2022 QCCA 1551, 2022 QCCA 1551

Davies c. Air Canada 2022 QCCA 1551 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-029675-212 (500-06-001039-201) DATE: November 17, 2022 CORAM: THE HONOURABLE GUY GAGNON, J.A. PATRICK HEALY, J.A. FRÉDÉRIC BACHAND, J.A. CAROLE DAVIES APPELLANT – Plaintiff v. AIR CANADA RESPONDENT – Defendant JUDGMENT [ 1 ] On appeal from a judgment of the Superior Court, district of Montreal (the Honourable Mr. Justice Thomas M.

Davis), [1] dismissing an application for authorization to institute a class action; [ 2 ] For the reasons of Bachand, J.A., with which Gagnon and Healy, JJ.A. agree, THE COURT: [ 3 ] ALLOWS the appeal and SETS ASIDE the judgment of the Superior Court; [ 4 ] GRANTS the appellant’s application for authorization to institute a class action; [ 5 ] ASCRIBES to the appellant the status of representative for the purpose of exercising a class action on behalf of the following class: All retired employees of the defendant eligible for free and reduced travel (“FRT”) flight passes in retirement. [ 6 ] IDENTIFIES the following as the main issues to be dealt with collectively: - Is the defendant under an obligation to provide class members with FRT passes? - If so: o what are the contents and/or modalities of the defendant’s obligation? o did the defendant breach its obligation by issuing higher-priority (B1 and C1) FRT passes to current employees? - Are class members each entitled to the following remedies: o $5,000 plus taxes per year representing the value of the yearly savings they make while benefitting from FRT passes based on seniority priority; o $5,000 in moral damages for the stress, trouble and inconvenience caused by the defendant’s breach of its obligation; o $1,000 in moral damages caused by being displaced at the last minute at the loading gate; o $2,000 in moral damages for being displaced at the last minute at the loading gate when returning from a trip and having to deal with last-minute, urgent ground and air transportation arrangements and hotel accommodations; o mandatory orders directing the defendant to ensure that current employees holding higher-priority passes will cease having priority over retirees when travelling for personal or leisure purposes and/or directing the defendant to immediately issue to each of the class members three B1 and three C1 flight passes per year;

o interest as well as the additional indemnity provided for in

article 1619 of the Civil Code of Québec on the abovementioned amounts; [ 7 ] IDENTIFIES the following as the main conclusions sought in relation to the aforementioned questions: - ALLOW the class action against the defendant; - CONDEMN the defendant to pay to each class member the following amounts, with interest as well as the additional indemnity provided for in

article 1619 of the Civil Code of Québec : o $5,000 plus taxes per year representing the value of the yearly savings they make while benefitting from FRT passes based on seniority priority; o $5,000 in moral damages for the stress, trouble and inconvenience caused by the defendant’s breach of its obligation; o $1,000 for moral damages caused by being displaced at the last minute at the loading gate; o $2,000 for the moral damages for being displaced at the last minute at the loading gate when returning from a trip and having to deal with last-minute, urgent ground and air transportation arrangements and hotel accommodations; - ORDER the collective recovery of all amounts owed to the class members; - ORDER that current employees’ FRT passes will henceforth not have priority over those of retirees when employees are travelling for personal or leisure purposes and/or ORDER the defendant to immediately issue to each of the class members three B1 and three C1 flight passes per year; - THE WHOLE with costs, including the cost of all exhibits, experts, expertise reports and notices; [ 8 ] REMANDS the file to the Chief Justice of the Superior Court for determination of the judicial district in which the class action will proceed and for appointment of the judge charged with hearing and managing the case; [ 9 ] REFERS the issues related to the publication of the notice to class members, the manner in which such notice is to be given and the time limit for requesting exclusion from the class to the judge of the Superior Court charged with hearing and managing the case; [ 10 ] THE WHOLE with legal costs.

GUY GAGNON, J.A. PATRICK HEALY, J.A. FRÉDÉRIC BACHAND, J.A.

Mtre Michael Earl Heller HELLER AND ASSOCIATES For the appellant Mtre Sébastien Richemont Mtre Mirna Kaddis FASKEN MARTINEAU DUMOULIN For the respondent Date of hearing: August 31, 2022 REASONS OF BACHAND, J.A. [ 11 ] At issue in this appeal is whether the motion judge made a reviewable error when he found that the facts alleged in the appellant’s application for authorization to institute a class action did not appear to justify the conclusions sought (article 575(2) C.C.P. ). * * * [ 12 ] The relevant alleged facts — which must be assumed to be true at the authorization stage [2] — are essentially to the effect that, over the past several decades, Air Canada: (

