Laid off workers file $30 million class action

Following approximately 600 layoffs from an Oshawa plant (and 450 in Laval, and another 140 in Trois-Rivieres, though this story regards only the Ontario layoffs) without notice or pay in lieu thereof, a class action has been initiated against IQT Solutions seeking approximately thirty million dollars.

Class counsel suggests that the most difficult part will be collecting, as it does not appear that IQT has significant assets. This may be the case, but when the news story says that "the company had allegedly gone bankrupt", and I doubt the accuracy and bona fides of that: After the layoffs, IQT hit the news when the City of Nashville caught wind of the layoffs and cut off discussions for a $1.6 million incentive deal for the creation of 900 jobs in Nashville. Seems that the company wasn't planning to completely shut down operations at the time.

The case is interesting, though, because I'm not aware of any wrongful dismissal class actions having been certified to date. There was recently a failed attempt to certify a constructive dismissal class action in Kafka v. Allstate Insurance Company of Canada, though this case may be more easily compared to last year's Fulawka v. Bank of Nova Scotia, in which the Court certified a class action claim for overtime wages alleged to be owing.

*****

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.

First Year Lawyer claiming "superior legal mind" fired from New York firm

It isn't Ontario law, but I felt the need to share this anyways: Gregory Berry, who was a first-year associate with Kasowitz Benson Torres & Friedman in New York, was fired from his position and is now suing for $77 million.

The framework for dismissal is very different in the U.S. than it is here. As I understand it, they don't have statutory regimes providing for minimum notice periods, nor do they consider there to be an implied contractual term that the employment relationship cannot be terminated without reasonable notice, as we do here. So it's pretty employer-friendly, and dismissed employees usually have to look elsewhere other than the fact of termination itself to find some basis of employer liability, unless they have entitlements arising from a written employment contract.

From the news story, it sounds like he did receive a severance package in any event, but his suit appears to be based on allegations that the firm misrepresented the firm's work culture, and that partners interfered with his work, inflicted emotional distress, and tried to thwart his career prospects. He was fired despite supposedly doing "superlative work" as he called it, after sending an email to partners asking for more responsibility (I wonder if I can fairly infer "less oversight" into that term), because it had become clear to him that he had "as much experience and ability as an associate many years my senior, as much skill writing and a superior legal mind to most I have met".

*****

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.

Justice Randall Echlin, 1950-2011

Sadly, I heard today that the Honourable Mr. Justice Randall Echlin passed away this past Friday. I never knew him personally, but from all accounts he was a wonderful and amicable person. I knew him only through his legal writing - judgments and employment law publications - and various presentations he made at legal conferences...he was easily among the leading authorities on Canadian employment law, and deservedly so. His decisions were well-written and well-reasoned, and when he penned an employment law decision, the bar listened. (Brito et al. v. Canac Kitchens, which is, as far as I can tell, his last reported decision, was the subject of an entry I wrote back in April.)

He often began his judgments with pithy quotations relating to the subject matter of the case, and I thought it might be fitting for me to summarize a few of them:

Pede v. Plaza Pontiac Buick GMC Inc., January 24 2011:
"Work is an extension of personality. It is one of the ways in which a person defines himself, measures his worth and humanity." - Peter F. Drucker, 1909-2005

Cunningham v. Moran, August 27 2010:
"Divorce is like an amputation: you survive it, but there's less of you" - Margaret Atwood, 1939-

Gore Mutual v. The Guarantee Company, July 8 2010:
"Common sense is the measure of the possible; it is composed of experience and prevision; it is calculation applied to life." - Henri Frederic Amiel, Swiss philosopher, poet, and critic, 1821-1881
"People who cannot recognize a palpable absurdity are very much in the way of civilization." - Agnes Repplier, American essayist, 1855-1950

Iliescu v. Voicegenie Technologies Inc., January 6 2009:
"Without trust, words become the hollow sound of a wooden gong" - John Harold Hewitt, Irish poet, 1907-1987

Link v. Venture Steel Inc., November 14 2008:
"How would you like a job where, every time you make a mistake, a big red light goes on and 18,000 people boo?"- Jacques Plante, Hockey Hall of Fame goaltender, 1929-1986

Ontario (Transportation) v. Canadian Surety Company, November 5 2008:
"all meanings we know depend on the key of interpretation." - Mary Ann ("George") Elliot, British novelist, 1819-1880

Fraser v. Holman Exhibits Limited, August 1 2008:
"patience serves as a protection against wrongs as clothes do against cold." - Leonardo da Vinci, 1452-1519

