Tuesday, September 17, 2013

Tracy Francis Action Update

In 2011, I referenced a law suit by Tracy Francis against Rusonik, O'Connor, Ross, Gordham & Angelini.

Earlier this year, the Law Times ran another story indicating two interesting facts:  Firstly, the firm dropped its 'just cause' defence.  Secondly, the plaintiff filed an amended claim, seeking $1.5 million in moral and punitive damages.  (Half a million in moral damages, and a million in punitive damages.)

It's pretty astronomical, and I'd be surprised if she got that whole amount, but there are probably a couple of solid reasons underlying that kind of move.

Moral damages can be really hard to get.  They used to be awarded as a matter of course as "Wallace" damages, but those were pretty much eliminated in the Honda v. Keays decision, and since then it's been hard to get any damages for breaches of the employer's duty of good faith and fair dealing:  Courts are looking for a high standard of evidence in terms of evidence of injury (i.e. it's hard to establish loss without medical evidence) and even then there are other challenges to overcome.  However, while the Wallace doctrine was far too employee-friendly, holding employers to a ridiculously high standard, there's a sense in many sectors that the current state of the law insulates employers too much against consequences for flagrant breaches of the duty of good faith and fair dealing.  The late Justice Echlin took a novel approach to this in Brito v. Canac Kitchens, awarding "ancillary damages", but this was reversed by the Court of Appeal on the basis that they were not pleaded.  My commentary on the appellate decision is here.

Enter the Jury - Boucher v. Wal-Mart

I'd wager that there's been a jury notice in this case.  The claim follows in the footsteps of Boucher v. Wal-Mart, where a jury awarded a constructively dismissed employee over 1.4 million in punitive and aggravated damages.

Unsurprisingly, Wal-Mart has appealed the Boucher award.  It appears that the appeal was heard last week, though the decision could still be several months away.  But, while the award is unprecedented in its size, it isn't exactly alone:  There was also a jury award in British Columbia in the Higginson case a few months earlier where the plaintiff won over $800,000 in punitive and aggravated damages.  Or Pate v. Galway-Cavendish, where a judge awarded $550,000 in punitive damages after the Court of Appeal told him he was wrong to refuse to consider them.

There's a probability that the appellate courts will scale back these awards.  In the Honda v. Keays case, the Ontario Court of Appeal reduced a $500,000 punitive damage award to $100,000, though the Supreme Court ultimately concluded that no punitive damages were appropriate at all in that case.  Punitive damages have a high threshold in the first place.

So, unless the Court of Appeal dodges the question by deciding that punitive damages were not appropriate at all on the facts (which seems difficult on those facts), they're likely to have to determine the appropriate range of punitive damage awards in these cases.  They might conclude that Ms. Boucher's award is high, but not to the level that calls for appellate intervention.  Or they might conclude that it is too high, and bring it down by as much as a factor of 10.  (Theoretically, they could bring it down more, but I think that's relatively unlikely.)

So what does this have to do with Tracy Francis' case?

The Poker Theory of Litigation

Litigation is often like playing poker in some ways.  Particularly at negotiation stages.

For Francis' case, the outstanding Boucher appeal probably looks like a game of Texas Hold 'Em:  After the flop, Francis raised, and the question is whether or not the parties really want to see the turn and the river.

If the Court of Appeal comes down on the side of Ms. Boucher, upholding a seven-digit award or something close to it, then Rusonik will be risking very substantial liabilities by taking it to trial.  If there's any real meat to the merits of Francis' punitive damages claim, that will put the 'sweet spot' on a settlement at a very high level.  If the Court of Appeal favours Wal-Mart, and significantly constrains punitive damages, then Francis' settlement prospects will be much lower.  Until the Court of Appeal decision comes out, a settlement might be rational somewhere in the middle.

The fact that Rusonik withdrew its just cause allegations...doesn't really look very good for them.  Unsustainable allegations of just cause are considered to be a breach of an employer's duty of good faith and fair dealing.  (There have been cases where, in a borderline case, an employer might drop a just cause argument at trial and not have it held against them - where the court can look at the facts and say, "It's understandable that they argued just cause" - but in general, the courts really frown on an employer leveraging a just cause position without an arguable basis.)

Of course, the decision to withdraw just cause allegations could be a tactical issue rather than a tacit admission:  Arguing just cause on the basis of disparaging remarks she allegedly made about a lawyer is going to (a) require evidence relating to the context and circumstances of the alleged disparaging remarks, which will probably require the employer to illustrate why Francis was disgruntled (and in a law firm setting, that often goes beyond strictly defensible exercise of management rights), (b) drag that lawyer's name through the mud, and (c) make it necessary for a great deal of evidence to be called about the workplace culture (which Francis says involved a lot of name-calling).  None of it will look good for the jury, and it's all public record, too, which means that to whatever extent the employer can avoid talking about pre-termination employee relations, they'll want to do so.


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.

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