basis in fact for each of the criteria for certification to
    obtain a certification order.

[35]

The
    motion judge explained that the some basis in fact test is not applied in the
    way that defendants have suggested. Rather, he observed that satisfying the
    some basis in fact test is necessary but not sufficient for the satisfaction
    of the various criteria (at para. 300). I will say more about his reasons on
    this issue below, at paras. 72-81.

[36]

The
    motion judge next addressed the five criteria for certification and concluded
    they were met for the following reasons.

(1)

Section 5(1)(a):  Do the Pleadings
    Disclose a Cause of Action?

[37]

The
    motion judge relied on his reasons on the Rule 21 issues to conclude that the
    plaintiff had shown a cause of action for unjust enrichment and for breach of
    contract based on express or implied contractual terms and based on contractual
    terms implied by force of statute: see para. 304.

(2)

Section
    5(1)(b): Identifiable Class

[38]

CN
    did not dispute that the plaintiff identified a class that technically
    satisfies the requirements of the

CPA
,

but argued that the class definition was deficient because the plaintiff failed
    to provide any evidence concerning FLSs in 56 of the 70 job positions held by
    FLSs, and argued that there was thus no basis in fact for including these FLSs
    as class members.

[39]

The
    motion judge found this argument to be fallacious because the plaintiff
    demonstrated some basis in fact for his own cause of action and for his own job
    description. He concluded that this was a sufficient evidentiary basis for the
    plaintiffs submission that there is a group of similarly-situated claimants
    with similar claims: see paras. 305-11.

(3)

Section
    5(1)(c):  Common Issues

[40]

The
    plaintiff initially proposed a list of seven common issues (the Revised
    List), which includes misclassification as common issue 1: see the motion
    judges reasons, at para. 322, and Appendix A to these reasons. The plaintiffs
    Revised List was predicated on his submission that, at the common issues trial,
    the court could and should determine whether FLSs were properly or improperly
    classified as managers on a class-wide basis: see the motion judges reasons,
    at para. 323.

[41]

The motion judge expressed reservations about the commonality of
    some of the proposed issues. To focus the discussion on his concerns, the
    motion judge prepared an amended list containing six common issues (the Amended
    Revised List) and requested the parties submissions on his suggestions:  see the
    motion judges reasons, at para. 325, and Appendix B to these reasons. This
    list did not include misclassification of the class as a free-standing common
    issue, although it included questions about whether CN had statutory or common
    law duties to properly classify class members and, if so, whether CN had
    breached any of these alleged duties.

[42]

The
    plaintiff accepted the Amended Revised List with the following three
    reservations: i) misclassification of the whole class should be certified as a
    common issue, as the plaintiff had initially submitted; ii) there should be an
    additional common issue about how management status can be determined on a
    class-wide basis; and iii) there should be a common issue about the aggregate
    assessment of damages.

[43]

CN
    disputed that any of the proposed common issues  whether from the plaintiffs Revised
    List or the motion judges Amended Revised List  are proper common issues for
    one or more or all of the following reasons: (i) the issues are not common to
    the class; (ii) answering the proposed common issues depends on individual
    findings of fact for each claimant; (iii) the proposed common issues are not
    necessary to the resolution of each class members claim for overtime; (iv)
    resolution of the common issues would not significantly advance the litigation;
    and (v) the common issues lack a factual basis in the evidence.

[44]

The
    motion judge examined each of the proposed common issues from both lists and
    through a process of elimination, he arrived at a final list of six questions,
    which he ultimately certified (Approved List): see the motion judges
    reasons, at para. 351, and Appendix C to these reasons. I include his Approved
    List here for ease of reference:

Common Issue One  Payment of Overtime Pay

Did the Class Members receive overtime pay under the
[
Code
]?

Common Issue Two  Contract Terms

What are the terms by force of statute of the Class Members
    contracts of employment with the Defendant respecting: (i) classification;
    (ii) regular and overtime hours; and (iii) the recording of hours worked?

Common Issue Three  Minimum
    Requirements of Manager Status at CN

In accordance with the meaning under s. 167 (2) of the

Canada Labour Code
,
of

employees who are managers or superintendents or
    exercise management functions, what are the minimum requirements to be a
    managerial employee at CN?

Common Issue Four  Unjust Enrichment

Would the Defendant be unjustly enriched by failing to
    compensate a Class Member with pay or overtime pay for hours worked in excess
    of his or her standard hours of work?

Common Issue Five  Damages or other relief

If the Defendant breached a duty or its contract or was
    unjustly enriched what remedies are available to the Class Member?

Common Issue Six  Punitive Damages

Would the Defendants conduct justify an award of aggravated,
    exemplary or punitive damages?

[45]

The
    motion judge observed, at paras. 353-54, that four of these questions (common
    issues 1, 2, 4 and 5) are answerable before the common issues trial. He said,
    at para. 359, that while answering these four questions would advance the
    litigation, they are not determinative of the action because the heart of the
    matter remains whether the first line supervisors were or were not managers,
    which is unanswered.

[46]

In
    arriving at this list, the motion judge rejected the plaintiffs proposed
    common issues 1, 2, 3(a)-(b), 4(a)-(i) and 7(a) from the Revised List. He
    observed, at para. 331, that these questions, which include the proposed misclassification
    common issue: lack commonality or would depend on individual findings of fact
    for each claimant. In his opinion, these questions cannot be determined on a
    class-wide basis and rather require individual questions to be answered.

[47]

Rather
    than certifying misclassification as a common issue, the motion judge certified
    a common issue of his own design  common issue 3  which would identify the
    minimum requirements to be a managerial employee at CN.
[7]
The motion judge reasoned, at para. 363, that this question avoids the
    problems of commonality of the plaintiffs proposed misclassification
    question. He found, at paras. 363-64, that common issue 3 could be answered on
    a class-wide basis and that doing so would substantially advance the litigation
    because it would divide the class into the following three groups:

i) class members who satisfy the minimum standards for being a
    manager at CN because of who they are and what they do;

ii) class members who could not possibly satisfy the minimum standards
    for being a manager at CN; and

iii) class members whose status as a manager at CN remained to
    be determined.

[48]

According
    to the motion judge, at para. 367, by dividing the class into these three
    groups, the claims of the first group would be dismissed, while the claims of
    the latter two groups would proceed to manageable individual issues trials as
    contemplated by s. 25 of the
CPA
.

(4)

Section
    5(1)(d): Preferable Procedure

[49]

After
    critiquing the parties approach to the preferable procedure issue, at paras.
    445-51, the motion judge concluded, at para. 456,
that
    a class action is preferable to the administrative process under the
Code
for
    resolving the class members claims. He observed that the class proceeding will
    provide access to justice and judicial economy for a mass mistake in an
    efficient and manageable way.

(5)

Section
    5(1)(e):  Representative Plaintiff and Litigation Plan

[50]

The
    motion judge found Mr. McCracken to be a suitable representative plaintiff
    because he has no conflict of interest in the sense that his claim or position
    in the class is adverse in interest to other class members and he was astute
    enough to hire seasoned class action counsel to prosecute the litigation: see
    paras. 471-72.

[51]

As
    for the litigation plan, the motion judge observed, at para. 474, that the
    plaintiff must go back to the drawing board and prepare a new litigation plan
    based on the outcomes of the motion and cross-motion. He held that, even in
    the absence of a suitable litigation plan, this criterion was satisfied because
    he foresaw no difficulty in producing one. The motion judge made the
    certification order subject to the condition that a litigation plan be settled.

(6)

Costs

[52]

The
    motion judge awarded the plaintiff  really class counsel  costs of the
    motions on a partial indemnity scale fixed at $740,650.55: see
McCracken v.
    Canadian National Railway Co
., 2010 ONSC 6026, at para. 33. He found that,
    even though the defendant succeeded in part on the Rule 21 motion and even
    though the plaintiffs certification motion was granted with qualifications,
    the plaintiff had achieved a level of success warranting an award of costs in
    his favour without an offsetting award in favour of CN (at para. 21).

E.

THE MISCLASSIFICATION ISSUE

(1)

Misclassification is a
    Necessary Element for Establishing Liability

[53]

As
    discussed, the class members claims for damages for unpaid overtime are framed
    in breach of statute, breach of contract, negligence and unjust enrichment. In
    attempting to make this action amenable to certification as a class proceeding,
    the plaintiff proposed a common issue concerning misclassification. In theory,
    if this common issue were to be resolved in the plaintiffs favour, this would
    be a finding that CN had uniformly and improperly classified all FLSs as
    managerial employees. Such a finding would significantly advance the unpaid
    overtime claims of class members on a class-wide basis because it would
    establish their eligibility to receive overtime wages under Part III of the
Code
.

[54]

Conversely,
    if CN were found to have properly classified the class members as managers or
    as employees who exercise managerial functions, then CN would not have breached
    any alleged statutory or private law duty to pay them overtime wages and their
    claims would fail.

[55]

The
    central factual assertion related to the misclassification issue is found in
    paragraph 13 of the statement of claim:

The nature of the Class Members duties, responsibilities and
    authority is such that they were not managers or superintendents or exercising
    management functions within the meaning of section 167(2) of the
Code
.

