Protecting Employee Reputations

Reputations are fragile things.  They take forever to build, but very little time to destroy.  In the recent case of Tipple v. Canada (Attorney General), 2012 FCA 158, reasons for decision released May 29, 2012, the Federal Court of Appeal was asked to answer the question of whether an employer has a free-standing duty to protect an employee’s reputation at the time of termination.

The answer was a “no, but...”

Facts

The facts of the case are set out in a decision of Adjudicator Quigley of the Public Service Labour Relations Board.  Adjudicator Quigley’s full reasons for decision can be found at Tipple v. Deputy Head (Department of Public Works and Government Services), 2010 PSLRB 83. 

Mr. Tipple was an executive with a specialty in real property. In 2004, Public Works and Government Services Canada (“PWGSC”) undertook a new strategy known as “The Way Forward,” which was implemented to reduce costs relating to accommodation for the federal public service. I. David Marshall, the Deputy Minister of PWGSC at the time, decided to recruit executives from the private sector to act as “special advisors” to accomplish this goal. PWGSC hired Mr. Tipple to be responsible for real property, and David Rotor to be responsible for procurement. Mr. Tipple signed a three-year contract (from October 11, 2005 to October 6, 2008) at an annual salary of $360,000.00 and with a performance bonus of 15% if certain benchmarks were met. His letter of offer also provided that “Your services may be required for a shorter period depending upon the availability of work and continuance of the duties to be performed …”

 Mr. Tipple began working in his new position in October 2005 and ultimately relocated his family from Toronto to Ottawa. In his first year, he met the target objectives and saved PWGSC $150 million.

 During his time at PWGSC Mr. Tipple advocated for the transformation of PWGSC into a Crown corporation. However, the government did not envision PWGSC as a Crown corporation or anticipate any major outsourcing of jobs, and PWGSC employees were preparing a campaign to challenge any such outsourcing. From April to June 2006, Deputy Minister Marshall had discussions with Yvette D. Aloïse, Acting Associate Deputy Minister, during which she expressed her view that Mr. Tipple’s role as special advisor was “not working out.”

 Nonetheless, in June 2006, Mr. Tipple received a performance review which rated his performance at the highest possible rating (“surpassed”) and he was paid his negotiated 15% bonus. The comments attached to the review were highly complimentary. Furthermore, Mr. Marshall approved the payment of Mr. Tipple’s upcoming membership fee for the National Club in Toronto in June 2006.

Then, from June 25 to 30, 2006, Mr. Tipple and Mr. Rotor traveled to the United Kingdom to meet with officials regarding that country’s approach to business transformation. Mr. Tipple was accompanied by his wife and he added some vacation days to the business trip, all at his own expense and with the approval of Mr. Marshall.

 PWGSC made the plans for the trip and arranged meetings with UK officials. Catherine Dickson, an employee of the Canadian High Commission in the UK, was responsible for arranging the meetings. There were problems with the planning of Mr. Tipple’s schedule resulting, it appears, from miscommunication between PWGSC and the Canadian High Commission. During his time in the UK Mr. Tipple was invited to attend procurement-related meetings, but given that procurement was Mr. Rotor’s responsibility, Mr. Tipple decided to attend only the real estate-related meetings within his area of expertise.

Subsequent to the trip it was suggested that Mr. Tipple had missed meetings. Mr. Tipple maintained that the trip was a success, that he attended all meetings relating to real estate, and that the procurement meetings he did not attend were not the focus of his trip or part of his mandate. Notwithstanding Mr. Tipple’s contention that he had not missed meetings, the Government of Canada sent letters of apology to the Government of the UK on July 12, 2006. The letters suggested the missed meetings were the fault of Mr. Tipple and Mr. Rotor. One letter, for example, which was sent by the Acting High Commissioner of Canada to the UK, stated that “I would like to apologize most sincerely for the behaviour of Messrs. David Rotor and Douglas Tipple …” Letters of apology were also sent by Yvette D. Aloïse, Acting Associate Deputy Minister, on behalf of Mr. Marshall.

On July 12, 2006, Mr. Marshall and Mr. Tipple met to discuss the trip; however, at that time Mr. Tipple was not informed about the letters of apology and it was not until August 9, 2006, that he became aware of them. On the same day he learned that the trip report he had prepared had been leaked to Daniel Leblanc, a reporter at The Globe and Mail. Mr. Leblanc made allegations that parts of the report had been plagiarized; they had not been. The version of the report leaked to Mr. Leblanc was a preliminary version which had not included the references contained in Mr. Tipple’s final report. The letters of apology and a number of emails were also leaked to The Globe and Mail.

