Tuesday, April 05, 2011

Ontario Employment Law: Can A Wrongfully Dismissed Employee Plead Systemic Misbehaviour By The Employer?

Unlike trial rulings, decisions on motions in the area of employment law rarely grab the attention of legal commentators, let alone employers and employees. A March 23, 2011 decision by Ontario Superior Court Master M.J. Sproat in Covelli v. Sears Canada Inc., however, is a definite exception to the rule.

The motions to strike brought by the Defendant employer, Sears Canada Inc., against a former employee, Mr. Covelli, raised the following two interrelated issues of fundamental importance to the parties:
1. Can a bald allegation of systemic misbehaviour by a Plaintiff employee in a wrongful dismissal action be struck for lack of particularity?

2. Whether a plaintiff employee can claim moral and punitive damages for alleged mistreatment of the plaintiff and other employees pursuant to this policy or practice?
In the case, Sears sought to strike the following allegations in their former employee's claim:
"11. Mr. Covelli pleads that Sears has adopted a corporate policy or practice of terminating employees for just cause, notwithstanding that it knows or ought to know that no just cause at law exists, as a means of unlawfully evading its statutory and common law obligation to provide employees with notice of termination or compensation in lieu of notice. Pursuant to this policy, Sears has engaged in similar conduct with other (now former) employees, which is also the subject matter of litigation. Mr. Covelli further pleads that Sears' cavalier and reprehensible conduct in this regard will invariably exacerbate his ability to secure alternate, comparable employment."
The Defendant emphasized the lack of particularity in the Plaintiff's allegation of systematic misconduct against it. It further took the position that circumstances leading to the termination of other employees is irrelevant and further, would lead to discovery of "monstrous proportions".

With respect to whether an allegation of a systemic wrong is relevant to an analysis of bad faith or punitive damages, Master Sproat cited and ultimately agreed with the following passage from Craig-Smith v. John Doe, [2009] OJ No. 4041, per CW Hourigan J.:
I reject the the submission that an allegation of systemic wrong is not relevant to an analysis of bad faith or punitive damages. There are many cases where such allegations are considered in the context of punitive damages or bad faith analysis (see, for example, Whiten v. Pilot Insurance Co.).
In other words, punishing a defendant appropriately for its systemic misconduct, which can be said to to be so "reprehensible" as to be deserving of a court's censure, in relation to a single plaintiff may call for consideration of other similarly placed individuals even where, as here, the plaintiff is the first to make such a claim against its employer for punitive damages for this alleged misconduct.

With respect to the lack of particularity in the allegation of a systemic wrong, Master Sproat stated:
. . . the case largely turns on whether there is a risk of "limitless" discovery or discovery of "monstrous proportions". I agree with the plaintiffs' counsel's submission that the discovery plan process can be used to place parameters on the information that can be obtained. . . The Rules also provide for the principle of proportionality to address discovery issues . . .
Master Sproat, also, stressed that "discovery" might not be monstrous in this case in any event:
If the impugned pleadings are permitted to stand, there will be fewer than 200 file reviews and likely far less than that number once it is conclusively determined how many of these cases are actually relevant . . . these are matters that can be explored in the discovery plan process and on discovery
If this decision is correct, the answer to the question posed in the title to this post, is a resounding "yes."

- Robert Tanha, Toronto
Visit our Toronto Law Firm website: www.wiselaw.net

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