The Ontario Court of Appeal released its decision on August 17, 2012 in the case of Bennett v. Cunningham, as the third (and maybe final) of a series of progressively higher Court judgments in this crazy dispute between two family lawyers.  In doing so, the Court of Appeal upheld a Superior Court decision from 2006 in which Ms Bennett’s wrongful dismissal law suit had been dismissed.  After such a long, protracted dispute over a relatively small amount, it appears that the lawyers for both sides are the big winners.

The plaintiff, Dawn Bennett, was a junior family lawyer with limited experience. She began working with the defendant, Karen Cunningham, as an associate lawyer in a small law firm in Mississauga in the summer of 2002.  The arrangement was a commission based arrangement where Ms Bennett would be paid a percentage of amounts that were billed and collected.  Ms Bennett would work regular hours, in an office provided by Ms Cunningham and would have minimal expenses to look after even though she would be treated as an independent contractor.

Shortly after joining the firm, Ms Bennett had a number of complaints about the way the office was run.  According to the Trial Court Judge, some of these issues were addressed.  However, Ms Bennett was not actually getting paid for fees that she was docketing and billing, which was causing her financial difficulties and she became quite concerned about this.

Ms Bennett decided to write a four page letter which she handed to Ms Cunningham on December 21, 2002, just as Ms Cunningham was leaving for a vacation.  She also sent a copy by registered mail, even though she knew that Ms Cunningham would be away.  The letter included a litany of complaints, including a suggestion that Ms Cunningham was “dishonest and negligent” in her docketing practices.

Ms Cunningham returned from vacation and fired Ms Bennett for “just cause.”  Ms Bennett sued for wrongful dismissal.

The parties could not resolve the dispute and conducted a six day trial.  They fought over whether or not Ms Bennett was an employee or an independent contractor.  The Trial Court had little difficulty concluding that the relationship was an employment relationship, or at least an “intermediate” relationship and that Ms Bennett would be entitled to reasonable notice if she was dismissed without cause.

They also fought over unpaid commissions owing, although Ms Cunningham eventually conceded that she owed Ms Bennett about $18,000 in billings that had not yet been paid to Ms Bennett.

Neither of these findings was disturbed by the higher Courts.

But the major issue in dispute was wrongful dismissal.  The Trial Court judge held that the relationship had been irreparably damaged by Ms Bennett’s “insolence” and that there was just cause for dismissal.  On appeal, the Ontario Divisional Court, in 2011, overturned that ruling and held that Ms Bennett’s conduct did not amount to just cause.  On further appeal, in the decision released in August 2012, the Ontario Court of Appeal restored the original Trial Court ruling.  It held that the decision of the Trial Court judge was mainly a finding of fact and that the judge was best situated to make that decision.   It held that the Trial Court judge had reviewed the evidence fully and was entitled to draw the conclusion that Ms Bennett’s conduct was sufficiently inappropriate to warrant a “just cause” finding.

It is noteworthy that even if Ms Bennett had won, she would have only been awarded about $17,000 in wrongful dismissal damages because she had found new employment within a few months.  This is what makes it even more bizarre that the parties spent so much time, energy and money fighting over this case.

So after 9 years of this heated dispute, Ms Bennett wound up with an award for about $18,000 in billings owing to her (plus interest on that amount) and some of her legal costs paid for the trial.  On the other hand, she lost her wrongful dismissal case and wound up owing legal costs to Ms Cunningham for the Appeal.  She also wound up with a harsh public decision about her conduct as an Associate lawyer.

The case is really an example of how parties can become involved in a legal dispute in which legal fees amount to far more than the value of what either side can achieve.

More importantly, the case is a very serious warning message to employees who are thinking of writing complaint letters to their employers.  Employees should be very careful not to use incendiary, harsh or accusatory language, especially if they cannot support the allegations they are making.  Employees should be particularly careful not to accuse their employers of “dishonesty,” “negligence” or other forms of inappropriate conduct unless they can really back up these accusations.  Even then, this type of letter should only be a last resort after other ways of addressing problems have been exhausted.

Perhaps, most importantly, employees should run this type of complaint letter by a lawyer first before sending out an ill conceived letter that could very well result in a just cause dismissal.

One of the alleged grounds for dismissal was a refusal by the plaintiff to provide a complete list of all of the brokers that he knew from previous experience and their detailed personal information to his new employer.  The Court rejected the argument that the plaintiff’s failure to provide this information could justify a cause dismissal.

