Brito v. Canac Kitchens Appealed

Last week, the Ontario Court of Appeal released its decision on the appeal of the late Justice Echlin's decision in the Brito v. Canac Kitchens case.  I discussed the original decision shortly after it was released in this post.

This was one of many wrongful dismissal cases against Canac, and included several plaintiffs.  One of the plaintiffs, Mr. Olguin, became disabled during the notional notice period, battling cancer.  Incidentally, he had found a new job fairly quickly after being fired, albeit at a lower rate of pay, and his new job didn't have benefits, so when he had to stop working, it was without any LTD coverage.

Justice Echlin found Canac Kitchens responsible for what the LTD policy would have paid out, but for the termination of benefits, to the tune of nearly $200,000.  Justice Echlin was pretty displeased with the employer's approach to termination of the coverage and litigating the point, and awarded $15,000 in what he called "ancillary damages" for not unilaterally continuing disability coverage and paying out only the statutory minimum notice.  There was some murmur in the employment law bar about this - it was novel, and condemned essentially what has become standard employer practice.  I commented in a discussion on Professor David Doorey's blog at the time that I wondered if this would hold up on appeal, as the ancillary damages "[look] like punitive damages to me, to which the appellate Courts have applied an extremely high standard in employment cases."

However, while the $15,000 in ancillary damages was novel, and in some ways asked for an appeal, Justice Echlin's reasoning on the damages for loss of LTD benefits looked relatively solid.  Both points were appealed, and the result is as expected.

The Court of Appeal upheld the award of damages in respect of LTD benefits, but found that the "ancillary damages" were in the nature of punitive damages...

...and that since punitive damages weren't pleaded in the statement of claim or sought at trial, the award could not stand.

My Thoughts


I'm a little disappointed with the Court of Appeal's dodge of the ancillary damages question.  It's a novel question of law, and while the decision was no doubt correct that it can't be awarded if not pleaded, I would have liked to see some obiter as to whether or not the award might have been upheld if pleaded.  As it stands, this does not endorse Justice Echlin's finding that Canac's conduct was blameworthy, but nor is it an outright rejection of the suggestion that paying only the statutory minimums might give rise to such damages. Given that this suggestion was made by a widely-respected judge and expert in the employment law arena, it's something that still might carry some sway.

Also note the costs award:  Canac Kitchens defeated the $15,000 ancillary damages award, but lost on the $200,000 issue, and therefore was ordered to pay another $20,000 to offset Mr. Olguin's costs on the appeal.  Just can't catch a break.

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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 Dangers of Scapegoats

There are two stories in the Toronto Star today about allegations of criminal misconduct against employees.

The 'front page' on the online version is about Oshawa Hospital Foundation firing its CEO, Jim Szeman, and calling the police after a Star report prompted an investigation and "forensic accountants turned up serious money and charity management problems."

Reading the story, it seems like they've done their homework and they're pretty confident that there was mismanagement.  But I have enough experience with media to not take any of it at face value, and I'm particularly doubtful about the strength of the case when the only specific allegations in the story are...less than obvious misconduct.  There's an allegation of self-dealing, that the charity paid a company of his over three hundred thousand dollars...which seems like a lot of money until you realize that this was over a six year period and his annual salary with the charity is over two hundred grand...where it is "unclear" (to the Star) who else on the Board of Directors knew of the self-dealing arrangement.

Reading the news, I always assume that I'm not seeing all the facts.  So it could be that this fellow is a hardened fraudster and the employer's response is reasonable.  Or it could be that he was acting in a transparent manner, taking perks that the general public might not have much patience for in the wake of the e-Health scandal, and that the employer decided it would rather blame let Szeman take the fall than stand behind him.

If it's the latter, there could be real liability risk.

The second story is about a former low-level employee of Durham Region who was fired and charged with fraud.  More to the point, the story is about his acquittal.

