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The Return of Large Punitive Damages Awards in Wrongful Dismissal Cases?

Are large punitive damages awards in wrongful dismissal coming back?  Looking at the trial court’s decision in the case of Pate v. Galway-Cavendish and Harvey (Townships), which is currently under appeal, one wonders.

Mr. Pate was a 9+ year employee at the Townships, who was terminated for cause due to his alleged non-remittance of building permit fees.  When he refused to resign (after being given no details of the allegations against him), he was dismissed and the matter was reported to the police.  In part due to the allegations against him and the ensuing criminal trial, Mr. Pate’s marriage and his side business with his wife both failed.  In addition, he was unable to re-establish a career as a municipal official.

Mr. Pate was subsequently acquitted, and it was determined by the trial judge that the employer had failed to disclose key information to the Crown which would have resulted in no charges having been laid in the first place.  The trial judge felt that the employer’s conduct merited relief in the form of a punitive damages award, due to the fact that damages for wrongful dismissal could not adequately address the fact that Mr. Pate’s career was effectively destroyed due to the allegations.  However due to the principle of proportionality, the trial judge awarded Mr. Pate only $25,000 in punitive damages.  The Ontario Court of Appeal subsequently overturned that decision and ordered that a new trial be conducted with respect to the quantum of punitive damages and another issue.

With reference to the damage caused to Mr. Pate as well as the fact that both the criminal proceedings and the wrongful dismissal trial took years to be dealt with, on the second time around the trial judge took full advantage of the Court of Appeal’s open invitation to punish the employer for its conduct, and increased the punitive damages award from $25,000 to $550,000.

While the matter is under appeal once again and it may be that the $550,000 was excessive, the Court of Appeal’s unusual invitation to the trial judge to reassess punitive damages at a higher amount makes it clear that our province’s highest court is not averse to punishing employers whose conduct is deserving of signficant punishment.

Pate Estate v. Galway-Cavendish and Harvey (Townships), 2011 ONSC 6620 (CanLII)

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The Return of Large Punitive Damages Awards in Wrongful Dismissal Cases?

Denunciation, Deterrence and Retribution: Jury Awards Dismissed Employee $573,000 in Punitive Damages

The Vancouver Sun has reported that a British Columbia jury recently awarded employee Larry Higginson over half a million dollars in punitive damages, on top of a $236,000 award for wrongful dismissal, taking damages flowing from a wrongful dismissal to new heights in Higginson v. Babine Forest Products Ltd. and Hampton Lumber Mills Inc.

The Jury decision is not reported, however according to reports, Mr. Higginson had been employed for 34 years with the Defendant, Babine Forest Products Ltd., until he was dismissed on October 14, 2009, apparently for just cause. The employer alleged that Mr. Higginson failed to perform his duties as a manager. In response, Mr. Higginson alleged that cause had not been established and that the employer had set him up for termination of employment, had made his working environment miserable and had alleged cause to avoid the obligation to pay notice of termination of employment to long-term employees.

The Prince George B.C. jury found that the employer did not have cause to terminate his employment, and awarded damages in excess of $800,000 as a result of the wrongful dismissal.

Such a large punitive damages award has not been seen since the 2008 Ontario Superior Court of Justice awarded $500,000 to a wrongfully dismissed employee in Keays v. Honda Canada Inc.  However, in Keays, the Supreme Court of Canada (2008 SCC 39) overturned the punitive damages award on appeal.

A Notice of Appeal was filed in Higginson on July 18, 2012.

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Denunciation, Deterrence and Retribution: Jury Awards Dismissed Employee $573,000 in Punitive Damages

Being Kicked in the Behind is No Laughing Matter: Employee’s Exaggerated Account of Workplace Altercation not Grounds for Summary Dismissal

Teresa Scholer was a fifty-five year old employee working in an entry-level position with the defendant employer. At the time of the termination of her employment, she had been working with the employer for approximately nine or ten months. In early 2010, Ms. Scholer was attending to her duties when she had an exchange with a co-worker. Inexplicably, after the exchange, her co-worker kicked Ms. Scholer in the buttocks. This event was captured by the employer’s video surveillance. The video surveillance also captured Ms. Scholer attempting to return the kick.