The plaintiff had also demanded a larger number of stock options than had been agreed upon and had tried to insist that the company pay him $30,000 that he claimed it had agreed to pay.  While the Court held that the company had not actually agreed to pay the $30,000 and did not award this amount at trial, it held that it was reasonable for the plaintiff to demand this sum because company officials had suggested (even if not clearly) that the defendant would pay this amount even if it had not committed to doing so.  The Court also rejected the argument that asking for more stock options was grounds for dismissal.

At trial, the defendant tried to prove that the plaintiff was “hopelessly inept” and “incompetent.”  However, it failed here as well, with the Court finding that the defendant only put forward “unreliable and meagre evidence” in this regard.  It wasn’t even a close call.  Justice Fenlon of the B.C. Supreme Court had little difficulty concluding that the plaintiff was wrongfully dismissed.

In assessing damages, the Court noted that the plaintiff had signed an employment contract with a 30 day termination clause.  Based on other Canadian legal precedents, this clause should not have been valid as it would have fallen below the minimum requirment of the B.C. Employment Standards Act at some point in the future.  Ontario and B.C. courts have ruled that this kind of clause is void and cannot be used to limit an employee’s notice on dismissal.  Nevertheless, the Court here applied the clause and awarded the plaintiff only one month’s pay – $5,000.  The plaintiff had only been employed for about 7 months but a reasonable notice period here, without the clause, probably would have been between three and six months in the circumstances.  The plaintiff was stuck with one month’s pay.  This aspect of the decision is probably easily appealable.  The plaintiff was self-represented and it is likely that he did not bring the appropriate cases to the attention of the Court.

In turning to punitive damages, the B.C. Supreme Court held that the employer did not meet its implied obligations of “good faith and fair dealing.”  Its conduct was “harsh, vindictive, reprehensible and malicious.”

The defendant did not even pay the plaintiff’s salary that was owing at the time of dismissal.  It tried to get the plaintiff to sign a release in exchange for this relatively small amount of back pay that it clearly owed him and when he refused to sign, it withheld the amounts.  It continued to refuse to pay the unpaid salary for more than seven years until the trial of this case.   It refused to return the plaintiff’s personal belongings when it fired him for at least some period of time.  It threatened to “bankrupt” the plaintiff if he sued the defendant.   In the context of the ligitation, the defendant alleged fraud and incompetence in its defence and these grounds were found to be without merit – and they made it difficult for the plaintiff to find work as an advisor.  The Court concluded than an award of $100,000 in punitive damages was appropriate.

The Court’s decision includes a detailed examination of the different grounds for awarding punitive damages, the purpose of awarding these damages and other issues relating to this type of situation.  It seems to me that the award may have been excessive, when compared to other Canadian punitive damages awards, even if there was some basis for an award of  punitive damages.  It may be that some of these damages should have been “general damages” for the breach of the duty of good faith and fair dealing rather than “punitive damages” though ultimately that might not really make a big difference.

What is clear from the decision is that there is a great deal of uncertainty when it comes to general and punitive damages.  This case will likely be appealed the B.C. Court of Appeal and it is difficult to predict what the Court of Appeal might do with this decision.  It seems likely that it would alter the notice award and change it from $5,000 to an amount closer to $20,000 to $30,000.  With respect to the punitive damages award, the Court of Appeal could rule that there was an insufficient basis for awarding these damages or it could uphold the award but reduce the amount to something closer to $20,000 or $25,000.

Ultimately, the case demonsrates that employers that take hard ball positions all the way to trial in wrongful dismissal cases can find themselves embroiled in years of litigation and can face suprisingly aggressive, unexpected punitive damages awards at trial.  For employees, the case does not clearly demonstrate that there is a pot of gold at the end of the rainbow.  This case has been going on for 7 years so far and will now probably take another year or two to make its way through the B.C. Court of Appeal.  The large award may or may not be upheld.  If Mr. Kelly is successful and actually receives his award of $100,000 in punitive damages, this type of case may well make many plaintiffs reluctant to settle their wrongful dismissal cases early on.  However, the outcome remains to be seen.

Fortunately, in the majority of cases, employers and employees try to resolve wrongful dismissal cases on a reasonable basis and manage to avoid facing years of protracted litigation with large scale punitive damages awards.  It would be a harsh world indeed if a very large number of dismissals in Canada were handled in this fashion.