Joel Nicholson was an employee with no legal training, in charge of collecting unpaid fines under the Provincial Offences Act.  Then, in 2002, his duties were expanded to include collecting from tenants in subsidized housing who owed rent arrears or money for damage caused.  And he built those debts into the same system he had for collecting other fines, seizing and garnishing assets and income.

Just one problem:  You can't do that.  There are certain actions that you have to take when dealing with residential tenants.  While they're in the rental unit, you need to go to the Landlord Tenant Board for an Order, which can then be converted into a Small Claims Court judgment, and enforced in the Small Claims enforcement process.  After they're out of the rental unit, such claims go directly to Small Claims Court.  The key is this:  You need to get a judgment before you can take enforcement action on a debt.

So Nicholson's actions in collecting these debts were deeply problematic, as was brought to light in 2009.  However, as the Court concluded, the mistakes were innocent on his part.  He didn't realize that he was doing anything wrong.  He didn't know that there was another process he had to use.  And it's not as if he was pocketing the proceeds.  And therefore, he was acquitted.

The story also notes that he is suing the employer in wrongful dismissal.  Likely a solid case, if this Court decision is any indicator.  (It isn't binding.  The burden of proof is different.  In order to convict him, the Crown needs to prove guilt "beyond a reasonable doubt".  To prove that he engaged in misconduct for the purpose of a wrongful dismissal suit, the employer only needs to establish it on a "balance of probabilities".  Accordingly, the fact that he was acquitted doesn't necessarily bar a Court from finding that he engaged in misconduct in a subsequent civil proceeding.)  The judge in the criminal proceeding seemed critical of the Region's managers for not spotting the "flagrant legal problems" in Nicholson's approach, and for failing to consult the Region's legal department.  If these criticisms were picked up by a judge in a wrongful dismissal case, then that could be very bad for the employer.

Where an employer makes allegations of cause which don't pan out, that usually amounts to a breach of the duty of good faith and fair dealing.  (Not always.  There is some case law suggesting that, if the allegations themselves are true and simply don't quite meet the threshold for cause, then there's no reason to think there's bad faith.  Similarly, one can easily imagine a circumstance in which an employer, having diligently investigated allegations of wrongdoing and reasonably, if incorrectly, concluding that the employee is guilty, might not have breached the duty of good faith and fair dealing.)  The more serious the allegations, the more serious the breach of the duty of good faith.  If they bring in the police and an unsuccessful criminal prosecution results, the employer's motives for calling the police will be closely scrutinized, as will their actions in making the police report.  Claims for malicious prosecution, negligent investigation, including aggravated and punitive damages, are easy to imagine in such contexts.

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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.

Fraser v. Ontario - Is the pendulum about to swing back?

The Supreme Court of Canada last week released its decision in Fraser v. Ontario, which has been long-awaited in labour law circles, on the question of the extent of the Charter right to collective bargaining.

To highlight the importance of this decision, note that the decision involved fifteen interveners, 33 lawyers, and 9 judges releasing 4 sets of reasons in 369 paragraphs.

There is much to be said about this decision. Many of the debates raised could be parsed in detail; I could write a full-length paper on the nuances of the distinction between ‘freedoms’ and ‘rights’ that Rothstein and Charron attempt to raise and the majority dismisses. But in this entry I will focus on the broad strokes of the decision.

A Brief History of Labour Relations under the Charter

Traditionally, the ‘standard’ labour relations regime follows what we call the ‘Wagner’ model: If the majority of employees in a bargaining unit support a union, that union gets the exclusive right to represent all employees in the bargaining unit in negotiations with the employer. There are certain exclusions from the Wagner model, including a traditional exclusion for agricultural workers in Ontario.

There were a series of early Charter cases where the Unions tried to raise “freedom of association” (s.2(d)) to challenge limitations on labour relations regimes. The Courts rejected these arguments: Freedom of association had nothing to do with forming unions.