It was not clear from the video whether this was horseplay or something more aggressive. However, Ms. Scholer’s position was that she had been assaulted, and she complained to the employer that she was considering seeking criminal charges against her co-worker. She also complained about an earlier incident involving the same co-worker and about the fact that the co-worker had been scheduled for more shifts.

The employer viewed the surveillance, and considered that Ms. Scholer had not been honest about the incident, and had exaggerated it. Ms. Scholer was informed of the employer’s view of her description of events, but before Ms. Scholer was given an opportunity to review the surveillance, the employer terminated her employment, allegedly because she was difficult. Ms. Scholer was paid statutory notice of termination of employment, but the employer nevertheless insisted at trial that the termination had been for just cause.

The B.C. Provincial Court found that the employer had not established just cause. In particular, the Court found the employer’s focus on Ms. Scholer’s description of the incident, rather than the fact that she had been kicked in the buttocks, perplexing.  In all, the Court found that Ms. Scholer’s inaccurate description of the incident was neither in and of itself just cause for dismissal, nor was it a culminating incident that would justify the termination of her employment. There was no evidence that prior to her termination Ms. Scholer was aware that her job was in jeopardy. Finding that she was wrongfully dismissed, the Court assessed a notice period of four weeks given her particular circumstances including her short service.

Scholer v. Hart Drug Mart Ltd., 2012 BCPC 220 (CanLII)

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Being Kicked in the Behind is No Laughing Matter: Employee’s Exaggerated Account of Workplace Altercation not Grounds for Summary Dismissal

Termination For Cause: Another Case of “Employer Beware”

A termination for good business reasons does not always equate to a termination for just cause.  In the recent decision of the Ontario Superior Court in Barton v. Rona Ontario Inc., Mr. Justice Lauwers stated that even if an employee’s serious misconduct was such that the employer concluded that it needed to dismiss him to make an example of him, the misconduct might not necessarily be sufficient to warrant a termination without notice.

The Facts:

Barton was employed by the defendant for over 10 years and at the time of termination he was an assistant store manager.  Under his watch, an order picker truck was used to lift a wheelchair-bound employee from the ground floor to a second floor training centre and back again, for computer training (due to the fact that the only training office in the store was on the second floor and not otherwise accessible to wheelchairs).  This incident was contrary to the defendant’s safety expectations as set out in the Employee Handbook, the Health and Safety National Manual and the Occupational Health and Safety Act.  While Barton indicated his discomfort with the planned incident to both the operator of the order picker truck and the disabled employee, he was aware that the disabled employee wanted to attend the training and he did nothing to stop the employees from proceeding with their plan.  The incident turned out to be even more dangerous than might otherwise have been the case, as the wheelchair was not secured to the skid during the descent to the ground floor, and as the area around the order picker truck was not secured and someone walked under it during the lift. Fortunately for all, nobody was hurt during the incident.

Several employees were disciplined due to their part in the incident, but Barton’s employment was terminated for cause due to the fact that he was held to a higher standard than the non-managerial employees.

The Decision:

Mr. Justice Lauwers referenced Mr. Justice Echlin’s statement that just cause is “the capital punishment of employment law”.  He also referenced the contextual approach set out in the leading case of McKinley v. B.C. Tel and stated that although Barton’s misconduct was serious, his performance appraisals were good, he had no disciplinary record and he did not give permission for the lift or descent (although neither did he stop them).  By applying the principle of proportionality set out in McKinley, he found that Barton’s actions were not sufficient to warrant a with-cause termination.  He found that while there may have been good business reasons for Rona to terminate Barton’s employment and make an example of him in order to ensure that this sort of incident did not happen again, those reasons were not sufficient to elevate the termination to one without notice.  As a result, Barton was awarded 10 months of damages due to wrongful dismissal.