i) consistently undertook to grant and continue to make available, including upon retirement, free and reduced travel (“FRT”) passes to all employees with at least six months’ experience; ( ii ) also undertook, throughout that period,

to ensure that priority for the use of those passes would be determined by seniority (i.e. length of service as an Air Canada employee); ( iii ) breached those undertakings by issuing FRT passes with higher priority to tens of thousands of current Air Canada employees ; and ( iv ) in doing so, caused an injury to its retirees — of which there are approximately 30,000 —, primarily by substantially reducing the usefulness of their travel benefits. [3] [ 13 ] As for the conclusions sought, the appellant, who wishes to act on behalf of Air Canada retirees who are eligible for FTR in retirement, is claiming pecuniary, non-pecuniary as well as punitive damages on behalf of all class members.

She is also seeking a number of mandatory orders. * * * [ 14 ] The judge concluded that the legal syllogism proposed by the appellant is fundamentally flawed in that it rests on the manifestly erroneous proposition that Air Canada is legally obliged to continue providing to retired employees FRT passes with seniority-based priority. The judge found that such an obligation cannot possibly arise from the relevant collective agreements, which — as admitted by the appellant — make no mention of FTR passes.

The judge further found that the retirees’ alleged rights cannot arise out of distinct individual employment contracts, as collective agreements leave no room for such supplemental contracts.

To the judge, it was clear from the record that FRT passes held by current retirees give them no rights as such, as they merely amount to privileges that have been discretionarily granted and that Air Canada can unilaterally modify as it sees fit. [ 15 ] The judge also concluded that, because the appellant has not alleged that she was unable to board a flight as a result of an Air Canada employee’s use of a higher priority pass, her pleadings are fatally flawed on the issue of prejudice. * * * [ 16 ] As the Supreme Court made clear in L’Oratoire Saint - Joseph du Mont - Royal and Asselin , the role of a motion judge on an application for authorization to institute a class action is very limited.

His or her task is not to “make […] determination[s] as to the merits in law of the conclusions in light of the facts being alleged”, [4] but rather to “filter out frivolous claims , and nothing more”. [5] This explains why, in order to clear the hurdle set by article 575(2) C.C.P. , “[t]he applicant need establish only a mere ‘possibility’ of succeeding on the merits, as not even a ‘realistic’ or ‘reasonable’ possibility is required”. [6] [ 17 ] Moreover, while the Court must generally adopt a deferential stance on appeals from judgments on applications for authorization to institute a class action, it is settled law that it can intervene if the motion judge erred in law or made a clear error while applying the criteria set out in

article 575 C.C.P. [7] * * * [ 18 ] In my opinion, the motion judge made errors of law when he found that Air Canada could not possibly be under any obligation to continue providing to retired employees FRT passes with seniority-based priority. [ 19 ] The judge considered two possible legal bases — or sources — of Air Canada’s alleged obligations. [ 20 ] He first sought to determine whether Air Canada’s alleged obligations could arise out of the collective agreements as implicit obligations within the meaning of

article 1434 C.C.Q. He began by quoting the following excerpt from a leading employment law textbook that was cited approvingly by the Court in 2017: [8] Le contenu implicite de la convention collective rejoint également les droits et obligations qui découlent naturellement du contrat de travail sous-jacent. Pour l’employé, sont ici en cause prioritairement ses obligations de loyauté envers l’employeur et d’exécution prudente de son travail. Du côté de l’employeur, c’est son pouvoir de direction et les conséquences qui en découlent qui seront au premier chef réputés faire

partie du contenu implicite de la convention collective . [Emphasis added] He then identified two propositions which, to him, flowed from that excerpt and categorically excluded any possibility that Air Canada’s alleged obligations arose out of the collective agreements: [33] […] Firstly, it cannot be reasonably argued that the alleged permanent right of a retiree to the same seniority priority as all future employees flows from the collective agreement, when that agreement does not contain any stipulations related to flight passes, privileges or acquired rights. [34] Secondly, the unfettered management rights of Air Canada would include the right to issue new categories of flight passes, as there is no prohibition to doing so in the collective agreement. [ 21 ] Second, the judge considered the possibility that Air Canada’s alleged obligations arose out of individual or collective contracts that were distinct and thus legally independent from the collective agreements.

Relying on precedent from the Supreme Court as well as from this court, he stated that “[i]n a unionized situation ‘[t]here is no room left for private negotiation between employer and employee’”, before adding that “[h]ence, there cannot be any individual or group agreements relating to benefits outside of the collective agreement that governed the working conditions of Mrs.

Davies”. [9] [ 22 ] In my respectful view, the judge’s analysis is erroneous in the following respects. [ 23 ] Firstly , while he was right that it is possible to consider the FRT programs as resulting from Air Canada’s exercise of its management rights, [10] the judge erred in assuming that such rights were so unfettered that they surely allowed Air Canada to

unilaterally modify, without prior notice, aspects of the program it had previously undertaken to maintain.

