Friday, July 18, 2014

The Double-Standard: Does Suing Your Employer Poison the Relationship?

There's a recent article in the Financial Post by Howard Levitt (you might remember him as the lawyer who abandoned a Ferrari California in rising floodwaters) about a constructive dismissal case in Nunavut decided this past January, in Kucera v. Qulliq Energy Corporation.

This is the factual gist:  Ms. Kucera and her significant other lived in Toronto until she accepted a position with Qulliq in Nunavut, starting July 1, 2009, as an Executive Assistant.  There were a number of issues that arose involving the Director of HR - largely office politics, etc., but her position was downgraded, her duties were changed, and then she was awarded a salary increase significantly lower than what her boss (the President of the company) had agreed to.  The problem was subsequently fixed, but not before a discussion with the Director of HR led Kucera to believe that she was 'undervalued' by the employer.

A few months later, Kucera came across an email from the HR Director to other staff regarding the salary increase, "Please ensure that the changes are made to Sarah's salary or I will face being shot in the face with 50 of her earrings."  Kucera felt that the comment was 'hurtful'; the HR Director said that it wasn't intended to be hurtful, but couldn't otherwise explain the context.

On August 5, 2010, Kucera's lawyer wrote to the employer taking the position that "she is in a position to pursue a claim for constructive dismissal", and sought to open negotiations for a severance package.  Qulliq took the position that the letter was insubordinate, and dismissed her for just cause on August 20, 2010.

The Court reviewed a number of precedents finding that "commencing a lawsuit against the employer is conduct that is incompatible with the employment relationship", and concluded that the demand letter was "a repudiation of the employment contract".  (Importantly, the Court also decided that Kucera's complaints did not satisfy the test for constructive dismissal.)

It's an important contextual factor in the case that, in the view of the Court, Kucera's letter and other conduct clearly suggested that she had no intention of staying in the employment relationship.


I seldom insert myself into ongoing employment relationships with constructive dismissal allegations, because lawyers are notorious for breaking deals, not making them, but there have been cases where I have done so.  In such a circumstance, the demand tends to include (and probably focus on) an option of a 'make-whole' remedy to restore the employment relationship.  Given the significant evolution in this area of law in the past several years, I think it was a mistake for Kucera's lawyer to use a 1999 precedent.  Sadly, the decision in Russo v. Kerr, which provides a much better rubric for such demands, wasn't released until three months after Kucera's lawyer sent this letter.

There is a fine line to walk, and sometimes it must be walked - think about the OLRB decision in Webster v. Securitas (my commentary here), dismissing a constructive dismissal claim on the basis that the objections hadn't been raised with the employer.  (I might question the correctness of that decision, but that's not much help to Webster.)

There is a logic to the conclusion here:  Kucera was essentially taking the position that the employment relationship was already over, and that she was entitled to wrongful dismissal damages.  She tried to hedge her bets by not resigning, but when you're alleging a poisoned work environment, that might be counter-productive:  It undermines the strength of the claim regarding the extent of the poisoned relationship, and yet the fact that you're claiming that the relationship is poisoned would, in and of itself, make it hard for the employer to continue that relationship.

But there strikes me as a conflict between the line of cases saying 'suing or threatening to sue your employer is just cause' and a separate line of cases saying 'your duty to mitigate can require you to stay with the employer you're suing'.

Consider, for example, Chevalier v. Active Tire (see my commentary here and here), where Mr. Chevalier was constructively dismissed - yes, as a matter of fact and of law, he was, and the court so found - and commenced litigation against his employer.  The employer, after obtaining legal advice, realized "Oops, we shouldn't have done what we did" and offered him his job back.  However, the fact that Mr. Chevalier had already commenced litigation was "not determinative", and he was found to have failed to mitigate.  (He ended up on the hook to his employer for very substantial legal fees as a result.)

Or consider Ghanny v. 498326 Ontario Limited, (my commentary here), where the Court felt that it was unreasonable for the plaintiff to impose conditions on his return to work that involved addressing the concerns in his ongoing wrongful dismissal action...except for the condition that he be permitted to continue the action.  "However, the third condition, the continuation of the lawsuit, was a legitimate entitlement and the former employer would have been wrong to insist otherwise."  Which seems kind of backwards to me:  If my employer fires me, and then two months later when I'm already suing offers me my job back, it seems to me that a resolution of the action - i.e. backpay, if nothing further - should be a necessary precondition for my acceptance of the offer.  And moreover, that's the commercially reasonable approach to take:  As a lawyer, if I'm suing a client on an outstanding bill, and suddenly the client comes to me asking for help on a fresh legal matter, then I'm absolutely going to refuse to be retained unless the client pays the old bill, with interest and costs, and provides a substantial monetary retainer against the new file.  (Not to say I'd necessarily take on the new matter on those conditions - there's kind of a 'fool me once, shame on you; fool me twice, shame on me' aspect to it.)  The notion that you should be required to enter into a new contract with a party while still suing them for breaching the last one...sorry, it doesn't make sense to me.

The proposition isn't entirely one-sided.  Consider the case of Benson v. Bird Mechanical (my commentary here), which extended a limitations period partly on the basis that it was 'unworkable' to sue while still employed.  This would seem to be more consistent with the Kucera proposition.  One might dispute as to whether or not Russo v. Kerr (noted above) contradicts Kucera:  Russo had been constructively dismissed, and made it clear that he was staying in the position only to mitigate his loss.  If he had been dismissed for commencing legal action, that would simply have the result of eliminating his mitigation earnings.  But the lead case on the mitigation issue, Evans v. Teamsters does suggest that the prior commencement of litigation is a relevant factor.  (This was considered in Chevalier, but simply not given a whole lot of weight.)


There's a clear conflict in the jurisprudence, to at least a small extent...but the trends are that the courts will generally say that an employee poisons the relationship by suing, but can nonetheless be expected to mitigate his or her losses by staying in the relationship while suing.  (Even though, yes, because you have to sue for your constructive dismissal entitlements, that relationship now may be poisoned.)

It doesn't mesh.  The way that the 'mitigation with the same employer' test has been set out by the Supreme Court and other appellate courts is that it will be a 'relatively rare' circumstance, marked by "a situation of mutual understanding and respect".  And as a litigator with plenty of experience representing both employers and employees, I can tell you that, by the time a statement of claim is issued, there's seldom much "understanding and respect" left as between the parties.  On either side.  Yet you still get cases like Chevalier and Ghanny, envisioning the parties tearing each other apart in an adversarial discovery process in the morning and then working productively together in the afternoon of the same day.


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.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

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