[56]

There
    is no question that, in the abstract, a class-wide resolution of the issue
    concerning the alleged misclassification of FLSs would significantly advance the
    litigation. A crucial question on the motion was whether there is some basis in
    fact to find that the misclassification issue could be resolved commonly.

(2)

Plaintiffs Proposed Common
    Issues Concerning Misclassification

[57]

The
    plaintiff argues that the motion judge erred in refusing to certify common
    issue 1 on his Revised List, which states:

Common Issue One  Misclassification

Are the Class Members excluded from overtime eligibility under
    contract (express or implied) and/or under the [
Code
]?

[58]

The
    plaintiffs Revised List includes other questions concerning the
    misclassification issue. These questions ask if CN had contractual, statutory,
    or tort duties to properly classify the class members and, if so, whether CN
    breached any of these duties: see common issues 2, 3(a) and (b) and 4(a)-(i) in
    Appendix A. My analysis of common issue 1 applies equally to the
    misclassification issue as it arises out of these common issues.

(3)

Plaintiffs Evidentiary
    Basis for Misclassification as a Common Issue

[59]

The
    plaintiff contends that he led evidence on the certification motion
    establishing that misclassification can be determined on a class-wide basis
    (or at the very least, on the basis of sub-groups), and that this evidence
    far exceeded the standard of some basis in fact.

[60]

The
    plaintiff points to two types of evidence that he introduced on the motion:

(1) evidence that CN made an arbitrary, class-wide
    determination that all class members are management without conducting any
    analysis of their job functions; and

(2) evidence of restrictive and common limits on class members
    authority and discretion such that they uniformly had no real decision-making
    authority in essential managerial matters.

[61]

The
    primary evidence that the plaintiff points to in the first category is the
    following testimony of CNs director of compensation, Louis Lagacé, during
    cross-examination on his affidavit:

Q. Have you ever analyzed the individual job functions [of
    FLSs]?

A. Not under my leadership.
[8]

Q. To your knowledge has it ever been done?

A. Well, I cannot speak of my predecessors. But clearly, you
    know, in our company first line supervisors are managers and therefore they are
    not subject to overtime.

Q. To your knowledge has there ever been an analysis of each of
    the jobs of the first line supervisors to determine whether theyre managers?

A. No. We rely largely on when someone is appointed a first
    line supervisor, say a trainmaster, clearly this individual is administered
    along the job grade and compensated accordingly.

[62]

The
    plaintiffs evidence in the second category  which is said to show that there are
    common limits on FLSs decision-making authority  consists of sworn affidavits
    from the plaintiff, 11 current or former class members, and two CN employees
    who are union representatives. The class members who gave affidavit evidence on
    behalf of the plaintiff held one or more of the following job titles: trainmaster,
    mechanical supervisor, chief train dispatcher (also known as manager of corridor
    operations or MCO), coordinator operations and crew management supervisor.
[9]
Although CN identified 70 different job titles for FLSs based on its payroll
    codes, the plaintiff submits that the job titles of the affiants are from a
    group of ten job titles that are held by nearly 80 percent of
    currently-employed class members.

[63]

These
    class members assert that FLSs do not have real decision-making authority in
    essential managerial matters and that they uniformly lack the following powers
    or responsibilities that are characteristic of managers:

·

the authority to hire, terminate, promote, demote or transfer
    employees;

·

the authority to represent management in collective bargaining or
    in grievance procedures;

·

unfettered authority to discipline;

·

involvement in setting budgets or policies;

·

determining employees schedules; and

·

negotiating contracts on behalf of CN.

[64]

The
    following summary of the affidavits submitted by the plaintiff illustrates the
    nature of the evidence that he tendered to show that FLSs uniformly lack real
    decision-making authority in managerial matters:

·

Affidavit evidence of Ian McCracken, who held the FLS position of
    manager, corridor operations, from 2005 to January 2008 and held the title of senior
    manager, corridor operations from January to March 2008, at MacMillan Yard,
    Toronto:

I do not believe that I was ever a manager or that I ever
    exercised management functions while I was a FLS. I could not hire, fire,
    promote, demote or transfer other employees. My efforts to assist in matters
    involving hiring were rebuffed. My power to discipline other employees was
    limited to investigating and recommending that minor disciplinary warnings be
    issued. I lacked the power to decide whether discipline would actually be
    imposed and, if so, its nature. Those decisions were made by my supervisors and
    more senior managers. I could not make budgetary or expenditure decisions on
    behalf of CN. I was told by my manager that I lacked the authority to make any
    changes to schedules for rail traffic controllers, even if I felt that a change
    was logical. When other MCOs requested the trains be subjected to unscheduled
    stops, I was expected to run these requests by the superintendent or assistant superintendent.

·

Affidavit evidence of George Anderson, presently a unionized
    employee at CN, who held three different FLS positions
[10]
from 1995 to 2006:

In my role as FLS, I did not have any authority to hire, fire,
    suspend, promote, demote or transfer employees.  I had no independent authority
    to issue demerit points, suspensions, terminations or demotions. I could
    initiate investigations and recommend demerit points to my supervisor or
    general manager, but I could not issue demerit points without their prior
    approval. I was never involved in any arbitration cases on behalf of CN. I had
    no independent authority to schedule hours of work for employees. I did not
    make any budgetary decisions and I had no involvement in the development of
    company policy or planning. I did not negotiate any contracts on behalf of CN.
    When employees under my supervision needed to work overtime, I could keep them
    working in accordance with their collective agreements and as specifically
    authorized by my superiors.
During my time at CN, I have worked primarily
    in the South Western Ontario region, including in Windsor, Sarnia and London.
    At all of these locations, in my experience, the FLSs had no different level of
    authority than described above.
[Emphasis added.]

·

Affidavit evidence of John Caissie, who has held FLS positions
[11]
in Winnipeg, Moncton, Toronto and Montreal over the last 19 years:

My responsibilities as a FLS have included supervising a number
    of employees. At no time have I exercised managerial functions. I have not had
    a determining influence on the employment, promotion or discipline of other
    staff. I have never hired, fired, promoted or transferred employees. I have
    never unilaterally disciplined employees, though I have recommended discipline
    at times to my superiors, who are under no obligation to accept my
    recommendations. I have not acted on behalf of CN at grievance arbitrations,
    nor have I ever controlled scheduling or made budgetary or expenditure
    decisions. Finally, I have never been involved in company policy or planning,
    or negotiated contracts on behalf of CN.
I understand, from speaking with
    various colleagues throughout my employment that the level of supervision I
    exercised as trainmaster, manager  crew utilizations and manager  corridor operations
    is in line with that exercised by other FLSs employed by CN in both large and
    small centres across the country.
[Emphasis added.]

(4)

CNs Evidence on the
    Misclassification Issue

[65]

CNs
    primary position on commonality, as described by the motion judge, at para. 56,
    was that the misclassification issue, as a matter of adjudication, cannot be
    proved globally in a class action because the status of each FLS must be
    assessed individually. To support this position, CN lead evidence to show a
    wide disparity in the roles and functions of FLSs, including of FLSs holding
    the same job position: see the motion judges reasons, at para. 69.

[66]

CN
    tendered evidence  including affidavits from 19 class members  to show that
    class members work in different environments ranging from small towns to large
    cities, from office environments to shops, garages, small depots, or outdoors
    in train yards, or along the vast length of track that comprises CNs rail
    network: see the motion judges reasons, at para. 44.

[67]

In
    addition, in an effort to highlight the lack of commonality of FLSs job
    functions and responsibilities, CN introduced a chart outlining the affidavit
    evidence adduced by both parties about the varying duties and responsibilities
    of class members who held the positions of MCO and trainmaster. CN argued that
    this chart illustrates that the level of authority and managerial
    responsibility of class members varies significantly. For example, some MCOs
    deposed that they have authority to approve overtime and to perform job
    performance appraisals of unionized employees without approval or oversight
    from higher levels of CN management. In contrast, other MCOs deposed that they
    have no authority to make any changes to work schedules or to provide input
    into performance evaluations.

[68]

Similarly,
    some class members who held the position of trainmaster said that they have
    authority to directly lay off unionized employees or to make decisions about
    required staffing levels that sometimes cause lay-offs, while another class
    member asserted that trainmasters cannot unilaterally lay-off employees.
    Several trainmasters gave evidence that they have the authority to remove an
    employee from service where drugs or alcohol are involved and in the event of a
    serious rule violation. There was no evidence to the contrary. Several trainmasters
    indicated that they have authority to impose demerit points and to level
    discipline, while others said that they never disciplined employees or they
    claimed to have only a limited role in discipline.

[69]

In
    addition, CNs tendered affidavit evidence indicated that FLSs working in more
    remote locations exercise greater decision-making authority than FLSs working
    in busier, more urban locations where more senior-level managers are present in
    the workplace. For example, one trainmaster, Norman Hart, deposed that he
    supervised only 16 yard employees and inbound and outbound train crews when he
    worked at CNs largest rail yard near downtown Toronto, whereas he supervised
    well over 100 employees when he worked at a smaller yard in Hornepayne,
    Ontario. His evidence indicated that he exercised more significant
    decision-making authority over unionized staff when he worked in Hornepayne
    where there was no higher-level manager within a several hundred mile radius.

