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.