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Foreign Worker Class Action Lawsuit Settled

Christine Davies

September 29, 2013

Denny’s Restaurants settles class action lawsuit brought by temporary foreign workers

In case you missed it, a class action lawsuit brought on behalf of more than 70 temporary foreign workers against Denny’s Restaurants in British Columbia settled earlier this year for over $1.4 million.

The workers alleged they paid thousands in recruitment fees in exchange for a promise of work, but Denny’s failed to provide the amount of promised work, and also failed to pay overtime or reimburse travel expenses. The class action, which was certified in 2012, alleged breach of contract, breach of fiduciary duty, and unjust enrichment.

Issues arose in the course of the proceedings because the workers maintained that Denny’s was trying to intimidate them from participating in the lawsuit or bringing other legal claims. This led to a court order, incorporated into the certification decision, that there would be no repercussions to any class members as a result of their participation in the action.

Despite this step, following certification, there were further allegations that the company was pressuring people not to participate in the lawsuit. Class members filed affidavits indicating that Denny’s management told them that the company would only support their work permits or applications for permanent residency if they opted out.  A large number of class members (approximately one quarter of the class) opted out of the lawsuit, raising questions about whether they did so out of fear of retribution or hope that they might receive support from Denny’s to obtain enhanced legal status in Canada.

In these circumstances, the representative plaintiff sought an order that the opt-out notices be declared void. The plaintiff argued that the “well had been poisoned” and the court could not conclude that the workers had made a free and informed decision to opt out of the proceedings. While Denny’s denied wrongdoing, it supported the nullification of the opt-outs.

The court noted that the temporary foreign workers were “particularly vulnerable” given their ongoing employment relationship with Denny’s and their need for its support in relation to their immigration status. While the court did not rule on whether Denny’s had, in fact, committed the alleged misconduct, given the employer’s earlier threats and acts of reprisal, the court held it was appropriate to invalidate the opt-out notices, since it could not be confident they were based on free and informed decisions.

As a result, all of the class members will benefit equally from the settlement, regardless of whether they opted out.
The settlement is worth approximately $1.4 million, and provides the following:

  • Class members who were promised 37.5 or 40 hours per week in their contract will be paid for any shortfall in their hours
  • Class members are entitled to overtime
  • Class members will be reimbursed for their airfare to Canada
  • Class members will be reimbursed their agency fees
  • Denny’s will make a donation to a migrant workers’ organization.

You can read a copy of the court’s decision approving the settlement here. The Toronto Star reported on the settlement here.

Lawyers

Christine Davies

Practice Areas

Class Action Litigation, Employment Law