Tuesday, December 16, 2014

Wrongful Dismissal Awards - During the Notice Period

Wrongful dismissal 101:  In general, a dismissed employee is entitled to 'notice' of dismissal, and entitled to be put into the position he or she would have occupied had actual notice been given.  In practice, this means pay in lieu of notice, among other things, but is subject to a duty to mitigate - i.e. an obligation upon the dismissed employee to take reasonable steps to obtain replacement employment, which income reduces his/her entitlement to damages.

Here's the trick:  The entitlement to damages accrues upon breach of contract - i.e. upon termination without adequate notice - whereas mitigation occurs in real time.  For longer notice periods, this sometimes has the result that a matter can be adjudicated before the full notice period has run its course:  Suppose I'm entitled to two years' pay in lieu of notice, and I get to a summary judgment motion 12 months into the notice period.  How can I be awarded two years' pay in lieu of notice, when I still have an obligation to mitigate for another 12 months, which could have a substantial impact on my entitlements?

The truth is that this phenomenon is not particularly unique to employment law:  In the field of personal injury litigation, a plaintiff will often seek damages based on a perpetual limitation on earning capacity.  My understanding - though I could stand to be corrected by a PI lawyer - is that this is often resolved by an arbitrary 'discount' to account for the possibility that the plaintiff will earn more than expected at the time of trial.

I've seen that argued in wrongful dismissal contexts.  I've never seen it succeed in Ontario, but that's at least partly because there often isn't a great deal of time left in notice periods at the time of adjudication.  If there are just a couple of months left, a discount seems relatively unnecessary.

This issue arose in the recent case of Donath v. Hughes Containers Ltd..  Ms. Donath was dismissed after 14 years of service as a payroll administrator, at age 64.  The matter was brought to trial 10 months after the dismissal, and she was awarded 12 months' pay in lieu of notice.  (She sought substantially more, and it does seem to me that 12 months is a little on the low-end, given the Bardal factors here.)

So Justice Pollok turned to the question of how to address the not-yet-elapsed portion of the notice period.

The employer argued that an award of pay in lieu of notice was premature, and that the issue of damages should be adjourned and brought back on after the end of the notice period.  After all, she's obligated to mitigate her losses, and awarding the full amount now would effectively relieve her from that obligation.

The plaintiff, by contrast, argued that it was open to the court to find as fact that she would not obtain replacement employment in the remaining two months of the notice period.

Justice Pollak rejected both arguments.  The prospects of re-employment were low, but the evidence didn't establish that re-employment was "not possible", and therefore the employee's pitch couldn't succeed on the evidence.  (Justice Pollak seemed a bit critical of the plaintiff moving so quickly to trial, knowing that she was seeking substantially more notice.)  However, the defendant's argument was regarded as being improper - the trial was complete, and it simply wasn't available to adjourn the issue to a later date.

Instead, Justice Pollak elected to do something similar to Bernier v. Nygard:  In that case, the court awarded the full amount, but impressed the award of damages with a trust - in essence, if the plaintiff earned mitigation earnings, they would be held in trust for the defendant.  In this case, Justice Pollak imposed a continuing obligation to account for mitigation earnings, by ordering judgment be paid at the end of the notice period, less any mitigation earnings.  (Actually, the wording of the endorsement kind of suggests that Justice Pollak may be imposing an ongoing duty to take reasonable steps to mitigate...which is not necessarily an unreasonable order, but has significant practical difficulties.)

Commentary

I like the result in Bernier v. Nygard.  In the right case, 'impressing the award with a trust' is the right solution, and Bernier was the right case for it.  Donath...probably not so much.  Asking the plaintiff to establish that re-employment during the reasonable notice period is 'impossible' is too high a standard - if the prospects of imminent re-employment are low, and we're down to the last two months of the notice period, then find as fact, on a balance of probabilities, that the plaintiff won't obtain replacement employment.

If we're talking about another 6-12 months, that's more difficult to do, and going down the road from Bernier - in the appropriate circumstance - can make more sense.  It's a compromise solution - effectively relieving the employee of the obligation to seek new employment, while holding the employee to the obligation to account for mitigation earnings.  Even then, it's imprecise, though, because 'mitigation earnings' aren't necessarily something you can nail down simply.

But what highlights that Justice Pollak appears to have been coming at this issue from the wrong angle is the treatment of interest:  It started to accrue only at the end of the notice period.  This is consistent with her treatment of the employer's obligations as only vesting after mitigation efforts are unsuccessful...

...and is straightforwardly incorrect on the law.  Interest can be a tricky issue.  It's often argued to start accruing at the date of breach, or sometimes halfway through the reasonable notice period.  But there's simply no basis for starting it accruing at the end of the reasonable notice period.

It's a minor issue, but it couples with her chastising the plaintiff for bringing the matter to trial so quickly, to really highlight the onus she's placing on the plaintiff to prove damages, as including proving that mitigation was or would be unsuccessful.

It dovetails in some ways with the error that I argued marred Justice Wilton-Siegel's decision in Garcia v. 1162540:  The Supreme Court jurisprudence is quite clear that wrongful dismissal damages flow from the breach of contract itself - that is, the employer's failure to continue employing (and paying) the employee through the notice period - and mitigation is a separate and subsequent analysis, with a different burden of proof.

*****

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, December 15, 2014

Punching a Co-Worker Does Not Necessarily Constitute Just Cause

As I've often said, 'just cause' for dismissal - that is, firing somebody for misconduct, such that they are not entitled to any notice or pay in lieu - is a high threshold, and always depends on the facts.

There's a recent case, Phanlouvong v. Northfield Metal Products (1994) Ltd., which serves as a pretty good cautionary tale for employers:  Mr. Phanlouvong ("Keg") was dismissed following a physical altercation between himself and a co-worker, in which the judge concluded Keg was the aggressor, which culminated in Keg punching the co-worker in the face breaking his glasses...and Justice Broad concluded that just cause was nonetheless not established.