Richard Ludchen was a plant superintendent working for the defendant Stelcrete Industries, which is a precast concrete company.  Ludchen had worked for the defendant for 11 years and was earning an annual income of $61,000 at the time of dismissal.  He had a clean disciplinary record.

In 2008, the company made a decision not to recognize Ontario “Family Day” as a day off but to pay employees for an extra day of holiday time in December instead.  In reaction to this announcement, the plaintiff allegedly made some very offensive anti-Semitic remarks about the owners of the company who were Jewish.  The company investigated, determined that the remarks had been made and fired Ludchen for cause.  Ludchen sued for wronful dismissal.

At trial, the judge accepted that, if the company could prove that the remarks had been made, this would have constituted just cause for dismissal.  The court also found that the credibility of the plaintiff was questionable and did not ring true.  However, the court was even more dismissive of the evidence presented by the primary company witness, which it rejected completely.  The company relied on the evidence of its investigator and did not call to the witness stand anyone who actually heard the offensive remarks being made.

Accordingly, the court concluded that the company had failed to prove that the remarks had actually been made.  The court held that Ludchen had been wrongfully dismissed and awarded him 12 months of wrongful dismissal damages, together with compensation for the loss of benefits and his average annual bonus.  The court rejected Ludchen’s request for any kind of additional punitive, aggravated or other damages.

The Ludchen v. Stelcrete Industries decision shows that the onus is squarely on the employers to prove all of the aspects of a just cause case.  Even if the alleged misconduct is very serious and the employee’s denial or explanation does not ring true, the employer must still prove its case clearly.

For dismissed employees, the case is further assurance to plaintiffs and their legal counsel that serious cause allegations do not always hold up in court, even where it appears likely that the misconduct may have occurred.

The case had an unfortunate twist.  The courier had worked as an employee with the company for ten years.  But after that, he had become an “independent contractor” and worked in that capacity for three years before this incident occurred.  He had signed an independent contractor agreement that provided for thirty days’ notice of any dismissal (without cause).

When the courier was wrongfully dismissed, he sued for breach of contract but he did not sue for wrongful dismissal.  He did not claim that he was really an “employee,” nor did he directly challenge the independent contractor agreement, although he claimed other damages flowing from breach of contract.  If the courier had been able to challenge the contract and prove “wrongful dismissal,” he might have been awarded a year’s pay or more.

However, he only alleged “breach of contract.”  As a result, the courier put himself in a situation where if were to win his lawsuit, he would win thirty days’ pay, as required under his contract.  If he were to lose, he would get nothing.

At trial, the lower court judge held that the package of pot, that had been sent to the courier from his brother in Vancouver, was “clear evidence of illegal or criminal conduct” and this would justify termination, even though no criminal charges were ever laid.

The Court of Appeal disagreed.  It overturned this finding and ruled that there was no clear evidence that the courier himself had engaged in any criminal or other misconduct.  Just because a family member delivers a package of illegal drugs to a person’s workplace, this does not mean that the person has engaged in any improper activity..or at least there is no clear evidence of such misconduct.

However, the Court of Appeal went on to award damages of only thirty days’ compensation, which amounted to the grand total of $2,973.70.   This was really a pyrrhic victory for the plaintiff.  He lost his courier job and got only 30 days’ compensation after 13 years of work.  He also lost the pot, which may well have been worth close to the amount of the judgment.  And we haven’t even mentioned legal fees…

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.

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.

But it is far too early to draw any definitive conclusions. I am not involved in this case in any way and have no first hand knowledge.  I am certainly in no position to assess whether or not Ghomeshi’s conduct was such that it actually substantiated the termination of his employment. But a few observations can be made to this point in time.

For one thing, unionized employees generally face quite an uphill battle in launching lawsuits. The Supreme Court of Canada has ruled, on a number of occasions, that unionized employees who are fired must use their grievance arbitration process. As a unionized employee, this means that Ghomeshi must proceed with a grievance arbitration with respect to the main  issue in his dispute – whether the CBC had just cause for terminating his employment.

Ghomeshi’s lawyers are obviously aware of this law. As a result, they have not sued for “wrongful dismissal.” Instead, they have framed the claim as one of “breach of confidence” and “defamation.” This is essentially a back-door effort to circumvent the existing case law and try to show that the essence of Ghomeshi’s case is not really wrongful dismissal.