[70]

CNs
    secondary line of attack against the proposed common issue of misclassification
    involved adducing evidence intended to refute the plaintiffs assertion that
    FLSs were not properly classified as managers. CN offered evidence showing the
    following attributes of FLSs, as described by the motion judge, at paras. 68-69:

·

FLSs are expected to play a pivotal role in managing CNs
    workforce because they are the primary point of contact between management and
    unionized employees.

·

Many FLSs undergo extensive training to acquire the management
    skills required for their jobs.

·

Some FLSs have the authority to approve overtime and leaves of
    absence, to co-ordinate crews, to schedule shifts, to approve changes to the
    vacation schedule, to complete job performance appraisals, to administer
    collective agreements and to oversee compliance with safety legislation.

·

FLSs carry out their role dependent upon their experience and
    aptitudes, for example, some FLSs manage large numbers of employees whereas
    others exercise control over significant budgets.

F.

ANALYSIS

[71]

As
    discussed, the success of the proposed class action is contingent on the
    threshold issue whether CN misclassified FLSs as managerial employees. The
    overarching dispositive question on appeal is whether the allegation of
    misclassification raises a certifiable common issue. In resolving this
    question, it is necessary to address the following three questions raised by
    the parties:

(1)

Did the motion judge err by
    creating a new test for certification?

(2)

Did the motion judge err by
    rejecting the plaintiffs proposed common issue of misclassification?

(3)

Did the motion judge err by
    reframing a common issue concerning the minimum requirements to be a managerial
    employee at CN?

(1)

Did the
    Motion Judge Err by Creating a New Test for Certification?

(a)

Plaintiffs Submissions

[72]

The
    plaintiff contends that the motion judge erred by applying a new test for
    certifying common issues. The relevant passage from the motion judges reasons
    states, at paras. 301-302:

That the some basis in fact test is a necessary but not
    sufficient condition for certification makes sense because the criteria for
    certification are not just factual matters. In so far as the criteria are
    factual, the plaintiff is more favourably treated than is the defendant.
    However, all the criteria are issues of mixed fact and law, and the legal and policy
    side of the class definition, commonality, preferability, and the adequacy of
    the representative plaintiff are matters of argument and not just facts,
    although there must be a factual basis for the arguments. While defendants may
    have to push the evidentiary burden up a steep hill, they are on a level
    playing field with the plaintiffs in arguing the law and policy of whether the
    various criteria have been satisfied.

Applying the some basis in fact test to the case at bar, Mr.
    McCracken must show that there is some basis in fact for his cause of action
    and some basis in fact for each of the certification criteria other than the
    first one. CN, however, if it is able to do so, may show that there is no
    evidentiary basis for the claims or the certification criteria. If the
    evidentiary basis is established, then whether the certification criteria have
    been satisfied remains a matter of argument between Mr. McCracken and CN on a
    level playing field.

[73]

The
    plaintiff interprets the motion judges comment that the some basis in fact
    test is a necessary but not sufficient condition for certification to mean
    that the motion judge not only required him to show some basis in fact for the
    proposed common issues, but that he also imposed an additional burden of proving,
    on a balance of probabilities, and as a matter of law and policy, that a common
    issue ought to be certified. According to the plaintiff, the motion judge
    viewed this additional burden as levelling the playing field between
    plaintiffs and defendants on a certification motion.

[74]

The
    plaintiff complains that the motion judges approach to establishing
    commonality is unsupported by any class action jurisprudence and is at odds
    with the purpose of class proceedings.  He contends that the motion judge failed
    to certify the proposed misclassification issue because he confused what should
    have been a factual analysis with a legal and policy analysis.

(b)

The Motion Judge Did Not
    Apply a New Test for Certification

[75]

The
    some basis in fact principle is meant to address two concerns. First, there
    is a requirement that, for all but the cause of action criterion, an
    evidentiary foundation is needed to support a certification order.

[76]

Second,
    in keeping with the procedural scheme of the
CPA
, the use of the word
    some conveys the meaning that the evidentiary record need not be exhaustive,
    and certainly not a record upon which the merits will be argued. This
    legislative intention is reflected in s. 2(3)(a) of the
CPA
, which
 although honoured more often in
    the breach  requires the proposed representative plaintiff to bring a motion
    for certification within 90 days of the filing of, or the expiry of the time
    for filing of, a statement of defence or notice of intent. Thereafter, leave of
    the court is required to bring the motion: see s. 2(3)(b).

[77]

With
    the exception of the motion judges suggestion that the some basis in fact
    test applies to the cause of action requirement in s. 5(1)(a) of the
CPA
,
    his reasons do not bear out the plaintiffs suggestion that he imposed an
    additional and unprecedented burden of proof on the plaintiff at the
    certification stage. In my view, the motion judge was simply explaining that
    the legal principles governing the criteria for certification have to be
    considered in the context of the evidentiary record filed in support of the
    motion. It is clear from
Hollick

that, were it otherwise, the
    certification criteria would be argued in the air.

[78]

An
    example of what the motion judge meant by his comment that the some basis in
    fact test is a necessary but not sufficient condition for certification is
    provided by the preferable procedure analysis in
Caputo v. Imperial Tobacco
    Ltd.
(2001), 236 D.L.R. (4th) 348 (Ont. S.C.J.). The court there stated,
    at para. 67: [I]
n
    as much as the defendants cannot simply assert to any effect that there are
    other procedures that would be preferable without an evidentiary basis, neither
    can the plaintiffs satisfy the onus with argument alone. It must be supported
    by some evidence.

[79]

This
    point applies equally to the common issues criterion in s. 5(1)(c) of the
CPA
.
In assessing whether there is some
    basis in the evidence to establish the existence of common issues, the motion
    judge must consider the pertinent legal principles that apply to the
    commonality assessment with reference to the evidence adduced on the motion.

[80]

As
    indicated, the notable exception is that the some basis in fact test does not
    apply to the first criterion in s. 5(1)(a) that the pleadings disclose a cause
    of action. This criterion does not require the plaintiff to lead evidence
    showing a basis in fact for the allegations in the pleadings: see
Hollick
,
    at para. 25. The pleadings must contain sufficient factual allegations to
    establish the necessary elements of the cause of action asserted. However,
    unless the allegations of fact are patently ridiculous or incapable of proof,
    the facts must be accepted as pleaded for the purpose of determining if the
    plaintiff has stated a viable cause of action.

[81]

It
    is not clear to me what the motion judge had in mind with his remarks about the
    plaintiff and defendant being on a level playing field on the certification
    motion. However, I do not accept the plaintiffs submission that the motion
    judge imposed an impermissibly higher burden on him to show commonality. The
    motion judge found that the misclassification issue required individual
    assessments of the class members. For the reasons that follow, I agree with his
    conclusion on this point.

(2)

Did the Motion Judge Err by Rejecting the Plaintiffs Proposed
    Common Issue of Misclassification?

(a)

Governing
    Principles on Common Issues

[82]

This
    courts reasons in
Fulawka
, at para. 80, describe the definition of
    common issues in s. 1 and the requirement in s. 5(1)(c) of the
CPA
that
    the claims of the class members raise common issues.
Fulawka
also sets
    out, at para. 81, the legal principles concerning the common issues requirement
    that have emerged from the case law, citing
S
inger v. Schering-Plough
    Canada Inc.,
2010 ONSC 42, 87 C.P.C (6th) 276,

at para. 140.
    And, as noted in
Fulawka
, at para. 82, it is up to the motion judge to
    decide which of the governing legal principles concerning the common issues
    requirement are contentious in any particular case.

[83]

As
    will become clear in the ensuing analysis, the contentious legal principles
    governing the commonality inquiry in the present case are the following:

The underlying foundation of a common issue is whether its
    resolution will avoid duplication of fact-finding or legal analysis:
Western
    Canadian Shopping Centres Inc. v. Dutton
,
2001 SCC 46, [2001] S.C.R. 534,

at para. 39.

With regard to the common issues, success for one member must
    mean success for all. All members of the class must benefit from the successful
    prosecution of the action, although not necessarily to the same extent. That
    is, the answer to a question raised by a common issue for the plaintiff must be
    capable of extrapolation, in the same manner, to each member of the class:
Dutton
,
    at para. 40;
Ernewein v. General Motors of Canada Ltd.
, 2005 BCCA 540,
    46 B.C.L.R. (4
th
) 234, at para. 32;
Merck Frosst Canada Ltd. v.
    Wuttunee,

2009 SKCA 43, [2009] S.J. No. 179 (C.A.), at paras.
    145-46 and 160.

A common issue cannot be dependent upon individual findings of
    fact that have to be made with respect to each individual claimant:
Williams
    v. Mutual Life Assurance Co. of Canada
(2000), 51 O.R. (3d) 54, at para.
    39, affd
(2001), 17 C.P.C. (5th) 103 (Div.
    Ct.), affd
[2003] O.J. No. 1160 and 1161
    (C.A.);
Fehringer v. Sun Media Corp.

