Bakshi v. Global Credit & Collection Inc.

In this matter Ken was co-counsel in a summary judgment motion in a class action lawsuit on behalf of the plaintiff. The Defendant, Global Credit & Collection Inc. brought the summary judgment motion.

A party to a lawsuit usually moves for summary judgment when the party is confident the facts and merits of the case favor their position. The purpose of a summary judgment motion is to attempt to end the litigation before a full hearing takes place. Although this may seem as a way to save time and costs, a summary judgment motion involves a lot of work and preparation as the parties always must put their best foot forward. Losing a summary judgment motion effectively ends the litigation (unless the losing party has grounds to appeal and actually proceeds to appeal the losing decision).

The plaintiff, Sachin Bakshi, was as employed as debt collector by the Defendant, Global Credit & Collection Inc. a debt collection company. On June 1, 2011, Global lost its largest client, Capital One. Global then laid off 368 employees, including 324 debt collectors like Mr. Bakshi.

Subsequently, Global and Capital One agreed to a settlement whereby Capital One paid Global $5.7 million with respect to any and all existing and potential disputes between the two companies.

The debt collectors (with Mr. Bakshi assuming the role of the representative plaintiff) commenced a class action against Global, claiming that the “$5.7 million payment was compensation for the post-dated cheques that were returned to Capital One when Global was terminated.” The class member also claimed they were contractually entitle to receive 15% commission on the $5.7 million (about $850,000) along with punitive damages.

After the class was successfully certified, Global brought a summary judgment motion on the common issues involved in the litigation and asking for the class action to be dismissed. The representative plaintiff brought a cross-motion for summary judgment on the same issues asking that they be answered in favor of the class.

Both sides filed extensive materials and affidavit evidence. Both sides agreed that the common issues could be decided on cross-motions for summary judgment.

Two key findings were made by the Court that led to a ruling in favor of Global.

First, the Honorable Justice Belobaba considered in detail the commission deal the debt collectors had ad the time with Global and concluded as follows:

“32 In short, I find on the evidence before me that the only “commission deal” was the breakeven commission deal and that the plaintiff’s first submission — that Global was obliged to pay commission on post-dates that were “cashed” after the debt collectors were laid off and did not make their breakeven — has not been established and does not succeed.”

Second, Justice Belogbaba ruled that the $5.7 million settlement payment was not intended by the parties for compensation for the post-dates that were returned to Capital One on termination:

“33 I also find on a preponderance of the evidence that the $5.7 million settlement payment was not intended by the parties as compensation for the post-dates that were returned to Capital One on termination. Rather, and in all likelihood, it was a settlement of a potential damages claim for “extraordinary expenses” and defamation that Global was actively considering.”

Apparently, immediately after the June 1, 2011 termination of the deal between Global and Capital One, rumors began circulating at Global and the debt collection industry that the deal had ended as a result of some kind of wrongdoing by Global. Global’s chairman came to believe that some of these rumours came from Capital One. As a result, Global threatened Capital One with legal action. As stated at paragraph 35 of Justice Belobaba’s decision, within a matter of days, Capital One “agreed to pay a $5.7 million settlement and issue a formal letter making it clear that Global had been terminated “for convenience” and not because of any “illegal collection activities.”

Finally, Justice Belobaba considered the common issues the parties had previously agreed to. The most important of these issues is found at paragraph 44 of the decision: “Was Global obligated to pay the class members commissions or damages arising from the Capital One post-dated collections?”

Justice Belobaba found that Global was not paid the $5.7 million settlement as compensation for the returned post-dates. Global was required to pay commissions only if the breakeven was exceeded by the debt collector while working the account. Additionally, Global was not contractually obligated to pay the class members commissions or damages as a result of the Capital One post-dated collections. Finally, Justice Belobaba considered the doctrine of unjust enrichment and found that Global had not been unjustly enriched by failing to pay post-dated collections commissions to class members.

This case illustrates the all-or-nothing result that may happen as a result of a summary judgment motion. Although the facts and the merits of the case appeared to favor the plaintiff class, Justice Belobaba appeared to ignore the plain meaning of certain documents presented in the case. This demonstrates that there is always uncertainty involved when proceeding to a hearing before the Court. It is preferable to negotiate a settlement whenever possible in order to keep costs down and avoid the uncertainty of litigation, however, in certain situations the litigants prefer to proceed to a full hearing on the merits. This matter was appealed to the Court of Appeal, however the Court of Appeal declined to interfere with the trial Judge’s factual findings. Again, this demonstrates the difficulties of appealing a trial decision.

Full citations:
Bakshi v. Global Credit & Collection Inc., 2016 CarswellOnt 17815, 2016 ONSC 4610, 273 A.C.W.S. (3d) 98
Bakshi v. Global Credit & Collection Inc., 2016 CarswellOnt 20545, 2016 ONSC 8095, 275 A.C.W.S. (3d) 503
Bakshi v. Global Credit & Collection Inc., 2017 CarswellOnt 10124, 2017 ONCA 548, 281 A.C.W.S. (3d) 28