Facts

Keg was an immigrant from Laos, who worked as a labourer for Northfield for 16 years.  In the last few years, he had some personal conflict with another worker at his station, Bailey.  Keg claimed that there was some racial animus to the conflict - he alleged that Bailey had once called him a "Chink or Korean", to which Keg replied "no I am Laos".  (Isn't that right out of King of the Hill?)  Another witness alleged that Bailey had once referred to Keg as "f*ing Chinese".

In October 2010, Bailey's elbow came into contact with Keg.  There was some dispute as to whether it was intentional or accidental contact - a 'brush' or a 'jab'.  The judge accepted that it was inadvertent.  When challenged on it, Bailey refused to acknowledge the contact or apologize for it, and the matter quickly escalated with pushing, and then Keg punching Bailey in the nose.

Bailey reported to the first aid station, and per employer policy was sent to Grand River Hospital to be examined.  In the mean time, management began to investigate, but they were pretty sure from early on what the result would be:  It appears that, in all previous incidents involving physical assault, they had terminated the offending employee.  So the Plant Manager's instruction to HR was pretty clear, that if it was confirmed that Keg had, in fact, punched Bailey in the face, he would be fired.

The HR Manager interviewed the witnesses, and then Bailey when he returned from the hospital.  The judge noted in his reasons that the HR Manager determined Bailey's penalty - a one week unpaid suspension - before getting Keg's side of the story.  He then interviewed Keg, who claimed to be acting in self-defence.  Afterwards, the HR Manager presented a termination notice indicated that he had 'discussed his findings' with the management team (even though he actually hadn't met with other members of management since conducting the interviews), and "agreed to terminate your employment as a result of your actions today."

Keg sued the employer in wrongful dismissal, claiming pay in lieu of notice aggravated damages, punitive damages, and a declaration that his Code rights had been violated.  He also sued Bailey personally, alleging assault, battery, and intentional infliction of mental distress.

The Decision

As noted above, the Court rejected Keg's contention that he had been intentionally elbowed or was defending himself.  The earlier contact was unintentional, and it was Keg who picked the fight.

However, Justice Broad is concerned that the employer never really canvassed the availability of lesser penalties than termination, concluding from minute one that, if Keg had in fact assaulted Bailey, he would be fired.

The employer argued that Keg's conduct was aggravated by its breach of the Occupational Health and Safety Act, the fact that he failed to take responsibility for his actions, and the fact that his first lawyer (not his trial lawyer) had allegedly prepared false affidavits for witnesses to bolster his story.

On the first aggravating factor (OHS), the Court concluded that this not eliminate the need for a contextual analysis.  The Court accepted that the second factor was relevant, but not necessarily determinative in this case.  And the third factor is rather unusual, and the judge wasn't persuaded that such an issue was appropriate for consideration as after-acquired just cause.

On the flip side, Keg had a long period of unblemished employment, with no prior discipline at all in his 16 years of service.

"In utilizing a contextual approach, and in applying the principle of proportionality, I find that Northfield has not discharged the onus on it to prove, on a balance of probabilities, there were no other reasonable alternatives to termination of Mr. Phanlouvong's employment without notice, and accordingly I find that Mr. Phanlouvong was wrongfully dismissed."

Keg was awarded pay in lieu of 15 months' notice, less mitigation earnings.  However, the other allegations and claims were not made out.

Commentary

It's always fun to sensationalize a story by pointing to the worst facts, in isolation, and say "Look, this guy punched his co-worker in the nose, and still couldn't be fired without a package."  But Justice Broad is absolutely right about at least one thing:  Breach of the workplace violence provisions of the OHSA, while probably an important factor, is not determinative, and still calls for a full contextual analysis.

What's most interesting about this decision is the overall sense that the judge is coming at it from a procedural point of view - it's less about whether or not there was an alternative to dismissal under the circumstances, and more about whether or not the employer had adequately considered the possibility.

Despite the increasing case law suggesting an employer's duty to investigate, it strikes me that it would probably still be an incorrect statement of the law to call it a procedural question:  Regardless of whether or not the employer properly investigated, and properly considered all their options, the question for the court is always going to be, simply (or perhaps not so simply), whether or not the employee's actions, in the circumstances, amounted to just cause for dismissal.

However, I don't think Justice Broad got this wrong, nonetheless:  It's an issue of onus, and the subtext of the decision seems to be that, having failed to seriously consider its other options, the employer can't satisfy its onus that termination was the appropriate response.

This is the trend throughout the 'duty to investigate' cases:  The extent of the obligation to investigate aside, the failure to investigate will create a practical bar to satisfying an employer's onus to prove just cause.  Remember Ludchen v. Stelcrete?  "Having failed to thoroughly investigate this matter at the time, Stelcrete now has great difficulty assembling the evidence to prove the alleged misconduct on which it acted more than five years ago."

Lessons to Take Away

The courts are sending a clear message to employers:  When you're faced with allegations of misconduct, and even of very severe misconduct, conduct a proper investigation with an open mind.  Obtain appropriate expert assistance to do so, if necessary.  Because if you have to go to court on a just cause issue - a very expensive proposition, especially if you lose - having covered off your bases at the start is going to be pretty much essential.

Quite frankly, if the employer had been able to come to court saying "We seriously considered whether or not we could continue the employment relationship in light of Mr. Phanlouvong's misconduct, and determined that, given the nature of the incident and the injuries sustained by Mr. Bailey, returning him to the workplace in any capacity would not have been consistent with our obligations under the Occupational Health and Safety Act", then this could have ended very differently.

As for what employees should take away from this case, that's less significant:  This case certainly does not stand for a proposition that first offenders get "one free punch", or anything of the like.  It's a contextual analysis.

However, this case highlights the importance of getting good legal advice after a 'for cause' termination, even if you did what you're accused of doing.  Because just cause is a two-part question:  Firstly, are you guilty of the conduct alleged to constitute just cause?  Secondly, is the misconduct sufficiently serious, in all the circumstances, to warrant summary dismissal?  And, obviously, that second question is never quite as open-and-shut as many employers would like it to be.

*****

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.

