Monday, March 30, 2015

Indiana: Protecting its people from the tyranny of equality since 2015

Every so often, I discuss about topics outside of Canadian labour and employment law, either because I find a topic interesting, or because I find it important.

This is the latter.

Indiana Governor Mike Pence signed a bill into law which is ostensibly to 'protect religious freedom'.  In essence the bill protects from 'substantial interference' by the state in a person's exercise of their religious belief, and allows people to defend against legal actions on the basis that their conduct was an exercise of religious freedom.

What Does the Law Do?

There are some interesting distinctions to be drawn at the outset:  There's some question as to exactly how far this law extends.  On its face, it only appears to deal with 'government action', in a quasi-constitutional way.  In other words, the government can't force you to do something inconsistent with your religious beliefs, or to abstain from doing something mandated by your religious beliefs, unless a certain test is met to justify the constraint.

Seems pretty innocent, no?

And the governor has argued that it "does not apply to disputes between individuals, unless government action is involved."  Sounds nice, but it glosses over the fact that such disputes invariably involve government action.

I'm not an Indiana lawyer, and there are certain gaps in my knowledge as to the state of anti-discrimination laws in Indiana.  In general, however, Canada and the United States have some pretty fundamental similarities:  I'm entitled to exclude whomever I want from my private property, unless there's a law telling me I can't.  I can refuse service to, for example, anyone who parts their hair on the left.  There's no law to stop me from doing that.

In Ontario, we have the Human Rights Code.  I can't refuse to serve people because of their religion, sexual orientation, race, gender, disabilities, among others.  In Indiana, I don't believe that such a broad law exists.  They have the EEOC, which has similar impacts in employment contexts specifically, but doesn't affect provision of goods and services.  My understanding is that there are some county-specific anti-discrimination ordinances, of varying scope.

Where such an ordinance doesn't exist, it would appear that it may already be legal to refuse service on the basis of sexual orientation.  Where such an ordinance exists, the ordinance would absolutely be subject to the religious freedom law, forcing the question of "Does making me serve homosexuals violate my religious freedom?"  And, if so, is that obligation justified by a compelling interest of the state?  It's not clear whether or not these ordinances will hold up under the new law (or to what extent), but there's little question that the goal of this statute was to undermine them in respect of gay marriage.

Religious Freedom to Refuse to Serve

In general, I find it laughably absurd that businesses claim that it offends their religious freedom to be required to serve others.  (Though it is not lost on me that I have a certain luxury to be able to laugh at it.)

It is fairly easy to conceive of hypothetical exceptions to this, particularly in gender contexts:  Suppose my religion prohibits me from seeing unrelated women in a state of undress, yet I'm a professional tattoo artist.

Such hypotheticals are generally pretty far-fetched, and very seldom occur.  (There was the one case in Toronto some time ago where a Muslim barber refused to cut a woman's hair on religious grounds.  That probably wouldn't amount to a legal defence for him, and whether or not it should, in the particular context, is an issue about which reasonable people can disagree.)  Regardless, those issues are not generally what we're talking about when looking at these 'religious freedom' laws.

To put it in perspective, Indiana banned same-sex marriage until less than six months ago, when the Supreme Court of the United States refused to hear an appeal from a decision finding the ban to be unconstitutional.  The timing is probably not a coincidence.

We are also not talking about, for instance, a Catholic Priest refusing to officiate a same-sex marriage within the Church.  Churches typically fall within well-established exemptions to anti-discrimination laws.  I don't think there are many who would seriously argue that the state should compel religious institutions to recognize gay marriage.

So we get into the grittier questions when we start talking about fundamentally secular businesses and institutions refusing service on religious grounds, where there are basically three classes of cases being discussed:  (1) provision of goods and services completely unrelated to weddings; (2) wedding industry services; and (3) solemnization by secular officials.

Provision of Goods and Services Unrelated to Gay Marriage

Before we wander into the arguably-muddier waters of services related to same-sex marriages, let's look at the general proposition of denying services to gays - for example, where a restaurant or movie theatre turns patrons away because of their sexual orientation.

If a restaurant put up a "gays not welcome here" sign on their door, my first instinct would be to mock it.  If a gay person walks in, how would restaurant staff know?  Do they administer a heterosexuality test at the door?  Would that be sanitary?

Besides, to the best of my knowledge, the religious folks objecting to gay marriage still insist that homosexuality is a transitory lifestyle choice, and not a fundamental aspect of a person's identity.  (Much easier to justify condemning someone for what he does, rather than what he is, I suppose.)  The sin isn't "being gay" (there's no such thing, according to homophobic religious dogma); the sin is to engage in homosexual carnality.  So one would think that, unless the gay person is engaging in homosexual carnality in the restaurant (which is probably a health code violation), the person's just another person.  Maybe a sinner, but...well, aren't we all?

After all, even a man who self-identifies as gay hasn't necessarily 'known' (to use the biblical term) another man.  So even if your problem is 'the sins your patrons engage in elsewhere', the question remains:  How do you know?

But okay, let's move to the practical reality of such an exclusion:  A scenario where a same-sex couple walks in, engaging in conduct that reasonably makes people think they're a couple - say, holding hands.  It isn't at all hard to imagine a response of "We don't want that kind of thing here; this is a family restaurant with good old-fashioned Christian values!"

There is no plausible argument, even within Christian dogma, that selling food to a gay person is inconsistent with your religious belief.  (There may be an argument rooted in Leviticus that being prohibited from executing gay men violates your religious beliefs, but I think and hope we can all agree that this argument would be pretty absurd in modern society.)

So let's look at what's really going on here.  People are uncomfortable with homosexuality.  I get that.  I'll admit that I'm a bit uncomfortable with it too, but frankly I think that discomfort is just a natural result of thinking too hard about what goes on in somebody else's bedroom.  So the restaurant owner wants to maintain a 'Christian' environment, where Christian families can eat without exposing their kids to gay couples.  (Because, let's face it, your average homophobe doesn't particularly get the nuanced distinction that gay couples aren't actually sinning in the act of sitting at a table together eating a meal.  Or in the act of, you know, existing.)

The only way you could frame this argument in any sort of cogent way is in the sense of "We don't serve sinners here".  As noted, however, we're all sinners, so such a policy, uniformly applied, would result in a pretty empty restaurant.  Even if you narrowed the scope to violations of biblical sexual purity (or, that is, being presumed to have offended biblical sexual purity laws), that still sweeps up most of society in this day and age.  Even in religious communities, 'waiting for marriage' is becoming an increasingly rare phenomenon.  (A couple years ago, a study came out finding that 1 in 200 American mothers claimed to be a virgin - and no, we're not talking about assisted reproduction technologies.  Of those supposed virgin mothers, 31% had taken a chastity pledge, usually for religious reasons.)

Even then, however, it would be really hard to ground such an argument, that you are not permitted to conduct business with certain classes of sinners, in any sort of scripture or mainstream religious teaching.

