The Ontario Court of Appeal’s decision in Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, is an excellent example of the consequences that can follow from failing to handle claims of workplace harassment and abuse carefully.
Facts of the Case
Meredith Boucher started working for Wal-Mart in 1999. After 9 years, she rose to the position of Assistant Manager at a store location in Windsor. In May 2009, her working relationship with her supervisor and Store Manager, Jason Pinnock, deteriorated after she refused to falsify a temperature log. According to the decision, thereafter Mr. Pinnock continuously humiliated and demeaned Ms. Boucher, often in front of other employees and using profane language.
Ms. Boucher eventually filed a complaint about Mr. Pinnock’s conduct under Wal-Mart’s Prevention of Violence in the Workplace Policy. However, in November 2009, senior management concluded that Ms. Boucher’s complaints were unsubstantiated and informed her that she would held accountable for making the allegations.
As stated in the decision, shortly thereafter, Mr. Pinnock once again humiliated Ms. Boucher in front of other employees. This time, he grabbed Ms. Boucher by the elbow and told her to prove to him that she could count to ten by counting out loud ten pallets of products that had yet to be unloaded. This caused Ms. Boucher to resign and a constructive dismissal action followed two weeks later.
At trial, the jury concluded that Ms. Boucher was constructively dismissed and awarded her damages for pay in lieu of notice equivalent to 20 weeks of salary, aggravated damages of $200,000.00 and punitive damages of $1,000,000.00 against Wal-Mart. The jury also awarded her damages for mental distress of $100,000.00 and punitive damages of $150,000.00 against Mr. Pinnock.
Both Wal-Mart and Mr. Pinnock appealed on the basis of liability and the quantum of damages for mental distress, aggravated damages and punitive damages. Ms. Boucher cross-appealed the dismissal of her claim for future loss of income.
In order to succeed on a claim for intentional infliction of mental distress, the employee must show:
- the defendant’s conduct was flagrant and outrageous;
- the defendant’s conduct was calculated to produce harm to the employee; and
- the defendant’s conduct caused the employee to suffer a visible and provable illness.
Although the Court of Appeal found the award of $100,000.00 very high, it was not so plainly unreasonable that it should be set aside. The award reflected the fact that the jury, representing the collective conscience of the community, was deeply offended by Mr. Pinnock’s misconduct.
Aggravated damages compensate an employee for additional harm suffered as a result of the bad faith or unfair way in which the employment agreement was terminated. Wal-Mart argued that an award of aggravated damages in addition to damages for mental distress amounted to double recovery for the same wrong. The Court of Appeal rejected this argument on the basis that the unfair way Wal-Mart handled Mr. Pinnock’s misconduct and Ms. Boucher’s complaint constituted a separate wrong from the actions of Mr. Pinnock.
Wal-Mart also argued that the award of $200,000.00 was excessive. Nevertheless, while the quantum of the award was unprecedented in Canadian employment law, the Court of Appeal concluded that it was not so inordinately high that it was plainly unreasonable and upheld the jury’s award.
Unlike damages for mental distress and aggravated damages, punitive damages are not compensatory. They are intended to act as the court’s denunciation where a defendant’s conduct has been malicious, oppressive and high-handed. The employee must also show that the award is rationally required to meet the objectives of retribution, deterrence and denunciation.
The Court of Appeal, at paragraph 61, had no difficulty in concluding that Mr. Pinnock’s conduct amounted to “a marked departure from the ordinary standards of decent human behavior.” Yet, having regard to the fact that the damages for mental distress already carried a strong punitive component, the Court of Appeal concluded that an additional award of $150,000.00 was not rationally required to achieve the purpose of punitive damages. The amount, as awarded against Mr. Pinnock, was reduced to $10,000.00.
In cases of breach of contract, such as an employment agreement, an award of punitive damages also requires an actionable wrong independent of the underlying breach of contract claim. Vicarious liability for the actions of another employee is not enough. The actionable wrong must be committed by the employer and requires more than just negligent conduct. In this case, the Court of Appeal concluded that Wal-Mart breached its duty of good faith and fair dealing towards Ms. Boucher, a separate actionable wrong that justified an award of punitive damages against Wal-Mart.
However, the Court of Appeal also noted that Wal-Mart was liable for $200,000.00 in aggravated damages, damages for constructive dismissal, $140,000.00 in trial costs, as well as $100,000.00 in mental distress damages against Mr. Pinnock for which Wal-Mart was vicariously liable. As such, a further award of $1,000,000.00 in punitive damages was not rationally required. The Court of Appeal reduced this head of damages to $100,000.00.
Future Loss of Income
Ms. Boucher argued that the trial judge erred in failing to award her damages for future loss of income in the amount of $726,601.00. The Court of Appeal upheld the trial judge’s decision.
According to paragraph 103 of the reasons for the decision, “A claim for future loss of income can arise in an employment context where a plaintiff has not recovered from the effects of the wrongdoer’s action and the plaintiff has thus suffered a loss of any earning capacity because of the wrongdoer’s tortious conduct.” In this case, Ms. Boucher recovered from her mental distress within two months of her resignation. Thus, she was capable of earning an income, but simply could not secure comparable employment.
In essence, Ms. Boucher did not suffer a future loss of income, but a past loss of income. The concept of reasonable notice is intended to assist the employee in securing comparable employment. It is the writer’s opinion that if the employee is incapable of searching for new employment, due to the employer’s tortious conduct, the notice period should not start. Until the employee has recovered from the employer’s wrong and the notice period can begin, the employee has a claim for the loss of income that would have been earned but for the termination of employment.
Some of the points to take away from this case are as follows:
- This case reiterates that damages for mental distress are indeed a separate head of damages from aggravated damages which, in turn, are another separate head of damages from punitive damages. Although the distinction may be seen as subtle, they are in fact discrete.
- Consequently, employers need to take claims of harassment and abuse in the workplace seriously and handle the investigation of such claims carefully. Investigations should be handled by someone with the requisite training and skill set. It is not enough to simply direct the matter to the HR manager or in-house counsel if he or she does not have any background in investigations.
- Since the Supreme Court of Canada’s decision in Keays v. Honda Canada Inc., personal injury litigation and employment litigation have become inextricably linked. It is important to have employment counsel with knowledge and experience in both areas. Medico-legal reports and subrogated OHIP claims are matters that employment lawyers have not always had to deal with.
This article is intended only to provide general information and does not constitute legal advice. Should you require advice specific to your situation, please feel free to contact me to discuss the matter further.