Friday, December 12, 2014

Superior Court Rules that Kumon Franchisee was Entitled to Reasonable Notice

Kumon is a well-established franchise offering after-school math and reading programs.  To my understanding, it has a very successful system for leading its students to excel in advanced content.  And the franchises are all over the place, including two within Newmarket.

But there's a very interesting new case, making new law, dealing with the termination of a Kumon franchise.  The facts are quite unique, as the franchisee (Ms. France) had been operating since before Kumon started using written franchise agreements, and refused to sign the various franchise agreements put to her by the franchisor.  So we're left with the scenario of an oral contract governing a franchise agreement, which is quite exceptional in this day and age.

One of the primary issues for Kumon is that France was resisting shifts to their business model - they've been trying to present a more professional image to the world, including establishing permanent and visible presence in appropriate commercial space, as distinct from - to use France's business as an example - just renting a church basement two nights per week.

With France refusing to sign written franchise agreements, Kumon eventually decided to end the relationship, and provided her with 12 months of notice.  Ms. France sued, taking the position that the contract was 'perpetual' and could not be terminated by the franchisor.  Kumon argued that there was an implied term permitting termination on reasonable notice, and that 12 months was reasonable.

The Decisions

The Court accepted Kumon's argument that a franchise agreement could be terminated on reasonable notice, but found that 12 months wasn't enough, and sought subsequent submissions on the reasonable notice period, rendering a decision on that issue yesterday.

There are some interesting parallels drawn between the franchise relationship and employment relationships, both in finding that Kumon was entitled to terminate the relationship on reasonable notice, and in the assessment of the reasonable notice period, including that franchise agreements are like employment agreements because they "include an element of mutual trust and an element of unequal bargaining power."

And in a context like a Kumon franchise, where many such businesses are run by single operators with minimal employees, it does indeed bear a significant resemblance to an employment relationship, or at least to a dependent contractor relationship.  On the other hand, if you look at a franchisee running, for example, a half dozen Swiss Chalet restaurants, it might be a little bit harder to see the resemblance.

Justice Goldstein assessed the reasonable notice period at 18 months, awarding Ms. France an additional six months' worth of income - quite a modest amount, really.

The judge made new law here, creating a 'test' for the reasonable notice period for terminating franchise agreements, including a non-exhaustive list of factors as follows:

  1. The length of the relationship;
  2. Whether or not there is a history of bad faith or oppressive conduct by the franchisor;
  3. Whether or not the franchisee has a history of poor performance;
  4. Whether the terminating party acted in good faith throughout the relationship; and
  5. Whether there have been violations of the Arthur Wishart Act.

When applying the factors (Ms. France was a 20-year franchisee, with a good history of performing her obligations, and Kumon had met its obligations of good faith to her), Justice Goldstein went on to apply a 'discount' recognizing that "Ms. France was not an employee, but an independent contractor".

Commentary

Suffice it to say that the test Justice Goldstein has laid out is very different from the employment law test for assessing reasonable notice periods, and in fact is directly inconsistent with that test in certain ways.  Which wouldn't necessarily be a problem, but for two things:  Firstly, he got to the point of applying such a test simply because of the similarities to an employment relationship, and secondly, the application of a 'discount' because she was an independent contractor and not an employee would suggest that the test is somehow supposed to be similar to that in place for employees.  It's also very probably wrong to call her an independent contractor.

In employment law, we look at the Bardal factors, including length of service, age of the employee, character of employment, and availability of replacement employment.  Fundamentally, the test largely addresses the challenges of obtaining new employment.  Performance is arguably irrelevant, so long as poor performance doesn't rise to the level of just cause.  Likewise, employer bad faith no longer factors into the assessment of the notice period in most cases.

Independent contractors are presumptively not entitled to notice.  However, there's an intermediate category of 'dependent contractors', who are treated similarly to employees.  There's little doubt that, if we're going to fit Ms. France into this framework at all, it's as a dependent contractor.

In a circumstance like France's, it's not so difficult to apply the Bardal factors.  As an individual franchisee, her age and ability to obtain similar work are not so difficult to assess.  Again, if we were looking at an owner of several restaurants, that changes things significantly.  But I might suggest that larger and more sophisticated businesses built on the franchise model would require more notice - that the implied term of reasonable notice is designed to give the non-terminating party an opportunity to land on its feet when the agreement is terminated.  So instead of the "availability of replacement employment", you might look at the availability of alternate business arrangements, and the difficulty associated with such a transition.  If you're running a fast food restaurant, and your franchise agreement is terminated, can you turn it into another type of fast food restaurant?  How hard would it take to enter into a new franchise agreement?  How long to physically transition the business and business model to suit the new franchisor?  Is there a non-competition agreement in place?  What long-term liabilities can the franchisee be expected to have?

The way I see it, the analysis has to be premised on the business entity underlying the franchisee continuing to exist and carry on business in some other fashion, and the reasonable notice period should bear the ultimate goal of allowing the franchisee to plan that transition.

Instead, Justice Goldstein seems to want the notice period to balance a series of rewards and punishments for good and bad behaviour in the course of the contract.  I'm not sure I see a principled basis for that.

The reality, though, is that the practical implications of this decision will be limited.  Most franchise agreements these days include detailed written provisions regarding how and when the agreement can be terminated (including fixed term provisions, notice provisions, or both).  This case will be an important precedent only for those few cases where the termination of the contract isn't spelled out in writing.

*****

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, October 27, 2014

Consent or Not? An Analytical Viewpoint of the Ghomeshi Scandal

Perhaps it's something you can watch with friends
or something that inevitably lends
itself to shapely curves and bends
of exploited women and their friends.
-Moxy Fruvous, Video Bargainville, 1993

Nearly a year ago, I posted an analytical commentary on an article about a 'bad date' with a thinly-anonymized Jian Ghomeshi, which alleged that Ghomeshi (er "Keith"), out with a would-be entertainment writer who thought he was gay, behaved in a creepy way, making unwelcome advances, etc.  My assessment of the article was that there were clear credibility 'red flags' - artistic license, hyperbole, admitted dishonesty, with the whole thing coloured by a 'social climbing' narrative.  The high watermark of misconduct described in the article was that he allegedly grabbed her behind - of which, if true, I would disapprove, but I was not comfortable assuming its truth based on the article on the whole.