(2002),
    27 C.P.C. (5th) 155, (S.C.J.), affd
(2003),
    39 C.P.C. (5th) 151 (Div. Ct.).

Common
    issues should not be framed in overly broad terms:
It would not
    serve the ends of either fairness or efficiency to certify an action on the
    basis of issues that are common only when stated in the most general terms.
    Inevitably such an action would ultimately break down into individual
    proceedings. That the suit had initially been certified as a class action could
    only make the proceeding less fair and less efficient:
Rumley v. British
    Columbia
,
2001 SCC 69, [2001] 3 S.C.R. 184, at para. 29.

(b)

Plaintiffs Submissions on his Proposed Common Issue of
    Misclassification

[84]

The
    plaintiff contends that misclassification cases are inherently amenable to
    resolution by way of class proceeding. In support of this view, he relies on
obiter
comments by the motion judges in
Fulawka v. Bank of Nova Scotia
,
2010 ONSC 1148, 101 O.R. (3d) 93, and in
Fresco v. Canadian Imperial Bank of Commerce

(2009)
, 84 C.C.E.L. (3d) 161 (Ont. S.C.),
    about misclassification class actions.

[85]

He
    also points to a substantial body of decisions by the Canadian Industrial
    Relations Board and its predecessor, the Canadian Labour Relations Board
    (collectively, the Board), which he says show that group-wide determinations
    of managerial classification can be made:
Re Algoma Central Marine
, 2010
    CIRB 531, [2010] C.I.R.B.D. No. 40, affd 2011 FCA 94, [2011] F.C.J. No. 340;
Re

NorthwesTel Mobility Inc.
, 2006 CIRB 346, [2006] C.I.R.B.D. No. 4;
Québec-Téléphone
    v. Syndicat des agents de maîtrise de Québec-Téléphone
, [1996] C.L.R.B.D.
    No. 36, affd (1997), 75 A.C.W.S. (3d) 1056 (Fed. C.A.);
International
    Association of Machinists and Aerospace Workers v. Quebecair
(1979), 33 di
    480 (CLRB no. 163);
Cominco Ltd.
(1980), 40 di 75 (CLRB no. 240); and
Island
    Telephone Company Limited
(1990), 81
    di 126 (CLRB no. 811)
.

[86]

The
    plaintiff then argues that the motion judge was satisfied that the evidence
    shows some basis in fact to find that the misclassification issue can be
    determined on a class-wide basis. He especially relies on the motion judges
    following statements, at paras. 70 and 293:

For his part, Mr. McCracken provided evidence about the role of
    first line supervisors, and his evidence shows that there is some basis in fact
    for his allegations that first line supervisors are not managers under the
Code
.
    There is evidence that at least some of them: (a) do not have authority to
    hire, terminate, promote, demote, or transfer employees; (b) do not represent
    management in collective bargaining or in grievance procedures; (c) have
    limited authority to discipline restricted to investigating and recommending
    minor discipline; and (d) are not involved in setting budgets, CN policies, or
    its Service Plan.

... Mr. McCracken has provided some basis in fact for the
    proposition that all first line managers are non-managers. Therefore, he might
    assert that the commonality of the first line supervisors is established as a
    common issue to be decided at the common issues trial.

[87]

The
    plaintiff says that, having made these factual findings, the motion judge erred
    by refusing to certify his proposed misclassification issue given that this
    issue is indisputably a substantial and necessary ingredient of each class
    members claim.

(c)

The Motion Judge Did Not Err by Concluding that the Plaintiffs Proposed
    Misclassification Issue Cannot be Determined on a Class-wide Basis

[88]

There
    are three flaws in the plaintiffs argument:

(i) the cases he relies on do not
    establish that misclassification cases are inherently amenable to resolution by
    way of a class action;

(ii) the motion judge did not find a
    basis in fact showing that the plaintiffs proposed misclassification issue
    could be resolved commonly; and

(iii) the plaintiffs evidence fails to
    establish the existence of a common issue of misclassification.

[89]

I
    discuss each flaw in turn.

(i)

Misclassification cases
    are not necessarily appropriate for certification

[90]

The
    plaintiff relies on Strathy J.s statement in
Fulawka
, at para. 145,
    that: misclassification cases are appropriate for certification due to
    commonality of employment functions and common treatment by the employer. He
    also relies on the following comments by Lax J. in
Fresco
, at para. 54,
distinguishing
    misclassification cases from the claim for overtime wages in the proceeding
    before her:

A useful place to begin is to compare the kind of claim that is
    advanced in this proceeding with the kind of claims that are advanced in the
    misclassification cases.
In those cases, commonality arises from the
    employees identical or similar job duties and the determination by the employer
    that it is not required to pay overtime to employees with these duties.
The question for the common issues judge is whether the employees duties
    entitle them to overtime within the meaning of the applicable statutes and
    regulations. This can be assessed without examining individual claims. Success
    for one does mean success for all... [Emphasis added. Footnote and citation
    omitted.]

[91]

These
    comments do not assist the plaintiff. I agree with the motion judges
    observation, at para. 385, that these comments cannot be taken as a categorical
    assertion that every misclassification case is inevitably certifiable as a
    class action. On the contrary, these comments make it clear that
    misclassification cases are amenable to certification where the similarity of
    job duties performed by class members provides the fundamental element of
    commonality.

[92]

Indeed,
    after the present appeal was argued, Strathy J. released a decision refusing to
    certify a proposed class action for unpaid overtime: see
Brown v. Canadian
    Imperial Bank of Commerce
, 2012 ONSC 2377, [2012] O.J. No. 1853. That
    action was based on the allegation that the defendant bank had misclassified class
    members as managerial employees. Strathy J. concluded that the actual job
    duties performed by the members of the proposed class differed significantly,
    which would make it impossible to assess on a common basis whether the
    defendant bank had properly classified them.

[93]

The
    Board decisions that the plaintiff relies on likewise do not support his
    position. In these cases, the Board made determinations of managerial status
    under s. 3 of Part I of the
Code
for the purpose of deciding if
    employees should be included in the bargaining unit. Employees who perform
    management functions are excluded from the collective bargaining rights
    conferred by Part I of the
Code
because the definition of employee
    in s. 3
excludes persons who perform
    management functions from the protection of Part I
.

[94]

A
    review of these decisions  and other Board decisions that CN cites reveals
    that the Board has made group-wide determinations of managerial status in cases
    where the job tasks of the affected employees are defined by a common job
    description and where there was no dispute that the employees perform similar
    tasks, or where the parties consented to a group determination by the Board:
    see e.g.
Algoma Central,
at para. 13;
NorthwesTel
, at paras.
    10-14; and
Vancouver Wharves Ltd
., [1975] 1 Can L.R.B.R. 162.

[95]

Contrary
    to the plaintiffs proposed reading of these decisions, in
Island Telephone
, the Board indicated that it carefully reviewed the
    individual circumstances of the employees in question.
In addition,
    where the case involves classifying numerous positions and where there are
    varying levels of responsibility between positions and within the same
    position, the Board has received extensive oral and documentary evidence to
    determine whether a particular employees position is managerial in nature: see,
    e.g.,
Canada Post Corp.
(1989), 79 di 35 (CLRB no. 767);
Canadian
    Union of Bank Employees v. Bank of Nova Scotia
(1977), 21 di 439 (CLRB no.
    91); and
Quebecair
.

Moreover, even in cases where the employees job
    descriptions were substantially similar, the Board considered the particular circumstances
    of individual employees in isolated locations and concluded that, unlike
    employees in more centralized work places who reported to higher-level managers,
    the employees in more isolated locations actually performed management
    functions: see
Québec-Téléphone
,
    at para. 40;
British Columbia Telephone Co.
(1977), 33 di 361 (CLRB No. 98), at p. 378
.

(ii)

The motion judge did not find a basis
    in fact showing that the plaintiffs proposed misclassification issue could be resolved
    commonly

[96]

The
    second shortcoming in the plaintiffs argument is his contention that the
    motion judge found there is a basis in fact establishing that the
    misclassification issue could be resolved on a class-wide basis. The plaintiff
    relies on the motion judges comment that his evidence shows that there is
    some basis in fact for his allegations that [FLSs] are not managers under the
Code
.
    However, the motion judge tempered this observation with his ensuing comment,
    at para. 70, that there is evidence that
at least some of them
 do
    not exercise managerial functions (emphasis added).

[97]

And
    while the motion judge said, at para. 293, that Mr. McCracken has provided
    some basis in fact for the proposition that all first line managers are
    non-managers, he concluded that same paragraph with the following remark:

However, as I will explain later in these Reasons for Decision,
    accepting Mr. McCrackens submission as correct is to accept as a given
    truth something that is patently or obviously untrue because there are some
    questions that are not common issues and rather are fundamentally or
    intrinsically or unavoidably individual questions.