Then the facts changed. In the 1990’s, Ontario’s Rae government removed the exclusion for agricultural workers. This was short-lived, and was reinstated by the subsequent Harris government. This was challenged in a case referred to as Dunmore, and the Supreme Court overturned its own prior jurisprudence, finding that s.2(d) of the Charter did, in fact, protect against government interference with people’s formations of employee associations and unions.

Remember: The Charter of Rights and Freedoms is a constitutional document which limits the powers of government. All the jurisdiction before Dunmore was clear that it could not be used to compel positive government action. Freedom of speech doesn't obligate the government to provide me with a soapbox; it just means that the government can't shut down my blog without good reason. Dunmore expressly maintained that proposition. However, the Supreme Court decided – rightly or wrongly – that the exclusion of agricultural workers in fact created a ‘chilling effect’, delegitimizing attempts by agricultural workers to organize into unions, making it harder for them to do so than if there was no labour relations protection at all. Accordingly, the exclusion was unconstitutional.

So the Ontario government enacted the Agricultural Employees Protection Act (“AEPA”), which gave employees the right to form associations and make representations to the employer. The employer is obligated to listen to and acknowledge receipt of those representations. That’s it.

So when a group of mushroom farm employees in Leamington were thoroughly ignored by their employer, Rol-Land Farms, they brought a constitutional challenge to the AEPA, saying it still didn’t give them a meaningful right to organize. This was the Fraser case. It went before Justice Farley, who held that there was no constitutionally protected right to collective bargaining in good faith, and that the AEPA had been enacted in accordance with the Supreme Court’s requirements in Dunmore.

Fraser appealed to the Ontario Court of Appeal. But before it was heard, things got interesting.

The appeal was delayed pending disposition of the Health Services case from B.C. at the Supreme Court: The government of British Columbia had legislated around and over the terms of various health care sector collective agreements, and the question became whether or not this violated s.2(d). The Supreme Court found that it did, and that there was a right to collectively bargain in good faith.

If that sounds weird, it should. I have the freedom of speech. That doesn’t compel others to listen. I have freedom of religion. That doesn’t compel you to provide me with a church. Yet saying that there’s a ‘right’ to have good faith collective bargaining suggests that the Charter itself requires employers to bargain in good faith with me. But, generally, it doesn’t: The Charter doesn’t affect private actors.

It makes some sense that the B.C. government might not be able to legislate over existing collective agreements. It kind of undermines the purpose and function of the employee association, and is clearly positive governmental action subject to Charter scrutiny.

But to go a step further and say that the Charter actually requires governments to legislate an obligation for employers to bargain in good faith…well, that is something different. And that is what the Fraser case became about: Basically a question of “Is that really what the Supreme Court said in Health Services?”

My Two Cents: The 2008 Hicks Morley Moot

It was around this time, in my third year of law school, that I participated in the Hicks Morley moot at Queen’s. Frequently, a moot involves addressing an issue answered by the Court of Appeal with a strong dissent. The appellant has to distill and argue the dissenting judge’s argument, and the respondent has to distill and argue the majority argument. This moot was more interesting, however, as the moot was of the appeal from Justice Farley’s decision, post-Health Services. A shift in the law meant that the moot was treading entirely new ground, that Justice Farley's conclusions of law were outdated and that we were looking at a fully novel legal question.

I was happily arguing the government side, and dealing with the s.2(d) issue. The structure of my argument was essentially this: The suggestion of a carte blanche proposition that everyone is entitled under the Charter to a Wagner-esque labour relations scheme is simply wrong, and is a misstatement of Dunmore and Health Services.

Quite the contrary; Dunmore was clearly a very narrow decision, expressly decided on the very unique factual situation where the existing legislation was shown to actually, in fact, have a chilling effect on organizing campaigns. Quite expressly, Dunmore would have permitted the legislature to scrap labour relations protections altogether. (Political suicide, certainly, but well within their constitutional powers.) The Supreme Court in Health Services referred to Dunmore as supporting the proposition that affirmative state action could be required in narrow circumstances where there was an evidentiary foundation to support the proposition that the government’s actions themselves were responsible for the impossibility of meaningful association.