Now, there's a new - and much more serious - controversy involving Jian Ghomeshi.  For the uninitiated, he has for many years had a popular radio show on CBC, and on Sunday it was announced that he was no longer with CBC.  As these things tend to, the information on exactly why was sparse at first.  But, in an unusual twist, Ghomeshi released a detailed statement explaining his version of events.  Read the whole statement here.

Ghomeshi's Side

Here are the highlights:  According to Ghomeshi, he was fired from the CBC, in relation to a sex scandal.  He confesses that his sexual tastes are irregular, including roleplay and BDSM, but claims categorically that everything he has done with his sexual partners was consensual.  However, a jilted ex-girlfriend and a freelance writer allegedly sought out others to corroborate allegations of sexual assault - the takeaway is that he expected a number of allegations from a number of women to be made in the near future, and his claim is that the allegations are untrue, and the result of collusion.

(Collusion is a big deal.  We tend to look for patterns.  One accusation is easy to disbelieve, but two or three similar accusations from different people becomes a pattern of conduct, and if they're similar enough they become inherently credible.  Collusion involves having multiple people coordinate to get their stories straight before making the allegations in the first place, and if true completely undermines the corroborating impact of similar stories.)

Ghomeshi states that he showed the CBC materials that illustrate the consensual nature of the acts in question.  (This raised an obvious question as to what kind of proof he relied upon.)  He claims that the CBC admits that they're satisfied that there was consent, but that they're firing him nonetheless because the sexual behaviour was unbecoming of a prominent CBC host.

He acknowledges that his sexual tastes may not be palatable to some - I'll be the first to admit that I find them to be disturbing and distasteful - but argues that "no one, and certainly no employer, should have dominion over what people do consensually in their private life."

The Star Article

It wasn't long before we got another side of the story.  The Toronto Star had started investigating the allegations several months ago, but elected not to print the article.  In the Star Editor's words:
The reason the Star did not publish a story at that time was because there was no proof the women's allegations of non-consensual sex were true or false.  They were so explosive that to print them would have been irresponsible, and would have fallen far short of the Star's standards of accuracy and fairness.
In view of Mr. Ghomeshi's extraordinary statement on Facebook on Sunday evening, and his high profile in Canada, we now believe that it is in the public interest to detail those allegations, which appear to have led directly to his sudden firing from the CBC.
So they printed the article late last night.  Again, you should read it yourself if you haven't already.

Put briefly, the Star interviewed three women who anonymously allege that Mr. Ghomeshi engaged in violent non-consensual sex with them over the past two years.  They deny that there were any 'safe words' employed, and claim that Ghomeshi was initially charming, but then started "suggesting or hinting at violent sex acts."

"When they failed to respond or expressed displeasure, they recalled Ghomeshi dismissed his remarks as 'just fantasies'", and promised not to do anything they weren't comfortable with.

However, he then became sexually aggressive and forceful without consent.  There's some detail about the level of violence - it's pretty disturbing, and I'm not going to repeat it here, but it's not entirely incompatible with what Ghomeshi described in his own statement.

But we come to the real crux of the issue:  Why didn't they go to the police?  Why is this a matter of purely anonymous allegations?

The Star article explains a number of reasons for their reluctance to come forward:  Firstly, they all cited the reaction to the Ciccone article - that Ciccone received very significant internet criticism for her piece.

As well, they cited "worries that their consent or acceptance of fantasy role-play discussions in text or other messages with Ghomeshi would be used against them as evidence of consent to actual violence."

There was a further allegation - a claim by a former employee of CBC that Ghomeshi had made a vulgar sexual remark to her, and that she complained to CBC, but that their response was unsatisfactory and she subsequently quit.  (Ghomeshi claims that there were never any formal complaints made against him.)

General Observations on Credibility

It's very important to understand that these are unproven allegations, made anonymously.  It is inherently unsafe to convict Ghomeshi - whether in a court of law or in a court of public opinion - based on such allegations.  It is really quite impossible for us to know who is lying or telling the truth based on the existing materials, and particularly when we're talking about such egregious criminal misconduct, the presumption of innocence prevails in my mind.

As well, while it's not uncommon for victims of sexual assault to be unwilling to come forward, their explanations of why they didn't come forward (except anonymously to the press) raise more questions than they answer.  Firstly, while the article states that they all cited the response to the Ciccone article as a reason to not come forward, the Star's timeline on these events strongly suggests that at least some of these assaults occurred well prior to the publication of the Ciccone article.  (As well, I might observe that the Ciccone article was a very different creature, being an article by an admitted social climber disparaging a celebrity on some pretty questionable bases.  The conduct in question is different here, as would be the ostensible motivations for coming forward.)

Secondly, concerns about "text or other messages" that expressed consent should raise real questions in readers' minds:  If their responses to Ghomeshi's suggestions of sexual violence were met with silence or displeasure, as the Star story suggests, what was it that they did consent to, such that it might be interpreted as supporting a consent to actual violence?  There's a real disconnect there.  The Star's story completely omits any mention of such consent until raising it, towards the end of the article, in defence of their anonymity.

And that's really important here.  With Ghomeshi admitting to the kinds of sex acts alleged, the core question to be answered is about the scope of consent.

But the remark about those "text and other messages" does seem to answer a question that had been bugging me about Ghomeshi's own account, as to the nature of the materials he used to prove his own innocence.  Naturally, they wouldn't be a full answer to the question, as to whether or not the acts performed in the bedroom exceeded the scope of consent, but it does fill out the narrative a bit.