"It's Against My Religion to Put Two Grooms on the Wedding Cake"

This is downright silly, frankly.  Yet it happens.

The reason it happens isn't because anyone's religious beliefs actually have any bearing on what cakes they can make, with what decorations, or for what occasions.  A wedding cake is not a religious artefact.  No, this happens because of simple bigotry.  Full stop.  It's a rule of exclusion with no good faith religious rationale, rooted in the fundamentally political opposition to the legalization of same-sex marriage.

(The case I linked above noted that the bakery, with a policy of not serving baked goods in connection with same-sex marriages, nonetheless once prepared a wedding cake for the 'marriage' of two dogs.)

There's no religious significance to preparing a cake, and at the end of the day the fact that the cake will be used in connection with a same-sex marriage does not in any way affect the character of your duties in making it.  It is no different, in any way, from the more general category I examined above.

Imagine that a baker who happened to be Jewish refused to sell a birthday cake to a parent because the main course was going to be cheeseburgers.  It makes about as much sense as this, really.

Solemnization by Secular Officials

This seems to be the one that gets the most sympathy:  If I'm performing City Hall weddings, and a gay couple comes before me, and I believe that their marriage is an affront to my personal religion, then shouldn't I be able to refuse to do it?

Simply put, no.  Your non-compliance with my religious values is not a violation of my freedom of religion, no matter how distasteful I may find it.

Likewise, if part of a teacher's religious structure of beliefs includes that women shouldn't be educated, that doesn't justify the teacher refusing to teach girls.  If an election official didn't believe, as a matter of religion, that women should be entitled to vote, that wouldn't justify him turning female voters away.

Solemnization of a civil marriage is not a religious role.  People who do it aren't priests, and the marriage has no meaning 'in the eyes of God' (as my Catholic relatives might put it).  That's true regardless of whether the individuals involved would be eligible for a church marriage.  It's simply a secular legal state of being, and for the officials to project their own religious views onto the union is not only inappropriate, but actually offensive to the people getting married, who presumably don't share those views.

Try to imagine, for a moment, that you're a Christian-raised atheist who goes to the City Hall to get married, and the person solemnizing the wedding was a Muslim Canadian...and he started questioning you in such a way as to make sure that your marriage met the requirements of his faith, before he would solemnize your union.  (That's exactly the kind of scrutiny that many people have non-religious ceremonies to avoid.)

Furthermore, I have never heard this objection made in context of any other ground of religious ineligibility to marry.  And it isn't as if other bases of religious ineligibility are rare - a great many couples get married in secular ceremonies simply because the couple's church of choice won't officiate the marriage.

Phrases I've never heard include:
"As a Catholic, I can't officiate this ceremony because she was previously divorced."
"As a [x], I can't officiate this ceremony because only the bride is an [x], and we don't permit interfaith marriages."
So on.

The objection to marrying same-sex couples simply reeks of bad faith, and because the solemnization has no religious significance in the first place, just doesn't make sense.


The whole religious argument seems to be premised on the notion that legalizing gay marriage somehow impacts the religious institution of marriage.  It doesn't.  It can't.  Because religious laws do not turn on secular laws, and because the secular legal regime expressly eschews any connection to religious laws.

People feel that the ability of two men to get married is somehow offensive to their religious rights.  This is totally nonsensical.  It would be like Muslim and/or Jewish groups arguing that the pork industry is an affront to their religious freedom.  To which the rest of us would respond:  You have every right in the world to refrain from eating bacon and pork sausage.  But we don't share your views; we don't have to share your views; and we'll eat as much bacon as our coronary arteries will allow.

So, to those of you who somehow feel aggrieved by the granting of marriage equality rights to people who are not the same as you...get over it.

As I said before, the exact impact of the law isn't yet clear.  But its purpose is almost certainly connected to same-sex marriage.  It's clearly intended to do something: Governor Pence has argued that it addresses government 'overreach', but the reality is that there already is a constraint, built into the First Amendment, on government overreach into the free exercise of religion.

It's hard to imagine what 'overreach' Governor Pence is concerned about, unless it's the overreach entailed in requiring the people of Indiana to treat homosexuals with the respect and dignity to which every human being is entitled.

Indiana's legislature once famously attempted to redefine pi and to 'square the circle', because, you know, math is hard, so let's make it easier by legislative fiat.  This is worse.  I support the various calls to repeal Indiana's so-called religious freedom bill.

Friday, February 6, 2015

Canada's New Constitutional Right to Strike

The Supreme Court of Canada finally released its decisions in the major labour law cases of Mounted Police Association of Ontario v. Canada ("MPAO") and Saskatchewan Federation of Labour v. Saskatchewan ("SFOL").

And the terrain of union rights in Canada has now shifted remarkably, with far more substantial rights being interpreted into s.2(d) of the Charter, freedom of association, than ever before.

There's a long history here, and I've written about it before.

Background Reading

Fraser v. Ontario:  Is the Pendulum about to Swing Back? - May 2011 - An examination of the history of labour law and s.2(d) of the Charter, and a commentary on the Fraser case.

The Right to Strike - February 2012 - A primer on the SFOL case, following the initial decision in Saskatchewan.

Ontario Court of Appeal Strikes Down Mountie Union - June 2012 - A primer on the MPAO case, after the appellate decision in Ontario.

Mountie Union Case Update - February 2014 - A follow-up on MPAO.

Labour Law and the Charter - March 2014 - A general history of the application of s.2(d) to union activities.

A Brief History

Allow me to summarize the history as briefly as I can here.  In 1987, the Supreme Court of Canada released three decisions referred to generally as the "Labour Trilogy", which concluded that union activities were not protected by s.2(d) of the Charter.  Despite a strong dissent, the majority felt that freedom of association could not grant collective rights that were not already individual rights.

By analogy, the question was raised as to whether or not there is a constitutional right to collectively golf.  Certainly, government can restrict my right to golf as an individual, without attracting Charter scrutiny.  But if I get three of my friends together to golf, is our activity suddenly constitutionally protected?  The answer, naturally, is no.  Thus, in 1987, the SCC concluded that the Charter did not protect the right to join a union, to bargain collectively, or to strike.

Ontario's Rae government inadvertently prompted the slide away from that.  Agricultural workers in Ontario have traditionally been excepted from our labour relations regime.  The Rae government changed that, extending labour protections to agricultural workers.  They were just starting to get organized when the Harris government changed it back, removing their right to organize and decertifying the unions that had already been certified as bargaining agents for agricultural workers.  The unions challenged this, leading eventually to the SCC's 2001 decision in Dunmore.


Dunmore was the first of five (to date) important decisions incrementally changing the Labour Trilogy doctrine.  The SCC recognized for the first time that freedom of association had to include the right to make collective representations to an employer.

