Huge Aggravated Damages Awards For Reprehensible Conduct Upheld

Punitive and aggravated damages in employment cases are alive and well in Canada, thanks to a recent decision of the Ontario Court of Appeal.  The ground-breaking decision in Boucher v. Wal-Mart (2014) ONCA 419 upheld significant findings of a trial decision even while reducing some of the amounts awarded.  The end result was that an Ontario employee was left with a court award of more than $400,000 after proving the tort of intentional infliction of mental suffering.  It is a tremendously useful decision for employees, particularly those who are subjected to workplace abuse.  For employers, the decision demands increased vigilance in dealing with complaints of inappropriate workplace treatment made by employees.

The plaintiff, Meredith Boucher, worked for Wal-Mart for a total of 9 years.  She had a strong employment history and had been promoted on a number of occasions.  By the time the relevant events occurred, Ms Boucher was working as an assistant manager at a Wal-Mart location in Windsor.

According to the trial court decision and the decision of the Ontario Court of Appeal, Ms Boucher refused to go along with her manager’s request to falsify a temperature log in the store that tracked produce and dairy product temperatures.  After this refusal on her part, her manager, Jason Pinnock, became irate and vindictive.  Mr. Pinnock proceeded to launch a “torrent of abuse” against her which included belittling, humiliating and demeaning conduct.

Ms Boucher complained to the district manager.  Rather than deal with the complaints properly, the district manager shared the complaints with the manager, who became even more vindictive.  Ms Boucher complained again.  She was told that her complaints were “unsubstantiated,” (despite overwhelming evidence) and she was threatened with consequences for continuing to undermine her “manager’s authority.”

At trial, a jury awarded $1M in punitive damages to the plaintiff, payable by Walmart.  It also awarded a host of other damages including damages for intentional infliction of mental suffering and punitive damages against the manager, Mr. Pinnock, personally. It awarded aggravated damages against Wal-Mart.  In total, the trial award came to more than $1.4M.

In a 2-1 majority decision, the Court of Appeal upheld some of these awards, while reducing the punitive damages awards.

The Court had little difficulty upholding the finding that the actions of the manager and of Wal-Mart were “reprehensible.”  In the case of Wal-Mart, the Court upheld findings that Wal-Mart had refused to take the complaints seriously, dismissed them as unsubstantiated, threatened to dismiss the plaintiff for making the complaints, refused to discipline the manager and, overall, acted in a “reprehensible” manner.

However, the Court was still left with the question of what this is all worth under Canadian law.  While it upheld an award of $100,000 for damages for “intentional infliction of mental distress” against the manager personally, the Court reduced the award of punitive damages against him from $100,000 to $10,000, seemingly out of concern for the appearance of a double recovery.  This total of $110,000 against a manager for intentional infliction of mental distress is still one of the higher awards of its type in Canadian employment law.

The Court also upheld an award of $200,000 for aggravated damages against Wal-Mart, finding that some of Wal-Mart’s actions, including its threat of a reprisal, were particularly vindictive.

However, the Court refused to uphold a jury award of $1M in punitive damages against Wal-Mart, finding that this would be too high.  Instead, it reduced the award to $100,000, which is still a very significant amount in all the circumstances.

Conclusion

The bottom line here is that an employee facing abusive treatment wound up with an Ontario Court of Appeal award of more than $410,000 plus legal fees – in addition to damages for severance.

This case is of tremendous significance.  Some of the previous Canadian cases have involved facts that are far more extreme.  For example, in one case, Pate Estate, the plaintiff had been the subject of a wholly unsubstantiated criminal trial.

In this Wal-Mart case, the facts, unfortunately, are far more common, at least in my experience.  It is not always easy for employees to prove that they were subjected to abuse.  But many Canadian employees are faced with somewhat similar treatment.

Here, fortunately for Ms Boucher, the co-employees apparently testified and provided evidence that bolstered her claims.

It is also fair to say that Canadian employers, more often than not, when faced with these types of claims, will attempt to deal with them properly and fairly.  It is rare that an employer will take no action whatsoever and instead threaten the employee who has made the complaint.  However, this certainly does occur more often than one might think.

I regularly represent clients who face abusive scenarios at work, even if many of those scenarios are not quite as extreme as what occurred in the Wal-Mart case.  Employees will now have a much wider range of options available, including the possibility of obtaining much greater damages awards.

For employers, this decision will really serve as a serious warning that complaints of workplace harassment must be investigated and handled appropriately.  The consequences of not responding properly can be dramatic and very costly.

While Wal-Mart may well ask the Supreme Court of Canada to hear this case, it is far from certain that the Supreme Court would see any reason to intervene.  If the Supreme Court does choose to hear the case, it may well consider a cross-appeal to reinstate the $1M in punitive damages that had been awarded at trial, given all of the harsh factual findings in this case.  It seems unlikely to me that the Court would interfere with the aggravated damages awards that were upheld by the Ontario Court of Appeal.

