Friday, October 12, 2012

Constructively Dismissed Wal-Mart Employee Awarded $1.4 Million

Yes, you read that headline right.  When I first saw it in the HR Reporter, my initial response was to think it must be American...except that American law doesn't really have much in the order of constructive dismissal, to the best of my knowledge.  No, it's Canadian, albeit right across from Detroit.  (No, Rob Ford, it isn't in Manitoba.)

And I can only imagine that the Court of Appeal clerks are already making room for this in their filing cabinet.

Meredith Boucher was an assistant manager at Wal-Mart in Windsor, and alleged that she was subjected to "profane and insulting mental abuse" from the store manager.  Her claims included sexual harassment and discrimination, intentional infliction of mental suffering, and assault - based on allegations that another assistant manager punched her in the arm on two consecutive days.  (This assistant manager was later fired.)

She opted for a jury trial - which appears to be a pretty good idea in a border town - and the jury accepted many of her allegations (though did not find that she had experienced sexual harassment or discrimination), and awarded her significant damages.

According to the HR Reporter, the award was as follows:

  1. $200,000 from Wal-Mart for infliction of mental suffering;
  2. $100,000 from the Manager (personally) for infliction of mental suffering;
  3. $10,000 from Wal-Mart for assault;
  4. $1,000,000 from Wal-Mart in punitive damages; and
  5. $150,000 from the Manager (personally) in punitive damages.

(Interestingly, I haven't found any indication of pay in lieu of notice.  If she was awarded any, it is dwarfed by the rest of the award.)

Wal-Mart's lawyer has been quoted as calling the award "perverse" and as saying that he has recommended an appeal, which he expects to succeed.  He sounds pretty confident, and not wrongly so.  While juries get a lot of deference from appellate courts on findings of fact, the appellate courts are nonetheless quite prepared to rein in runaway damage awards.

My Thoughts on Appeal

Bear in mind that I don't have firsthand knowledge of this case; I've read several media reports and commentaries, but take it all with a grain of salt.  And, more particularly, I'm not in a position to know if there may have been evidentiary objections or problems with the jury instruction that could give rise to grounds of appeal.

From what I've seen, though, the evidence included fairly dramatic evidence of injury, including weight loss and vomiting blood.

Compensatory Damages

Since Honda v. Keays, it has been exceptionally difficult to get an award of aggravated damages in a wrongful dismissal context.  The Courts have been quite demanding in terms of proof of loss and evidence of causation.  But...and this is important...the jury's finding that she was mistreated, and that she suffered significant compensable loss as a result of her mistreatment, is going to be entitled to very significant deference.  While a judge might have resolved the case differently, the bottom line is that the jury believed her, and there appears to have been evidence on which the jury reasonably could conclude that she suffered significant loss.

Likewise with the assault.  They believed that she was assaulted, and awarded a relatively constrained amount of general damages in compensation for it.

So the findings of liability are likely to be resistant to a successful appeal.  But what about the quantum of aggravated damages?

Well, this is one area where I'm a little puzzled by the coverage:  The finding of liability against Wal-Mart would presumably turn on "vicarious liability" - i.e. that the employer is liable for the actions of its employees, which is especially true of managers.  That's probably not a controversial matter.  However, when an individual is liable for compensatory damages, and an employer is vicariously liable for those damages, they are usually considered to be "jointly and severally liable" - which means that a plaintiff gets one award of compensatory damages against both defendants, and can enforce it fully against either one.  What I'm seeing described in the coverage here appears to be separate awards against each defendant, and I'm not sure what the basis of that is.

Especially when the Manager appears to have been alleged to be the primary bearer of hostility towards her, it isn't at all clear how she could have suffered $200,000 worth of distress from Wal-Mart in addition to those damages for which the Manager was responsible.  (One can imagine a scenario where there are some additional damages against Wal-Mart for their part in the mistreatment beyond what the Manager did, but not a completely separate award, and not two thirds of the total aggravated damages.)  It's possible there's something I'm missing here, not having full context.