Mian v. Girdhar, April 22 2008:
"There is nothing more likely to start a disagreement than an agreement." - E.B. White, American author, 1899-1985
"The only way to make a man trustworthy is to trust him; and the surest way to make him untrustworthy is to distrust him and to show your distrust." - Henry Lewis Stinson, U.S. Secretary of State during both World Wars, 1867-1950

Wesst Hill Communications v. Chua, April 7 2008:
"Money is the opposite of the weather. Nobody talks about it, but everybody does something about it." - Rebecca Johnson, New Yorker columnist

Laszczewski v. Aluminart Products Limited, December 14 2007:
"Getting fired is nature's way of telling you that you had the wrong job in the first place." - Hal Lancaster, former Wall Street Journal editor
"the excesses of hope must be expiated by pain, and expectations improperly indulged must end in disappointment." - Samuel Johnson, British essayist, 1709-1784

946648 Ontario Limited v. Discount Car & Truck Rentals Ltd., September 21 2007:
"Pennies do not come from heaven. They have to be earned here on earth." - Margaret Thatcher, 1925-
"In nature, nothing can be given, all things are sold." - Ralph Waldo Emerson, 1803-1882

Rodrigues v. Powell, July 24 2007:
"it is one of the characteristics of a free and democratic modern nation that it have free and independent labour unions." FDR, 1882-1945

Fancy v. Standard Securities Capital Corporation, May 24 2007:
Investors should "try to buy good businesses at fair prices rather than fair businesses at good prices." - Warren Buffett

Donor Gateway Inc. v. Passero, February 13 2007:
"Life is short, judgment difficult, and opportunity transient." - Johann Wolfgang von Goethe, 1749-1832

Rabi v. Rosu, October 31 2006:
"Fraud and falsehood only dread examination. Truth invites it." - Samuel Johnson

Carscallen v. FRI Corporation, June 10 2005:
"Discipline isn't just punishing, forcing compliance, or stamping out bad behaviour." - Lawrence Baiter, U.S. Psychologist

Takhar Investments Inc. v. Household Finance Corp., March 4 2005:
"money often costs too much." - Ralph Waldo Emerson

Panapers Inc. v. 1260539 Ontario Ltd., December 30 2004:
"a successful restaurant makes everything in it, including the patrons, seem a little better than they are." - Mason Cooley, American aphorist

Marshak v. Branch, October 26 2004:
"If it looks too good to be true, then it probably is." - New York Times, 1861

Daley v. Depco International Inc., June 18 2004:
"To err is human, to forgive divine." - Alexander Pope, 1688-1744

Moving Store Franchise Systems Inc. v. Norseman Plastics Ltd., May 7 2004:
"I just want to say one word to you: Plastics. There is a great future in plastics." - The Graduate (film), 1967

*****

Justice Echlin had a number of his own quotable observations about the workplace, ranging from pre-dismissal tensions comparable to the banquet of Damocles (Carscallen) to recruitment. I would like to close with a single recruitment quotation, but I invite readers to post any memorable Echlin quotations in the comments.

McCulloch v. Iplatform Inc., December 16, 2004:
"Recruitment is akin to 'the dating game'. Employers and employees both preen themselves, put on their best faces, sometimes overstate themselves, and try to look attractive to the other....If employees were not interested in moving, they would not even give the recruiter or new employer the time of day." - The Honourable Mr. Justice Randall Echlin, November 29 1950 - August 12 2011.

Rest in peace.

Unions can be certified as bargaining agent even without majority support

One of the amendments made to the Labour Relations Act by the McGuinty government is the restoration of what is commonly referred to as the "remedial certification" clause: Where the employer has engaged in unfair labour practices that interfere with a union organizing campaign, it is possible for the union to apply for certification even notwithstanding that the members of the bargaining don't want to unionize.

There are a few different structures for union certification. The most general one is that, if the union can show that it has the support of at least 40% of the bargaining unit (i.e. the group of employees whom it would represent), the matter can be put to a vote. If the union gets 50% plus one support, it becomes the certified bargaining agent. The 40% support is usually shown through signed union cards. (In the construction industry, it is even possible that, if the majority of the employees have signed union cards, the union can be certified without a vote. This is called "card-based certification")

Many employers do not want to have to deal with unions, yet the Labour Relations Act prohibits employers from taking certain actions which would interfere with unions or the exercise of rights under the Act - "unfair labour practices". If the employer engages in unfair labour practices and this interferes with an organizing campaign, there are a number of remedies available to the union, such as holding a new representation vote and providing them with whatever access they need to the employees prior to the same...or, if these remedies would not suffice, remedial certification is now available.

