Can Class Action Proceedings be Commenced for Employment Claims?

Junior hockey players claiming to be employees – class action settlement not approved by court

Facts

In October 2020, the Superior Courts of Ontario, Alberta, and Quebec all declined to approve a $30 million settlement concerning the employment status of major junior hockey players who played in the CHL (OHL, WHL, and QMJHL). This has been a contentious issue and one that still remains uncertain.

The plaintiffs alleged that the CHL, WHL, OHL, QMJHL, and the respective teams were employers to the class members and are entitled to employment benefits including minimum wage and overtime pay. The defendants denied the class members were employees and argued the class members were amateur athletes and the relationship was one of development and education. The claims were mediated and a tentative settlement was reached to settle all three class action claims and needed approval by the courts.

However, prior to the court approval hearing, some of the class members objected to the settlement because the proposed release may discharge the defendants from liability for the additional class actions that were commenced against the defendants and leagues. The additional claims seek damages against the leagues related to concussions, sexual and physical harassment, and breaches of the Competition Act.  

Analysis

In determining whether to approve the settlement, the courts agreed with the class members. The courts held that the proposed settlement release was problematic and overly broad. The courts found the proposed $30 million dollar settlement (an estimated average of $8,381 for each class member) was not in the best interests of the class members since the class members would be required to sign the overly broad release.  

In denying the approval of the settlement, the courts held that class action settlements should be viewed “with suspicion and seriously scrutinized by judges because they are entered into by defendants and class counsel who have interests and incentives that may not align with the best interests of the class”.  In this case, for example, class counsel would have received a 30% contingency fee for the proposed $30 million dollar settlement.

The courts dismissed the proposed settlement and the class action proceedings still continue. Both parties may apply for future settlement approval if the parties can agree on a more limited scope of a release. To date there has been no public announcement as to any agreement on the terms of the release. This is a development to watch. 

Takeaway

This case illustrates that there is a possibility of class action proceedings to be commenced for employment claims in some circumstances.  All employers should be aware of this, particularly those in larger organizations.  The case also illustrates how the scope of a release can be a contentious issue that jeopardizes a tentative settlement. 

This update was authored by Brett Weninger. Looking for more information regarding similar issues? Contact Brett at [email protected] or anyone else listed on the authors page.