Finally, while it's not unusual for victims of sexual assault to be reluctant to come forward, and that's understandable, I'm less willing than some to give them a pass on the avenue they did decide to take.  You're not willing to talk to the police about it, but you're willing to talk to the press about it on condition of anonymity?  Nineteen times out of twenty, I'd sooner trust the police than the press to protect the identity of a victim, and in fact there are mechanisms to protect the identities of victims of sexual assault (typically, over the objections of the media).  Why talk to Kevin Donovan, to another freelance reporter, to others you're hoping will corroborate your story, etc., but still not want to tell your story to a judge with the power to order your identity protected?

And why go to the press?  What do you hope to accomplish through anonymous allegations?  That the country will know who Jian Ghomeshi really is?  That would raise the important question of how much stock we, as a society, are willing to put into anonymous allegations, and the simple reality is that there are very good reasons for the presumption of innocence, the right to face one's accuser, etc.  The bottom line:  We should never be prepared to assume that someone is guilty of a serious criminal offence simply on the basis of anonymous allegations.

Why Did the CBC Actually Fire Ghomeshi?

Here, I'm getting into 'best guess' territory.  Ghomeshi claims that the CBC was satisfied that there was consent.  I don't necessarily believe that's what anyone actually said (that's the sort of thing that can be easily misstated), but even if it was said, that doesn't mean it's entirely true.  I suspect that we're into a situation where they're acting on the assumption that Ghomeshi's version of events is true.

On Twitter, I've seen people post statements arguing that it's hard to believe that the CBC would terminate him if they believed there was consent, such as the following:
I mean, come on.  You honestly believe the CBC fired Jian because someone's trying to out him for being kinky in bed?
Yes, it seems pretty absurd.  But as a labour/employment lawyer, it's even harder to believe they would fire him over allegations of sexual assault unless they were satisfied not only that the allegations were true, but provably true.  When an employer alleges just cause for termination, the onus is upon the employer to prove those allegations on a balance of probabilities, and with the accusers unwilling to come forward, it would seem pretty much impossible for the employer to meet its onus.

So whether or not the CBC believes the allegations of non-consent is pretty much irrelevant.  Either way, they're going to be worried about the political firestorm that would follow such allegations, and either way, they're unable to jump on the bandwagon and fire him over the allegations.

Ordinarily, with allegations of this nature, an employer like CBC would be expected to place the employee on an administrative leave and make no comment until the matter is resolved - basically, a "The matter is before the courts" response.  But the trouble is that the matter isn't before the courts, and will not obviously have any judicial resolution, and so the CBC needed to find some other way to head off the oncoming scandal.

So they'd try to find something else - an allegation that the conduct he has admitted is somehow incompatible with continuation of his employment relationship.  So yes, I do believe Ghomeshi when he says that the CBC is taking the position that his termination was warranted because of his consensual bedroom conduct.

And from a legal perspective, I suspect it's an uphill battle for the CBC to satisfy an arbitrator that this amounts to just cause.  There are circumstances where an employer can fire an employee for misconduct outside of the workplace, but it's a high threshold, looking to factors such as the following:

  • Whether the misconduct harms the the company's reputation or product;
  • Whether the misconduct renders the employee unable to perform his duties;
  • Whether the behaviour leads to the refusal, reluctance, or inability of other employees to work with him;
  • Whether the behaviour is a serious breach of the Criminal Code; and
  • Whether the behaviour places difficulty in the way of the company properly carrying out its function of efficiently managing its works and directing its workforce.
There's no question that Ghomeshi was tied to the CBC's brand.  But the rest of the factors are harder to get to here, absent serious criminal behaviour.  While it's true that BDSM can fall into a legal grey area, ultimately, I suspect that Ghomeshi is right, that it's going to be very difficult for an employer to discipline based on what happens behind closed doors between two consenting adults, even where one of their major celebrities is involved.

(Ghomeshi does go further, calling sexual preference a human right.  While sexual orientation is certainly a human right, sadomasochism is probably not.  It certainly doesn't stand as a prohibited ground under the Human Rights Code, and probably not as an analogous ground under s.15 of the Charter.)

Choice of Process

There's another interesting quirk here:  Ghomeshi's lawyers have indicated that they will both grieve the dismissal under the collective agreement and file a $50 million law suit.

This is bizarre.  Typically, where a grievance process under a collective agreement is available, you can't sue your employer in court.  The courts just don't have jurisdiction over matters under a collective agreement.  And lots of people have tried to circumvent that by casting a claim as falling outside the scope of the collective agreement, but the courts have taken a very expansive interpretation of the collective agreement, and such efforts generally fail.

However, it's unlikely that Ghomeshi's lawyers would be making a civil claim without at least an arguable basis for jurisdiction, and thus (unlike others such as Howard Levitt, who assert that the suit is just a baseless publicity stunt) I have to assume that there's something there - perhaps some contractual relationship outside of his employment under the collective agreement, maybe something to do with the fact that he co-created the Q program?

It will be interesting to see how that issue plays out.

*****

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.

Wednesday, October 15, 2014

Costs awards when represented by a lawyer in the family

I noticed an interesting decision a few weeks back, Watkins v. Toronto Terminals Railway, involving a motion in an ongoing wrongful dismissal case where the plaintiff is represented by her husband.  The costs decision was just released, which has some interesting discussion.

Background

The case is a wrongful dismissal case, involving allegations that the plaintiff was harassed.  She's being represented by her husband, Ryan Watkins.

Firstly, I should highlight that, unlike doctors, we lawyers aren't prohibited from rendering professional assistance to family members.  There are professionalism 'red flags' raised by such things in some contexts, but it's something that's not inherently improper.  In a wrongful dismissal context, for a lawyer to represent a spouse can certainly make sense.

However, there's another concern in such a context:  It isn't at all uncommon for a spouse to be a part of workplace interactions, particularly workplace social events, and there is a pretty strict prohibition on lawyers acting as witnesses.  That's how the motion in issue comes up:  The defendant alleged that Mr. Watkins is a potential witness, in part because he attended at least one social event with his wife and the alleged harasser.  Master Muir rejected this argument, however, on the basis that there are no controversial facts arising from that social event, and no "significant likelihood" of Mr. Watkins being called as a witness.