Following up on this point, the motion judge later
    said, at para. 333, that: [t]he common label of being a first line supervisor
    tells almost nothing about entitlement [to overtime pay] under the
Code
.

[98]

Thus,
    when his reasons are viewed in their entirety, I do not think that the motion
    judge can accurately be said to have found that there is a basis in fact
    showing that the plaintiffs proposed misclassification issue could be
    determined on behalf of the entire class.
[12]

[99]

I
    will now explain why such a factual finding was not available when the
    applicable legal principles on commonality are applied to the evidentiary
    record.

(iii)

The plaintiffs evidence fails to establish the existence of a common issue
    of misclassification

(a)

What the plaintiffs evidence needed
    to establish

[100]

The plaintiff
    filed evidence from multiple class members indicating that they do not have
    real decision-making authority and asserting that CN has misclassified them as
    managers or as employees who exercise managerial functions. However, to raise
    common issues, more is required than simply showing that some members of the
    class have similar claims. This point was made in
Lau v. Bayview Landmark
    Inc.
(1999), 40 C.P.C. (4th) 301 (Ont.
    S.C.), at para. 24
:

But
    neither is it enough to show that there is a group of similarly situated
    individuals with respect to claims against the defendants. Evidence of the mere
    existence of multiple plaintiffs with a similar cause of action against the
    defendants does not in and of itself establish that the claims should be
    litigated as a class action. The claims that those individuals could assert
    must also be capable of raising common issues.

[101]

To satisfy the
    commonality requirement in s. 5(1)(c) of the
CPA
, the evidence must
    afford some basis in fact to find that the claims of individual class members
    raise common issues as defined by the case law.

[102]

The plaintiffs
    proposed misclassification common issue asks:

Are the class members excluded from overtime eligibility under
    contract (express or implied) and/or under the [
Code
]?

[103]

The plaintiff is
    required to show that there is a basis in fact to find that this proposed common
    issue satisfies the apposite legal principles concerning commonality, which are
    repeated here for ease of reference (citations omitted):

The underlying foundation of a common issue is whether its
    resolution will avoid duplication of fact-finding or legal analysis.

With regard to the common issues, success for one member must
    mean success for all. All members of the class must benefit from the successful
    prosecution of the action, although not necessarily to the same extent. That
    is, the answer to a question raised by a common issue for the plaintiff must be
    capable of extrapolation, in the same manner, to each member of the class.

A common issue cannot be dependent upon individual findings of
    fact that have to be made with respect to each individual claimant.

Common
    issues should not be framed in overly broad terms:
It would not
    serve the ends of either fairness or efficiency to certify an action on the
    basis of issues that are common only when stated in the most general terms.
    Inevitably such an action would ultimately break down into individual
    proceedings. That the suit had initially been certified as a class action could
    only make the proceeding less fair and less efficient.

[104]

For these legal
    principles to be satisfied in the context of a proposed common issue of
    misclassification, the plaintiffs evidence must establish some basis in fact to
    find that the job functions and duties of class members are sufficiently
    similar that the misclassification element of the claim against CN could be
    resolved without considering the individual circumstances of class members. In
    the absence of such evidence, there is no basis in fact to find that resolving
    the proposed common issue would avoid duplication of fact-finding or legal
    analysis, or that success for one class member will mean success for all, or
    that individual findings of fact would not be required with respect to each
    individual claimant. Likewise, in the absence of this type of evidence, the
    requirement that the common issue should not be framed in overly broad terms is
    not met. That is because the motion judge could not be satisfied that the plaintiffs
    proposed abstract question will not break down into individual proceedings.

(b)

The plaintiffs evidence

[105]

The plaintiffs
    evidence, as summarized above at paras. 62-64, includes affidavits from class
    members who held several different FLS positions. This evidence indicates that
    these class members lacked real decision-making authority in managerial
    matters, including the powers of hiring and firing, imposing discipline, and
    setting budgets and policies.

[106]

These class
    members spoke more generally about the duties and responsibilities of other
    FLSs  including ones they had worked with or ones they had spoken to. However,
    even in this latter respect, the affiants assertions are not evidence that a
    court could rely on as establishing a basis in fact for the existence of a
    common issue of misclassification because the assertions in question are vague
    and anecdotal.

[107]

For example,
    Mr. Anderson deposed: D
uring my time at
    CN, I have worked primarily in the South Western Ontario region, including in
    Windsor, Sarnia and London. At all of these locations, in my experience, the
    FLSs had no different level of authority than described above
.

    Mr. Anderson does not indicate what FLS job positions he is referring to, the
    number of class members he has in mind, or why he is well-positioned to assess
    the level of authority exercised by these class members.

[108]

Equally vague
    and unhelpful is the following statement in Mr. Caissies affidavit:

I understand, from speaking
    with various colleagues throughout my employment that the level of supervision
    I exercised as Trainmaster, Manager  Crew Utilizations and Manager  Corridor
    Operations is in line with that exercised by other FLSs employed by CN in both
    large and small centres across the country.

[109]

Mr.
    Caissie does not identify the various colleagues he spoke with, nor indicate the
    positions held by the other FLSs to which he refers. He also fails to explain
    why these colleagues were well-positioned to comment on the level of
    supervision exercised by FLSs in both large and small centres across the country.

[110]

Even considering
    rule 39.01(4) of the
Rules of Civil Procedure
, which permits an
    affidavit on a motion to contain statements of the deponents information and
    belief, this evidence falls short of meeting the requirement for specifying the
    source of the information and belief: see
Smith v. National Money Mart
    Company
, [2007] O.J. No. 1507 (S.C.). In sum, these statements are simply
    bald, sweeping and conclusory assertions. They do not constitute evidence
    showing a basis in fact for the claim that the class members job duties and
    responsibilities across all of CNs workplaces are sufficiently similar that a
    common issues trial judge could determine on a class-wide basis whether CN
    properly classified them as managerial employees.

[111]

The plaintiff,
    in responding to CNs evidence showing a lack of uniformity in the job duties
    and responsibilities of class members, also filed affidavits from two union
    leaders at CN: Rex Beatty and John Dinnery. Mr. Beatty has never held a FLS
    position, while Mr. Dinnery held a FLS position from 1979-1982  long before
    the start of the class period.

[112]

Mr. Beatty
    described his experience working for unions representing CN employees. The
    relevant parts of his evidence are confined to observations about the authority
    of the trainmaster position, which is held by about 18 percent of current class
    members. For example, he stated: At no location do trainmasters have the
    authority to hire, discipline, or terminate employees, to negotiate contracts
    with the union, or to participate in the grievance procedure beyond its most
    preliminary stage.

[113]

Mr. Dinnerys
    evidence primarily describes his involvement with FLSs in his role as president
    of the United Steel Workers Union, Local 2004 (USW 2004). The USW 2004
    represents CN employees in the engineering division. Employees in the
    bargaining unit represented by USW 2004 are subject to Collective Agreement
    10.1, which is one of approximately 40 collective agreements governing CNs
    unionized workforce. Mr. Dinnery said:

Because the Collective Agreement is the same from coast to
    coast, the authority of [FLSs] under the Agreement is similarly uniform. Based
    on my experience in the union leadership, I believe that the unions dealing
    with [FLSs] are exactly the same across Canada. Indeed, under the Collective
    Agreement, employees must be treated in the same manner by their supervisors.

[114]

This evidence
    reveals several inaccuracies and limitations. First, the premise for Mr.
    Dinnerys claim that the authority of FLSs is uniform appears to be that their
    authority is defined by the collective agreement. However, the collective
    agreement only dictates the terms and conditions of the work performed by
    employees who are supervised by the FLSs. In other words, the uniformity is not
    of the supervisors but of the supervised.

[115]

Second, his
    statement ignores that there are different collective agreements that apply to
    the employees supervised by FLSs. Differences in the collective agreement
    provisions concerning matters such as imposing discipline, lay-offs, and
    setting hours of work undermine the premise of uniformity in the FLSs
    authority.

[116]

Third, Mr.
    Dinnerys evidence is limited to discussing the role of FLSs in CNs
    engineering division. He says nothing about the role of FLSs in the
    transportation or mechanical departments, or in the areas of sales and
    marketing or support services. His evidence is further limited to describing
    the role played by FLSs in imposing discipline and participating in the
    grievance process. In the former respect, he acknowledged that under the
    collective agreement with USW 2004, FLSs have authority to impose up to 15
    demerit points for minor infractions without needing authorization from higher
    management to do so, subject to the employees right to request a formal
    investigation by more senior management. Mr. Dinnery did not discuss the other
    indicia of management functions, such as the extent of FLSs authority over
    matters such as budgeting, scheduling hours of work, deciding staffing levels,
    ordering lay-offs, or participating in policy-making.

(c)

The lack of evidence of job descriptions
    for FLS positions

[117]

On the certification
    motion, there was no evidence in the form of job descriptions for the various
    FLS positions. Class counsel asked CNs representative, Mr. Lagacé, to
    undertake to provide copies of the various job descriptions [for FLSs] in the
    various salary grades as they existed in 1999.  CN refused on the basis that
    the undertaking was not within the proper scope of a cross-examination on an
    affidavit and on the basis that it is not relevant to the issues before the
    court. The plaintiff did not bring a refusals motion to compel the requested
    undertaking.

