Ex-Walmart Employee Awarded $1.4 Million Damages in Wrongful Dismissal Case

Dismissed employees and their legal counsel continue to push the envelope in Ontario by using jury trials to obtain large damages awards.  Even though these awards are usually scaled back by the Ontario Court of Appeal or by the Canadian Supreme Court, the wrongful dismissal landscape in Canada is beginning to shift noticeably.

In the latest example, the plaintiff, Meredith Boucher of Windsor, Ontario, was awarded $1.4 million by an Ontario jury.

Ms Boucher had brought a case for constructive dismissal.  She had alleged that she had been forced to leave Walmart after being subjected to sexual harassment and discrimination, intentional infliction of emotional suffering and other misconduct including actual physical assault.

Among other allegations, Ms Boucher had claimed that she was called a “(expletive)” idiot and that she was forced to count skids in front of others to prove that she knew how to count.

The jury of three men and three women took only 2 1/2 hours to make its decision after a two and a half week trial.  Although the jury did not award any damages for sexual harassment or discrimination, it awarded $200,000 for intentional infliction of emotional suffering, $1 million for punitive damages and $10,000 for assault.  The jury also made an award of $250,000 against the assistant manager.

Walmart will certainly appeal and it is likely that the award will be scaled back considerably, given Canadian legal precedents.   However, this type of award and the publicity that it attracts will cause dismissed employees across the country to reconsider their lawsuits and to reevaluate the potential damages that they might receive if they take their cases to trial.

It is worth remembering that these types of awards are only made in cases involving extremely inappropriate conduct. Fortunately, for Canadian employers and employees, these types of allegations are absent in most Canadian wrongful dismissal cases.



Wrongful Dismissal: Punitive and Bad Faith Damages Scaled Back Dramatically: Keays v. Honda

Wrongful Dismissal: Punitive and Bad Faith Damages Scaled Back Dramatically: Keays v. Honda

In 2008, the fourth decision of the Supreme Court of Canada (as reviewed in this series of articles) was the most widely anticipated decision. Many employment lawyers and commentators were predicting that the Supreme Court would issue a wide ranging decision that would expand the availability of punitive damages for dismissed employees. Contrary to the expectations of many, the decision scaled back dismissal damages, changed the nature of “bad faith claims” and focused on the particular facts of the case that was before the Supreme Court.

Keays had worked for Honda for 11 years before being diagnosed with Chronic Fatigue Syndrome. He was off work for a period of time on disability benefits and then returned. He continued to require frequent absences from work. Honda followed up by asking Keays to meet with its own medical specialist. Keays refused because Honda would not provide an explanation of the specialist’s purpose, methodology and parameters of the intended meeting. Keays was worried that Honda was simply trying to use its own favoured doctor to assit Honda to force Keays back to work without a proper detailed review or understanding of the circumstances. After Keays continued to refuse to meet with Honda’s specialist, he was dismissed by Honda.

At trial, Keays was awarded 15 months pay for wrongful dismissal. The Trial Court also held that Honda had committed acts of discrimination, harassment and misconduct. It increased the notice period to 24 months and awarded punitive damages of $500,000, which would have set a new standard in Canadian employment law decisions. The Court of Appeal of Ontario reduced the punitive damages awarded to $100,000. Honda appealed to the Supreme Court of Canada.

In a 7-2 decision, the Supreme Court of Canada eliminated the bad faith damages and the punitive damages that had been awarded to Keays. It upheld a finding that Keays had been wrongfully dismissed and was entitled to 15 months’ compensation. However, it eliminated all other damages that Keays had been awarded at the Trial Court level.

The Keays v. Honda decision is very significant because it has redefined the damages that are available to dismissed employees. Since the Supreme Court of Canada’s decision in Wallace v. United Grain Growers in 1997, Canadian Courts have been awarding damages for bad faith conduct by employers in wrongful dismissal situations. Courts have awarded these damages by extending the notice period to which employees are entitled – where employees are treated in a bad faith manner. In Keays v. Honda, the Supreme Court has changed Wallace and has redefined when damages will be available.