That seems a fair assessment.  It's likely that the defendant made the motion as a tactical matter:  If they could have Mr. Watkins removed from the case, Ms. Watkins would have to start incurring legal fees, and this would lead to pressure to settle.

But the costs decision is far more interesting.

Costs

Mr. Watkins does not appear to be charging his wife for work on the file.  This complicates a costs decision, as the primary purpose of a costs award is 'indemnity' - i.e. to compensate a party for the costs being incurred.

However, there are other purposes to costs awards - to deter frivolous litigation, and to discourage unnecessary steps that prolong litigation.

There's a growing body of 'pro bono' case law where a costs award is made even where the client isn't getting charged.  Presumably, this money will go to the lawyer, compensating him or her directly for the time incurred.

Watkins argued that this falls into the same framework.  Master Muir disagreed to some extent:  "the lawyer for the plaintiff is not handling this matter as part of the profession's commitment to ensuring access to justice.  It would appear that he is handling this matter in order to reduce his spouse's legal expenses."

That being said, it remains true that the opposing party should still have to consider, when evaluating what steps to take in the litigation, the risk of having to contribute to the plaintiff's costs if they're unsuccessful.  Therefore, the plaintiff was awarded costs of 25% of what she was seeking - $2,774.10 instead of $11,096.39.

Commentary

I'm not sure how I feel about this.  I do agree that some costs are warranted, but I'm not sure about the arbitrary reduction.

It does bear noting that self-represented litigants, even lawyers, have a hard time obtaining costs awards at all.  The system does not particularly value the time and energy that self-represented litigants have to spend preparing their own case.

But Mr. Watkins is not the litigant.  He is a professional, rendering professional services for which he is licensed, to a client.  Unlike a self-represented litigant (for whom a license to practice is strictly irrelevant), his assistance to his client in this context requires a licence.  True that he is not charging that client, but I'm not sure I see a basis for devaluing his time on that basis:  The defendant forced him to incur dozens of hours of time to respond to this motion; the internal retainer arrangement between himself and his client would seem to be immaterial to the reasonable amount of costs that the defendant should have to bear for that.  Certainly, as a busy lawyer, he could be turning that time around into billable hours that would line his own pocket (or, rather, his firm's pocket, such that he would be in a better position to negotiate raises and bonuses).

*****

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, October 14, 2014

Stranger than Fiction: Litigating a Junior Soccer Tournament

The sports fans among us are very aware of the 'human element' in the officiation and regulation of sports.  Sometimes, there are controversial calls - bad calls on the field, or discipline off the field.  And, for the most part, sports fans (and players) recognize that this is just a reality of the game.  We gripe, then we move on.

So the recent case of West Toronto United Football Club v. Ontario Soccer Association is quite striking.

The Facts

The dispute involves an Under 16 Boys Tier 1 Division soccer team, the West Toronto Cobras 98 (the "Cobras").  On August 23, 2014, they played the semi-final game of the Ontario Cup tournament, against the Woodbridge Strikers.  The Cobras won, though the Strikers had raised some issue about the Cobras allegedly using six players as 'call-ups' improperly.

On August 27, the Strikers made a formal protest in relation to the alleged call-ups.  The OSA's Protest Committee gave the Cobras until noon the next day to respond, and they did, denying the use of any call-ups.

On August 29, the OSA - of its own initiative - raised a new issue, alleging that one of the Cobras players had only been added to the roster on August 12, too late to allow him to play in the Ontario Cup.  This took the Cobras completely by surprise - they were able to speculate that there may have been an administrative error at the Toronto Soccer Association (which couldn't be contacted until after the long weekend), and asserted that the player in question, Tristen, had been on their roster for the entire season.  On September 3, the TSA confirmed to the Ontario Soccer Association that, in fact, there was an administrative error on their end, that Tristen had been accidentally removed from the roster (and placed back on it) on August 12, and had been playing for the Cobras for the whole season.  It was an issue that hadn't come to anybody's attention until the OSA looked at the roster during the process of the Protest.

The Protest Committee, after receiving that information, essentially disregarded the TSA's advice.  They concluded that there was 'no evidence' that his removal from the roster had been accidental, and that therefore he was ineligible and shouldn't have played in the semi-final game.  As a result, it awarded the semi-final game to the Strikers, and they advanced to the final.

On September 5, the Cobras advised all parties that it would dispute the finding of the Protest Committee, but the final match was played (and won) by the Strikers on September 6, and they would advance to the National Club Championships.  The Cobras attempted to file an appeal with the OSA, but the OSA returned the appeal materials, asserting that there was no appeal available from the decision of the Protest Committee.

Therefore, the Cobras brought an application for judicial review to the Superior Court of Justice.

Jurisdiction

Historically, judicial review was generally regarded as being available to challenge exercises of statutory power:  If I'm empowered by a statute to make a certain decision, I'm obligated to exercise that power in a rational and fair-minded manner, and if I don't, then my discretion can be subjected to a judicial override.

However, there's some case law expanding judicial review beyond exercises of statutory discretion, in appropriate circumstances, and these circumstances called for it:  The OSA controls the playing of competitive soccer in Ontario.  "Put simply, you cannot play competitive soccer in this Province without subjecting yourself to the authority of the OSA."  Justice Nordheimer was satisfied that there must be some fair process available for officials to be able to deprive teenage athletes of their hard-fought win.

Result

On the face of the facts, the Protest Committee's decision was unsustainable.  They'd raised an issue on their own initiative, and were completely unreceptive to reasonable explanations by both the Cobras and TSA confirming the inadvertent nature of the administrative error.  (In fact, even before receiving the information from the TSA and making their decision, they'd already published a schedule for the finals, showing the Strikers playing in it.)

In the absence of some incontrovertible proof, the OSA concluded that there was 'no evidence' supporting the Cobras' position.  Quite the contrary, there was no significant evidence supporting the Cobras' position, no evidence to the contrary, and no apparent reason to doubt the veracity of the Cobras' and TSA's evidence.