From August 15 to 18, 2006, The Globe and Mail published a series of articles suggesting that Mr. Tipple and Mr. Rotor had “left a trail of cancelled meetings” and raised allegations of plagiarism and unethical behaviour. Mr. Tipple felt that the articles contained “a number of false, disparaging and defamatory statements and imputations” which caused emotional distress and were damaging to his personal well-being and reputation.

Throughout the ensuing media storm, Mr. Tipple repeatedly requested that PWGSC defend him against the allegations in the media and that he be allowed to respond personally to them. Mr. Tipple insisted that he had not missed any meetings, but PWGSC representatives told the media that the meetings were “cancelled because of logistical problems.” PWGSC refused to allow Mr. Tipple to speak to the media and assured him it would develop a media plan. Mr. Tipple wanted PWGSC to take a more proactive approach, and repeatedly expressed dissatisfaction with its actions vis-à-vis the media. Mr. Tipple claims PWGSC never developed a media plan but instead sacrificed his reputation in the interest of “damage control.”

In response to the media attention, PWGSC launched an internal investigation into the UK trip. The investigation (the Minto Report) exonerated Mr. Tipple. The Minto Report found, among other things, that despite the administrative confusion, “… both advisors appear to have used their time in a responsible and productive manner … [and] that all expenses claimed and approved will be reasonable and approved in accordance with prescribed rules.” The report was not made public.

On Friday, August 25, 2006, Mr. Marshall met with the Minister of PWGSC. They discussed Mr. Tipple’s work and whether the hiring of the private sector executives was working effectively. Mr. Marshall reflected on their conversation over the weekend and by Monday, August 28, 2006 had decided to terminate Mr. Tipple’s employment, allegedly because Mr. Tipple had delivered his key commitments, The Way Forward was ahead of schedule, PWGSC could not absorb further changes, no major initiatives were left for Mr. Tipple, and because Mr. Tim McGrath, Acting Assistant Deputy Minister for Real Property at PWGSC, was sufficiently up to speed to assume any further work required for The Way Forward.

At the hearing before the PSLRB Mr. Marshall testified that no integration or organizational structure analysis was done prior to Mr. Tipple’s dismissal. Mr. Tipple testified that prior to his dismissal, he was never told that his performance was unsatisfactory, that The Way Forward had reached its saturation point, or that there was a possibility he could be laid off.

On August 31, 2006, Mr. Marshall terminated Mr. Tipple’s employment. Mr. Rotor was dismissed on the same day. Mr. Tipple was given compensation equal to one month’s pay. He was not given any reasons for the termination other than that Mr. Marshall had accepted a recommendation from his staff that the special advisors’ responsibilities be transferred to and merged with those of the respective Assistant Deputy Ministers. Mr. Tipple testified that his termination was highly unusual given that there was no transition plan for transferring responsibilities from him to Mr. McGrath, no analysis of the work plan, and no briefing of his staff, and that he was asked to leave the premises immediately. Mr. Tipple also testified that he had been hired to complete the implementation as well as the planning of The Way Forward, and that the implementation phase was not yet complete. Mr. Tipple testified that if he had been hired as an “idea person” and only for planning and not implementation, he would not have relocated his family to Ottawa.

The next day The Globe and Mail reported on the dismissal and suggested it was caused by Mr. Tipple’s misconduct during the UK trip.

Mr. Tipple filed Statements of Claim in the Ontario Superior Court commencing actions against both PWGSC and The Globe and Mail. The wrongful dismissal action against PWGSC was stayed; the defamation action against The Globe and Mail continues. He also filed a grievance with PWGSC regarding his dismissal which he subsequently referred to adjudication under the Public Service Labour Relations Act. The Adjudicator upheld Mr. Tipple’s grievance, in part. It is that decision that is under review in these applications.

Mr. Tipple was unable to secure permanent employment after his termination. He had no income in 2007 and only $38,172.00 of income in 2008. This was not due to a lack of effort on his part as he contacted 15 executive recruiters and 37 consulting firms attempting to obtain work. He was told by recruiters that until he was vindicated, he was “basically off limits,” and that a search of his name on the internet brought up unflattering and damaging articles that questioned his integrity. Mr. Tipple did attempt to obtain a position with a private firm to pursue real-property assets that might be offered for sale by the Government of Canada, but PWGSC refused to grant him permission to pursue the opportunity due to its post-employment policy that imposed a 12-month waiting period on accepting employment in the private sector of the sort he considered.