[118]

CN asserts on
    appeal that it does not have any formal job descriptions for FLS positions. In
    oral argument, the plaintiff asked the court to draw an adverse inference on
    this point because of CNs refusal to provide any documentation in response to
    the questions put to the deponent.
[13]
However, there is no adverse inference that could be drawn that would advance
    the plaintiffs request to certify the action. Evidence of job descriptions is
    only relevant to the commonality criterion. In considering as a whole the
    evidence of the nature of the job functions performed by class members, the
    court cannot go so far as to infer that each job is identical or substantially
    similar. CN has adduced evidence to the contrary suggesting that individuals
    with the same job title had different duties and responsibilities.

(d)

The plaintiffs suggested use of sub-groups

[119]

The plaintiff
    in apparent recognition of the lack of evidence showing sufficient commonality
    of the job functions and responsibilities of class members  suggested on
    appeal that the misclassification issue could be adjudicated based on
    sub-groups. However, he did not offer any concrete guidance on how to
    sub-divide the class, such as by way of job title, or by the location where
    class members worked (e.g., urban centres versus more isolated areas). Instead,
    the plaintiff suggested using the sub-groups that the motion judge identified
    in approved common issue 3, namely: (1) class members who clearly meet the
    minimum managerial criteria; (2) those who clearly could not meet these
    criteria; and (3) those whose status remains to be determined.

[120]

Applying the
    plaintiffs suggested lines of division would not assign individual class
    members to a particular sub-group. The common issues trial judge would need to
    identify the indicia of managerial functions and would then need to apply these
    indicia to members of the class, without any assurance that this application
    could be done commonly, that is, without the need to examine the individual
    circumstances of most, if not all, of the 1,550 class members.

(e)

Plaintiffs position in reply

[121]

In his reply
    factum, the plaintiff contends that a trial judge would substantially advance
    the case for all class members by making a class-wide determination of the
    various indicia of management that are relevant within the organizational and
    operational context of CN. He goes on to identify three possible scenarios that
    might arise after the trial judge identifies these criteria:

In particular, a trial judge could substantially advance the
    case for all class members by first making a class-wide determination of the
    various indicia of management
specifically
    relevant within the organizational and operational context of CN
.
A trial judge could then make one of several determinations depending on the
    evidence led at trial.
One determination would be to move to an individual
    assessment process in which the common issues judge could use the considerable
    resources of the CPA to achieve manageable individual proceedings in order to
    determine, on a principled and consistent basis, which of the class members (or
    groups of class members) are not management.
A second determination could
    find that the class as a whole, or sub-groups within the class, do or do not
    have sufficient independent authority under the above criteria to qualify as
    management. A third determination could be that some of the common indicia may
    be determined, on a class-wide basis, leaving only limited individual
    inquiries. [Footnotes omitted. Emphasis added.]

[122]

The next section
    of my reasons explains why determining the various indicia of management will
    not substantially advance the case for all class members. I make three
    observations about the plaintiffs position in reply.

[123]

First, the
    plaintiffs Revised List did not refer anywhere to the need for the trial judge
    to identify the legal and factual criteria for deciding whether class members were
    properly classified as managerial employees. In submitting that a trial judge
    could substantially advance the case for all class members by first making a
    class-wide determination of the various indicia of management, the plaintiff
    is arguing, in effect, that the action should be certified so that the common
    issues trial judge can determine what the common issues should be.

[124]

At a conceptual
    level, the plaintiffs approach is fundamentally wrong. The sentiment expressed
    in
Caputo
, at para. 56, applies here:

[T]he judge presiding over the common issues trial is there
    in the role of arbiter of issues that have already been set out. That role is
    to make findings with respect to issues certified for trial, rather than to
    decide what issues are to be resolved. Setting the issues for trial is the role
    of the motions judge on certification.

[125]

In other words,
    it is a misapplication of the
CPA
to certify an action where the
    common issues trial judge is expected to formulate the issues for trial. I
    would add that while the motion judge on certification may amend or revise
    common issues, it is the plaintiff who bears the responsibility at first
    instance for proposing the common issues and for adducing evidence
    demonstrating that those issues exist. The plaintiff must not abdicate this
    responsibility in the hope that the motion judge will formulate certifiable
    issues.

[126]

Second, the
    plaintiffs submissions reveal a practical defect. The plaintiff speaks of the
    common issues trial judge making determinations of the indicia of management
    that are specifically relevant within the organizational and operational
    context of CN. However, the evidentiary record reveals that the
    organizational and operational context of CN differs for individual class
    members depending on factors such as which FLS job title they hold, where they
    work and whether they work alongside other FLSs or higher-level managers. The
    effect of this evidence is that there are no common issues but rather an
    amalgam of individual assessments. As stated by Cullity J. in
Risorto v.
    State Farm Mutual Automobile Insurance Co.

(2007),
38 C.P.C. (6th) 373 (Ont. S.C.), at para 45:
    [i]f an issue is one that the court at trial could decide only by reference to
    the facts relating to the claim of each class member, it lacks commonality.

[127]

Finally, the
    plaintiff acknowledges in these submissions that, after the common issues trial
    judge identifies the indicia of managerial status, one determination would be
    to move to an individual assessment process for deciding which of the class
    members are not management. This acknowledgement amounts to a full and complete
    answer to the certification requirement in s. 5(1)(c) because it is an admission
    that the plaintiffs evidence does not provide a basis in fact to find that the
    misclassification issue can be resolved without the need for individual
    assessments of class members.

(f)

Summary

[128]

The plaintiffs
    litigation strategy seizes on the superficial commonality that all class
    members work for CN and all share the common label of being a FLS. However, this
    common label conveys a false impression of commonality given the evidence on
    the motion of the different job responsibilities and functions of class members,
    who hold many different job titles and who work in a variety of workplaces with
    different reporting structures and different sizes of workforce. There is no
    basis in fact to support a finding that the essential misclassification
    determination could be made without resorting to the evidence of individual
    class members. Simply put, the plaintiff has not shown that any significant
    element of his claim is capable of common proof.

[129]

Finally, determining
    the minimum requirements to be a managerial employee at CN would not advance
    the claims of class members in any significant way.

(3)

Did the Motion Judge Err by Reframing a Common Issue Concerning
    the Minimum Requirements to be a Managerial Employee at CN?

[130]

The motion judge
    rejected the plaintiffs proposed misclassification common issues on the basis
    that they lacked commonality. Having done so, he drew up a set of revised
    common issues for certification, at para. 351, which included the following
    common issue:

In accordance with the meaning under s. 167 (2) of the
[
Code
]
, of employees who are managers or
    superintendents or exercise management functions, what are the minimum
    requirements to be a managerial employee at CN?

The motion judge held that this minimum requirements
    issue could be determined on a class-wide basis and that resolving it would
    substantially advance the litigation.

[131]

I do not agree
    with the motion judges conclusion that the issue he proposed is a certifiable
    common issue. The motion judge rejected the plaintiffs various formulations of
    a misclassification common issue based on his finding that the element of
    commonality is lacking. In that, he was correct.

[132]

Where the motion
    judge fell into error was in attempting to recast common issues that were, in
    his view, amenable to certification. Despite his efforts to reformulate the
    common issues, the evidentiary shortcomings remained. A core of commonality
    either exists on the record or it does not. In other words, commonality is not
    manufactured through the statement of common issues. The common issues are
    derived from the facts and from the issues of law arising from the causes of
    action asserted by class members and not the other way around.

[133]

In the absence
    of a common issues trial that would be able to resolve the threshold
    misclassification issue, determining the issue of the minimum indicia of
    management  or on the motion judges formulation, the minimum requirements
    for being a managerial employee at CN  would not advance the proceeding in any
    significant way. The motion judge seemingly acknowledged this point, as
    reflected by his remarks, at para. 359, that the heart of the matter remains
    whether the first line supervisors were or were not managers, which is
    unanswered.

[134]

In attempting to
    state common issues that would minimally advance the proceeding on a class-wide
    basis, the motion judge lost sight of the fact that the plaintiffs action for
    unpaid overtime is fundamentally a misclassification case. Answering the motion
    judges revised common issues would not eliminate the need for substantial
    individual inquiries to determine whether  having regard to the specific job
    duties and responsibilities of class members and the organizational context in
    which each works  CN had properly or improperly classified FLSs as managerial
    employees.

[135]

In the absence
    of an evidentiary basis for certifying a common issue that would resolve the
    misclassification allegation, the proposed class action for unpaid overtime
    wages simply collapses.

G.

ADDITIONAL ISSUES

[136]

On the Rule 21
    motion, the motion judge concluded that the Superior Court of Justice has
    jurisdiction to enforce the provisions of Part III of the
Code
pertaining to overtime and holiday pay. He reached this conclusion based on his
    view that the
Code
provisions are terms of CNs employment contracts
    by force of statute. CN contends that this conclusion is in error.