The logic is this: The employer has a great deal of power over employees. If the employer actively takes steps to frighten or intimidate employees to oppose the union, then it may be impossible for any attempts at persuasion by the union to overcome the employer's intimidation. In such cases, the only way to get past the employer's intimidation is to certify the union even notwithstanding that it does not have the support of the members of the bargaining unit.

The most recent such decision out of the Ontario Labour Relations Board was in LIUNA v. 1652472 Ontario Inc. That case involved a pretty typical dispute about the termination of a union supporter.

Organizing campaigns often begin when the employer hires a new employee with union connections. Of course, the employer doesn't know about this, and it is in fact illegal to refuse to hire somebody because they have union connections. But the new employee goes to great lengths to keep this secret, and quietly begins discussing the union with co-workers to try to gain support.

The trouble - for the employer, as it turns out - is that union insiders often quickly develop adversarial relationships with management for reasons other than their union organizing efforts. Whether the union supporter is a new employee (whose priorities are obviously something other than demonstrating exemplary dedication and professional competence) or an existing employee (who would usually support the union because of an existing acrimonious relationship with management), it is neither unusual nor surprising that management frequently ends up disciplining and/or terminating union supporters in organizing campaigns. Then, the union simply has to allege that the employee was terminated because of their involvement with the union, and the employer bears the onus of proving that, in fact, union involvement had no bearing on the termination.

In most cases, as in this one, the fight on the facts becomes whether or not the employer knew or suspected that the employee was involved with the union.

(I've seen cases, however, in which there was reason to question whether or not a disciplined employee even was involved with the union prior to the discipline, where it looks like even the employee didn't know about the organizing efforts until approached after the discipline, and then alleging that the discipline was motivated by anti-union animus.)

In this LIUNA case, the foreman insisted that he had no knowledge of the employee's union involvement: The employee was fired for performance issues, and because the other guys on the team didn't like working with him. The Board didn't believe him...well, the Board accepted that he wasn't popular, and that the other guys didn't like him, but nonetheless the Board found it unlikely that he was fired when he was without his union involvement being a motivating factor.

That, alone, will usually be enough for remedial certification. But that wasn't everything. In addition, there was a confrontation between a union organizer and the foreman on the construction site, which the Board found was an effort to alienate the union. And then there was a letter which the employer read aloud to most of the employees to express their feelings about the union.

What an employer can and can't say to employees is the subject of much jurisprudence. An employer is allowed to say that it opposes unionization. It is allowed to educate employees about the process for unionization (i.e. to ensure that they know about the potential for card-based certification, that they may not in fact get a subsequent chance to vote aye or nay if they sign enough cards). But it cannot make or imply any threat to job security. This prohibition stands even if the 'threats' are nothing more than objectively true and verifiable facts - employers have been found to have breached the Act simply by walking through the numbers and showing why the additional costs of doing business with a union (and there are additional costs) would prevent the facility from continuing to be economically viable. There is also case law finding that an employer, when asked by employees whether or not job security would be endangered, breached the Act by refusing to answer.

The letter in this case contained the following sentence:

From my perspective, there are a lot of down-sides to unionization. We will have less flexibility in terms of where we work, the work that we do, how we structure our days and how we price projects so that we are the successful contractor.

The Board interpreted this as a threat to job security. Given all the factors, the Board found that the Act had been breached, and granted remedial certification.

Food for Thought

There are obvious policy concerns with remedial certification. While it can and has been argued that this is a way to ensure that employers "don't get away with" their unfair labour practices, thus discouraging unfair labour practices, that casts the certification itself as a punitive action. If punishment is appropriate in a given case, the ordinary sphere of quasi-criminal punishment should suffice: Hoisting a bargaining agent upon workers who don't want it is not an appropriate way of punishing the employer.

No, the real objective must be compensatory. Yet who are we concerned about compensating? The workers? Perhaps, but there is something patronizing and unsettling about saying to workers, "Because you're being kept from choosing what's best, we're taking the choice away from you." Perhaps more concerning is that remedial certification is automatic. The union need not show that it would have won the vote but for the employer's unfair labour practice. If you look at it as a way of compensating the workers, then you have to presuppose that workers, acting without coercion, will *always* want a union. And that is simply and obviously not true. In this case, on the facts as found by the Board it seems like a fairly safe bet that LIUNA was going to have a hard time winning a certification vote: Their insider was not well liked at all in the bargaining unit.