But there's a further problem:  The constitution typically can't be used to compel positive government action.  My freedom of expression means that the government can't take active steps to silence me; it does not mean that anyone has to take steps to facilitate my speech.  Likewise, my freedom of association means that the government can't (subject to certain limits) prevent me from joining a union, but creating a statute that protects me from private sector reprisals for doing so?  That's the kind of positive action that the Charter can't typically require.

The SCC got around that in Dunmore because it was found as fact that the statutory exclusion generated a 'chilling effect' - that telling the private sector "Unions are generally protected, but not in the agricultural sector" sent the message that agricultural unions were illegitimate, tacitly encouraging agricultural employers to take steps against unionization.

The SCC didn't set out the full scope of s.2(d), leaving that for another day, but said that at minimum agricultural workers were entitled to a scheme that protected their right to join an association and to make collective representations to the employer.

B.C. Health Services

The next case in the saga was the 2007 decision in B.C. Health Services.  British Columbia enacted health service reforms without consultation with the unions, including overriding collective agreements by statute in various ways.  The unions challenged this, arguing that there is a constitutional right to collective bargaining - in other words, that B.C. couldn't just override collective agreements and implement new ones by legislative fiat.

The SCC concluded that s.2(d) extends to a constitutional right to good faith collective bargaining.

Because the B.C. government actually actively overrode collective agreements, the Supreme Court didn't have to do any Dunmore-style dancing about chilling effects to warrant subjecting the acts to Charter scrutiny.

And because they didn't have to dance in that fashion, the lines between the government as legislator versus the government as employer became a little blurry, and the decision arguably created a positive obligation on government to take active steps to protect the collective bargaining rights of private sector workers.


After the decision in Dunmore, Ontario's government did the bare minimum suggested by the SCC, giving agricultural workers the right to join an association and make collective representations to the employer.  The unions challenged this, arguing that it still didn't give agricultural workers meaningful associational rights.  It was certainly well short of the robust protections granted to most workers under the traditional North American labour regimes (known as 'Wagner' style labour relations).

The Supreme Court, in one of their weirdest decisions I've seen in a long while, concluded in 2011 that the new statute did not contravene the Charter, because it implicitly contained an obligation for the employer to bargain in good faith.  The right to collectively bargain is a derivative right, only important insofar as it is necessary to facilitate workers meaningfully acting together toward their collective goals.

This drew a line on s.2(d) rights:  There was a right for employees to act collectively, and to be able to do so meaningfully, but no right to a particular mechanism or legislative structure for the collective bargaining - s.2(d) did not enshrine full Wagner-style labour relations protections.

MPAO and SFOL:  Background

Police aren't generally allowed to unionize.  Most police have associations that look a lot like unions, but the RCMP were under a different framework, with an association that was basically created by management itself.

So the Mounted Police Association of Ontario (among others) challenged the prohibition, arguing on the basis of Dunmore that RCMP officers were entitled to act collectively.  The Ontario Court of Appeal rejected the argument following Fraser, finding that the existing in-house system was adequate to give effect to their s.2(d) rights.

As well, Saskatchewan enacted a statute curtailing the right to strike of their civil servants, and the Saskatchewan Federation of Labour commenced a Charter challenge.

Last month, the SCC decided the MPAO case, allowing the appeal and concluding that Mounties do in fact have a right to join a union:  The existing in-house model lacked the 'choice' and 'independence' necessary for employees to meaningfully exercise their associational rights.

A compelling dissent by Justice Rothstein made a couple of potent criticisms of the majority decision:  Firstly, that 'choice' as defined by the majority is actually a component missing from domestic models in which workers have been very effective at exercising collective rights (such as, for example, Ontario's teachers).  He also highlights that Wagner-esque majoritarianism actually deprives significant workplace minorities of having any meaningful 'choice'.  Secondly, that 'independence' is a feature of the Wagner model, but not essential to the meaningful exercise of collective rights, as there are alternative models available which are just effective.

In a nutshell, Justice Rothstein argued that applying the test as set out in Fraser, that a labour relations regime would be constitutionally permissible so long as it didn't render it effectively impossible for workers to act collectively, would lead the court to dismiss the appeal, and that it was deeply inappropriate for the court to resile from a proposition of law established a mere 4 years ago.

(I wonder if he was being intentionally ironic.  In Fraser, Justice Rothstein argued that the 4-year-old precedent of B.C. Health Services was unworkable.  The majority decision in Fraser, authored by the same two judges as in MPAO, responded that Rothstein's criticism was "premature".)

The majority disagreed with Rothstein's interpretation of Fraser, but conceded that some passages in Fraser may have confused the issue.

Which brings us to the recent decision in SFOL, concluding that s.2(d) does indeed extend to a right to strike.

The question as addressed by the majority - authored by Justice Abella - is primarily framed as being whether or not the strike is truly a "necessary component of the process through which workers pursue collective workplace goals".  They answered in the affirmative, and from that everything else falls into place pretty logically.

The reason they answer in the affirmative appears to be more about deference to a broader international consensus rather than because of any actual examination of the importance of the strike to the contemporary Canadian workplace, or the consideration of alternative models.  Justice Abella highlighted the importance of the strike in the historical development of Wagner model labour relations regimes, and also its prominence in certain other countries.  Likewise, the ILO regards the right to strike as being an integral part of freedom of association (though it bears noting that the actual convention on the point to which Canada is signatory does not expressly refer to a right to strike).

The dissent by Justices Rothstein and Wagner makes a number of criticisms of the majority decision.  They argue that the breadth of the majority decision is irresponsible, with potential far-reaching consequences, that in fact there are reasonable alternatives to the right to strike that would preserve the meaningful pursuit of collective workplace goals, and that the majority's reliance on historical and international perspectives is misplaced.


On MPAO, the majority is trying to have their cake and eat it too.  Rothstein is right about the wording of the test in Fraser:
The question here, as it was in those cases, is whether the legislative scheme (the AEPA) renders association in pursuit of workplace goals impossible, thereby substantially impairing the exercise of the s. 2(d) associational right.
There is a fairly easy solution to the disconnect between Fraser and MPAO:  With the cases of B.C. Health Services, MPAO, and SFOL, the issue surrounded the government as employer, whereas Fraser and Dunmore dealt with the government's role in regulating private sector labour relations.  If one concludes that s.2(d) extends to a right to good faith bargaining, that may well tie the government into good faith bargaining with their own employees.  (Whether or not there was a failure to do so in the case of MPAO is a separate issue, perhaps.)  If the government does something that substantially interferes with the pursuit of collective workplace goals, including by its own employees, that's likely to be unconstitutional.

To my mind, however, determining the extent of protections that the government must extend to private sector employees should be a different question.  The 'effectively impossible' language that trickled down from Dunmore alluded to the impact of the omission of agricultural workers.

In other words, if we were to read the case law as saying that the Charter imposes a positive duty on government where the failure to protect a right would make the exercise of that right effectively impossible, but prohibits the government from taking positive action which substantially interferes with collective bargaining rights, then we'd have almost reconciled the results in these cases.

