Bank's overtime practices and policies breach Canada Labour Code, class claims allege
The Court of Appeal for Ontario recently upheld as fair and reasonable a $25 million fee award for class counsel following the settlement of a class action lawsuit against the Canadian Imperial Bank of Commerce (CIBC) concerning unpaid overtime work.
In 2007, a CIBC employee initiated this class proceeding, which involved claims on behalf of approximately 31,000 current and former front-line employees at the bank’s retail branches who worked unpaid overtime from 1993–2009. The proceeding alleged alleged violations of the Canada Labour Code, 1985 and initially sought $600 million in damages.
After 15 years of litigation, which included multiple court decisions and an appeal to the Supreme Court of Canada, the parties reached a settlement in October 2022. CIBC agreed to pay $153 million to settle the claims. After deductions, including the $25 million fee award to class counsel, $106 million remained for distribution to class members.
Class counsel – comprising Goldblatt Partners LLP, Roy O’Connor LLP, and Sotos LLP – initially sought a 30-percent contingency fee, equivalent to $44 million. The motion judge, however, awarded a 17-percent contingency fee, resulting in a $25 million award.
This award represented a multiplier of approximately 1.5 times the $16.5 million in time docketed as reported by class counsel, or roughly 1.85 times the reduced lodestar of $13.5 million following a review of time records to eliminate unnecessary duplication.
The motion judge acknowledged the high-risk nature of the litigation but concluded that class counsel overstated these risks, particularly after the class action was certified and summary judgment was granted in favour of the plaintiffs on liability issues.
Class counsel requested a $30,000 honorarium in recognition of the representative plaintiff’s role in initiating and pursuing the litigation over many years. The motion judge refused. While the representative plaintiff was diligent and courageous, her involvement did not rise to the level of “truly extraordinary,” which was required to justify such an honorarium, the judge said.
On appeal, class counsel argued that the motion judge failed to properly weigh the risks and results of the litigation and failed to apply objective criteria to determine the appropriate fee. They also alleged that the judge’s subjective views and presumptions influenced his decision.
In Fresco v. Canadian Imperial Bank of Commerce, 2024 ONCA 628, the Ontario Court of Appeal dismissed the appeal and upheld the motion judge’s class counsel fee award.
The motion judge properly considered the relevant factors, including the risks involved in the litigation, the results achieved, and the proportionality of the fee to the settlement amount, the appeal court ruled.
The motion judge considered similar settled class actions and the proportionality of the class counsel fee to the class settlement fund in determining that the amount of $25 million was fair and reasonable, the appeal court found.
The appeal court stressed the discretionary nature of fee approvals in class proceedings and noted that it should defer to the lower court's decision unless it was unreasonable or unless it contained a clear error in principle.
The ruling of the appeal court also upheld the motion judge’s decision to deny the representative plaintiff a $30,000 honorarium. The appeal court explained that it should reserve honoraria for exceptional cases where the representative plaintiff faced significant personal risk or hardship in connection with the litigation.
