Theft and Just Cause: Better Prove It!

Is theft just cause for termination of employment in Canada?  It might be.  But employers looking to support a just cause case with allegations of theft must be able to prove that they have built a very solid, airtight case.  Otherwise, the dismissed employee may well succeed with a wrongful dismissal claim and win substantial damages.

The recent case of Dennis v. Ontario Lottery and Gaming Corporation (2014) ONSC 3882 demonstrates just how high the bar may be for Ontario employers.

The plaintiff, Brenda Dennis, was a security manager for the defendant, the OLG.  She had worked for the OLG for more than 13 years in a senior position, supervising some 55 employees.

Ms Dennis was dismissed on what was, initially, a without cause basis.  She was offered a severance package of just under one year’s pay.  She signed off on the package and waited for her settlement funds.

However, it came to light that Ms Dennis had been in charge of arranging Wonderland tickets for OLG employees, for the social committee.  This was not an official part of her job duties.  However, in performing this role, Ms Dennis apparently “borrowed” more than $1,000 from the social committee’s Wonderland ticket proceeds.  She needed the money to pay debt she had incurred after becoming the victim of a Nigerian scam.  She gave evidence that she had always intended to repay the money.

Before paying out Ms Dennis’ severance, OLG discovered that there was a shortfall of more than $1,000 from this Wonderland ticket arrangement.  It questioned Ms Dennis and decided to withhold the agreed upon severance pending a further investigation.

Ms Dennis was charged criminally with theft but the charges were ultimately dropped.  However, OLG continued to maintain that Ms Dennis had stolen the money and that this would constitute just cause.  It refused to pay out the agreed upon settlement.  Ms Dennis sued and argued that there was no evidence of theft as she had always intended to repay the money.  She sued for an order that OLG should be required to honour the settlement arrangements.

OLG took the position that this was “after acquired cause” and that it should not have to pay out the funds since it had discovered the “theft.”

After reviewing various just cause decisions, the court came to the conclusion that termination with “just cause” would be “totally disproportionate.”

Justice O’Marra relied on a number of points:

1.  Running the social committee’s Wonderland ticket program was something that was “voluntarily assumed” by the plaintiff was not “an essential condition of her employment contract with the OLG;”

2.  Ms Dennis might not have believed or understood that “borrowing” the money would be criminal;

3.  The victim was Canada’s Wonderland rather than Ms Dennis’ employer;

4.  The employer concluded that Ms Dennis had admitted to theft but she had only admitted to borrowing the money;

5.  The internal investigation was “inadequate and inaccurate;” and

6.  The employer had agree to pay the settlement funds and Ms Dennis had signed a release that OLG had prepared.

The court therefore concluded that OLG could not maintain just cause and that it was required to pay out the agreed upon severance amounts plus legal fees.

The end result is one that seems very charitable for Ms Dennis, the dismissed employee, using the analysis the court proposed.  Obviously, this was a compassionate judge who considered the human elements of the case, the impact on Ms Dennis of being denied severance after 13 years and the circumstances in which Ms Dennis had been the victim of a Nigerian scam.  There is certainly case law support for taking into account these types of considerations.

However, stepping back for a moment, the facts seem to show that Ms Dennis’ actions were quite serious.  She removed and used more than $1,000 from a social committee fund that did not belong to her and only repaid the money after being caught.  For many judges, this may well have met or exceeded the high standard required for an employer to prove just cause, particularly for an employee in a position of trust in a high level security role.

It remains to be seen whether this decision will be appealed and how the Ontario Court of Appeal would approach the case.

The court may well have come to the same result by focusing on the deal that the employee had reached with the employer.  Since Ms Dennis had already signed off on a signed release that the employer had prepared and had already agreed to a deal, it would probably have been fair for the court to say that it was too late for the employer to start making allegations of just cause after the deal was concluded.  Instead, the court delved into issues of just cause and theft.

If the decision is upheld, particularly the court’s analysis of the theft allegations, it will demonstrate quite clearly that wrongful dismissal law in Canada is heavily skewed in favour of employees.  While more often than not that is a good thing, this type of decision will leave some employers wondering whether the just cause bar can ever be reached.