From a lawyer's perspective, the Protest Committee's decision was clearly unreasonable.  (Bear in mind, of course, that athletic committees don't typically have lawyers in them.)

But here's the rub:  The Strikers have already moved on, already played a final match on the basis of having won the earlier one.

Justice Nordheimer crafted an unusually flexible remedy, ordering that, unless it's impractical to do so, the Final should be replayed between the Cobras and the other finalist, the Panthers.  If that's not practical, then the Cobras should replace the Strikers as winners of the Ontario Cup, and should proceed to Nationals.  Justice Nordheimer concluded that this result would do "no disservice" to the Panthers who already played and lost the Final match.

As it turns out, the OSA proposed a date for a replay, in the tight timeframes, but the Cobras unsurprisingly claimed to be unavailable that date - keeper injuries, and a top player overseas.  Suffice it to say that the Panthers aren't exactly on the same page as Justice Nordheimer's "no disservice" conclusion.

Accordingly, the Cobras were given the title, and advanced to the Nationals, where they won Silver this past weekend, losing 2-1 to Coquitlam.

Commentary

Firstly, I should say that it's downright lucky that the Strikers won the Ontario Cup final match.  Despite their objections, Justice Nordheimer is right that that fact put the Panthers into a position of having nothing to really complain about.  They played the loser of the Cobra/Striker match, and still lost.  Yes, it's possible that it would have turned out differently against the Cobras, but there's no real reason to think it would have or should have.

Had they beaten the Strikers, that would have been a much more difficult scenario to resolve.  It would be impossible to fairly resolve without a Cobra/Panther match, and even then there would invariably be 'fairness' complaints from the losing side because the short notice wouldn't leave either team at its best.

One might well argue that the Panthers should have been a party to the proceeding, given the potential impact on them of the order sought.  (Incidentally, they were given notice of the proceeding, and didn't appear.  Should they have paid a lawyer to try to secure a rematch?)

This decision is definitely fact-driven to a certain extent.  The OSA's decision-making process was deeply flawed and deeply unfair to the Cobras, and that definitely pushed towards Justice Nordheimer taking jurisdiction:  There has to be some place to go for a remedy, and where if not here?  And, as strange as it is in some ways, I think it's probably the right call.  And, to Justice Nordheimer's credit, he did remark a couple of times that courts should be very reluctant to interfere in sporting results.

Still, I'm a little concerned about floodgates:  Sports organizations have to make decisions about eligibility, disqualifications, or team selections all the time.  And, truthfully, they aren't necessarily very good about making sure that such decisions are fair.  I've seen athletic tournaments - at the high-performance national level - where the person who created the 'draw' (i.e. the schedule of who plays whom) was a competitor in the tournament.  Surprise, surprise - all the stiff competition ended up on the other side of the draw from his team, and he ended up progressing to a level that got him a cash prize.  In my experience, I've seen a number of such issues - people being disqualified from events because of administrative errors without a fair review process, coaches selecting their own juniors for regional rep teams without an objective tryout process, etc.  And they often do have difficult ethical or legal decisions to make, with real consequences:  How to apply the criteria for funding grants to athletes; how to apply eligibility criteria for national representation in international tournaments, etc.

And it's never just about the individual athletes about whom the decision is being made - there are always other athletes affected.  If an athletic organization allows a person with questionable eligibility to represent Canada at the Olympics, for example, that's likely to push somebody else off the Olympic team.  If you waive a requirement for funding eligibility in recognition of somebody's extraordinary circumstances, that will mean that a different athlete doesn't get funded.  It's easy to be sympathetic to somebody asking for special treatment, but it's always sum-zero, with another person being negatively affected by the decision.

I definitely see the need for fair decision-making processes, and I definitely see how certain athletic organizations are lacking in that area, but the prospect of significant athletic litigation worries me.  Every time a decision is made, will the athletes play subsequent matches under threat of judicial intervention?  Will athletes and athletic organizations - already significantly underfunded in most sports - need to start budgeting for substantial legal fees on a regular basis?

But the worst part is that it undermines the finality of games:  Losing is an important part of athletic development.  Losing gives you an opportunity to grow.  Nobody likes to lose, but the ability to accept a loss, learn from the loss, and let it motivate you to train harder and play better next time, is pretty fundamental for a high performance athlete.

If we ever come to the point that a lost athletic match becomes like a lost trial - "Yeah, we lost the match, but we're reviewing our options for an appeal" - then I think we'll have forgotten what sport is really about.

*****

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, October 6, 2014

Must Lawyers Be Nice To Their Clients?

There's an interesting recent case out of the Superior Court of Justice - it's only peripherally related to employment law, but it interests me for a number of reasons, including that it's the first reported decision citing the case of Morland-Jones v. Taerk - you might recall the case where Justice Morgan indicated that litigants required a "rather stern kindergarten teacher", rather than a judge.  And it cites Taerk in context of determining whether or not clients are entitled to be compensated when their lawyers aren't nice to them.

The case is Stewart v. Hosack, and the essential facts aren't particularly complicated:  The defendants are lawyers.  Stewart, her husband (Tank) and their company (JS) were long-time clients of the firm, and in particular of Bob Nightingale (now Justice Nightingale).  On August 12, 2012, a former employee of JS was charged with uttering a death threat to Ms. Reece, and Mr. Hosack, assisted by the firm's criminal lawyer Mike McArthur, accepted a retainer to defend Ms. Reece in the criminal proceedings.

Suffice it to say that Ms. Stewart was not thrilled to discover that her own lawyers were defending the woman who allegedly threatened her life.

More Background

It's a little more complicated than that, of course:  There's some issue as to whether she had any active files into 2012.  There were a couple of real estate files, but the lawyers claim that Stewart's husband was the sole client on those matters.  And then there are some question about the circumstances in which those retainers were terminated.  (It almost sounds like an employment law file:  Why did you fire us as clients?")  The judge ultimately concluded that Stewart was a client on the real estate files, and that the matters were terminated as a result of the Reece file.