Employers’ management rights are subject to articles 6, 7 and 1375 C.C.Q. , [11] and it is well established that a contracting party’s general obligation to refrain from acting excessively or unreasonably — which derives from the broader duty to act in good faith — includes an obligation not to create false expectations in the mind of their counterparty. [12] Consequently, the proposition that Air Canada’s assumed-to-be-true failure to act consistently with its past representations amounts to an excessive and unreasonable [13] — and thus wrongful — conduct cannot be discarded as frivolous or surely devoid of any merit. [ 24 ] Secondly , the judge erred in dismissing out of hand the possibility that Air Canada’s alleged obligations arose out of distinct contracts legally independent from the collective agreements.

While, in principle, a collective agreement leaves no room for separate contracts concerning the conditions of employment, [14] there is authority recognizing the possibility that independent agreements addressing matters not mentioned in the collective agreement may exist and be legally effective. [15] For this reason, one cannot exclude the possibility that Air Canada’s longstanding practice regarding FRT passes gave rise to one or several tacit contracts constituting the source of its alleged obligations.

Again, the issue at this stage is not whether the appellant is likely to succeed, but rather whether her argument is frivolous or obviously ill-founded.

I find that it is not. [ 25 ] Thirdly , the judge overlooked the possibility that the syllogism asserted by the appellant could find support in the theory of estoppel or peremptory exceptions ( fins de non-recevoir ), which — as the Court noted in 2006 — is often resorted to in the employment context. [16] [ 26 ] To understand that theory’s potential application here, it is instructive to briefly consider Emerson Electric Canada ltée , [17] where the Court confirmed a judgment rendered by Justice Clément Gascon, [18] then of the Superior Court.

In that case, the employer had — for more than 10 years — extended to Quebec employees certain benefits to which their colleagues in Ontario were entitled as a matter of law. The dispute arose after the employer ceased to continue providing those benefits in certain situations.

Emphasizing the fact that its decision to extend the benefits to Quebec employees was purely discretionary as it was not legally required to do so, the employer had argued that the benefits amounted to nothing more than privileges that it could modify as it saw fit. [ 27 ] The arbitrator seized of the matter at first instance ruled against the employer and, in doing so, he relied on the theory of estoppel.

The following excerpt from the judgment of Gascon J.’s dismissing the application for judicial review of the arbitrator’s award is worth quoting at length: [19] [106] L’arbitre estime que dans l’exercice de son droit de gérance et de ce droit discrétionnaire prévu à l’article 6.1.2 du régime de retraite, l’employeur a ainsi fait le choix depuis plusieurs années d’appliquer la Règle du 55 aux employés québécois que représente le Syndicat. [107] Dans ces circonstances, il considère que, durant la vie de la convention collective applicable, il serait inéquitable que l’employeur successeur Astec exerce autrement ses droits par ailleurs stricts de l’article 6.1.2 du régime de retraite. [108] Le Tribunal ne voit pas en quoi cette analyse et ces motifs peuvent être qualifiés de déraisonnables face à la preuve faite.

Il s’agit plutôt d’explications défendables et de motifs qui soutiennent sans ambages l’assise de la sentence. […] [110] À l’audience sur la requête en révision judiciaire, Astec a ajouté ceci sur ce point. En agissant comme il l’a fait, l’arbitre aurait ni plus ni moins appliqué la théorie de l’ estoppel au soutien d’une réclamation du Syndicat, alors que l’ estoppel n’est pas en soi générateur de droit. À ce chapitre, Astec soulève l’adage voulant que l’ estoppel ne puisse être utilisé qu’« as a shield and not as a sword ».

Ici, dit Astec, le raisonnement de l’arbitre conduit à essentiellement utiliser l’ estoppel « as a sword », ce que ne reconnaîtrait pas la jurisprudence . [111] Soit dit avec égards, le Tribunal estime cet argument peu convaincant pour deux raisons. [112] En premier lieu, dans les circonstances, le Tribunal est loin d’être convaincu que le Syndicat utilise ici la théorie de l’ estoppel « as a sword » plutôt qu’« as a shield ». [113] En effet, le grief de principe du Syndicat du 28 juillet 2002 se veut une contestation de la décision d’Astec de ne pas appliquer la Règle du 55 aux situations visées par l’article 15 de la convention.