Instead, the majority has hedged, trying to define basic characteristics of a constitutionally acceptable labour relations regime, and in doing so - I agree with Rothstein - has gone well beyond the scope of the truly essential characteristics, and furthermore that these efforts will have the inadvertent result of making perfectly functional labour relations regimes unconstitutional.

The Right to Strike

Some of Rothstein's criticisms in SFOL resonate with me.  I'm not sure I necessarily subscribe to his dire warnings of a slippery slope or catastrophic unforeseen consequences, but when I was reading through Justice Abella's reasons, I was already thinking that the reliance on the historical context is deeply misplaced.  The formative role of strikes in the early 20th century labour movement - sometimes illegal, often not protected, often in response to an employer's refusal to recognize a union - is very different from contemporary Canada, where most labour relations regimes require an employer to recognize a certified bargaining agent, and to bargain in good faith.

A contemporary strike results in significant protections to the workers that didn't exist in the timeframe Abella writes of.  In the 1930s, if all my workers walked out of my factory, I was at liberty to refuse to take them back, and to go hire a new workforce.  Nowadays, the hands of the employer are significantly fettered when dealing with labour disruptions, and if that framework is what the majority is saying is constitutionally protected, it very much tilts the balance of power.

The international context is useful, but not, in and of itself, a reason to adopt the same conclusions that other countries have.  Justice Abella, if your friends Germany and Israel jumped off a bridge, would you do it too?

There must be a mechanism for resolving a bargaining impasse.  That's fairly obvious.  And arbitration has its limits - it isn't necessarily ideal, because it doesn't necessarily reflect all the applicable market realities.  But not being 'ideal' doesn't mean that a requirement to arbitrate instead of strike would necessarily amount to substantial interference to the pursuit of collective workplace goals.  Indeed, some of the strongest unions are in the workforces traditionally barred from striking, like police and fire.  It actually seems quite absurd to suggest that the absence of the right to strike is a substantial interference, in light of the empirical evidence that police are not at all impeded in their pursuit of collective workplace goals.

To be clear, I'm not generally a fan of 'no strike' legislation.  I've opposed movements to designate garbage collection as an 'essential service' - I think it's disingenuous (not to mention inviting a judicial response like this).  I prefer to have unions and employers battle it with regard to their natural economic bargaining power, meaning that they should be able to apply economic pressure through the use of strikes and lockouts.

But I don't think that this is functionally necessary for the exercise of freedom of association, and moreover I don't think it is workable that the Charter now appears to compel the government to enact legislation as to regulate private sector labour relations in a particular way:  That is deeply inconsistent with the principles underlying the overwhelming majority of constitutional jurisprudence (including Dunmore and Fraser), and it unduly restricts our democratically elected representatives.


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.

Thursday, February 5, 2015

Arnone v. Best Theratronics: Ontario Court of Appeal Upholds Wrongful Dismissal Summary Judgment

A little over a year ago, the Supreme Court of Canada, in the Hryniak case, modified the test for summary judgment motions in Ontario.

Even before Hryniak, wrongful dismissal cases were often well-suited for summary judgment motions.  Since then, judges have repeatedly approved of the summary judgment mechanism for such cases.

Now, the Ontario Court of Appeal has weighed in, mostly upholding a summary judgment in the case of Arnone v. Best Theratronics:
Finally, while the appropriateness of bringing a summary judgment motion must be assessed in the particular circumstances of each case, a straight-forward claim for wrongful dismissal without cause, such as the present one, strikes me as the type of case usually amenable to a Rule 20 summary judgment motion.
The Facts

Mr. Arnone worked for Best for 31 years, and occupied a role with a managerial title.  He was dismissed on November 26, 2012, a mere 16.8 months away from the date he would have been entitled to a full unreduced defined benefit pension.  As well, Best's practice was to give retiring employees a retiring allowance of a week's pay per year of service, up to a maximum of 30 weeks.

Arnone sued, seeking 24 months' pay in lieu of notice, the full retiring allowance, and the lost value in his pension.

The employer argued that Arnone was merely a front-line supervisor, and not a manager, and that this issue required a trial.  For the purpose of the summary judgment motion, Arnone conceded the point, and agreed to have the notice period assessed on the basis of his duties being characterized as supervisory rather than managerial.

Accordingly, the motion judge granted the motion for summary judgment.  But in assessing damages, things got a little bit unusual.

The motion judge appeared to regard his role as determining one primary question:  Would the reasonable notice period extend 17 months or more, such that the employer should have 'bridged' the employee to retirement?  Clearly the notice period would be over 17 months...but what the judge did with that was strange.

Firstly, he concluded that the employer had no reasonable expectation that the employee would mitigate his losses, because he was so close to retirement anyways.  This is rather bizarre, and resulted in a windfall in this case as Mr. Arnone actually had made new employment earnings during the reasonable notice period.  Secondly, the judge concluded that Mr. Arnone had no entitlement to reasonable notice past the end of 16.8 months, because at that point he had recourse to a full unreduced pension.

So the judge awarded the equivalent of 16.8 months' pay in lieu of notice, plus $65,000 to offset the reduced value of the pension, plus 30 weeks' in respect of the "retiring allowance" he would have obtained upon retirement.  The judge further noted that, but for the 'bridging', he would have assessed the reasonable notice period at 22 months.

The employer appealed, and Arnone cross-appealed.

The employer argued that mitigation earnings should have been deducted from the judgment.  The plaintiff agreed that the failure to do so was an error in law, so the employer's appeal was allowed on that ground, with the judgment being varied accordingly.

However, Arnone - while agreeing that the 'bridging' approach was an error - argued that reducing the notice period from 22 months to 16.8 was inappropriate.  The Court of Appeal agreed, and increased the reasonable notice period to the full 22 months.

The employer continued to argue that the character of employment was an issue requiring a trial.  (This seems strange, given that it was conceded by the plaintiff.  It amounts to:  "Yes, the motion judge accepted that our version of the facts was accurate, but we still want to present them in a trial format anyways.")  The Court of Appeal agreed with the motion judge's treatment of the issue, distinguishing this case from the Thorne case relied upon by the employer.

As well, the employer challenged Arnone's entitlement to its customary retiring allowance, arguing that it's only available for 'retirement', not for restructuring dismissals.  However, without any policy making that distinction clear, the Court of Appeal regarded the retiring allowance as amounting to an implied term of the employment contract.

The employer also challenged the compensation for the lost value in Arnone's pension, but really, that's fairly straightforward law.  This is something for employers to pay attention to:  If the reasonable notice period crosses entitlement thresholds for defined benefit pensions, the costs of dismissal without notice can be severe.


There aren't really many surprises in the appellate decision.  The bridging approach was clearly problematic, both in reducing the notice period and in disregarding mitigation earnings, so the Court of Appeal's reversal of that is not particularly surprising.