Hard to imagine that much of the case will proceed successfully. In all likelihood, there will be a preliminary motion in which the CBC will seek to have most, if not all of the case thrown out. The basis for the motion will be the argument that this is really a lawsuit over the CBC decision to terminate Ghomeshi’s employment. The Statement of Claim itself alleges that the CBC fired Ghomeshi because it made a moral judgment about the appropriateness of Ghomeshi’s sexual conduct. For the most part, this type of allegation and dispute would be the type of issue that an arbitrator has the exclusive legal jurisdiction to adjudicate in a unionized context.

What about allegations of “breach of confidence?” In certain circumstances, dismissed employees can succeed with tort claims that are beyond the scope of the normal dismissal claim. But, for the most part, the court must find that the conduct is outside of the scope of the employment relationship.

Here the Statement of Claim alleges that Ghomeshi shared various details about his sexual practices, which it is alleged included consensual BDSM. The claim alleges that Ghomeshi shared this information with the CBC “voluntarily and in good faith” in the interest of working with the CBC to refute “false allegations.”

Does this duty of confidence normally exist? It might in certain limited circumstances. For the most part, when employees tell their employers about conduct in which they are involved, they are not normally immunizing themselves from their employer’s future assessment of the propriety of their conduct. To date, Canadian law has not normally recognized a principal of prophylactic, premature explanation as a means of inoculating oneself from future disciplinary action.

If the facts demonstrate that CBC either explicitly, or even implicitly, undertook to ensure confidentiality and agreed that it would not use Ghomeshi’s information for any other purpose, perhaps there might be an argument. But that does not even appear to be the allegation that is being made in the claim.

Overall, there may well be something to the suggestion that has been made by some commentators that the Statement of Claim is largely strategic, a further protective move aimed at discouraging any would-be complainants from coming forward under the threat of facing expensive litigation. But I did not read the Statement of Claim as one that was filled with defamatory statements made about other individuals. Nevertheless, given that the CBC is not likely to back away from the litigation any time soon, one can’t help but wonder about the real intended recipients of the claim and the real goals of the lawsuit.

As I mentioned, I am in no position to predict the final results or assess the various claims. But if at least part of the claim remains public (union arbitration hearings are not), salacious news stories will create lots of buzz. Canadians are bound to find the details of Ghomeshi’s alleged BDSM lifestyle titillating, particularly in the wake of the world wide success of 50 Shades of Grey.

The employment law question, assuming that Ghomeshi’s alleged conduct was in fact consensual, will be whether an employer can fire a high profile employee for legal personal behaviour to which it objects because of its concerns about its own profile and image. If the case is ever actually decided (rather than settled like most Canadian cases), the decision is likely to make for some fascinating and very entertaining reading.

In the case of Fernandes v. Peel Educational & Tutorial Services Limted, the plaintiff was awarded one year’s salary.  Perhaps more significantly, he was awarded the value of disability benefits that he would have been eligible to receive because he became disabled within a short time period after being dismissed.

Mr. Fernandes had been a teacher with Peel Educational Tutorial Services for more than 10 years.  In 2009, the school alleged that Mr. Fernandes had falsified students’ marks and committed “academic fraud” by doing so.  Mr. Fernandes conceded that some of his calculations were incorrect and that there were some issues with his submitted marks.  But he denied his conduct was “fraudulent.”

This case involved a 10 day trial, which featured the evidence of numerous witnesses.  One of the witnesses called by the school was  a “Mr. Zero,” who certainly has an interesting name for a witness in which one of the allegations is that certain students should have been given a mark of “0” for failing to hand in assignments.

In any event, after all of this extensive evidence, Justice Lemon concluded that Mr. Fernandes had been wrongfully dismissed.

The court made some interesting findings including:

• Mr. Fernandes gave incorrect marks;
• The marks he gave were late;
• He allowed students to have overdue assignments;
• Even though he was a computer teacher, his own computer program did not provide accurate marks;
• He lied to his employers about how the marks were calculated;
• He lied to the court about the student presentations were marked;
• He admitted to falsifying some marks on students’ records.

These are all findings made by the court and appear in the decision.

However, the court also noted that Mr. Fernandes had been employed for more than 10 years and up to these incidents, was considered a “well-regarded teacher.”

Taking into account all of the circumstances and relying heavily on a charitable reading of McKinley v. B.C. Tel (2001) S.C.C. 38, [2001] 2 S.C.R. 161, the court concluded that “immediate termination was not the appropriate sanction for this misconduct.”  The court noted that “the defendants could have fashioned a reprimand and a warning that such conduct, if repeated, would lead to summary dismissal.”   The court awarded Mr. Fernandes one year’s compensation amounting to just over $50,000.

