Employers who fear large jury awards in wrongful dismissal cases can breathe a little easier in the wake of a recent Alberta Court of Appeal decision. In Elgert v. Home Hardware Stores Ltd., the Court of Appeal said that a $500,000 jury award for aggravated and punitive damages in a wrongful dismissal case was too high, reducing it from $500,000 to $75,000.
In the spring of 2002 the Home Hardware Distribution Centre in Wetaskawin, Alberta fired Daniel Elgert without notice. Elgert had worked for Home Hardware for 17 years and was a supervisor at the Distribution Centre when two female co-workers made sexual harassment complaints against him. Following the complaints, Home Hardware immediately suspended Elgert and engaged in what the Court of Appeal described as a perfunctory investigation that presumed his guilt.
The investigation ended up with Elgert getting fired. He sued for wrongful dismissal and the lawsuit proceeded by jury trial.
The jury decided that Elgert was innocent of sexual harassment, and that the complainants were guilty of defamation. It also determined that Home Hardware fired Elgert in a manner that was unfair, in bad faith, misleading and unduly insensitive. In addition to awarding Elgert two years pay in lieu of notice and damages for defamation payable by the complaining co-workers, the jury awarded $200,000 in aggravated damages and $300,000 in punitive damages against Home Hardware.
Court of Appeal Reduces Award
The Court of Appeal agreed with the jury's awards for pay in lieu of notice and defamation. But it significantly reduced the punitive damages and set aside the aggravated damages altogether. In setting aside the aggravated damages award, the Court of Appeal said there was no evidence that Elgert had suffered as a result of the manner of his dismissal. So even though it agreed that Home Hardware had conducted an unfair investigation, the Court of Appeal said there was no basis for aggravated damages.
The Court of Appeal agreed that punitive damages were justifiable but disagreed with the amount of the jury award. The Court of Appeal said that the range advised by the trial judge was inaccurate in an employment context, where the upper range for previous punitive awards was $100,000. In reducing the award from $300,000 to $75,000, the Court noted that "appellate courts can be more interventionist as regards punitive damages than other jury awards" and that an award of $300,000 in this circumstance was "inordinately high and unnecessary to convey the message intended."
Impact for Employers
While the prospect of a jury trial might create visions of large damage awards for employers, Elgert indicates that wrongful dismissal actions in Canada should produce similar damages regardless of whether a judge or jury makes the award. While this is by no means an encouragement for companies to dismiss employees without due care and attention, it does provide employers with peace of mind in knowing that extravagant jury awards will likely be curtailed by Canadian courts.