Furthermore, the contention that this was a case requiring a trial, on all the facts, appears to have been a very long stretch, in light of the Hryniak decision.  I might be more interested in knowing what the result would have been had character of employment not been conceded.  Because frankly, between Hryniak and the Court of Appeal's view in Di Tomaso that character of employment is of "declining relative importance", my view is that it's a rare case that character of employment is an issue requiring a trial.  The employer relied on Thorne, which was a pre-Hryniak case from the Superior Court, and the Court of Appeal noted:
Also, the jurisprudence on the Bardal factors not only stresses that no one factor should be given disproportionate weight, but more recently indicates that the character of employment is a factor of declining importance in the Bardal analysis.
The quotation at the top, about straight-forward wrongful dismissal claims usually being amenable to summary judgment, immediately follows this point, strongly suggesting to me that sending a wrongful dismissal action to trial over a dispute as to character of employment will usually not be appropriate.

The retiring allowance issue is a little more interesting, though, as it's something on top of reasonable notice.  It makes sense that he would still be entitled to it.  Suppose that he was given 22 months' actual notice:  Even if one assumed that it was necessary for an employee to 'retire', what would have stopped him from doing so on the last day of the notice period, thus earning an additional 30 weeks' pay?  So yes, if the employer had complied with its obligation to give notice, then he would have gotten 22 months' notice plus an additional 30 weeks' pay.

I can't help but wonder if that's why the motion judge decided to 'bridge' to retirement in the way that he did, because he felt that 22 months plus 30 weeks was in some way double-recovery, but if one regards him as retiring when he's eligible, then 16.8 months plus 30 weeks seems like a far more palatable conclusion.


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.

Monday, February 2, 2015

Majewski v. Complex Services Inc.: Plaintiff Wins Wrongful Dismissal Trial...Again

Two years ago, I wrote about a Divisional Court decision in the case of Majewski v. Complex Services Inc., involving a card dealer dismissed, allegedly for cause, who sued in wrongful dismissal.  He won at trial, with the Deputy Judge concluding that just cause was not established, but the Divisional Court found that the trial judge had made critical errors, and sent the matter back to the Small Claims Court for a new trial.

The trial took place over 5 days in December 2013, June 2014, and January 2015, and the decision was recently released.  The result:  The plaintiff won again.

The case was before Deputy Judge Marshall, a Niagara Falls lawyer.  I've had the pleasure of appearing before him in a settlement conference, and found him to be a relatively knowledgeable Deputy Judge in terms of employment law (though that may have something to do with the fact that, when I was before him, this trial was already ongoing).

The plaintiff's lawyer was Margaret Hoy, a prolific employee-side lawyer on the Niagara peninsula who has litigated no fewer than five matters against this particular employer (and whose other credits include the unusual case of Ludchen v. Stelcrete, which highlighted the need for thorough and timely investigations).  The defendant used Hicks Morley for the Divisional Court appeal, but for whatever reason - my guess is cost - decided to have in-house counsel, Paul Pingue, handle the re-trial.

The Facts

This is getting to be a long saga.

Majewski began working at the casino in the late 90s, and was dismissed in August 2005.  The culminating incident involved a confrontation with a co-worker, Maracle:  Majewski had a migraine, and wanted to put his name down on an "E/O list" - basically a sign-up sheet to be sent home early if workload allows.  Maracle had the sheet in hand, but was bringing it to another part of the building, and wouldn't let Majewski see it.  Majewski then called Maracle a "f***ing a**hole" (and/or a "f***ing prick").

Maracle complained to management, management investigated, Majewski admitted the comment, argued that he hadn't done anything really wrong, and they dismissed him for cause.

The defence primarily turned on a 'cumulative cause' argument, because of Majewski's disciplinary record.

In 2001, Majewski had a couple of incidents, first losing his temper in the break room, and later making an offensive comment to a casino patron that 'men don't wear pink shirts'.  After the 'pink shirt' incident, he received a warning that further incidents could lead to dismissal.

The next disciplinary notice was more than 2 years later, in November 2003:  Playing for the Casino Niagara hockey team, Majewski used abusive language toward the referee (another co-worker), and was ejected from the tournament.

Next up:  In October 2004, Majewski was upset with a patron who had been blowing cigar smoke in his face for 20-30 minutes.  He asked the individual to stop, and the person's response was "f*** you".  Majewski sought the assistance of his supervisor, who didn't help, and then brought in the Pit Manager to resolve the situation.  However, while the Pit Manager was discussing the matter with the patron, Majewski heatedly interjected numerous times, and was disciplined on the basis that he "has to let his supervisors handle these types of situations".  The disciplinary noticed threatened "progressive counselling" in the event of "further situations like these".  However, management seemed to be under the impression that Majewski was clearly warned that further confrontations would lead to termination.  After the Maracle incident, relatively minor though it was, they basically concluded that Majewski was irredeemable.

It sounds like Majewski has a bit of a temper.  But aside from these incidents, he had, by and large, positive reviews.  It also bears noting that the plaintiff led evidence that there's a culture of swearing among casino employees, particularly off the floor.

The Judge's Findings

Deputy Judge Marshall accepted the evidence that there was a culture of swearing, but noted the important difference between swearing, simpliciter, and swearing at someone.  He concluded that Majewski's conduct toward Maracle was disciplinable - perhaps even seriously disciplinable, in light of his history - but it didn't rise to the level of just cause, even considered together with his disciplinary history.

He accepted that the 'cigar smoke' and 'pink shirt' incidents were severe, because they involved inappropriate interactions with casino patrons.  The hockey incident was only marginally connected to the workplace (and tempers flaring in a sporting event is hardly unexpected...the decorum is a little different than that of a workplace).  The other two incidents (including the Maracle incident) were in the 'back', not in front of casino patrons, and accordingly were objectively less serious.

The Deputy Judge rejected the contention that there was any clear 'final warning' given, and found that the incidents did not amount to the employee doing something "fundamentally or directly inconsistent with the employee's obligations to his...employer".

He made two interesting remarks that I intend to touch on, however:  Firstly, he queried whether or not the "last chance" doctrine reflects the state of the law, and concluded that it doesn't:  One still needs to look at the objective seriousness of the Maracle incident in its full context.  (The wording suggests to me, though it's not entirely clear, that even had a 'last chance' warning been given, it wouldn't have been enough in the circumstances.)

Secondly, the Deputy Judge remarked that, had the Maracle incident and cigar smoke incident been reversed in time, it may have given the employer a stronger argument for cumulative cause.  (Not necessarily saying it would have succeeded, however.)

As I noted in my previous entry, quantum was no longer in issue:  It was all or nothing, $25,000 or $0.


It's a good decision, and it very closely parallels the findings of the original trial judge.
I very much agree with Deputy Judge Marshall's assessment of the law.  Giving an employee a clear warning that further misconduct will lead to an important step for generating just cause, but the analysis doesn't necessarily end there.  One must still examine the objective seriousness of the misconduct.

