In Flesch v Apache Corporation, the Alberta Court of Appeal (“ABCA”) upheld the certification of an employee class action arising out of the cancellation of a long-term incentive compensation plan. This case is significant because the court discussed increasing its gatekeeping function in the certification of class actions, and it serves as a warning to employers who seek to amend or cancel incentive plans.  


In July 2017, the Apache Corporation (“Apache”), an American oil and gas company, announced the closure of its Canadian operations. Through a series of amalgamations, Apache’s Canadian subsidiary was sold to the company that became Paramount Resources (“Paramount”). Apache cancelled all awards under its long-term compensation plan, including restricted stock units, stock options, and performance awards. Apache advised the over 300 transferred employees that they would participate in Paramount’s compensation plan.

The employees alleged that Paramount’s plan was less remunerative. They claimed damages for breach of contract, breach of duty of good faith, breach of fiduciary duty, and unjust enrichment.

The chambers judge granted the employee group’s application for class action certification against Apache, Paramount, and individual board members. The defendants appealed certain aspects of the certification.


The majority of the ABCA upheld the certification decision. The court rejected the appellant’s argument that there was no basis in fact to conclude that they were common employers because they were subsidiaries or affiliates. The court also rejected Paramount’s argument that they should not be included as a defendant because Apache could be held liable. The ABCA overturned the certification of the unjust enrichment claim as a common issue because it had no reasonable prospect of success.

One element of the test for certification is whether the pleadings disclose a cause of action. The requirement has a lower bar than the other elements. It will be satisfied unless, assuming the facts are true as pleaded, it is “plain and obvious” that the claim cannot succeed. The majority applied this standard test.

In a concurring decision, Justice Slatter held that the court should exercise a more robust gatekeeping function at certification. He noted that “cluttering up class action proceedings with collateral and marginally relevant causes of action” does not serve the objectives of Alberta’s class action regime. Instead, mirroring the Federal Court Rules and jurisprudence, Justice Slatter held that the court should raise the standard to require “pleadings to disclose a reasonable cause of action.” He envisioned that the court would apply a generous test to the main cause of action and the more rigid standard to secondary causes of action.


  • Justice Slatter suggested an enhanced gatekeeping function for courts in certifying class actions. This reasoning was not part of the majority decision, so it will be interesting to see whether other courts follow his suggestion.
  • Employers need to be aware of the risk of class proceedings associated with revising or cancelling incentive compensation programs. This is especially important in the context of workforce transitions.
  • A successor company may not be shielded from class proceedings based on the conduct of prior employers.
  • Employers and their directors need to be aware that class proceedings can be certified against individual managers of incentive programs for breach of fiduciary duty.

John Pirie leads Baker & McKenzie's Litigation and Government Enforcement Group in Canada. He is a Chambers listed trial lawyer who acts for clients in complex business disputes, with significant experience in cross-border litigation and arbitration. Widely recognized as a leading trial, arbitration and appellate lawyer, John has a long record of success acting for both foreign and domestic parties. John has acted for multinational corporations, banks, a securities regulator, a stock exchange, investors and a range of professionals. John has recently been engaged to act for an Ontario Superior Court Judge.


David Gadsden represents global clients in complex commercial disputes. He is the Chair of Baker McKenzie's Canadian Class Actions Group and is known for his sound advice on commercial class actions, competition and antitrust matters, arbitration, fraud cases and product liability matters. Clients value David's pragmatic and determined approach to disputes and have described him as "absolutely terrific at bringing across the finish line the most complex and multidimensional issues". David has been recognized by Benchmark Litigation, Legal 500, Best Lawyers Canada, and Lexpert’s annual Guide to the Leading US/Canada Cross-border Litigation Lawyers. He has previously been recognized by Lexpert as a Rising Star. As Chair of Baker McKenzie's Canadian Class Actions Group, David draws on his extensive class action experience, having acted as counsel for defendants and plaintiffs in numerous national and global class action lawsuits involving allegations of anti-competitive conduct, professional service negligence, product liability and securities fraud. David's practice also comprises international and domestic business disputes of all manner, including competition and antitrust litigation, commercial arbitration, business tort and trade secrets claims and product liability matters. David also has deep experience in fraud and financial crime matters. He is trusted counsel on multijurisdictional fraud investigations, including related civil disputes and regulatory proceedings. David has appeared as counsel at all levels of court in Ontario and in international and domestic arbitrations. He has completed the Osgoode Intensive Trial Advocacy Program, as well as the Intensive Advocacy Training Program conducted by the National Institute of Trial Advocacy. David has also lectured in the Osgoode Hall Graduate (LL.M.) Programme.


Brendan O'Grady is a senior associate with Baker McKenzie's North America Litigation & Government Enforcement Practice Group in Toronto. He advises on commercial litigation and arbitration proceedings.


Dave Bushuev is a member of Baker McKenzie's Employment & Compensation Law Practice Group in Toronto. Dave provides employers with timely and effective advice on a wide range of labour and employment issues, including hiring, termination, labour relations, human rights, disability accommodation, occupational health and safety, privacy, and performance management. Dave represents clients in a variety of litigation matters before Ontario's Superior Court of Justice, the Ontario Human Rights Tribunal, and the Ontario Labour Relations Board. Dave also provides strategic advice and drafting with respect to hiring, terminations, establishing operations across Canada.