Alberta Court of Appeal, 2011
The plaintiff Elgert was employed by the defendant Home Hardware Stores Ltd. (“Home Hardware”) as a supervisor at the Distribution Centre for 17 years when he was terminated without notice following allegations of sexual harassment made by defendants Christa Bernier (“Bernier”) and Diane Stengle (“Stengle”).
The plaintiff submitted negative comments on Bernier’s performance review and transferred her to a different department. Witnesses testified to comments by Bernier regarding her desire to “get even” with the plaintiff. Shortly thereafter, Bernier told her father, manager of the Distribution Centre, and her co-worker, Ms. Bowen, of an alleged incident of sexual harassment by the plaintiff. Bernier also told the story of her alleged harrassment to other coworkers (including Stengle) after Stengle had recounted a similar story. However, Stengle later testified that she never filed a complaint regarding her own alleged incident because she thought it was all a joke.
Subsequently, Bernier’s father informed Head Office of the alleged incident, and Bernier’s co-worker Ms. Bowen informed the Distribution HR Manager Ms. Borowdawka, who similarly informed Head Office. Head Office HR Mr. Gingrich sent a Mr. Kirck (who had no experience of sexual harassment investigations) to conduct an investigation. Both Mr. Gingrich and Mr. Kirck were close personal friends of Bernier’s father.
The investigation consisted of oral conversations with Ms. Bowen, Ms. Borowdawka, and Bernier. Immediately following the conversation with Bernier, Mr. Kirck suspended the plaintiff, accusing him of sexual harassment but refusing to give any particulars, despite the pleas and tears of the plaintiff. The plaintiff was then escorted out of the premises, and was not permitted to collect his belongings from his workstation. The plaintiff begged Mr. Kirck to do a thorough investigation as he believed someone may have been out to get him.
Immediately following the suspension, Mr Kirck told the plaintiff’s son that the plaintiff had been suspended for sexual harassment. When the son asked if there would be an investigation, Mr. Kirck told the plaintiff’s son that he would not have suspended the plaintiff if he had not been 100% sure of his guilt.
Counsel for the plaintiff and defendants agreed on the questions to be put to the jury at trial. The jury responded that the plaintiff had not committed the alleged acts of sexual harassment, and awarded the defendant two years’ pay in lieu of notice, $200,000 aggravated damages, $300,000 punitive damages, interest, and costs. They further concluded that the defendants, Bernier and Stengle, defamed the plaintiff and awarded him damages of $50,000 and $10,000, respectively.
The issue on appeal was whether the trial judge erred by leaving the issue of aggravated and punitive damages with the jury. The appellants further submitted the damage awards were inordinately high.
In order to grant aggravated damages there must be evidence that the employer acted badly in the course of the dismissal, and evidence that the employee suffered actual damages as a result of the manner of the dismissal (versus the fact of dismissal). The Court of Appeal held that the element of bad faith was clearly met by the inclusion of Bernier’s father in the matter, the carriage of the investigation by two of his friends, Mr. Kirck’s conduct during the meeting with Bernier, and the failure to conduct an appropriately broad investigation taking into account Bernier’s motives against the plaintiff. The Court of Appeal, however, also found that the plaintiff had failed to prove that his distress arising from termination stemmed from the manner of termination, and not just the fact of the dismissal. The Court of Appeal held that aggravated damages should not have been put to the jury and therefore set aside the $200,000 award.
In the context of wrongful dismissal, punitive damages are awarded for malicious or high-handed conduct giving rise to an independent actionable wrong. The Court acknowledged that although an employer cannot be faulted for honestly believing an allegation of sexual harassment, and should not be punished due to a clumsy investigation, the employer is not permitted to conduct an unfair investigation or behave in vindictive or outrageous ways. The Court held that there was sufficient evidence to leave punitive damages with the jury, but found the amount awarded was inordinately high and reduced the $300,000 award to $75,000.
The Court of Appeal also acknowledged that the $60,000 to be apportioned for defamation was high, but not unreasonable, and therefore declined to interfere.