It's not that different from the issue with 'zero tolerance'-type policies.  Remember Plester v. PolyOne Canada Inc., where the employer had a series of "Cardinal Rules" for safety purposes?  Nonetheless, one still needs to look at the full context and determine whether or not dismissal is objectively warranted.

Likewise, I think that Deputy Judge Marshall is correct to suggest that a reversal of the disciplinary incidents could have made a difference.  Cumulative cause is not a cup that gets incrementally filled up - the 'straw that broke the camel's back' is a very difficult concept in employment law.

Indeed, I was a little surprised at first at how seriously the 'cigar smoke' incident was regarded.  Interjecting between a manager and a customer is a problem, certainly disciplinary, but it's something that I would expect to result in coaching at the first instance.  However, on a full read of the decision, it appears that the employer regards customer service as paramount - essentially, since all they're selling is service, it needs to be good.  So on the basis of this element of workplace culture, otherwise minor incidents involving patrons are treated very seriously.  That's fine.  But that inflation of seriousness won't translate at all for conflict between co-workers.

And looked at in that light, it's fairly straightforward:  Yes, Majewski had a bit of a history of losing his temper.  He'd had a couple of incidents on the floor, which were disciplined seriously.  But incidents 'in the back' aren't quite the same thing, and he couldn't be expected to see them as being the same thing...and before the Maracle incident, it had been over 4 years since his previous incident 'in the back'.

That's not to say that the Maracle incident could never amount to just cause.  But you would need clear warnings dealing with comparable misconduct.  By analogy, I'm entitled to insist that my employees show up on time.  Imagine the following scenario: an employee has frequently been over an hour late, and I engage in progressive discipline up to the point of threatening termination in the event of further lateness.  The employee is then punctual for a couple weeks, then one day shows up 10 minutes late in poor weather.  Am I justified in dismissing him for cause?  Probably not.  By contrast, change the scenario to one where the progressive discipline related to shorter periods of lateness - i.e. where he was routinely 10 minutes late.  In that scenario, it's a lot easier for an employer to make this pitch:  I'm entitled to expect my employees to be punctual, and progressive discipline wasn't working; despite my clear directions and warnings, the employee failed to take appropriate measures to get to work on time..  Minor misconduct is hard to turn into just cause, but persistence in minor misconduct despite discipline can amount to insubordination.

There's also an interesting commentary about the impact of the investigative meeting - the Deputy Judge put little weight on Majewski's conduct in that meeting, arguing with management about his conduct, which the employer regarded as insubordinate.  The Deputy Judge felt that having a frank discussion about the conduct is not disciplinable:  "I see no reason why parties cannot have a robust meeting on a heated topic, ultimately agreeing to disagree....A dealer needs to respect management, no[t] cower to it."  He got that right as well, in my respectful opinion, and it's an important distinction.  Refusing to accept responsibility for misconduct can be aggravating, perhaps increasing the seriousness of the conduct (as opposed to, say, apologizing), but will not in and of itself amount to insubordination.  If I sincerely think that an action was justified, then there's absolutely nothing wrong with me trying to make my case to the employer.  (Of course, there are limits to the way in which I make my case.)  At the end of the day, if neither one of us persuades the other, then management has the final word:  You may think that you were justified; fine, you can think whatever you want, but it's going in your file regardless, and we expect you to hold to a higher standard in the future.

The result is right.  The employer can't be faulted for wanting Majewski gone.  If he really couldn't control his temper, it was probably just a matter of time before another incident on the floor.  But just cause isn't really about prevention - it's about the seriousness of the misconduct in which the employee has engaged.  And the decision to get rid of an employee because of what he might (or even 'probably will') do in the future, while a reasonable business decision, has to come with notice or pay in lieu.

That said, this case raises certain concerns about proportionality and access to justice.  It has been almost 10 years since the dismissal.  The second trial, on its own, was five days.  For a Small Claims Court trial, that's insane.  The value of the legal time going into that trial on each side no doubt rivalled or exceeded the value of the claim.  That's without considering the costs of the Divisional Court appeal, or the first trial.  And since the Small Claims Court is limited in its ability to award costs, that makes litigating a 5-day trial rather uneconomical for both sides.


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.

Tuesday, January 20, 2015

Contractual Interpretation: Bonus Formulas

There's an interesting new decision, Hillman v. Bedford Consulting Group Inc., dealing with an argument over an employee's bonus eligibility.

Mr. Hillman worked as an executive search consultant, and was hired in 2009 by Bedford as a senior level recruiter.  In 2012, his compensation structure was changed, to a commission structure, plus a bonus contingent on achieving certain thresholds.  Exactly what those thresholds entailed, and whether or not they were reached in 2013, was the central issue in the litigation.

Basically, if Hillman billed and collected a million dollars or more, then he was entitled to a bonus of 3% of his billings.  However, the employer argued that there was another condition - that he also needed to collect a minimum of 5% in 'admin fees' over and above the placement fees.

And there was a basis for it in the contract language, too, with language fairly clearly stating that the admin fees were a precondition for the bonus.  However, one of the paragraphs in the contract added some uncertainty:
A Partner must achieve a minimum of 5% admin fees. *We still need to discuss if the bonus is affected for underachieving on this minimum threshold.
That's a problem.  It very much suggests that underperforming the admin fee target isn't meant to disentitle the employee to his bonus (or, at least, not completely), but might be the subject of a subsequent agreement.  Justice Stinson applied the doctrine of contra proferentum, interpreting the resulting ambiguity against the party who drafted the contract - i.e. the employer.

Yet another reason why having a lawyer review your contracts is important.

Equitable Setoff

Perhaps the most interesting element of this case was the treatment of the employer's claim for equitable setoff.

When the employee resigned, he started his own competing business, and before departing he advised a client of his plans.  That client subsequently ended its relationship with the employer, and moved over to Mr. Hillman.  Accordingly, the employer made a counterclaim for the lost revenues - $43,200, on its calculation, and relied on the doctrine of equitable setoff.

This is important, because the decision itself is in the context of a motion for summary judgment by the plaintiff:  The plaintiff is seeking judgment on his claim, while the employer is not seeking judgment on its counterclaim, but is nonetheless claiming an entitlement to apply the amount of the counterclaim against any judgment the plaintiff may obtain.

After the employee left, the employer withheld a large sum in commissions owing - over $129,000 in undisputed commissions, according to the decision.  After litigation was commenced, the employer paid the commissions owing (not including the bonus), less $43,200.

Justice Stinson wasn't convinced that this scenario was appropriate for equitable setoff - in essence, that wages owing are appropriately connected to damages for alleged misappropriation of an opportunity.  However, it appears that his decision to deny the claim for equitable setoff arises more from his distaste for the way that the employer conducted itself:
Initially, the defendant refused to acknowledge or pay the undisputed amounts owed to the plaintiff, with the result that the plaintiff had to commence litigation. The defendant then forced the plaintiff to go to the further trouble and expense of bringing a motion for summary judgment. Only then, faced with the prospect that it had no real defence to the majority of the claim, did the defendant finally pay the undisputed amounts. In my view, such conduct should be discouraged and fully justifies the refusal of the discretionary remedy of equitable set-off. This situation would appear to fall squarely within the examples given by Palmer, above, in which equitable relief may properly be refused where funds have been wrongfully retained or not dispersed as agreed.
Therefore, the plaintiff essentially has a judgment for the full amount of his claim, and can enforce that claim, even though the employer may maintain an action against him seeking payment of $43,200.