Punitive Damages of $450,000 for Malicious Prosecution

The Ontario Court of Appeal has reduced a trial court award from $550,000 to $450,000 for malicious prosecution in a wrongful dismissal suit.  Unfortunately for the plaintiff, the decision in Pate Estate v. Galway Cavendish and Harvey (Township) came more than 14 years after Mr. Pate was dismissed and two years after he passed away.

Background – Wrongful Dismissal, Criminal Acquittal and Malicious Prosecution Lawsuit

Mr. Pate had worked as a building inspector for the defendant township for more than 10 years.  In 1999, his employment was terminated and the township alleged that it had uncovered “discrepancies” relating to building permit fees.  Prior to terminating his employment, the township demanded that Mr. Pate resign.  He was told that if he refused, the township would involve the police, even though Mr. Pate was not provided with full details of the allegations against him.  When Mr. Pate refused, the township fired him and provided information to the police. The police were reluctant to charge Mr. Pate due to the insufficiency of the evidence. But, according to the Ontario Court of Appeal, the township exerted pressure on higher level officials within the OPP and Mr. Pate was eventually charged.  Three years later, in 2002, Mr. Pate was acquitted after a four day trial.

After his acquittal, Mr. Pate brought a wrongful dismissal lawsuit against the township.  He also sued for malicious prosecution, punitive damages, reputational injuries, criminal defence costs and aggravated damages.  In 2009, after a civil trial, Mr. Pate and the township agreed that he should be paid 12 months’ compensation for wrongful dismissal.  In addition, he was awarded an array of other damages totalling approximately $130,000 plus costs and interest by the court.  However, the trial judge refused to award damages for malicious prosecution as the judge concluded that the facts in Mr. Pate’s case did not meet the legal threshhold.  Mr. Pate appealed this decision and also appealed the amount of award of punitive damages, which had been set at $25,000, a number the judge felt reflected the principle of “proportionality” in awarding punitive damages.  Mr. Pate was successful with both appeals and the matter was sent back to the trial judge.  The trial judge now changed the award of punitive damages to $550,000 and also made a finding of malicious prosecution for which Mr. Pate was awarded $1, though the punitive damages award was related to the finding of malicious prosecution.  The Township appealed this second decision to the Ontario Court of Appeal.

Court of Appeal Decision:  Reducing Award to $450,000 for Punitive Damages and Malicious Prosecution

In a decision released on November 5, 2013, the Ontario Court of Appeal reduced the award of $550,000 in punitive damages to $450,000 by a two to one majority.  One judge would have kept the amount  at $550,000.  The Court of Appeal also upheld the finding of malicious prosecution.

The Court of Appeal summarized the elements of a successful lawsuit for malicious prosecution:

1.  The criminal proceedings were “initiated” by the defendant;

2.  They ended in favour of the plaintiff;

3.  There was no reasonable and probably cause for the prosecution; and

4.  There was “malicie, or a primary purpose other than that of carrying the law into effect…”

The Court of Appeal uhpheld the trial court finding that the township had knowingly withheld exculpatory evidence from the police when it pushed to have Mr. Pate charged criminally.    Moreover, this was evidence that the police could not necessarily be expected to find through a normal investigation.

Turning to the award of punitive damages, the Court of Appeal adopted the minority statement that an appellate court may revisit an award of punitive damages if the award is so large that it “offends the court’s sense of reason.”  The Court of Appeal concluded that the trial judge had applied all of the proper tests and that the award was not unreasonable.  However, the majority of the Court concluded that the aggravated damages award and the substantial indemnity costs awards should be factored into the award of punitive damages.  Accordingly, the Court reduced the award by $100,000 due, primarily, to duplication of damages.

The Court agreed with the reasons of the dissenting Court of Appeal judge in which the Court reviewed and considered a wide range of punitive damages cases.   Ultimately, the Court of Appeal agreed with the trial court that this case should be at the high end of the range.  It upheld the findings that the township’s conduct was “rerehensible,” “offensive and morally repugnant” and “a departure to a marked degree from ordinary standards of decent behaviour.”

In a lengthy but partially dissenting decision, Justice Lauwers would have kept the puntive damages award at $550,000.  Justice Lauwers disagreed with the majority that the award should be reduced due to a perceived duplication.  Even with the reduction that by the majority from $550,000 to $450,000, the award of punitive damages on this scale is still quite significant.

Conclusion – Higher Punitive Damages Awards May Become More Common

Punitive damages cases are very dependent on particular facts.  Generally, the behaviour in these cases is quite extreme.  Nevertheless, even with extreme facts, courts have historically awarded much lower amounts.  Given some of the more recent punitive damages cases that the Court of Appeal referenced in its decision in Pate Estate v. Galway Cavendish, there may well be a signficant upward trend in punitive damages awards.  Even with the reduction of $100,000 in this case, this decision will greatly benefit plaintiffs in wrongful dismissal cases who have been treated in an extremely harsh and vindictive manner.

However, this Court of Appeal decision will also make it more difficult to resolve many of these types of cases and will make it much more enticing for plaintiffs and their legal counsel to take these types of cases all the way through to a trial.

 

 

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