Mr. Fernandes had also sued for $300,000 in “intentional infliction of mental distress.”  This claim was rejected.

However, in addition, he had brought a claim for “long-term disability benefits” for $226,000.  At trial, he demonstrated that he was suffering from severe depression and other related symptoms.  The court held that he became disabled after being dismissed and during the applicable notice period.  The employer was therefore responsible for the full value of the disability benefits.  Given that Mr. Fernandes was 52 at the time of dismissal, this could mean approximately 13 years of LTD benefits, for which the defendant school would be responsible.

It remains to be seen what the Ontario Court of Appeal will do with this case.  Given the findings of the judge, there seems to be significant findings of improper conduct that may well warrant a just cause dismissal.  Although the judge was in the best position to make these findings of fact, the Court of Appeal may well review the court’s conclusion that just cause dismissal was not warranted in the circumstances.  It should provide for some interesting reading if the case is actually appealed and argued.

Irrespective of what ultimately happens with this case on appeal, if it gets there, here are some key points to consider:

1.  Establishing just cause for long service employees is extremely difficult and costly.  Many judges are willing to give plaintiffs the benefit of the doubt, even where serious misconduct is alleged.  Even were there is evidence of some misconduct, courts will consider the whole employment history of a dismissed plaintiff;

2.  Dismissed employees can and should fight employer determinations of “just cause” if there is any reasonable prospect of success and sometimes, these cases can sometimes even be won where the prospects look grim;

3.  Dismissed employees are entitled to insurance benefits during any applicable notice period.  If they are cut off from these benefits by their employer and then later found to have been wrongfully dismissed, employers will be responsible for the full value of the benefits.  This means that if an employee dies during a notice period, the employer will be responsible for the full value of the life insurance policy that had been in effect.  If the employee becomes disabled, the employer will be responsible for the full value of the disability benefits.  Employers need to consider liability very carefully before cutting of an employee from all benefits when making a termination decision.

A CBC spokesperson announced earlier this week that Ghomeshi had dropped his $55M lawsuit against the CBC. According to the CBC, Ghomeshi agreed to a dismissal of the case and to pay $18,000 towards the CBC’s legal costs. Wow, what an embarrassing result; a total victory for the CBC.  In hockey terms, that is the equivalent of an 8-0 loss, something that Toronto Maple Leaf fans have been known to experience (even if the CBC will have fewer future occasions to broadcast these matches). Ghomeshi can still pursue a grievance arbitration, if his union decides to take the case to a hearing. But the only courtroom he is likely to encounter now will be a criminal court, if his case winds up going to trial.

I discussed some of the employment law aspects of his case here when some of initial details began emerging. Now that the case is effectively over, it is worth highlighting a few additional points:

1. The best defence is not always an outrageous offence:

Although there are some very aggressive employment lawyers in Toronto, a pre-emptive strategy is simply not always the best course of action. Some Canadians might be tempted to think that a strategy that worked in the past for former Prime Minister Mulroney must be a sensible one. But each case has its own facts. Sometimes employees facing a dismissal with cause are able to negotiate a quiet resolution of their situation that involves minimal publicity and perhaps even a mutually agreeable statement about the person’s departure. It is far from clear that Mr. Ghomeshi would have been able to arrange that type of deal with the CBC. But a strategy of posting a lengthy message on Facebook, launching an outrageous, ill-conceived claim and remaining defiant is extremely risky at the best of times. It does not seem to have served Mr. Ghomeshi very well in this case.

2. Appropriate legal representation

Unionized employees face a tremendous uphill battle in trying to sue their former employers. Generally, they are prohibited from bringing such cases. If they wish to proceed, they must show that the lawsuit raises issues that our outside of the scope of the employment relationship and can stand on their own as independent torts or causes of action. In Mr. Ghomeshi’s case, he claimed, among other things, that he was dismissed because the CBC made a moral judgment about his lifestyle choice. That type of pleading almost certainly doomed this lawsuit from the start.

Employment lawyers are left scratching their heads. We must prepare a pleading that stands a decent chance of surviving the requirements that have been set out by the Supreme Court of Canada. If this cannot be done, clients will usually be advised that the claim has no chance of success. Mr. Ghomeshi may well have been provided with that advice. However, Mr. Ghomeshi’s decision to proceed with such an ill-fated claim, even after having been provided with the assessment that success was virtually impossible seems highly questionable, at best, on the part of Mr. Ghomeshi and his legal team.