The first noteworthy point is that the Supreme Court of Canada extensively reviewed the facts of the case. Although the Supreme Court has stated on numerous occasions that its job is not to review factual details of cases, Keays v. Honda is very much a decision in which the Supreme Court scrutinizes almost all of the factual findings made by the Trial Court and proceeds to reverse the Trial Court’s findings and conclusions. The Supreme Court defines the Trial Court’s findings as “palpable and overriding”. In using this wording, the Supreme Court cloaks itself with the judicial prerogative to make entirely different factual conclusions than those made by the Trial Court.

Essentially, the Supreme Court took a very different view of the manner in which Honda had treated Keays. It held that none of the “four foundations” for bad faith damages as held by the Trail Judge were valid. The Supreme Court went through its interpretation of the facts in detail. It concluded that Honda was trying to rely on expert advice and was not being “callous” or insensitive. It rejected the Trial Judge’s conclusion that Honda had set Keays up for failure or that Honda was taking a “hardball” approach. It also rejected the Trial Court’s conclusions that Honda had decided to stop accepting medical notes from Keays as a reprisal against Keays for seeking legal advice. Finally, the Supreme Court rejected the notion that Keays’ disability after dismissal was caused by the manner of his termination.

Once the Supreme Court came to such a dramatic reversal of the factual findings and conclusions of the Trial Court, Keays’ legal case had been eviscerated. With the Supreme Court’s factual findings that Honda had acted appropriately, there was no remaining basis for considering or discussing bad faith or punitive damages. Even so, the Supreme Court proceeds to analyze these types of damages and makes pronouncements that are intended to apply to future cases.

The Supreme Court makes a number of points:

Damages for mental distress should only be awarded where they were contemplated by the parties at the time the contract started. In most cases, employees expect to be dismissed eventually, so mental distress damages for hurt feelings should not be awarded simply because the employees have been dismissed.

Employers still have an obligation of good faith and fair dealing in the manner they dismiss employees. If employers breach this duty, then employees are entitled to damages – as long as they can prove that they have suffered actual damages. According to the Supreme Court, employees are no longer entitled to an extension of their notice period simply because of this type of bad faith treatment.

Punitive damages are only to be awarded where the acts by the employer are “so malicious and outrageous that they are deserving of punishment on their own”. Breach of the Human Rights Code, for example, is not sufficient on its own to warrant an award of punitive damages.

The crux of Keays v. Honda is spelled out by Justice Bastarache who accepts that the need of employers to “monitor the absences of employees who are regularly absent from work is a bona fide work requirement in light of the very nature of the employment contract and responsibility of the employer for the management of the workforce”.

The majority decision of the Supreme Court is devoid of any language that is empathetic to employees. Much like the Supreme Court’s other 2008 decisions in RBC and Hydro-Quebec, the majority focus is on the need for employers to be able to run their businesses efficiently. The Supreme Court in Keays v. Honda makes it dramatically more difficult for dismissed employees to obtain damages for bad faith – and even more difficult to ever obtain punitive damages.

Justice Lebel delivers a partial dissent to the reasons of Justice Bastarache. Surprisingly, Justice Abella sides with the majority even though she was the lone dissenting voice in both Evans and RBC. Only Justice Fish supports Lebel in the dissenting view. Justice Lebel concludes that the extended damages that had been awarded to Keays at the Trial Court level should have been upheld. Justice Lebel notes that the trial in this case lasted 30 days. The Trial Court heard extensive evidence and was best positioned to make factual findings and conclusions. Justice Lebel disagrees that the Supreme Court should overturn so many findings of fact that were “generally supported by the evidence”.

The most significant gap between the majority and the minority decisions in Keays v. Honda is the extent to which the judges are prepared to review and wholly revise factual findings and conclusions. Since Bastarache and Lebel come to such contrasting views of the factual background, it is not surprising that they have completely different approaches to the applicable law afterwards.

The minority agrees with the majority’s approach to redefining bad faith damages. However, the minority would have upheld the damages for bad faith that were awarded by the Trial Judge on the basis of Honda’s conduct and the harm it caused to Keays. The minority would have also left the door open for litigants to argue that breaches of human rights legislation can lead to awards of extended damages.

