Wal-Mart Rolls Back Award of Punitive Damages

In a decision released earlier this week, the Court of Appeal for Ontario reduced an award of punitive damages against a Wal-Mart manager from $150,000 to $10,000, and against Wal-Mart itself from $1,000,000 to $100,000. In the same decision, however, the court upheld the award of $100,000 in damages for intentional infliction of mental suffering against the manager, and the award of $200,000 in aggravated damages against Wal-Mart.

The case of Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 (CanLII) concerned an appeal by Wal-Mart of the much-celebrated jury award of $1,000,000 in punitive damages against the retailer.

In an earlier post on this blog following that initial award, Former Walmart Employee Awarded $1.5 Million for Mistreatment, I wrote the following:

Because the case was decided by a jury no reasons for the decision were provided. Similarly few facts, as found by the court, are yet known.

Where does this decision leave those in the employment law world? I suspect waiting for the decision of the Court of Appeal.

Now that the decision from the Court of Appeal has been released, more information is available.

Facts

The facts of the case demonstrate that a former assistant store manager of a Windsor Wal-Mart store, the plaintiff in the case, was a good employee who was treated very poorly by her immediate supervisor, the store manager, one of the defendants.

As is set out in the reasons for decision of the Court of Appeal for Ontario:

At first Boucher, [the plaintiff] and Pinnock, [the manager] worked well together. Their relationship turned sour, however, after an incident in May 2009 in which Boucher refused to falsify a temperature log. Pinnock then became abusive towards her. He belittled, humiliated and demeaned her, continuously, often in front of co-workers. Boucher complained about Pinnock’s misconduct to Wal-Mart’s senior management. They undertook to investigate her complaints. But in mid-November 2009 they told her that her complaints were “unsubstantiated” and that she would be held accountable for making them. A few days later, after Pinnock again humiliated Boucher in front of other employees, she quit. A few weeks later she sued Wal-Mart and Pinnock for “constructive” dismissal and for damages.

As mentioned above, the case was tried before a judge and a jury. The jury found that Boucher had been constructively dismissed and awarded her damages equivalent to 20 weeks salary, as specified in her employment contract. The jury also awarded her damages of $1,200,000 against Wal-Mart, made up of $200,000 in aggravated damages for the manner in which she was dismissed, and $1,000,000 in punitive damages. And the jury awarded Boucher damages of $250,000 against Pinnock, made up of $100,000 for intentional infliction of mental suffering, and $150,000 in punitive damages (awards for which Wal-Mart is vicariously liable as Pinnock’s employer).

Both Pinnock and Wal-Mart appealed the awards. Ms. Boucher appealed as well.

Decision of Court of Appeal for Ontario

It is important to note that there was a split decision by the Court of Appeal, potentially leaving the door open to a further appeal to the Supreme Court of Canada. If anyone has the means to take up an appeal to the Supreme Court of Canada, it most certainly is Wal-Mart.

However, on that point, the only decision with which Associate Chief Justice Alexandra Hoy parted company with Justices Laskin and Tulloch was the award of punitive damages against Wal-Mart. Whereas Justices Laskin and Tulloch awarded $100,000 in punitive damages against Wal-Mart, Associate Chief Justice Hoy would have only awarded $25,000. Her Honour agreed with the balance of the Court of Appeal’s decision.

In its decision, the Court of Appeal found the award for intentional infliction of mental suffering reasonable and refused to interfere with the amount. In upholding the award, Justice Laskin noted, with reference to the test for such damages established by the Court of Appeal in Prinzo v. Baycrest Centre for Geriatric Care, 2002 CanLII 45005 (ON CA):

[48] The evidence of Samantha Russell [one of the witnesses]… which the jury almost certainly accepted, shows that Pinnock intended by his conduct to cause the very harm that occurred; he wished to cause Boucher so much stress or mental anguish that she would resign.

[50] Pinnock’s conduct was flagrant and outrageous. He belittled, humiliated and demeaned Boucher continuously and unrelentingly, often in front of co-workers, for nearly six months.

[51] Pinnock intended to produce the harm that eventually occurred. He wanted to get Boucher to resign. To do so, he wanted to cause her so much emotional distress or mental anguish that she would have no alternative but to quit her job. The evidence of Samantha Russell, which was not challenged in cross-examination, and was reviewed by the trial judge for the jury, supports this element of the tort. Ms. Russell testified that Pinnock was “overjoyed” when Boucher resigned because he had achieved his goal.

In reducing the award of punitive damages, Justice Laskin commented as follows:

[64] The award of tort damages against Pinnock is very high. The magnitude of this compensatory award carried a strong punitive component. The compensatory award alone provided retribution to Boucher, substantially denounced Pinnock for his conduct, and in the Windsor community would likely deter Pinnock and other senior employees from engaging in similar conduct. An additional award of $150,000 against an individual employee is not rationally required to achieve these purposes or to punish Pinnock. To give modest effect to the jury’s view of Pinnock’s misconduct, an award of $10,000 in punitive damages would be appropriate. Accordingly, I would allow Pinnock’s appeal on punitive damages and reduce the jury’s award from $150,000 to $10,000.