Barton v. Rona Ontario Inc., http://canlii.ca/t/fs8n7

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Termination For Cause: Another Case of “Employer Beware”

Évitez les mauvaises surprises : notions de base en droit canadien de l’emploi, de l’immigration et du travail

L’article dont il est question dans le présent billet a été rédigé par Andrea Raso Amer et Tony Schweitzer.

Bien que le Canada et les États-Unis entretiennent d’étroites relations et que leur gouvernance et leurs lois présentent de nombreuses similarités, il existe entre les deux pays des différences importantes et distinctes, dont il faut tenir compte dans la conduite d’activités commerciales transfrontalières. La façon d’attirer, de gérer et de fidéliser les employés est notamment assez différente au Canada et toutes les entreprises qui songent à brasser des affaires au nord de la frontière devraient être informées de certains points très importants à prendre en considération.

FMC vous invite à lire un article traitant de différents sujets de façon approfondie, notamment les permis de travail, les membres de la famille qui accompagnent les travailleurs, les heures supplémentaires et les congés.

Pour lire l’article, veuillez cliquer ici (en anglais seulement).

 

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Évitez les mauvaises surprises : notions de base en droit canadien de l’emploi, de l’immigration et du travail

Avoiding Frostbite: A Primer on Canadian Employment, Immigration and Labour Laws

This article was written by Andrea Raso Amer and Tony Schweitzer.

While Canada and the United States share very close bilateral ties, and there are many similarities in our governance and laws, there are also some very distinct and important differences that are relevant to cross-border business. One key difference exists in attracting, managing and retaining employees in Canada. Any company contemplating business north of the border should be made aware of these very significant considerations.

This article contains in-depth discussions on various topics including work permits, accompanying family members, overtime, and leaves of absence.

To read the full article, please click here.

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Avoiding Frostbite: A Primer on Canadian Employment, Immigration and Labour Laws

Employee Fails to Mitigate Damages by Turning Down Employer’s Replacement Job Offer

An Ontario Judge has confirmed that an employee’s duty to mitigate may well include taking a job that is offered by the dismissing employer.

In June 2008, Aleem Ghanny was told by his employer that his employment as the Service Manager of a local Toyota dealership would terminate at the end of the month. However, at the same time, Ghanny was told that he would be relocated to a related dealership where he would continue as Parts and Service Manager and receive an identical compensation package. Despite the employer’s assurances that Ghanny’s seniority would be transferred to the new dealership which was located only a few blocks away from his current workplace, Ghanny rejected his employer’s replacement job offer and commenced a claim for wrongful dismissal.

Holding that Ghanny had acted unreasonably in rejecting his employer’s offer, the Judge dismissed Ghanny’s claim. Viewed objectively, there was no difference between the two positions nor was there any indication that the working conditions at the new dealership were demeaning or that Ghanny’s relationship with the owner or other employees had become difficult or acrimonious. Further, while Ghanny had expressed some concern over the future of the new dealership, the Judge noted such concerns were unfounded – “Even if the replacement job had only lasted nine months… that was still nine months of reasonably required mitigation.”

Ghanny v. 498326 Ontario Limited: http://www.canlii.org/en/on/onsc/doc/2012/2012onsc3276/2012onsc3276.pdf

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Employee Fails to Mitigate Damages by Turning Down Employer’s Replacement Job Offer

“Eleventh Hour Claim of Just Cause” Rejected by Court: Witnesses “Tailored” Evidence

An Ontario judge has rejected a just cause defence raised by an employer two and a half years after the employee was dismissed.  The company alleged that the plaintiff, a sales manager, made fraudulent misrepresentations about future sales revenues during his hiring process.

The judge noted that a key employer witness’s evidence was “glaringly devoid of written corroboration” and that he “often appeared as if he was making his answers up as he went along”.  That witness testified, for instance, that he always jotted notes of discussions but he didn’t keep them, although he had earlier testified that he had not kept notes.

The judge stated, “The court was left with the definite impression that the defendant’s witnesses tailored their evidence to support their eleventh hour claim of just cause.”