Health Services should be interpreted similarly narrowly. “The Charter applies only to state action. One form of state action is the passage of legislation. In this case, the legislature of British Columbia has passed legislation applying to relations between health care sector employers and the unions accredited to those employers.” (Paragraph 88.) Health Services does not purport to reverse or modify the general rule that the Charter cannot force positive government action, but adopts the general rule subject to the narrow nuanced exception in Dunmore.

Read in that context, the Court’s more sweeping statements regarding the contents of the right to collectively bargain (such as “The parties have a duty to engage in meaningful dialogue and they must be willing to exchange and explain their positions. They must make a reasonable effort to arrive at an acceptable contract” at paragraph 101) must be read simply as explaining the content of meaningful association and simply cannot be read as imposing large-scale affirmative obligations on government (or private actors) to ensure widespread meaningful association.

So the only question is whether or not the AEPA creates the same chilling effect as the statute in Dunmore did, and I argued that there was not (or, at least, was not yet) the evidentiary foundation to support the existence of such a chill. Justice Farley had not made the factual findings necessary to ground such a claim, and had in fact noted that it was too soon to tell what the effects of the AEPA were.

Eventually, the Ontario Court of Appeal essentially found that Dunmore plus Health Services equals an affirmative obligation for legislatures to enact comprehensive labour protections for all, subject to s.1 of the Charter, and accordingly the AEPA was unconstitutional.

The SCC Decision

The Court was divided here: Of nine judges, there was a majority decision by five of them, two sets of concurring reasons (sort of…really dissenting) by three of them, and a lone dissent from Justice Abella. Justice Abella was the only one arguing that the appeal should be dismissed and the AEPA found unconstitutional…but the other 8 essentially had a very important 5-3 split.

Let’s start with the concurring reasons. Justice Deschamps argued that Health Services should be interpreted narrowly, and that it is difficult to begin imposing affirmative obligations on government on the basis of the Dunmore analysis; these cases are about economic inequality, but the courts have always refused to recognize economic inequality as a s.15 (anti-discrimination) ground, and the Dunmore analysis was a convoluted sidestep to allow that continued refusal. Justice Deschamps would prefer to open up the s.15 analysis and resort to the ‘omission’ analysis in Vriend v. Alberta. (Alberta couldn't exclude sexual orientation as a ground of protection in its Human Rights legislation.)

Justices Rothstein and Charron argued that Dunmore and Health Services were wrongly decided, that they broke with established jurisprudence and are unworkable and undesirable and should be reversed.

The majority, however, rejected these arguments. Health Services is still good law, did not constitute a break from existing jurisprudence, and should not be overturned without good reason. It is too soon to tell if it is, indeed, unworkable.

The majority essentially said that a full-blown Wagner model is not necessary, but the legislative regime is required to give all necessary protections to ensure a meaningful right to collective bargaining. They looked at the AEPA and decided to read in an obligation on the employer to consider proposals in good faith.

Sections 5(6) and (7) are critical. They provide that the employer shall listen to oral representations, and read written representations, and acknowledge having read them. They do not expressly refer to a requirement that the employer consider employee representations in good faith. Nor do they rule it out. By implication, they include such a requirement.

The argument for such an interpretation is three-fold: (1) A statute should be interpreted in such a way as to give effect to its purposes, and there’s not much purpose in telling an employer to listen to a proposal if they aren’t being required to consider it; (2) a statute is presumed to intend to comply with the Charter; and (3) the Minister said that the government of Ontario intends to meet its obligations to grant meaningful freedom of association.