As for the numbers, they're high, but the misconduct and harm described (and, again, accepted by the jury) was pretty egregious.  $100,000 certainly wouldn't be out of the realm of possibility, based on the facts which the jury appears to have accepted, and even $300,000 isn't obviously excessive.

But - unless I'm missing something in terms of the apportionment of damages - with the damage caused by the Manager appearing to have been assessed at $100,000, it seems to me that there is good ground for Wal-Mart to argue that an additional $200,000 is unreasonable, and that the correct apportionment of aggravated damages would be $100,000, total, jointly and severally.  (Of course, the converse argument from the plaintiff, on a cross-appeal, is that the jury actually found that she suffered $300,000 worth of aggravated damages, for which both defendants ought to have been jointly and severally liable.)

Punitive Damages

1.15 million dollars in punitive damages is absolutely massive, and unlike anything we've ever seen before in a wrongful dismissal case (in fact, there was a B.C. case recently where a jury awarded less than half that in punitive damages, and that turned a lot of heads in the employment bar).

Again, though, the facts accepted by the jury were pretty egregious.

Let's talk for a second about some of the principles of punitive damages:  Punitive damages are only available where there's a separate actionable wrong (which the jury clearly found there was here), and where the conduct of the defendant is so egregious that a further award is needed to penalize and denounce the defendant for it.  (Based on what I've seen, I don't think that liability for punitive damages is likely to be successfully appealed.)  The quantum should be the lowest award necessary to properly deter the conduct in question.

There's also a matter of proportionality.  In a seminal insurance case, Pilot v. Whiten Insurance, the plaintiff's house burnt down, and the fire insurer refused to pay out on the basis of trumped up allegations of arson.  At trial, the plaintiffs received a million dollars in punitive damages; the Court of Appeal reduced the award significantly, but the Supreme Court restored it, finding that it was at the high end, but that the conduct at issue was particularly severe, and the amounts otherwise at issue in the case (i.e. the compensatory damages on their house burning down, and the associated legal fees) were pretty significant, so ultimately a million dollars wasn't so far out in left field that it should be open to appellate review.

Combine this with the fact that Wal-Mart is an immensely successful corporation, and that a million dollars really doesn't create much in the way of hardship for them (i.e. less won't necessarily force them to rethink how they deal with employee relations), and I might think that, if a $300,000 award of compensatory damages holds up, the punitive damages against Wal-Mart will likely stand as well.

However, the chances of the quantum of punitive damages awarded as against the Manager...I very seriously doubt that that will hold up to an appeal.  Punitive damages against individuals are usually in the four or low-five-digit range.  Even where a person was found to be the criminal mastermind behind a massive insurance fraud scheme, he was penalized by only $100,000 in punitive damages, by contrast to $150,000 against this Manager.  The question is this:  If the Manager only had to pay, say, $25,000 out of his own pocket for punitive damages, would this make him think twice before embarking upon a similar campaign regarding another employee?  I would expect the answer to that to be yes.  For Wal-Mart, a million dollars is chump change.  But for a Wal-Mart Manager, $25,000 is pretty substantial, and $150,000 is potentially a bankruptcy-level award.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.


  1. So much to read here, but I have often wondered about the relationship between manager and large corporations regarding these sorts of cases. The punitive damages here to absorbed by the manager did not make much sense to me in the context of corporate structure and responsibility. Could it be that an era of personal responsibility was ushered in by a jury of folks from Windsor? We'll see on appeal. A most interesting case for sure. I have not read much about it here in Kitchener. Perhaps personal responsibility is still on the wane here...

  2. Regarding your comment:

    "But - unless I'm missing something in terms of the apportionment of damages"...

    Executives at Wal-Mart were made aware of the abuse, did not respond appropriately to it, and in fact let it continue, thus leading to the finding of liability against Wal-Mart in addition to that against Pinnock.

  3. Thanks for the input, but it doesn't really address my concerns.

    My point is that, if Wal-Mart is liable for the manager's misconduct, then Wal-Mart and the manager should together be liable for the same compensatory damages, unless Wal-Mart did something over and above the manager's misconduct which increased the injury to the employee.