So it strikes me that the real objective of remedial certification is to compensate the union itself. Which concerns me: When the union's interests are put ahead of the interests of the employees, it seems to be a perversion of the very purposes of the Labour Relations Act.

Add to this the 'entrapment' potential for a union quietly engaging in an organizing campaign, and there are real policy concerns.

*****

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.

Pregnancy does not always require sick leave

As much as the Human Rights processes in this Province and others are maligned in some circles for their treatment of some less clear cases, both in my practice and in my review of the Human Rights Tribunal's jurisprudence I am often shocked by some of the instances of overt discrimination which still occur in workplaces.

In the high profile 2009 case of Maciel v. Fashion Coiffures, Jessica Maciel was terminated from her new job when she revealed that she was pregnant. That received a lot of media coverage, but is not alone. Similar cases include Guay v. 1481979 Ontario (2010) and Bickell v. The Country Grill (2011).

Almost invariably, there's a fight on the facts. In Maciel, the employer claimed not to have known about the pregnancy, but said that the termination was brought on instead by Maciel allegedly asking for a part-time schedule. Maciel denied having asked for a part-time schedule, and on all the facts the Tribunal found Maciel's account to be more plausible. In Guay, the employer claimed that the termination was motivated by performance concerns, which the Tribunal didn't entirely reject, but found that the pregnancy was also part of the motivation. In Bickell, the employer did not file a response.

Last week, the Tribunal released its decision in Graham v. 3022366 Canada Inc., in which there was surprisingly little conflict on the facts.

The Facts

The employer was a security company, and Graham was a "mobile patrol officer" who started her job in 2007 and had been quite successful and competent. Graham found out that she was pregnant in May 2009; this was unplanned, and in fact her relationship with the father had ended. Graham notified the office manager of the pregnancy, who told her to tell Condie (owner and president of the employer).

They met the following Monday (May 11), and Condie told Graham that it was against company policy for pregnant employees to remain on the shift schedule, so she would be immediately removed from the schedule. She was given a letter to take to her doctor so that she could apply for EI sick benefits. Condie was under the mistaken belief that this would not affect the parental leave benefits she would receive.

First an unplanned pregnancy, now suddenly unemployed with only the modest EI benefits to live on, Graham sought other employment, including both a minimum-wage retail position and a short-lived office job with another security company...and when Condie found out about that one, he fired her.

The Issues

As I said, there was little dispute on the facts. The employer's position was that the dangerous nature of the work was inappropriate for pregnant women, and that a pregnant woman on the job would be at increased risk, or alternatively would cause other workers to take unnecessary risks. Therefore, the employer argued, taking her off the job was necessary from a health and safety perspective. The employer did not advance any expert evidence or empirical data to support this contention, but were based on what the Tribunal called "stereotypes and assumptions...unsupported by fact."

The absence of any objective evidence of the health and safety concerns was probably fatal to the employer's case. The evidence of Graham and others was that the job does not, in fact, involve physical altercations. And Condie's decision to treat Graham as being immediately disabled and unable to complete her duties is problematic: Graham wasn't looking for accommodation; in fact, her pregnancy proceeded without complications and she maintained her regular fitness schedule throughout, and felt that she could certainly have continued her ordinary duties at least until August or September, at which point she expects that she might have asked to be assigned other duties.

The Lesson

Lesson #1: When dealing with people who may require some level of accommodation (due to pregnancy or disabilities), it is far preferable to reach a mutually agreeable manner of moving forward. There is some jurisprudence to suggest that the employer has to be proactive in determining whether accommodation is necessary, but before forcing an employee into unwanted accommodation the employer must make sure not only that the measure is necessary, but also that it can prove that the measure is necessary. Tread carefully.

Lesson #2: It is important that employers seriously consider the consequences of the Human Rights Code on employment practices and policies. Saying "It's just our policy" will not excuse human rights breaches. (I've seen that in my own practice, as well, including communications from opposing counsel using an appeal to a company policy as an attempt to justify absurdly discriminatory practices, such as a requirement that female employees wear skirts, not pants. [Really, what century is it???] To entrench unlawful discrimination in a company policy likely makes the discrimination worse, not better, and at a minimum easier to prove.)

What sometimes shocks me even more than the discrimination itself are some of the reactions to it in the public. Jessica Maciel was heavily criticized in the "comments" of every online publication for not having disclosed her pregnancy during the hiring process. Why should that be important? Then she simply would not have been hired, and the discrimination would have been just as illegal but harder to prove.