If I may comment personally, I find this argument to be disingenuous. Firstly, the majority is picking and choosing its principles of statutory interpretation. The legislature’s word choice is important, and had they intended to impose good faith obligations such as in the Labour Relations Act, they would have used similar language. The fact that the legislature only requires the employer to “acknowledge” the representations has meaning, which the majority is ignoring. In fact, it seems that the majority is finding ambiguity where none exists: The language simply does not bear the interpretation given to it by the majority. No reasonable person would look at the language and suggest that it actually creates an obligation on the employer to bargain in good faith. Rather, the obligations it places on the employer are quite explicit, unambiguous, and minimal.

Further, the ‘obligations’ the Minister promised to meet were the ones set out in Dunmore – his language is quite express – and this predated Health Services. It cannot be the case that this rather puffed up statement of intention to comply with the Charter gives the Courts carte blanche to read in whatever remedial language they like.

The Minister also said that the AEPA was not intended to “extend collective bargaining to agricultural workers”, but the majority chose to interpret their way around that.

According to the majority, ultimately, the AEPA (“correctly interpreted”) protects the right to have employee submissions considered in good faith, and therefore is constitutional. The majority further notes, as I argued, that the AEPA has not been fully tested to see if the protection it gives to freedom of association is ‘meaningful’.

My Analysis

I smell change on the wind again. Ten years after Dunmore, the pendulum has just hit its apex on the swing towards labour. This is a weak majority decision by the Supreme Court, with certain irrationalities in the decision that makes the whole thing smell a little of horsetrading (and makes the whole thing rather bad law), and the next few judges to retire will have their replacements appointed by Mr. Harper, meaning that they likely won’t be labour-friendly, for better or for worse.

I mentioned irrationalities: The suggestion that Health Services does not break from established jurisprudence is revisionist. It is said to hold true to Dunmore (which was, itself, a massive break from established jurisprudence), but in fact was a significant expansion from Dunmore. Indeed, this decision interprets Health Services quite broadly, finding that there is a carte blanche obligation on governments to impose labour relations regimes which protect good faith bargaining.

I would also object to the fact that the majority seems to presuppose, without the necessary analysis, the unconstitutionality of the AEPA in the absence of the language being read in.

No, seriously, step back and look at the second rationale for reading in a good faith obligation: Legislation should be presumed to be intended to comply with the Charter. Therefore, we will interpret the language in such a way as to comply with s.2(d), rendering it unnecessary to proceed with a s.1 analysis.

But without a s.1 analysis, how can you say that the alternative interpretation would be unconstitutional? In fairness, of course, the s.1 analysis wouldn't have saved the alternate interpretation.

Yet the decision isn’t fully labour-friendly. Ultimately, the UFCW lost. They were going for a full-blown Wagner scheme, and they didn’t get it. They now get to go the employer and say “See, you have to consider these representations in good faith”…then when the employer comes back and says “Okay, we’ve considered them carefully, and decided that we are not prepared to agree to them; now go away”, their only recourse is to a novel and untested administrative tribunal process. The Court is not prepared to dictate how the substantive s.2(d) rights must be addressed, which gives the government some flexibility.

So this decision is an expansion on labour rights, but a tempered one, like when Vikings Rage pauses near the top of its highest swing before coming back crashing down the other way.

Also, the expansion itself may carry the Dunmore doctrine beyond the weight it can reasonably support. It goes from the Court telling the government “You can’t legislate contrary to the Charter” to the Court dictating public policy. This is so deeply at odds with the history of Charter jurisprudence that it cannot hold. Particularly in light of the door being left open for future arguments about ‘unworkability’, I think we will see those arguments being made into the future, and I think the Courts will scale the doctrine back over time.

Any thoughts from readers? Where will s.2(d) go next?

And a further question: I would invite perspectives on whether or not the expansion of s.2(d) opens up the door to challenges to the Rand formula.

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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.