Deciding that the employer did not have just cause for immediate dismissal, the court stated that the employee’s business plan, which he prepared and gave to the employer during the hiring process, was not a promise or guarantee of sales, but instead was a forecast of what he hoped could be achieved over the next five years.  The business plan was not “fraudulent” as alleged by the employer.  Further, the employer could not rely on conduct that they knew had occurred more than a year before the termination; the company had condoned or accepted the employee’s conduct.

The court awarded the sales manager, who had only two and a half years’ service, 6 months’ pay in lieu of notice.

This case illustrates that employers who wish to allege just cause for dismissal based on facts known at the time of termination should, in general, do so at the time of termination.  In this case, by waiting two and a half years to allege just cause, the employer subjected its position, and its evidence, to criticism by the court.

McGregor v. Atlantic Packaging Products Ltd.

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“Eleventh Hour Claim of Just Cause” Rejected by Court: Witnesses “Tailored” Evidence

Bill 44: British Columbia’s Alternative to Court Proceedings

In early May 2012 the British Columbia Legislature introduced the Civil Resolution Tribunal Act, creating a new adjudicative tribunal with jurisdiction to hear and decide some claims that are currently heard by the B.C. Courts.  The Act has now received Royal Assent and will come into force by regulation.

When the Act comes into force, the Tribunal will be structured to provide an alternative to traditional dispute resolution processes, such as the B.C. Provincial Court’s small claims division.  In the words of the Ministry of Justice, the Tribunal “will be structured to encourage people to use a broad range of non-litigation based dispute resolution tools to resolve their disputes as early as possible, while still preserving adjudication as a valued last resort.”

These non-litigation based dispute resolution tools include an on-line dispute resolution process and an initial case management phase in which the parties may seek a negotiated resolution.  Of particular note are Sections 19, 25 and 29 of the Act, which allow for the use of electronic communication tools in conducting all or part of a tribunal proceeding or facilitated dispute resolution process, and Section 20 which prohibits parties from being represented by legal counsel subject to certain exceptions.

Currently the Act applies only to strata property disputes and some small claims matters. It remains to be seen whether the Tribunal’s jurisdiction will increase over time.

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Bill 44: British Columbia’s Alternative to Court Proceedings

Release No Bar to Wrongful Dismissal Claim

A recent decision of the Ontario Supreme Court, Rubin v. Home Depot Canada Inc., 2012 ONSC 3053, has some potentially dangerous implications for employers and the agreements they make with their employees.

The plaintiff, a competitive shopper, was employed by Home Depot for 19.75 years and was 63 years old when his position was eliminated. At the termination meeting, Home Depot presented him with an offer of 28 weeks’ pay in lieu of notice that it said was to “exceed our obligations under the Employment Standards Act” in exchange for a release. It did; but only by .25 of a week’s pay. The plaintiff accepted the offer and signed the release before leaving the termination meeting, although the letter indicated that he had one week to review.

Shortly after signing the release, the plaintiff realized that he’d made a mistake and he attempted to negotiate a better severance package. Home Depot refused and relied upon the release.

The Court found the release to be unconscionable and set it aside. In doing so, it reasoned that it actually did not matter how much more than the statutory requirements the offer represented, “but, whether in the circumstances, it is so unreasonable as to be grossly unfair”. According to the Court, this determination comes from assessing the situation as a whole. In the Court’s assessment, the notice period was “grossly inadequate” and “sufficiently divergent from community standards that it ought to be set aside”. In particular the Court held as follows: “The idea that, in the modern day, a twenty-year employee, moving to the end of his expected working life, who is fired without cause, for reasons reflected in an internal re-organization of the company, would receive only six months’ notice, is far removed from what the community would accept.” The Court also faulted Home Depot for being misleading in suggesting that he would not be paid at all if he didn’t sign the release and in taking advantage of the plaintiff’s vulnerability and the power imbalance in its favour. The Court thus set aside the release and set the reasonable notice period at 12 months’ salary and benefits.

The Court’s willingness to intervene, not because the termination letter was misleading, but because it determined the agreement was grossly unfair, is of concern. It creates unpredictability if employers are not able to rely on compromise agreements reached with their employees because the employee may simply be able to renege without consequences.

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Release No Bar to Wrongful Dismissal Claim