What Should the Employer Have Done Differently?

At a glance, the equitable setoff decision reads a little oddly:  The employer felt it was entitled to claim against the employee, and unilaterally withheld money from the employee to offset the claim, and that was wrong, so we're not going to let the employer continue to withhold that money.  If there were a legitimate claim to equitable set-off in the first place, then surely the employer is entitled to withhold the amount of that claim in the first place.

But it seems that the judge is more concerned about the unjustified amount withheld.  Had the employer simply withheld the $43,200, then it is likely that the judge would have regarded the employer's conduct as more reasonable.

That being said, I suspect that Justice Stinson was also right that this wouldn't be an appropriate case for equitable set-off anyways - and indeed that application of the doctrine is precluded by statute.  The unpaid commissions are likely 'wages' within the meaning of the Employment Standards Act, and there are very limited scenarios in which employers can withhold amounts from wages.  The "pay the wages, and then pursue your own remedies separately" approach is very often the legally mandatory approach for employers who feel they are owed money by departing employees.


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.

Tuesday, January 13, 2015

Three Year Employee Awarded $345k in Lieu of Notice

Every so often one comes across a case where the sheer numbers make you do a double-take.  The recent case of Rodgers v. CEVA is one such case.

Prior to starting with CEVA, Rodgers had been president of Sameday Worldwide, where he had worked for over a decade.  An acquaintance of his who worked for CEVA approached him about potentially joining them to run their Canadian operations, and after seven interviews, including two in Texas, CEVA made an offer of employment.  He didn't accept the first one, but when they revised the offer, he did accept, starting in September 2009.

His annual salary was $276,000, plus a signing bonus, plus other benefits.  As well, as a condition of his employment he was required to make a substantial investment ($102,000) in CEVA Investments (senior managers were expected to have "skin in the game"), and sign a shareholder's agreement that came together with non-competition and non-solicitation obligations.

He was dismissed in June 2012, on a not-for-cause basis.

After his dismissal, he inquired about the status of his investment in the company, and was basically told to go away:  "The investment remains in the care of the company.  There is not currently a process that would enable you to exit the plan by selling your CEVA Investments Limited stock."

He later received a mass shareholder mailing indicating essentially that his stock in CEVA Investments was worth nothing.

Rodgers sued in wrongful dismissal.  The decision on the merits was made in November, and the costs award was released last week.

The Decision

Rodgers took the position that he had been 'induced' away from his previous employer, and therefore was entitled to a longer notice period.  The Court was satisfied that there was 'some' inducement, but not at the level of some of the other case law on the point.

He was 55 years old, and in a position of very significant responsibility, but also not a long-service employee.

As well, there's a morally persuasive question of what to do about the investment.  It's not necessarily the case that there's a legal remedy for the loss of an investment - that's the risk you take when you buy stock.  But the Court regarded the investment as indicative of the expectation of the parties that this would be a longer-term relationship - presumably, if he's investing six digits into the company, there's an expectation that he's not going to be summarily dismissed on minimal notice.

On the basis of the factors, the Court awarded 14 months' pay in lieu of notice.  After mitigation, this was over $345,000.


Overall, while the numbers are a little surprising at a glance, there's little to criticize about the decision.

Inducement - the notion that an employer might be on the hook for representations made to draw the employee away from other secure employment - is always a little bit tricky.  As the late Justice Echlin once put it:
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 the time of day.
Typically, the courts are looking primarily for representations of job security.  If I already have a secure job, and I jump ship because you're offering more money, then that may not be regarded as inducement.  However, if I'm reticent to give up a sure thing for a company I don't really know, and you convince me that the new job is just as sure...then that's another matter.

On the facts of this case, the finding of some inducement seems fair.  It was the employer who initiated discussions; the employer facilitated multiple interviews; and the employee declined the first offer by the employer, being satisfied with his current secure position.  But it's also fair to temper the impact of the inducement, because there don't appear to have been any express representations about job security.

What's particularly novel here is the Court's dealing with the investment.  There's an overarching feel here that Rodgers got a bit of a raw deal.  He's hired away from a secure job, he's asked to put up over $100,000 as an investment, and then he's fired less than three years later...and can't even redeem his investment.  On the 'traditional' Bardal factors, you'd probably be looking at a notice period in the single-digit months, which after tax may not even cover the lost investment.

But yes, it's highly unusual for an employer to ask for a sizeable up-front investment, and I agree with the Court's decision to treat it as indicative of an expectation that the relationship would be long-term.  Which both stands as a relevant factor on its own, and also dovetails somewhat with the concept of inducement.  On all the facts, it seems that the parties anticipated a long-term relationship.

Avoiding Such a Mess

It may be that both parties are at fault for ending up having to litigate this.  The reality is that you don't often see wrongful dismissal litigation on this scale, because employers looking to hire senior employees like Rodgers are *usually* going to have the forethought to hire a lawyer to draft the contract, who will clarify expectations as to the end of the relationship.

It's not so unusual, however, for US-based employers to fail to do so.  US law is very different.  If they use the same contractual frameworks for their Canada-based employees as they do for their American ones, then they're indeed likely to run into problems that way.

Likewise, I would never recommend that an employee entering into an employment relationship rely on concepts of 'inducement'.  They're often factually and legally messy, turning on things like 'off-the-record' conversations, etc.  One of my rules of thumb of contract negotiation:  If you want me to rely on a representation, put it in the contract.  (Likewise, when I ask for a change to language and get the response, "Well, I thought that was implied", then my response is always "Then you shouldn't mind making it express.")

There are ways of papering job security.  No employer will ever guarantee a job for life (well, no rational employer will), but termination clauses can be built in such a way as to compensate the employee in the event of early termination.  If I'm getting induced away from secure employment, and I'm worried that the new job might not be as secure as it looks, I'm going to ask for a substantial sum of money on termination, even in the early stages of the contract.

And it isn't just about compensation for me, either - it's about incentives for the employer.  Let's suppose you hire me on, and I negotiate a base golden parachute of 12 months' salary.  Six months down the road, for some reason you think about dismissing me.  Maybe the 'fit' isn't quite right.  Maybe there's been a downturn in the company's business.  Maybe the president's son finished school, and wants you to hire him into my role.  If you decide to fire me, then I'm okay - I get 12 months' wages for my soft landing.  But, more to the point, it's far less likely that you'll decide to fire me, knowing what it will cost you, unless it's absolutely necessary.