Perhaps the real message that should have been taken from this case is that neither side can reopen a severance deal once the deal has been negotiated and the release has been signed unless there is clear evidence of misrepresentation by one side or the other, which was clearly not an issue in this case.

 

 

After-Acquired Cause – Employee Fired For Drug Transactions

What is “after-acquired cause?”  It is a legal doctrine that allows employers to prove just cause – even after they have fired employees on a “without cause” basis.

In other words – the employer decides to fire an employee “without cause” and offers to pay some severance.  The employee challenges the severance amount and goes after the employer for more compensation.  The employer then digs through the employee’s old expense accounts, cell phone transactions, computer files etc., looking for some evidence of wrongdoing.  If the employer finds evidence and it can prove serious wrongdoing, the employer can take the position that the employee had been dismissed for just cause – even if it did not allege this at the time the employee was first fired (because it didn’t know about the misconduct).  This is known as after-acquired cause.

This is exactly what happened in the recent B.C. Court of Appeal decision in Van den Boogaard v. Vancouver Pile Driving Ltd. (2014) BCCA 168.

The plaintiff was working as a project manager.  He was responsible for the safety of the job site in a high risk, heavily regulated industry.  He was also responsible for enforcing the company’s drug policy.  His employment was terminated after he had worked for the company for just over a year.

Initially, the plaintiff was let go without cause and paid four weeks’ pay.  He sued for wrongful dismissal.  After the plaintiff challenged the dismissal, the defendant employer went through the company cell phone that the plaintiff had returned.  It found a series of text messages, sent during work hours, in which the plaintiff was soliciting and procuring drugs from one of the employees he supervised.  The main drugs were Dexedrine and Clonazepam, though others were also mentioned.  All of the drugs were illegal or restricted substances.  The defendant concluded that it had just cause for letting the plaintiff go and relied on the legal doctrine of after-acquired cause.

I have to admit that I am sometimes amazed at the types of cases that make it to trial.  Given the plaintiff’s position, the activities in question, the fact that the conduct was all admitted or proven, the fact that it involved the plaintiff’s subordinate and numerous other factors, this would seem like a no-brainer, that is a virtually unwinnable case.

Yet the plaintiff took the case to trial, using a summary trial procedure in B.C.  Not surprisingly, he lost at trial.  The trial court judge held that the plaintiff’s conduct was seriously incompatible with his duties as a project manager.  The court held that there was just cause, even though it was after-acquired cause.  The court dismissed the case and ordered the plaintiff to pay legal costs to the defendant.

The plaintiff then appealed to the B.C. Court of Appeal.  The CA also had little difficulty upholding the trial court decision unanimously.  The Court concluded that the plaintiff had been involved in “criminal conduct with a person over whom he had supervisory authority…”  This misconduct went to the root of the employment relationship and warranted a dismissal for cause.

This case is a clear example of after-acquired cause.  It can be devastating for an employee, particularly one who was dismissed at first on a “without cause” basis and perhaps even offered severance.

Lessons for Employees and Employers

There are important lessons from this type of decision for both employees and employers.

For employees, this case reinforces the point that lawsuits are always risky.  Employees who challenge a severance package run the risk that employers will go through their expense accounts, computer files, cell phone records and other items with a fine tooth comb.  For most employees, this will not create any major problems.  But for employees who have a reason to be concerned, there is a possibility that a diligent employer will discover the misconduct and rely on it to deny any further severance, using the after acquired cause argument.   Employees should make sure to canvass any such concerns carefully with their legal counsel before deciding whether or not to challenge a severance package.

For employers, this case illustrates the fact that employers can investigate an employee’s conduct carefully, even after the employee has been dismissed on a without cause basis.  If the case has not yet been settled and the employer finds something significant, it can be used to save a substantial amount of money.  The employer must prove that it did not know about the misconduct at the time it dismissed the employee and that the misconduct is serious enough to warrant a cause dismissal.

For employees and employers, this case demonstrates the costs and risks of litigation.  While dismissed employees will often want their day in court, the aggressive pursuit of an ill considered lawsuit can be quite costly for an unemployed plaintiff.

 

google-site-verification: googlec03888379d3701bb.html