Ainsi, même si le grief est celui du Syndicat, il s’agit par contre d’une réaction à une prise de position d’Astec quant à cette Règle du 55. [114] En somme, par sa contestation, le Syndicat oppose à la position d’Astec (certains diront « as a shield ») la pratique passée qu’il invoque par le biais de la théorie de l’ estoppel . [115] Pour tout dire, quoique le Syndicat soit celui qui dépose le grief, il est en quelque sorte en « défense » dans le cas sous étude, puisque l’initiative d’une modification de la situation provient d’Astec.

C’est de fait pour parer à cette prise de position que le Syndicat dépose le grief de principe et, partant, invoque le moyen de fin de non-recevoir qu’il plaide. [116] En second lieu, contrairement aux prétentions d’Astec, il est loin d’être acquis qu’en matière d’arbitrage dans le domaine des relations de travail, l’adage suivant lequel l’ estoppel « is a shield and not a sword » a toujours cours.

Le moins que l’on puisse dire, c’est que la jurisprudence arbitrale, loin de faire l’unanimité sur le sujet, comporte plutôt un courant solide et continu de décisions qui établissent que l’ estoppel peut être invoqué autrement que comme seul moyen de défense . Dans sa sentence, l’arbitre réfère à au moins une décision qui va dans ce sens, à laquelle on peut ajouter au moins cinq autres décisions arbitrales fouillées rendues au cours des dix dernières années au même effet.

[117] Somme toute, tout comme l’arbitre Foisy l’a fait en l’espèce, de nombreuses décisions reconnaissent qu’un syndicat peut invoquer avec succès la théorie de l’ estoppel en matière de relations de travail, même dans des situations où le grief découle de son initiative. [References omitted; emphasis added] [ 28 ] It also bears emphasizing that, in its brief decision confirming Gascon J.’s judgment, the Court did not merely find that the arbitrator’s application of the theory of estoppel to the facts of that case was reasonable, it went further by holding that the arbitrator’s decision was correct: “ l’arbitre a eu raison d’appliquer à l’espèce la théorie juridique des fins de non-recevoir ou de l’« estoppel », puisque depuis plusieurs années l’employeur (Northern et par la suite Astec) avait fait le choix, dans l’exercice d’une discrétion qui était la sienne, de faire bénéficier les employés de la règle 5 5”. [20] [ 29 ] In sum, I find that it is at the very least possible that Air Canada will be found to have committed a fault on the basis of the theory of estoppel or peremptory exceptions. [ 30 ] In light of these considerations, I am of the view that a number of legal bases arguably support the appellant’s proposed syllogism regarding Air Canada’s alleged breaches of undertakings benefitting its retirees.

Given the Supreme Court’s holding in L’Oratoire Saint - Joseph du Mont - Royal that “[t]he applicant need establish only a mere ‘possibility’ of succeeding on the merits, as not even a ‘realistic’ or ‘reasonable’ possibility is required”, [21] I further find that the appellant’s allegations regarding Air Canada’s wrongful conduct meet the standard set out in article 575(2) C.C.P. * * * [ 31 ] I am also of the view that, based on the record as it currently stands, it is possible that the appellant will succeed in proving that she and other Air Canada retirees were injured by the extensive issuance of higher priority FRT passes.

Common sense and logic suggest that the issuance by Air Canada of such passes to tens of thousands of current employees is not without significant consequences on the value and usefulness of the retirees’ travel benefits. That, along with the frustration and anxiety the appellant allegedly suffered as a result of the issuance of higher priority passes, constitute actionable injuries.

The judge made a reviewable error by assuming that a retiree in circumstances similar to the appellant’s who has yet to be prevented from using their FRT pass as a result of a current employee’s use of their higher priority pass cannot possibly have sustained an actionable injury. [ 32 ] That said, there is no basis to allow the appellant to bring a claim for punitive damages. That claim, which rested on alleged breaches to Quebec’s Charter of Human Rights and Freedoms , [22] is not being pursued on appeal.

What remains are alleged breaches of civil obligations that cannot give rise to punitive damages. [23] * * * [ 33 ] Air Canada having conceded that the other criteria set out in

article 575 C.C.P. are met, I conclude that the appeal must be allowed and the class action authorized, except in respect of the claim for punitive damages. [ 34 ] In closing, I note that Air Canada has not raised any objection to the Superior Court’s subject-matter jurisdiction over the appellant’s claims. I further note that, given the Court’s 2020 decision in Regroupement des cols bleus retraités et préretraités de Montréal , [24] there may be an issue as to whether those claims fall within the exclusive jurisdiction of a grievance arbitrator.

However, I believe that this issue is better left to the Superior Court if and when a jurisdictional objection is raised by Air Canada. [ 35 ] For these reasons, I propose that the appeal be allowed so as to authorize the appellant to institute a class action against Air Canada, except in relation to the claim for punitive damages. FRÉDÉRIC BACHAND, J.A.