*****

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.

Application is not appropriate for enforcing restrictive covenants

For non-law readers, let me first simply explain a point of civil procedure.

In civil litigation, there are really two kinds of proceedings: Applications, and actions. (It's really quite a bit more complicated than that, but let's keep it simple.) An action is what we usually think of as a law suit: I sue you, you defend, we go through disclosure and discovery, pre-trial conferences, then we set a trial date.

An application under the Rules of Civil Procedure is usually a much briefer and simpler process. If I'm issuing a Notice of Application, I will obtain a date from the Court before I even start the process, which could be just a couple of weeks out. I issue the documents, serve them on any respondents, and you have an opportunity to file responding materials...but we end up in Court fairly quickly. Witnesses aren't usually called to testify, but evidence is introduced through affidavit.

It's simpler and faster, but not always permissible under the Rules. Even in cases in which an application is permissible, if there are serious facts in dispute, such matters can be referred to a trial, and are then treated as an action.

In the recent case of Portable Packaging Systems Inc. v. Brackin, the employer attempted to proceed by application to enforce restrictive covenants against the employee, seeking damages and injunctive relief. The Court noted that injunctive relief is only available on an application where it is ancillary to other relief properly sought by application, and damages are seldom available on applications.

The proceeding by application is likely a consequence of the admitted difficulty in proving damages. But the Court ultimately concluded that an application was inappropriate and that the relief sought should be sought by way of an action. Accordingly, the Court dismissed the application.

I question why the decision does not address the applicability of Rule 14.05(3)(d), which permits applications seeking, among other things, "the determination of rights that depend on the interpretation of a ...contract...". Consider, for example, Mason v. Chem-Trend Limited Partnership, which I blogged about here: The employee brought an application for a declaration that restrictive covenants were unenforceable, and the Court of Appeal ultimately found them not to be enforceable.

*****

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.

Contractual Notice does not supplant mitigation principle

Bowes v. Goss Power Products Ltd., a recent case from the Ontario Superior Court of Justice, involved an employee in a common situation making a "Hail Mary" play.

Bowes was a Vice-President making a base salary of $140,000 plus bonus and benefits. His employment was terminated, without cause, in April 2011 after about 3.5 years of service, and the language in his contract entitled him to six months' notice or pay in lieu thereof. So, when he was terminated, he was told that his salary would be continued for six months, but he was obligated to seek replacement employment and keep the employer apprised of his progress.

And he found a new job, with equivalent salary, 12 days later.

In contracts, the "mitigation principle" holds that a plaintiff cannot recover for a loss which is avoidable or avoided. So, when an employer terminates employment without notice, and the employee finds a new equivalent job shortly thereafter, most of the actual loss is avoided, and the employer's liabilities are quite limited.

It's well-established law in Ontario that the statutory minimum notice under the ESA is not subject to mitigation, but contractual/common law notice is.

So, for Bowes, getting the new job is a double-edged sword. He has his new job, and a stable source of income...but he doesn't get much more money from his old employer. An employee dismissed without cause usually wants that vindication. And the extra money would be nice, too. So Bowes initiated this Application to interpret the contract, to argue that his actual mitigation doesn't reduce his entitlement.

Some contractual language does have the "golden parachute" effect of not being subject to mitigation. This case doesn't have that kind of language. Yet I understand the argument: The mitigation principle is triggered by breach of contract. In the ordinary course, the employer isn't actually entitled to terminate on pay in lieu of notice (see, for example, Love v. Acuity Investments); pay in lieu of notice is the way of calculating damages caused by the breach of contract which is termination without notice. So I've been fired without notice, I lose my income, and I have a cause of action against my employer, but I have to try to mitigate.

When the contractual language, however, provides for termination with pay in lieu of notice, then there has been no breach of contract when the employer terminates with salary continuance. There has been no cause of action, no breach of contract, and no duty to mitigate accrues. So when the employer has elected to terminate with pay in lieu of notice, the employee should be entitled to pay through the whole notice period, regardless of whether or not a new job is obtained, correct?

The challenge is that this 'notice or pay in lieu thereof' language is used in many employment contracts, and the purpose is simply to supplant 'reasonable notice' and provide more certainty as to the notice period. While there's a certain technical logic to my above analysis, and ordinarily employers are held to a very high technical threshold, in this circumstance the policy considerations cut the other way: Bowes, with his new job, isn't in a morally persuasive position arguing that he should be getting his old salary in addition to his new one. The Court held that the intention of the contract was not to supplant the mitigation analysis.

*****

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.