An employer may not be prepared to agree to the terms you want for the desired level of job security.  But if they aren't, then that's fine, when you already have secure employment.  "Fine, you aren't prepared to give me what I need?  No problem, I'll stay where I am."  The power to walk away is a very strong negotiating tool...but to properly utilize it, that sometimes means actually walking away.

As well, while there is indeed something to be said for an employee having "skin in the game", I for one would be pretty uneasy about having to pay up front for the privilege.  It isn't uncommon for a senior employee to receive compensation by way of stock and/or stock options, to accomplish exactly that goal.  But the reality is that, by the nature of the employment relationship, employees *always* have skin in the game.  When you have to put in a hefty investment of your own money, you're failing to diversify your own interests.  (The folks I know who get the employer's stock unload it as quickly as they can:  If the business *does* go south, then you might be out of a job *and* your shares will be worthless.)

Ultimately, there are two points that I cannot emphasize enough:

(1) Employers should routinely obtain legal advice on their employment contracts; and
(2) Employees should *always* get legal advice before signing an employment contract.


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.

Tuesday, January 6, 2015

Pilling v. Lowerys Limited - Motion to Correct

Back in September, I made an entry about the costs decision in Pilling v. Lowerys.  Plaintiff's counsel, Sean Bawden, kindly provided the link to the decision on the merits.  (Incidentally, congratulations to Sean for winning a 2014 Clawbie for Best Employment Law Blog for his Labour Pains blog.)  In the comments, I expressed some surprise about the decision on mitigation...

Background - The Decision on the Merits

You see, the Deputy Judge, when summarizing the facts, indicated that the plaintiff had confirmed having received consulting income of $7,458.17 from the date he was dismissed from employment (in August 2013) to December 2013.  Presumably, the plaintiff was seeking pay in lieu of notice for roughly that period, which would have the effect that the $7,458.17 sum would be backed out of his entitlements as 'mitigation earnings'.

However, the Deputy Judge did not award four months' pay in lieu of notice, rather making a surprisingly low award of two months.  From which the Deputy Judge proceeded to deduct the entire $7,458.17 sum (i.e. the earnings over the 4 or 5 month period) as mitigation earnings.

The only way for that result to be in line with the legal entitlements of the parties would be if the entire sum was earned during the first two months after his dismissal.  This, on its face, is highly improbable.  (In fact, based on evidence led in the subsequent motion, it appears that the sum earned through the two month period was $4,378.25.)

Nonetheless, in the absence of a breakdown as to when the sums were earned, I would have understood had the Deputy Judge simply pro-rated the mitigation reduction.  It would be imprecise, but the Small Claims Court permits some 'rough justice'.

However, applying four-five months of mitigation earnings to two months of pay in lieu of notice?  That simply seemed to get it wrong.

The New Development - A Motion to Correct

The Plaintiff brought a motion to correct the decision.  Such a motion, under the Rules, can be brought under only two circumstances:  Firstly, that there was a "purely arithmetical error in the determination of the amount of damages awarded"; or secondly, that there "is relevant evidence that was not available to the party at the time of the original trial and could not reasonably have been expected to be available at that time."

The second criterion clearly wasn't met, so the plaintiff had to try to characterize the mistake as a "purely arithmetical error".

The judge rejected the argument, stating that "[c]ounsel necessarily need to anticipate the broad range of possible outcomes and introduce evidence accordingly during the course of the trial" - basically, that it was the plaintiff's (or his counsel's) fault that the evidence of two months' mitigation earnings wasn't on the record at the trial, and not the judge's mistake for calculating mitigation based on what was on the record.


I might think that the Deputy Judge has a point about the necessity of counsel anticipating the range of outcomes and leading the appropriate evidence, but not in this case, for three reasons:

(1)  The Burden of Proof

It's well-established law that the burden to establish mitigation (or failure to make reasonable efforts to mitigate) is upon the defendant.  What exactly this proposition means has been the subject of some debate, as I discussed last June, but the proposition itself is not in question.

In other words, the failure to call evidence as to the mitigation earnings through the notice period actually the defendant's failure.  (In practice, the defendant should have asked about it on cross-examination.)

In the absence of any evidence as to what mitigation earnings were made during the two-month notice period, the principled answer would appear to be that the defendant has failed to meet its burden, and therefore there should be no deduction for mitigation earnings.

(2)  The Obviousness of the Problem

On a cursory review of the decision, the problem jumped out at me.  The Deputy Judge's result was clearly not supported on the evidence he described. Yes, the evidence on the record was incomplete, but that puts the Deputy Judge in a position of having to recognize and resolve the incompleteness, providing some rational basis for why he resolved it in a particular way:  Something to the effect of "No evidence was led as to what mitigation earnings were made specifically during the two month period following dismissal, and therefore..."  There are three logical possibilities:  Deduct the whole amount, deduct zero, or deduct somewhere in the middle.  As I've said, the third option - infer as fact that the earnings were distributed over the August-December period, and deduct an amount accordingly - would probably have been acceptable rough justice in a Small Claims Court setting.  If he wasn't prepared to make such an inference, then - again, as I've said - it seems to me that the principled response would have been the second one.

However, while I could perhaps understand selecting the first option (an error though I think it would be), the Deputy Judge seemed to be actually oblivious to the fact that there *was* an omission in the evidentiary record.

While I think the plaintiff's efforts to characterize the error as being 'arithmetical' were a stretch, this, if anywhere, is where that proposition finds a bit of support.  Simply, he applied 4-5 months of mitigation earnings against 2 months of pay in lieu of notice, and appeared not to have been aware that the equation didn't balance.

(3)  The Nature of the Small Claims Court

Yes, it is a part of any lawyer's job to anticipate the range of possible outcomes, and prepare accordingly.  However, this would not likely have happened in the Superior Court, because the evidentiary record is, by design, much more full.  The actual paper trail supporting mitigation earnings would probably have been entered into evidence, meaning that the calculation of mitigation earnings would have been simply an arithmetic extrapolation from the evidence.

It is in this way - through a rigourous review of the material evidence - that lawyers prepare for such a range of outcomes at the Superior Court.  Could we do the same at the Small Claims Court?

Well, yes, but it would kind of defeat the point of having a Small Claims Court, if the expectation of production of evidence remained at the same high level as in the Superior Court.


While the plaintiff's 'arithmetical error' argument was not totally groundless, it was tenuous, and I have to comment that the Deputy Judge probably got one thing right:
If I have erred in principle, that is a matter for an appellate court to determine. I lack jurisdiction to sit on an appeal from my own decision.
It does indeed seem to me that it's easier to characterize the trial judge's failure to account for the timeframe of the mitigation evidence as an error in principle, and he's likely correct that this means that he can't simply reverse it.  Sadly, that means an expensive Divisional Court appeal for a low-dollar-value issue, if the plaintiff chooses to pursue it.  It's not really where the 'justice' of the case lies, in my respectful opinion.


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.