[137]

Given that I
    see no basis in fact for the proposed common issue of misclassification, it is
    not necessary to consider the parties arguments concerning jurisdiction. Nor
    is it necessary to consider CNs submission that the motion judge should have
    struck the plaintiffs claims for breach of contract for failing to state a
    proper cause of action. However, in not addressing these issues, I do not wish
    to be understood as endorsing the motion judges reasons on them.

[138]

The parties also
    object to the following rulings by the motion judge on the Rule 21 motion and
    on the certification motion:

1. Did the motion judge err in staying
    the plaintiffs claims for breach of express or implied terms of the class
    members contracts of employment?

2. Did the motion judge err in
    dismissing the plaintiffs claim for holiday pay?

3. Did the motion judge err in striking
    the plaintiffs pleading in negligence for policy reasons without the benefit
    of a proper record?

4. Did the motion judge err in refusing
    to certify the proposed common issue concerning contractual terms?

5. Did the motion judge err in refusing
    to certify any of the proposed common issues concerning the duty in contract,
    the duty of good faith, and a duty in tort?

6. Did the motion judge err in finding
    that an aggregate assessment of damages would not be available?

7. Did the motion judge err in finding
    on the certification motion that a class proceeding would be the preferable
    procedure?

[139]

Again, given my
    reasons on the absence of a proper common issue concerning the fundamental
    question of misclassification, it is not necessary to assess these questions
    individually. However, as the first five of these questions point to a common
    theme about the scope of a motion judges authority on a Rule 21 motion and on
    an accompanying motion for certification, I make the following comments.

[140]

The motion judge
    made the following rulings and observations that, in my view, misconstrue the
    extent of his authority under the
Rules
and under the relevant
    provisions of the
CPA
:

·

A consequence of the certification and Rule 21 motions is that
    several common issues will have already been determined (at para. 14).

·

The function of a Rule 21 motion is not to adjudicate the genuine
    merits of a claim or defence, but there is a way on any motion to obtain
    judgment on the merits by way of a motion for judgment. It is appropriate to
    use the motion for judgment jurisdiction under rule 37.13(2) in this case to
    dismiss the plaintiffs claim for holiday pay on the merits (at paras.
    211-12).

·

It is also appropriate to use the motion for judgment
    jurisdiction and the jurisdiction provided by ss. 12 and 13 of the
CPA

to decide common issues on their merits before the common issues trial (at
    paras. 228-31).

·

It would be propitious to the advancement of the class action and
    fair to both the class members and CN to exercise the courts jurisdiction to
    decide that the terms of the
Code
are terms of the employment
    contracts by force of law (at para. 232).

·

The plaintiffs claims for breach of express or implied contract
    terms should be stayed (at paras. 228-34).

·

Four of the six questions on the list of approved common issues
    can and should be answered before the common issues trial and these answers,
    which are readily available, would substantially advance the class members
    litigation against CN (at para. 353).

·

The answer to common issue two is now known as a by-product of
    CNs motion under rule 20.01(3)(a). The answer to the question is that
    compliance with the overtime provisions of the

Code

is by force of statute an implied term of the
    contracts of employment between CN and the FLSs (at para. 357).

·

Answering common issue two substantially advances the litigation
    and makes it unnecessary or moot to answer several factually or legally more
    difficult questions (at para. 357).

·

Common issues four and five

are subjunctive tense
    questions that are readily answered in the subjunctive. On the assumption that
    CN did not pay overtime pay when it was required to do so and on the assumption
    that CNs as yet unpleaded defence failed at the common issues trial, then the
    requirements for an unjust enrichment claim would be satisfied at the common
    issues trial and CN would have to disgorge its ill-gotten gains, once those
    gains had been calculated (at para. 358).

[141]

While a Rule 21
    motion permits a motion judge to find that a pleaded cause of action is wholly
    without merit, a motion judge should not convert such a motion into a motion
    for judgment using rule 37.13(2)(a) unless the parties agree that all relevant
    evidence is before the court and they have had a full opportunity to argue
    their positions on the motion for judgment: see
Royal Bank of Canada v.
    Rastogi
, 2011 ONCA 47, at para. 22, citing
CMLQ Investors Company v.
    CIBC Trust Corporation

(1996), 3
    C.P.C. (4th) 62 (Ont. C.A.), at para. 8. Those circumstances did not exist
    here.

[142]

Nor do I agree
    that the provisions in ss. 12 and 13 of the
CPA
confer jurisdiction on
    a certification judge to decide the common issues before the common issues
    trial. Section 12 is a purely procedural provision that allows a motion judge
    to make orders concerning the conduct of a class action, while s. 13 empowers a
    motion judge to stay a related proceeding.

[143]

Moreover,
    deciding common issues on the certification motion is antithetical to the
    well-established principle enshrined in
Hollick
, at para. 16, that the
    decision to certify a class action is not a decision on the merits of the
    action. A key reason for this is that the evidentiary record at the certification
    stage is far from complete.

[144]

I also note that
    the motion judge fundamentally altered the plaintiffs proposed common issues.
    While this is a power that may be exercised by the motion judge, it should be
    exercised with caution and restraint and should be the exception rather than
    the norm.

[145]

Given his
    decision to refashion the common issues, the motion judge granted certification
    subject to the condition that a litigation plan be settled. In my view, motion
    judges should not, as a matter of common practice, bifurcate the requirement in
    s. 5(1)(e)(ii) of the
CPA
to produce a plan for the proceeding that
    sets out a workable method of advancing the proceeding on behalf of the class.
    Nor should the litigation plan requirement be treated as a mere afterthought.

[146]

Preparing a litigation
    plan requires the plaintiff to translate his or her analytical proposal for a
    class proceeding into practice by having to explain, in concrete terms, the
    process whereby the common issues, and any remaining individual issues, will be
    decided. The need for a clear explanation of how a proposed common issue would
    be resolved for all class members on a common basis serves as an important
    check in considering if the plaintiff has met the common issues and preferable
    procedure criteria.

H.

CONCLUSION AND DISPOSITION

[147]

The absence of
    commonality is fatal to the certification of this action. I would allow CNs appeal
    and cross-appeal from the certification order and would set aside that order.
    The plaintiffs appeal from the motion judges certification order is
    dismissed. Given my proposed disposition of the appeals from the certification
    order, I would dismiss the parties appeals from the motion judges order under
    Rule 21.

[148]

In light of this
    result, the motion judges costs order should be set aside. CN shall have its
    costs of the certification motion, to be fixed by the motion judge.

[149]

The parties may
    make written submissions on the costs of the appeal, with the respondent/defendants
    submissions to be delivered within 10 days of the release of these reasons and
    the appellant/plaintiffs submissions to be delivered within 10 days thereafter.

Released: WKW

W.K. Winkler CJO

I agree John Laskin
    J.A.

I agree E.A. Cronk
    J.A.

APPENDIX A: Plaintiffs Revised List of Common
    Issues

Common Issue One  Misclassification

1.

Are the Class
    Members excluded from overtime eligibility under contract (express or implied)
    and/or under the

Canada
    Labour Code
, c. L-2, as amended?

Common Issue Two  Overall Breach and Misclassification

2.

Did the
    Defendant breach its contracts of employment with the Class or was it unjustly
    enriched, by denying eligibility for overtime compensation to some or all Class
    Members whom CN classified as [FLSs]?

Common Issue Three  Breach of Contract

3.

a)

What
    are the relevant terms of (express or implied or otherwise) of the Class
    Members contracts of employment with the Defendant respecting: (i)
    classification; (ii) regular and overtime hours; (iii) holiday pay; and (iv)
    the recording of hours worked?

b)

Did
    the Defendant breach any of the foregoing terms? If so how?

Common Issue Four  Duties of the Defendant

4.

a)

Did
    the Defendant have a contractual duty (express or implied) to take reasonable
    steps to ensure that Class Members were properly classified?

b)

If so,
    did the Defendant breach this duty?

c)

Did
    the Defendant have a statutory duty to take reasonable steps to ensure that
    Class Members were properly classified?

d)

If so,
    did the Defendant breach this duty?

e)

Did
    the Defendant have a duty to act in good faith in the performance of its
    contractual and/or statutory obligations to the Class and individual Class
    Members, including (but not limited to) a duty to take reasonable steps to
    ensure that Class Members were properly classified?

f)

If
    so, did the Defendant breach this duty?

g)

Did
    the Defendant owe a duty of care to the Class or each Class Member to ensure
    that individual Class Members were properly classified?

h)

If so,
    what is the standard of care?

i)

Did
    the Defendant fall below the standard of care? If so how?

Common Issue Five  Unjust Enrichment

5.

a)

Was
    the Defendant enriched by (i) failing to compensate the Class Members with pay
    or overtime pay for hours worked in excess of their standard hours of work, or
    (ii) failing to compensate the Class Members with holiday pay?

b)

If the
    answer to question 5(a)(i) or (ii) is yes, did the Class suffer a
    corresponding deprivation?

c)

If the
    answer to question 5(a)(i) and (b) is yes, was there any juristic reason for
    the enrichment?

d)

If the
    answer to question 5(a)(ii) and (b) is yes, was there any juristic reason for
    the enrichment?