Malicious Prosecution and Wrongful Dismissal

An employer always needs to be careful when accusing employees of misconduct, but an additional level of caution needs to be exercised when the alleged misconduct has criminal dimensions, and - as a new case from the Ontario Court of Appeal, Pate v. Galway-Cavendish (Township), 2011 ONCA 329, makes clear - an employer must be especially careful and diligent when reporting alleged employee misconduct to the police.

This is not the first cautionary tale. In a recent post about Canac Kitchens, I alluded to the Correia case in which the employer investigated thefts then mixed up two employees with similar names and reported the wrong one to the police.

This new Pate case, however, is interesting for a number of reasons.

Mr. Pate was the Chief Building Official for the Township of Galway and Cavendish for 9 years before it amalgamated to form the Township of Galway-Cavendish and Harvey on December 31st, 1998. He was relegated to a Building Inspector position and reported to Chief Building Official John Beaven. No, this isn't a constructive dismissal case. This arrangement didn't last long.

On March 26th, 1999, Mr. Pate was told of apparent 'discrepancies' relating to permit fees paid to him but not remitted. He was not given an opportunity to respond, but was told that, if he resigned, the matter would not be reported to the police. He did not resign, so he was fired and charged criminally.

In December 2002, following a trial lasting four days over the course of a year, he was acquitted, and he sued in December 2003 in wrongful dismissal and malicious prosecution. (A caution about limitations: Following amendments to the Limitations Act effective January 1st 2004, there would be a solid argument today to be made that the wrongful dismissal claim was brought too late.)

So the obvious questions are these: On what basis was he accused, and on what basis was he acquitted?

Well, Mr. Beaven was a retired staff sergeant from what was then known as the Metropolitan Toronto Police Service, and conducted his own investigation into certain irregularities - records of remittances missing, essentially - and prepared statements for the police relating to alleged theft of fees relating to six properties.

The trouble is that there were other explanations for the irregularities. In one case, the records were kept under a different name because the fees had been paid by the property owner's son-in-law. Mr. Pate noted this in his journal. However, on termination, Mr. Pate's journal was seized by Mr. Beaven, and was not provided to the police. In other cases, property owners had paid fees at a municipal satellite office which moved in 1998, during which move many files were lost. Municipal officials were well aware of the missing files, but police were not told.

One of the irregularities had even come to the Township's attention in 1995, whereupon it was investigated and the Township concluded that there was no wrongdoing. Of course, the police were not told about this.

Remember the effect on the employee, and the timeline. He was fired in March 1999, charged with theft in or around April 1999, and only had the charges finally dealt with in December 2002, nearly four years later. One can imagine the toll it would take on his professional life, and as well it seems that his marriage fell apart in that time.

The parties agreed on a reasonable notice period of 12 months, but argued about the entitlement to aggravated damages, punitive damages, and whether or not the employer was liable for "malicious prosecution". The trial judge dismissed the malicious prosecution claim, but awarded aggravated and punitive damages on the wrongful dismissal claim.

Malicious prosecution is a hard claim to make, but the trial judge found that this was a close case, then proceeded to refuse the claim...but made a couple of mistakes in doing so. He set the bar too high, finding that the necessary intention of the employer would have to have been to pervert the administration of justice, and also found that the employer did not 'initiate' the prosecution...failing to fully consider the effects of its failure to disclose the material exculpatory facts in its possession. To top it all off, the trial judge did find malice in the wrongful dismissal context, so the conclusion that there was no evidence of malice in the malicious prosecution context is inconsistent.

The other issue on the appeal was the quantum of punitive damages: The judge awarded $25,000, essentially saying that the principle of proportionality prevented him from awarding more. The Court of Appeal found that the reasons the judge provided for limited himself were inadequate.

So we're more than twelve years past the termination date, and the Court of Appeal sent the matter back for a new trial on those two issues.

The lesson for employers is simple: When referring a matter to the police, make sure you're certain of your reasons for doing so, and make sure you disclose everything to the police.