3. Resolving an unwinnable case

The CBC did not even bother putting in a Statement of Defence in response to Mr. Ghomeshi’s claim. There was no need to do so. Instead, it simply brought a preliminary motion to strike out the claim as one that disclosed no real cause of action. Normally, that is a difficult standard to meet. Moreover, if a plaintiff becomes concerned that the case is unwinnable or that there are reasons to drop it (like the prospect of criminal charges), this can often be done on terms that are close to neutral for the plaintiff. Many defendants will agree to a consent dismissal of a lawsuit without the payment of any legal costs. If legal costs are to be paid, most defendants will agree to some type of confidentiality provision. In this case, Mr. Ghomeshi appears to have surrendered completely. His case was dismissed with costs. It was announced publicly. And it was also announced that he was forced to pay the CBC’s legal fees of $18,000. While there are certainly cases in which a plaintiff is ordered to pay the defendant’s costs after losing an actual trial, it is quite rare for a plaintiff to pay legal costs just for the privilege of dropping a lawsuit. Obviously, there are many facts that the public has not been told and it became quite clear to Ghomeshi and his lawyers that he was likely to wind up paying a much higher amount in legal fees if the case was dismissed by court after hearing the motion.

Overall, the case has been a reminder that lawyers cannot work miracles. Sometimes the best strategy for dismissed employees facing strong just cause cases is to negotiate the best possible, confidential, walk-away resolution. If that cannot be done, steps should still be taken to minimize the potential damage rather than exacerbate it.

The plaintiff, Susan Steel, was a help desk analyst.  She had been employed by the Credit Union for 21 years.  In 2008, the plaintiff accessed the personal folder of a manager.  The manager kept a folder for assigning parking spaces and the plaintiff wanted to check her status.  She was caught because the manager was accessing the folder at the very same time.  She was confronted and admitted her misconduct.  She also acknowledged that she did not have authorization.

At trial, the judge reviewed the case law, focusing on the Supreme Court of Canada’s landmark decision in McKinley v. B.C. Tel (2001) SCC 38. The court dismissed the case and found that Ms Steel had been dismissed for just cause.  The plaintiff appealed to the B.C. Court of Appeal.

By a 2-1 majority decision, the B.C. Court of Appeal upheld the trial court decision and dismissed the appeal.  As the Court of Appeal put it, “McKinley requires courts to apply a contextual analysis to determine whether employee misconduct amounts to just cause for dismissal….Following McKinley, a single act of dishonesty as a matter of law no longer gives an employer an absolute right to dismissal its employee.”

However, the Court of Appeal also noted that “a single act of misconduct can justify dismissal if the misconduct is of a sufficient character to cause the irreparable breakdown of the employment relationship.”

The majority of the court held that a breach of privacy was such a fundamental obligation in this type of employment position that the plaintiff’s action could be seen as causing a “fundamental breakdown of the employment relationship.”

In dissenting reasons, Justice Donald included this sentence:  “What is absent from the trial judge’s reasons is an explanation why a single instance of a breach of the privacy rules should end a 21 year career….The record does not show deceit, fraud, theft or stealth.  The misconduct was serious, as the judge found, but her analysis of the proportionality of the penalty left out a vital factor.”  Justice Donald would have allowed the appeal and remitted the case to the trial judge for an assessment of damages.

The McKinley decision has been cited many times and has been interpreted in different ways.  In some cases, it has been used to help dismissed plaintiffs obtain damages where many people might find the results to be puzzling and overly sympathetic.  In other cases, courts have limited the application of McKinley to minor or more limited instances of dishonesty or misconduct.

Ultimately, each judge applies his or own sense of “proportion” and reasonableness.  Here two appellate court judges held that one instance of this type of dishonesty was cause for dismissal, whereas one judge disagreed.

For plaintiffs and for employers these are risky cases.  They are fact driven.  But they also depend on sensibilities of the particular judge hearing the case as well as the appellate court panel that might hear the case if it is appealed.

For Susan Steel, this was a very costly and time consuming ordeal.  The Court of Appeal decision was released in 2015, some seven years after Ms Steel was dismissed.  Ultimately, she has been awarded nothing after 21 years of employment and may well have incurred significant legal fees.  The case is a reminder of the high stakes of pursuing just cause litigation where an undisputed instance of improper conduct is involved.