Mr. Tipple testified that as a result of his termination he suffered “bouts of low self esteem, lack of confidence, stress, anxiety, feelings of betrayal, humiliation and hurt feelings” and that the ordeal had been “very emotional and traumatic and my mental and physical health have been affected.”

Adjudicator’s Decision

Adjudicator Quigley found that Mr. Tipple’s dismissal was unwarranted, calling it a “sham” (para. 359.)  In addition to the damages that he awarded for the dismissal itself, Quigley awarded Mr. Tipple $250,000 for “loss of reputation.”

Decision of the Federal Court on Judicial Review

The federal government sought judicial review of Adjudicator Quigley’s decision and Justice Zinn of the Federal Court granted the Crown’s application to set aside the award for loss of reputation.  Justice Zinn’s reasons for decision can be found at Canada (Attorney General) v. Tipple, 2011 FC 762.

As is noted in the Federal Court of Appeal’s reasons for decision:

[Justice Zinn] set aside [the award for loss of reputation] because he concluded that the adjudicator had erred in law by creating a new legal duty owed by an employer to an employee – a duty to protect the employee’s reputation – and awarding compensation for a breach of that duty.

Federal Court of Appeal

On appeal to the Federal Court of Appeal, Mr. Tipple sought to overturn Justice Zinn and uphold Adjudicator Quigley.

Writing for the Federal Court of Appeal, the Honourable Justice Karen Sharlow held that Adjudicator Quigley had not awarded damages in recognition of a new tort, as Justice Zinn had concluded, but rather awarded damages for the manner of Mr. Tipple’s termination as contemplated in Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701 and Honda Canada Inc. v. Keays, 2008 SCC 39.

Wrote Justice Sharlow on this point:

As I understand the adjudicator’s reasons, he did not conclude that PWGSC as Mr. Tipple’s employer had a free-standing duty to protect his reputation. Rather, he found that the law imposed on PWGSC a duty of good faith when terminating Mr. Tipple’s employment. When PWGSC decided to terminate Mr. Tipple’s employment in the midst of press reports impugning his integrity on the basis of information leaked from PWGSC which senior officials of PWGSC knew to be false, the duty of good faith included the duty to take reasonable steps to ensure that the termination did not cause undue and unjustified harm to Mr. Tipple’s reputation. In my view, the adjudicator’s conclusion is well within the scope of the Wallace principle, and is reasonable.

In upholding Adjudicator Quigley’s decision, Justice Sharlow affirmed the approach taken by him, writing that,

In my view, [the principle established by Justice Iacobucci in Wallace] may be applied if, in connection with a wrongful termination of employment:

1. the employee’s reputation is damaged by public knowledge of false allegations relating to the termination,
2. the employer fails to take reasonable corrective steps and offers no reasonable excuse for such failure, and
3. the damage to the employee’s reputation has impaired his ability to find new employment.  [Para. 16]

Commentary

In my humble opinion, Adjudicator Quigley and Justice Sharlow were correct.  Whether one calls the damages awarded “loss of reputation” or “failure to protect reputation on termination,” the fact remains that the employer owed Mr. Tipple a duty to ensure that in terminating him they treated him fairly.

PWGSC knew that what was being printed in the national media was wrong, but did nothing to correct it.  How they thought Mr. Tipple would find new employment is beyond this observer, as it would appear to be for Adjudicator Quigley and Justice Sharlow.

Recently I wrote on the duty to mitigate (see posts here), what needs to be remembered is that the duty to mitigate is a shared duty: employers have a duty to look for new employment; but employers have a duty not to unreasonably impede such efforts.  PWGSC’s actions clearly served to thwart Mr. Tipple’s efforts (although in this case, no such duty existed.)

Takeaways

The takeaway for employers should be clear, if not intuitive: treat employees fairly on termination.  Do not engage in rumours and where one learns of false allegations, take corrective action or be prepared to pay the consequences.

The takeaway for employees is that if one’s employer has behaved especially poorly at the time of dismissal, the court may be prepared, in certain cases, to recognize that that behaviour was unwarranted and provide monetary compensation.

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As always, everyone’s situation is different.  The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.

Sean Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer.  He tweets from @SeanBawden.