With respect to the appeal by Wal-Mart, the court again declined to interfere with the jury’s award of $200,000 for aggravated damages. Wal-Mart was aware of Mr. Pinnock’s conduct and either failed or refused to do anything about it. In expressing the court’s condemnation of Wal-Mart’s actions, Justice Lasin wrote:

Wal-Mart took no steps to bring an end to Pinnock’s misconduct. It did not take Boucher’s complaints seriously, finding them unsubstantiated despite substantial evidence from co-workers that they were well-founded. It failed to enforce its workplace policies, which on their face were designed to protect employees from the kind of treatment Pinnock subjected Boucher to. And it threatened Boucher with retaliation for making her complaints, an especially vindictive act. Despite all of this Boucher was willing to continue to work at the store if Wal-Mart addressed her complaints about Pinnock. Only when Wal-Mart refused to do so, did Boucher resign. These considerations show that Wal-Mart’s own conduct justified a separate and substantial award for aggravated damages.

In deciding that the award of punitive damages against Wal-Mart should be reduced, however, Justice Laskin wrote:

[92] Wal-Mart is already liable for significant compensatory damages. Its misconduct lasted less than six months. It did not profit from its wrong. And while it obviously maintained a power imbalance over Boucher, it did not set out to force her resignation. In the light of these considerations, a punitive damages award of $100,000 on top of the compensatory damages it must pay is all that is rationally needed to punish Wal-Mart and denounce and deter its conduct. Accordingly, I would allow Wal-Mart’s appeal on punitive damages and reduce the award from $1,000,000 to $100,000.

Briefly, Ms. Boucher cross-appealed, arguing, similar to what was argued in the case of Piresferreira, that on account of Mr. Pinnock’s actions she was no longer able to work and should therefore be compensated for all her lost earnings potential. However, the challenge with Ms. Boucher’s argument was that the medical evidence demonstrated that she was capable of working only two months after she got away from Mr. Pinnock. The facts simply did not support the argument.

Commentary

I will start by saying that the Court of Appeal’s decision with respect to the punitive damages’ awards hardly surprises me. It was highly doubtful that the court would allow an award of $1,000,000 to stand given the court’s recent decision in Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669, considered by this blog in the post Wrongful Dismissal Damages Carry Punitive Elements: ONCA.

What is surprising is the Court’s potential change in the law of intentional infliction of mental suffering.

As regular readers of this blog will know, I have long taken issue with the Court of Appeal’s decision in Piresferreira v. Ayotte, 2010 ONCA 384. In that case, the Court of Appeal for Ontario held that the tort of negligent infliction of mental suffering was not available in the employment context. For my thoughts upon that issue, I would direct readers to the post Tort Damages Place in Wrongful Dismissal Cases .

To me, it would appear that the Court of Appeal may have now softened its position on the availability of tort damages in the employment context. The change is with respect to the criterion of the Prinzo test that, the flagrant or outrageous conduct must be “calculated to produce harm.” While the “harm” that the conduct was intended to produce has always been thought of, at least by me, as physical harm, i.e. “a visible and provable illness”, which is the third criterion of the Prinzo test, in Boucher, Justice Laskin commented that the harm that was intended by the defendant was that the plaintiff would quit. (See paragraphs 48 and 51 of the decision, mentioned above.)

Changing the test from requiring the plaintiff to show that the defendant intended to produce the physical harm that resulted to requiring the plaintiff to only show that the defendant intended to cause some harm, namely the resignation of the plaintiff, significantly reduces the evidentiary burdens on plaintiffs and significantly lowers the threshold for the award of such damages, I would submit.

If the decision stands, either because neither party appeals, or the Supreme Court of Canada declines to hear the case, or the Supreme Court of Canada agrees with this decision, then we may be seeing significantly more cases of intentional infliction of mental suffering cases coming out of the employment law world.

Takeaways for Employees

The takeaway for employees from this case is that even with the significant reduction in the award of punitive damages against Wal-Mart and the belligerent manager, Ms. Boucher won. Big.

The court agreed that the manager’s behaviour was wrong and worthy of sanction. Ms. Boucher was entitled to damages as a result and acted reasonably in the decision to leave her employment with Wal-Mart.

If you are a worker in Ontario and feel that your circumstances are such that you simply cannot persist in employment, it may be time to speak to a lawyer. The professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

Takeaways for Employers

Obviously, Wal-Mart is now on the hook for a considerable sum of money, even with the court’s reductions. This decision from the Court of Appeal, I believe, is likely going to lead to even more claims of workplace harassment.

Managing employees is difficult. Complaints will come notwithstanding all best efforts. However, the lesson from this case is that when such complaints are made, the employer has a duty to respond and deal with those complaints. The failure to do so will, as this case demonstrates, occasionally result in severe penalties being meted out by the courts.

If you are an employer and suspect that there is an issue in your workplace, it may be time to speak to a lawyer. The professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

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A quick tip of the hat to fellow Kelly Santini LLP employment lawyer, Shawn O'Connor for the title of this post. His wit should be acknowledged.

As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.