Just Cause and Butt For

The expression “but for” is commonly used in the law. Usually “but for” is used in the context of causation analysis, that is, “but for” x, y would not have happened. However, butts (with two "t"s) are used for other things; like mooning.

Jason Selch has cojones, and given his actions it is possible that his employer has seen them. If readers have not already figured matters out, Mr. Selch mooned the board of his employer during one of their meetings. He was subsequently fired for just cause. His claim was dismissed on summary judgment by the circuit court of Cook County, Illinois. Mr. Selch appealed and reasons for decision were released at 2011 IL App (1st) 111434.

This post will consider Mr. Selch’s actions and the court’s decision.

Facts

Mr. Selch’s Employment Agreement

Mr. Selch was hired by Wanger Asset Management, L.P. (WAM) on June 27, 1994 as an investment analyst. Overtime WAM was acquired by other entities, culminating in a purchase by Columbia, a division of the Bank of America.

As is set out in the court’s reasons for decision:

In September 2009, the Partnership created the WAM rights partnership non-qualified profit sharing plan (the Plan) to provide for the distribution of the Contingent Payments to plaintiff and others in his position. As a part of the Plan, the participants in the Plan could lose their rights to the Contingent Payments if they were terminated for "cause" or for "good reason," as defined in the Plan.

As set out in Mr. Selch’s employment agreement "cause" for termination was defined as:

A "conviction of a felony, engaging in misconduct that injures the Company, performing your duties with gross negligence or any material breach of your fiduciary duties as an employee of the Company."

Likewise, the Agreement defined "good reason" for termination as:

"(i) a reduction in your base compensation, (ii) a material change in your level of work responsibilities which has not been remedied within 30 days after you have given written notice of such claimed event or (iii) a requirement that you be based at a location more than 50 miles outside the Chicago metropolitan area."

The Mooning

NB: The term “the mooning” is the actual heading used in the court’s reasons for decision.

On April 27, 2005, Mr. Selch was informed that a friend and colleague of his at the bank, one O’Dea, had been terminated because he refused to accept a lower wage in his new position within Columbia and the Bank of America. Mr. Selch additionally found out that Roger Sayler, Columbia's chief operating officer (COO) in New York, and Charles McQuaid, C-WAM’s chief investment officer (CIO) in Chicago – and plaintiff’s direct boss in the Columbia/BOA hierarchy – had terminated his friend earlier that day.

In response to this action, Mr. Selch testified that he was very upset and wanted to tell Sayler and McQuaid how he and the rest of the team felt about O'Dea's termination. In order to  do so, plaintiff opened the door to the conference room in which Sayler and McQuaid were seated, and walked in.

After confirming that he was not bound by a non-competition clause Mr. Selch proceeded to unbuckle his pants, pull them down, and "moon" Sayler and McQuaid. Afterwards, Sayler and McQuaid testified that Mr. Selch pulled up his pants and stated that he hoped Sayler would never come back to the Chicago office. Mr. Selch then walked out of the conference room.

Incredibly, Mr. Selch was not immediately terminated from the bank. Instead he received a written warning. On this point the appeals court held that, “The Formal Warning itself was a disciplinary action. It did not contain a promise or guarantee to plaintiff that he would be able to keep his job with the company.” (Para. 25.)

When the Chief Executive Officer of the Bank of America, one Keith Banks, learned of the mooning incident he insisted that Selch be fired. Warned of the risks of litigation and advised that Selch was a valuable employee, Banks nonetheless insisted, testifying that:

Mr. Selch’s behavior was "egregious" and was harmful to the company and the leadership. Moreover, Banks testified that "not only would the Chicago leadership team lose all credibility, but so would the Columbia team in general," if plaintiff were allowed to keep working for the company. McQuaid still did not budge from his position, although he did maintain that plaintiff’s insubordination did violate the employee manual and code of conduct, and that he could be terminated for cause. (Para. 30.)

As a result of his termination Mr. Selch forfeited his contingent payment. A loss of nearly $2 million, it has been reported.

Court’s Analysis

The motion to dismiss was determined using pre-2010 Ontario Rule 20 analysis. For readers unfamiliar with what that means, essentially the question was whether or not the case could be decided without the need for a trial because there was “no genuine issue of material fact.” Unlike Ontario, in Illinois an appeal of such a decision results in a hearing of the motion de novo, which essentially means the court heard the motion again and made its own decision.

In the opinion of the appeals court, the question to be determined was whether mooning the company executive was “conduct that injured the company.” Mr. Selch contended that it was not, whereas the Bank pleaded that it did. (Para. 41)

The court ruled that Mr. Selch’s behaviour not only injured the company, but was a “deliberate and willful violation of a reasonable rule or policy of the employing unit,” contrary to Illinois statutory law. On this point I would note that Illinois law is similar to Ontario in that “just cause” under the Ontario Employment Standards Act, 2000 regulations is defined to include “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” (O. Reg. 288/01, para. 2(1)3.)

Specifically, the court held that:

Plaintiff violated the rules and regulations in the handbook by behaving in a disruptive, unruly, and abusive manner – "mooning" Sayler and McQuaid and informing Sayler that he was not welcome in that office and that plaintiff hoped he would never return to the Chicago office – that also may be considered obscene behavior. Therefore, according to the Agreement, plaintiff violated his duties as an employee of the company. (Para. 45)

In the result the decision to dismiss the plaintiff’s case was affirmed. Mr. Selch lost his position and forfeited his bonus.

Commentary

I have often commented on cases of just cause, (see other posts here) arguing that single acts of bad behaviour may not always be sufficient grounds for just cause, no matter how serious.

I am struck by the fact that most of the executives within the organization wanted to keep Mr. Selch on staff. This fact, in my mind, begs the question of just how “injured” the company truly could have been.

Nonetheless, I am inclined to agree with the court. There are limits to everything and dropping your pants in the executive board room is over the line. The act was wilful and deliberate. Mr. Selch clearly knew what he was doing, and contemplated the fact that he could be fired by asking about a non-competition clause before ‘dropping trou.’

Takeaways

The takeaway for employees is this: you can disagree with management’s decisions, you can object to those decisions, you can voice those objections, but what you cannot do is moon corporate executives during a board meeting and expect to keep your job. Or perhaps put a better way, "don't get too cheeky."

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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.