Summary Judgment Ends Class Action

A class action claim that had the potential to transform the nature of the Canadian garment business as well as other industries that depend on subcontracting was recently dismissed on summary judgment.

The proposed plaintiff class were homeworkers in Toronto who sew and assemble garments for various manufacturers and were not paid wages owed by the defendant employer manufacturer Eliz World. The plaintiff representative alleged that the clothing she sewed was ultimately sold by the defendant retailers and claimed wages from the retailers under section 12 of the Employment Standards Act.

Section 12 of the Act treats separate corporations as one employer and extends liability for wages owed and other employment standards, to corporations other than the actual employer, if they carry on business or associated or related activity with the actual employer corporation and if the intent or effect of the arrangement is to defeat the intent or purpose of the Act.

The retail defendants brought a motion for summary judgment prior to the certification hearing, arguing that section 12 did not extend to corporate entities with no common ownership or shared management with the employer manufacturer and which merely acquired garments through a supply chain in which the manufacturer is one link.

Mr. Justice Peter Cumming of the Ontario Superior Court of Justice ruled in favour of the retailer defendants, finding that the proposed representative plaintiff failed to show that her claim was one with any real chance for success.

Christopher Bredt and Colleen Shannon of Borden Ladner Gervais LLP represented J. Crew Group, Inc., Brian Morgan and Joe Starkman of Osler, Hoskin & Harcourt LLP represented Venator Group Canada Inc., Susan Adam Metzler of Miller Thomson LLP represented E. Knitted Garment Inc. and Tom Gorsky represented Clothing for Modern Times Ltd. The proposed plaintiff was represented by Michael D. Wright and Veena Verma of Cavalluzzo Hayes Shilton McIntyre & Cornish.