Conclusion – Effect of Keays v. Honda Yet to be Determined

The full effect of Keays v. Honda remains to be determined. The Supreme Court has dramatically altered the existing landscape. Courts should no longer award simple notice period extensions as a result of breach of the duty of good faith. But damages for breach of good faith are still available. In fact, it is arguable that the amount of damages that can now be awarded for breach of the duty of good faith may be much higher than the amounts that were previously being awarded. However, to get these damages, dismissed employees will have to have evidence to show that they have suffered losses as a result of their former employer’s actions.

Ho Ho! Hold the December Firings

Published in the National Post – December 19, 2002

Downsized. Right-sized. Laid-off. Let-go. Whichever words are used, there is never really a good time to lose a job. But legally speaking, is it worse to be fired just before the December holidays? It may be. December terminations can create a number of special problems in wrongful dismissal cases.

First, there is the timing itself. In many jobs, December is a time of networking. Calendars are filled with invitations to seasonal parties. These can include industry get-togethers, client affairs and of course, the annual company holiday party. In some industries, this is a crucial time of year for developing new business. It can also be a time for rekindling friendships with old clients and other contacts.

Losing these networking opportunities can be devastating. Attending these functions after being dismissed can be difficult and disheartening. Since many of us define ourselves to some degree by our work, unemployment creates a loss of part of our identity. The Supreme Court of Canada has recognized this problem, referring to work as an essential component to our sense of identity, self-worth and emotional well-being.

In a landmark decision in 1997, Canada’s highest court ruled that employees must be treated honestly and fairly when being dismissed. If a person is treated in a “bad faith” manner at the time of dismissal, the bad faith treatment can extend the person’s wrongful dismissal damages. Since the “Wallace decision,” as it has become known, courts across Canada have listened carefully to evidence about conduct that might justify these extra damages. Refusing to give a reference or to pay wages and vacation pay amounts owing are examples of conduct that has been cited. Giving false reasons for dismissal is another example. Firing pregnant employees or employees on sick leave has also met the test. All told, being fired just before the holidays alone may not be mean extra damages. But a court might consider the poor timing as one of the factors in determining whether the employer acted in bad faith.

In one recent case, decided by an Ontario Court on October 18, 2002, Robinson Group Limited had decided to hold back three weeks’ wages when it dismissed Mary Black in December 2000. The Court called the Robinson Group’s actions “unconscionable” and awarded an extra two months’ pay to Ms Black on top of her twelve-month notice award.

Even if there is no bad faith in the way a person is fired, December dismissals can still lead to longer notice periods. Most employees dismissed in Canada are entitled to reasonable notice or payment instead of notice. There is no set formula. The Ontario Court of Appeal has called the process of setting notice periods an art rather than a science. Courts award these notice periods based on a person’s length of service, age, position and other related factors. The goal is to estimate the expected time needed to find a new similar job. Since few employers are actively recruiting in December, employees may need additional time if dismissed this time of year.

Another difficulty is the loss of a bonus. Bonuses are often paid either just before Christmas or just after the New Year. Some are calculated to year-end but paid later. If an employee is dismissed just before the holidays, can the employee still collect the year-end bonus?

Here the answer is usually easier. During the reasonable notice period, employees are entitled to be compensated for everything that they would have had if they had continued to work. So if a bonus would have been paid, dismissed employees should still be entitled to it. This might not mean getting the annual Christmas present but at least it is some consolation.

Employees who are let go this time of year should put together a careful record of everything they are missing as a result of the timing; parties, bonuses, presents and networking opportunities. It may all be relevant evidence for a judge to consider in setting a notice period.

For employers, it often seems easier to get expenses off the books before the end of the year. Starting out with a clean slate, especially after a rough year, can be attractive. But before jumping too fast, employers should weigh the human toll of ill-timed terminations. Although waiting one more month might make things more difficult from an accounting viewpoint, accounting is only one part of the equation. Any steps that employers can take to help their dismissed employees to get resettled and find new work are steps that can save money on severance pay. Handling dismissals in an honest, professional and compassionate manner is sound business practice. It fits the Supreme Court’s guidelines on dealing with employee dismissals. It may save money. And more often that not, it means letting employees enjoy their holidays and dealing with reorganizations early in the New Year.

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