Common Issue Six  Damages or other Relief

6.

a)

If an
    answer to any of the foregoing common issues is in favour of the Class, what
    remedies are Class Members entitled?

b)

If an
    answer to any of the foregoing common issues is in favour of the Class, is the
    Defendant potentially liable on a class-wide basis? If yes:

1.

Can damages be assessed on an aggregate basis? If yes:

a.

Can
    aggregate damages be assessed in whole or in part on the basis of statistical
    evidence, including statistical evidence based on random sampling?

b.

What
    is the quantum of aggregate damages owed to Class Members?

c.

What
    is the appropriate method or procedure for distributing the aggregate damages
    award to Class Members?

Common Issue Seven  Punitive Damages

7.

a)

Is the
    Class entitled to an award of aggravated, exemplary or punitive damages based
    upon the Defendants conduct?

b)

If the
    answer to 7(a) is yes, can that damage award be determined on an aggregate
    basis?

c)

If the
    answer to 7(b) is yes, what is the appropriate method or procedure for
    distributing the aggregate aggravated, exemplary or punitive damage award to
    the Class?

APPENDIX
    B
: Motion Judges Proposed Amended Revised List of Common Issues

Common Issue One  Payment of Overtime Pay

1.

Did the Class
    Members receive overtime pay and or holiday pay under the

Canada Labour Code
, c. L-2, as amended?

Common Issue Two  Breach of Contract

2.

a.

What
    are the terms (express or implied or otherwise) of the Class Members contracts
    of employment with the Defendant respecting: (i) classification; (ii) regular
    and overtime hours; (iii) holiday pay; and (iv) the recording of hours worked?

Common Issue Three  Duties of the Defendant

3.

a.

Did
    the Defendant have a contractual duty (express or implied) to take reasonable
    steps to ensure that Class Members were properly classified?

b.

If
    so, did the Defendant breach this duty?

c.

Did
    the Defendant have a statutory duty to take reasonable steps to ensure that
    Class Members were properly classified?

d.

If
    so, did the Defendant breach this duty?

e.

Did
    the Defendant have a duty to act in good faith in the performance of its
    contractual and/or statutory obligations to the Class and individual Class
    Members to ensure that Class Members were properly classified?

f.

If
    so, did the Defendant breach this duty?

g.

Did
    the Defendant owe a duty of care to the Class or each Class Member to ensure
    that individual Class Members were properly classified?

h.

If
    so, what is the standard of care?

i.

Did
    the Defendant fall below the standard of care? If so how?

Common Issue Four  Unjust Enrichment

4.

a.

Would
    the Defendant be enriched by (i) failing to compensate a Class Members with pay
    or overtime pay for hours worked in excess of his or her  standard hours
    of work, or (ii) failing to compensate the Class Member with holiday pay?

b.

If
    the answer to question 4(a)(i) or (ii) is yes, would the Class Member suffer
    a corresponding deprivation?

c.

If
    the answer to question 4(a)(i) and (b) is yes, was there any juristic reason
    for the enrichment?

d.

If
    the answer to question 4(a)(ii) and (b) is yes, was there any juristic reason
    for the enrichment?

Common Issue Five  Damages or other Relief

5.

If the Defendant
    breached a duty or its contract or was unjustly enriched what remedies are
    available to the Class Member?

Common Issue Six  Punitive Damages

6.

Would the
    Defendants conduct justify an award of aggravated, exemplary or punitive
    damages?

APPENDIX C: Common
    Issues Approved By The Motion Judge

Common Issue One  Payment of Overtime Pay

Did the
    Class Members receiv overtime pay under the
Canada Labour Code
, c.
    L-2, as amended?

Common Issue Two  Contract Terms

What
    are the terms by force of statute of the Class Members contracts of employment
    with the Defendant respecting: (i) classification; (ii) regular and
    overtime hours; and (iii) the recording of hours worked?

Common Issue Three  Minimum Requirements of Manager
    Status at CN

In
    accordance with the meaning under s. 167 (2) of the
Canada Labour Code
,
    of employees who are managers or superintendents or exercise management
    functions, what are the minimum requirements to be a managerial employee at
    CN?

Common Issue Four  Unjust Enrichment

Would
    the Defendant be unjustly enriched by failing to compensate a Class Member with
    pay or overtime pay for hours worked in excess of his or her standard hours of
    work?

Common Issue Five  Damages or other relief

If the
    Defendant breached a duty or its contract or was unjustly enriched what
    remedies are available to the Class Member?

Common Issue Six  Punitive Damages

Would
    the Defendants conduct justify an award of aggravated, exemplary or punitive
    damages?

[1]
In
Fulawka
, the plaintiffs pleadings included a misclassification claim
    concerning Level 6 employees at Bank of Nova Scotia (Scotiabank). In 2008,
    Scotiabank re-classified these employees as non-management and extended
    overtime entitlement to them. Scotiabank also implemented a retroactive claims
    process whereby Level 6 employees could claim unpaid overtime going back to
    2005.

[2]
The appellate routes are a maze of complexity owing to s. 30 of the
CPA
and
    s. 6 of the
Courts of Justice Act
,
    R.S.O. 1990, c. C.43
. The parties both filed motions for leave to
    appeal in the Divisional Court from the motion judges order certifying the
    action as a class proceeding. In addition, both parties appealed to this court
    from the motion judges order under rules 21.01(1) and (3) of the
Rules of
    Civil Procedure
dismissing part of the plaintiffs claim. The defendant
    sought leave to appeal the interlocutory parts of the Rule 21 order to the
    Divisional Court and cross-appealed as of right from the final elements of that
    order to this court. The defendant also sought leave to appeal to the
    Divisional Court from the motion judges costs order on the motions. On consent
    of the parties, leave to appeal to the Divisional Court from the interlocutory
    parts of the motion judges Rule 21 order, and his certification and costs
    orders, was granted by orders of Jennings J., dated December 14, 2010. Pursuant
    to a consent order of Doherty J.A., dated February 9, 2011, the appeals as of
    right from the order under Rule 21 were combined with the appeals pending in
    Divisional Court for hearing by this court.

[3]
Amended Fresh as Amended Statement of Claim, dated March 3, 2010.

[4]
Most FLS positions exist in the Operations Division in one of three
    departments: Transportation, Mechanical and Engineering.

[5]
These statutory and regulatory provisions are discussed in this courts reasons
    in
Fulawka
, at para. 35.

[6]
The criteria in s. 5(1) of the
CPA
may be summarized as follows:

(a) the pleadings disclose a
    cause of action;

(b) there is an identifiable
    class;

(c) the claims raise common
    issues;

(d) a class proceeding would
    be the preferable procedure for the resolution of the common issues; and

(e) there are appropriate
    representative plaintiffs who could produce a workable litigation plan.

[7]
The motion judge reviewed, at paras. 58-67, various cases describing the
    analytical approach under the
Code
to classifying employees as a manager
    or an employee who exercises management functions.

[8]
Mr. Lagacé assumed the role of Director of
    Compensation at CN in January 2001.

[9]
The class member, Enzo Fabrizi, says he held the position of Commuter Central
    Officer from 1997-2006 and his affidavit focuses on this time period. This
    particular job title does not appear on the list of 70 FLS job categories as of
    April 1, 2008, which CN filed in evidence.

[10]
Mr. Anderson deposed that he held the FLS positions of MCO in Toronto and
    manager of dispatchers and crew clerks in Michigan, U.S.A. He also held the position
    of trainmaster, first in Michigan, and later in Windsor and Sarnia. To the
    extent that Mr. Andersons comments relate to his experience while working as a
    FLS in Michigan, it is not admissible evidence in the proposed class action.
    The class consists only of FLS employees at CNs Canadian operations.

[11]
Mr. Caissie deposed that he held the following FLS positions:  manager for
    customs in Winnipeg; crew coordinator in Moncton; trainmaster in Brampton; and
    manager  crew utilization in Toronto. He is currently a MCO in Toronto.

[12]
I recognize that the motion judge commented, at para. 345, that Mr. McCracken
    has met the low standard of showing that there is some basis in fact for his
    proposed common issues.  However, this comment must be read in light of his
    finding, at para. 331, that the plaintiffs proposed misclassification question
     together with various other of his proposed questions on the Revised List
    cannot be determined on a class-wide basis and rather require individual
    questions to be answered.

[13]
The record suggests that CN at least had a job description for the FLS position
    of trainmaster. The record includes a 2007 report by an inspector with Human
    Resources and Social Development Canada under Part III of the
Code
,
    regarding his investigation of a trainmasters complaint that he was improperly
    excluded from the overtime provisions of the
Code
because CN
    misclassified him as a manager. The inspector commented:  It is my
    determination, after reviewing the comments made by both parties,
the job
    descriptions of the Trainmaster submitted by both Mr. [H] and CN Rail
and
    the above-noted cases, ... that Mr. [H] did perform sufficient managerial
    functions to warrant his exclusion from the Hours of Work provision of the
Code

    (emphasis added).