Also, I should highlight that the "Resign and we won't call the police" bit is most certainly not conduct the Court would look kindly upon. As a lawyer, I am prohibited by the Rules of Professional Conduct from threatening criminal proceedings to secure a civil advantage. It smells like blackmail, and that's how the Courts are likely to see it.

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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.

Bad Faith Dismissals and Systemic Practices

Ever since Honda v. Keays changed the face of employment law in June 2008, most dismissed employees have found that their implied contractual right to be dealt with fairly and in good faith by the employer has been a right without a remedy. In order to recover on the basis of a breach of the employer's duty of good faith and fair dealing, an employee has to prove that he has suffered compensable losses as a result of the breach itself.

Combined with repeated affirmations by appellate courts that the test for punitive damages in employment cases remains very high, there is not much incentive for employers to comply with the duty of good faith and fair dealing at this point.

The employer has a lot of bargaining power at every stage in the relationship. And while the law tends to be employee-friendly (in most areas, at least), the legal arena is not. Employees are often unable to afford the legal fees necessary to move forward. When liability is in issue, lawyers are less willing to enter into creative billing arrangements that allow payments out of the settlement proceeds (i.e. contingency fees, etc.). Some employers rely on that to differing extents.

An organization with bargaining power, who owes a duty of good faith to the other party, isn't supposed to play hardball. Yet, given the usual lack of a remedy for that, I am coming to suspect that, for an organization large enough to terminate frequently, a limited amount of hardball may actually be the prudent course of action. Many employees won't fight back at all. Many will have a limited capacity to litigate, and will have to enter into settlements that are unfavourable to them. And while hardball escalates legal fees, it also sends a message to other employees who may later end up in the same place.

In Covelli v. Sears, the the plaintiff has pleaded that Sears takes that sort of approach as a matter of practice, and Sears brought a motion to strike those pleadings.

“11. Mr. Covelli pleads that Sears has adopted a corporate policy or practice of terminating employees for just cause, notwithstanding that it knows or ought to know that no just cause at law exists, as a means of unlawfully evading its statutory and common law obligation to provide employees with notice of termination, or compensation in lieu of notice. Pursuant to this policy, Sears has engaged in similar conduct with other (now former) employees, which is also the subject matter of litigation. Mr. Covelli further pleads that Sears’ cavalier and reprehensible conduct in this regard will invariably exacerbate his ability to secure alternate, comparable employment.

17. …

• Adopting and applying a corporate policy or practice of asserting and maintaining allegations of cause where Sears knows or ought to know that no legal cause exists as a means of unlawfully evading its legal obligation to provide statutory and common law notice of termination (or pay in lieu)

19. …”in particular its corporate policy or practice of asserting just cause when it knew or ought to have known that it did not have just cause at law as a means of evading its legal obligations…”

The plaintiff (actually, the plaintiffs...the decision actually deals with three separate wrongful dismissal actions) was seeking production of documents relating to other terminations within a two year period of employees in certain classes. The plaintiffs argue that the systemic practice helps make out their claims for punitive damages.

Sears argued that these other terminations are matters between the employer and the specific employee, and that it would be improper for the plaintiff to gain a benefit from conduct by Sears which had absolutely no effect on the plaintiff.

The Court did not accept Sears' arguments. In this case, the scope of productions and discovery which would be necessitated by the claim was not of "monstrous proportions". So the plaintiffs can pursue and lead evidence of the systemic practice by the employer. These cases, if they don't settle, will be interesting to watch unfold.

What are the wider implications of this, though? The "monstrous proportions" argument is one that could only be made in the first place by an extremely large employer, and was circumvented in this case by the plaintiff limiting the scope of productions sought. What about smaller employers who only terminate infrequently? One would think it would be even harder for them to resist production requests based on allegations of systemic misconduct. This could well open the door to a new boilerplate pleading in wrongful dismissal actions.

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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.