And the facts get delightfully convoluted indeed when you bear in mind the 'small town' factor - it all took place in Norfolk County, where I practiced for a time, earlier in my career.  (So yes, I personally know most of the lawyers involved here.  There really aren't many lawyers in town, and very few firms, so conflicts of interest can get a bit tricky.  The reality is that if Hosack and McArthur didn't defend Reece, there were only a few other lawyers in the community to whom she could have gone.)

By way of 'small town' factor elements, the death threat in question was allegedly made at the Norfolk Tavern in Port Dover, of which Hosack is a part owner.  (As an unrelated piece of trivia, I understand that McArthur is a partial owner of a local winery.  Lawyers and alcohol, eh?)  There was an allegation that Hosack "withheld for a time" video evidence of the incident giving rise to the charge(s) against Ms. Reece, on the basis that he had immediate access to the Norfolk Tavern's video surveillance system.  (This appears to me to be likely a frivolous allegation, but I won't go into detail on that at the moment.)

After the Crown threatened to bring a motion to disqualify the firm because of the supposed conflict of interest, the firm helped Reece obtain new counsel.  Later, the charges were withdrawn by the Crown, for "no reasonable prospect of conviction".

Ms. Stewart, for her part, sued the firm, alleging a breach of fiduciary duty.

The Court's Findings

As I noted above, the Court concluded that Stewart was, in fact, an ongoing client of the firm when the firm took on the Reece retainer.  However, on the question of whether or not that generated a conflict of interest, the Court concluded that it did not:  Ms. Stewart was not actually a party adverse in interest: though an alleged 'victim' in the criminal proceedings, victims are not parties, and do not typically have an interest in the outcome of the proceedings.  As well, none of Stewart's confidential information, coming out of the solicitor-client relationship, was relevant in the criminal proceedings.

However, "there is still no doubt that Ms. Stewart has been badly treated by the firm", primarily because they unexpectedly terminated her retainers as a means of circumventing conflict of interest rules, and thus they breached their duty of loyalty, and their duty of candour by "failing to disclose their intention to represent Ms. Reece and allow Ms. Stewart to make her own decisions about continuing her retainer with the firm or going elsewhere."  Justice Lemon concluded that the refusal to act for her, on those circumstances, constituted a breach of fiduciary duty.

However, no damages flowed.  On the facts, she established no damages, and no entitlement to punitive damages:  "If there were a conflict, it was one upon which reasonable people might disagree."  The breach of fiduciary duty was not based on profit, but simply an error of judgment.  In finding that Stewart's emotional consequences were not compensable, the Court quoted the following passage from Taerk:
As I explained to Plaintiffs' counsel at the hearing, a court cannot order the Defendants to be nice to the Plaintiffs.  Litigation must focus on legal wrongs and legal rights - commodities which are in very short supply in this action.  As my colleague Perrell J. put it in High Parklane Consulting Inc. v. Royal Group Technologies Ltd., "[i]t is trite to say that living is a stressful activity and that much of life can be nasty and brutish.  Tort law does not provide compensation for all stress-causing and nasty conduct that individuals may suffer at the hands of another..."
Accordingly, the action was dismissed.  (However, there may be LSUC proceedings ongoing.)

Commentary

The judge's reasoning on the conflict of interest issue, on the facts as set out, appears to be sound.  I can certainly imagine cases where the issue might fall the other way, though.  It's not hard for me to imagine a scenario where an employer might actually have an interest in the resolution of criminal charges against a former employee, though I'm not sure it's really legitimate to allow that to make the employer an interested party.  In this case, it would be particularly strained, as the employer is discrete from the victim, and the alleged criminal conduct arose post-employment.  Likewise, it isn't hard to imagine a case where a criminal defence might be able to make use of confidential solicitor-client communications involving the victim, but that doesn't appear to have been the case here.

Thus, on these facts, I think the judge is right that there's no conflict.

That being said, I find it difficult to reconcile that finding with the conclusion that there was a breach of fiduciary duty, and in particular of the duty of candour.

Accepting, for a moment, that they were not prohibited by the Rules of Professional Conduct's conflict of interest rules from taking on the Reece retainer, it's hard to see how taking it on would have generated additional duties on the lawyers in connection with Stewart.  If the Reece retainer does not generate a conflict, then no consent is required by Stewart for them to take it on...and as for the finding that Stewart should have had an opportunity to decide whether to stay with the firm in light of the Reece retainer, that can't be right:  The implication would be that a client is entitled to know what new retainers an existing firm is taking on - entitled to know the identities of the firm's other clients.  For the non-lawyers in the audience, the very existence of a solicitor-client relationship is confidential and subject to solicitor-client privilege.  For the firm to tell Stewart, as Justice Lemon seems to think they should have, "We're taking on Reece's defence" would have straightforwardly violated their professional obligations to Reece.

"How do you obtain consent without telling clients about each other?" is an age-old catch-22 for lawyers trying to resolve a conflict of interest.  If I have two clients adverse in interest, then even if I think that they might consent to me acting for both, how do I even approach the subject without breaching the other's confidentiality?  The answer is often "I can't", and therefore I have to stop acting for one or both while telling them nothing beyond "a conflict of interest has arisen".  However, in this case, if there's no conflict of interest, then there's actually no legitimate reason to decline the Reece retainer, and no good faith reason for them to turn Reece down.

The finding that the firm treated their client unfairly is, perhaps, entitled to deference as being mostly a finding of fact (i.e. that they fired a client suddenly and unexpectedly because they took on a different client), but the extension of that to a finding of breach of fiduciary duty is based on the premise that "a law firm should not summarily and unexpectedly terminate a retainer as a means of circumventing the conflict of interest rules".

That premise is sound, but the conclusion does not necessarily follow:  If there was no conflict of interest, then why would the firm need to circumvent conflict of interest rules?  Moreover, that principle seems more apt to a scenario of a new (better?) client walking in the door, and the lawyer firing an existing client with an adverse interest in order to be able to take on the new retainer.  That's kind of different from what appears to have happened here, even on Stewart's theory of the case.

*****

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.