In September 2012, a jury in Ontario assessed damages for a former Walmart employee. In late May 2012, the Ontario Court of Appeal (“the Court”) (with one justice in dissent) varied those damages in Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419. The following briefly reviews highlights of the decision.

For ease of reference, the outcomes at the jury trial and appeal were as follows:

Click here to view the table.

Why is this decision important to lawyers and employers?

There are several lessons to learn from the decision – two of the more significant are outlined below.

(a)        Aggravated Damages: The Tort of Intentional Infliction of Mental Suffering

To be successful in receiving compensation for this tort, a plaintiff must prove:

  • The defendant’s conduct was flagrant and outrageous;
  • The defendant’s conduct was calculated to harm the plaintiff;
  • The defendant’s conduct caused the plaintiff to suffer a visible and provable illness.

In all cases, for the plaintiff to establish intentional infliction of mental suffering, it must show that the defendant intended to produce the kind of harm that occurred or knew that it was almost certain to occur (Piresferreira v. Ayotte, 2010 ONCA 384, leave to appeal to SCC refused at [2010] SCCA No. 283).

In this case there was evidence that the former manager publicly berated the employee and that his overall conduct resulted in her inability to eat or sleep, physical health complaints and the use of sedatives for all stress-related manifestations of workplace harassment. What did the former manager do? Here’s what the Court of Appeal summarized in the second paragraph of its decision:

At first Boucher and Pinnock 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.

Some of the types of behaviour inflicted on the former employee by her manager were summarized from her evidence in the decision:

  • [the manager] pulled employees who reported to [the former employee] into morning store tours and in front of them told [the former employee] how stupid she was, and that her career was blowing away;
  • When [the manager] criticized [the former employee], he pounded his chest and said “let me know when you can’t fucking handle it anymore”;
  • [the manager] berated Boucher in front of other managers, and even store customers: “he would say this is a fucking shit show, look at this fucking mess”;

The decision noted that co-workers testified that:

  •  [the manager’s] treatment toward [the former employee] was “humiliating”, “we were constantly called idiots like we were so stupid”; and
  •  [the manager’s] treatment of [the former employee] was “terrible, horrific”.

Wal-Mart concluded that the employee’s complaints were “unsubstantiated”. She was advised that she would be held accountable. The Court found that Wal-Mart’s management team appeared to ignore numerous incidents in which the former manager berated her in front of co-workers and did not seek information from witnesses who had witnessed the abusive conduct.

The Court found that the manager’s conduct was flagrant and outrageous; that it intended to produce the harm that eventually occurred; and the stress caused as a result of that conduct caused physical symptoms.  The Court found Wal-Mart took no steps to end the manager’s misconduct and did not take the former employee’s complaints seriously. It failed to enforce its workplace policies that were designed to protect employees from the kind of treatment the former employee was subjected to. It threatened the former employee with retaliation for making complaints. This showed that Wal-Mart’s own conduct justified a separate and substantial award for aggravated damages.

This decision is a harsh reminder that workplace harassment, or bullying, is unacceptable in the workplace.

(b)        Punitive Damages

Punitive damages are aimed at punishing defendants for malicious, oppressive and high handed behaviour that is a marked departure from ordinary standards of decent behaviour. The Court said in this case that once it upheld aggravated damages (above), it became necessary to ask whether punitive damages were required for the purpose of retribution, denunciation and deterrence.

In finding that the tort damages carried a punitive component, the Court reduced the punitive damages award against the manager from $150,000 to $10,000 saying:

The award of tort damages against [the manager] is very high. The magnitude of this compensatory award carried a strong punitive component. The compensatory award alone provided retribution to [the former employee], substantially denounced [the manager] for his conduct … an additional award of $150,000 against an individual employee is not rationally required to achieve these purposes or to punish [the manager].

As for Wal-Mart, its conduct was “sufficiently reprehensible to merit an award of punitive damages”, but again, the Court said the high aggravated damage award sent a “significant and denunciatory and punitive message and will likely have a deterrent effect” and reduced the punitive damages from $1,000,000 to $100,000, saying:

Here, by contrast, 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 [the former employee], 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. …

While malicious, oppressive and high handed behaviour is never condoned, the jury award of $1,000,000 stirred the legal community when it first came out as setting a target for subsequent jury trials. This decision, and the Pate Estate v. Galway-Cavendish and Harvey (Township)2013 ONCA 669 decision, confirm that courts must avoid the “pitfall of double-compensation or double-punishment” discussed by Bastarache J. in Honda Canada Inc. v. Keays, 2008 SCC 39 (CanLII) and seemingly reins in punitive damages for future courts consideration.

What this means to employers

While the focus in the appeal was on damages, the message on liability cannot be any clearer or stronger. Workplaces demand respect and civility from all participants.  Complaints of harassment or bullying by employees must be taken seriously. The Wal-Mart case confirms again that employers have a duty to properly respond and deal with complaints as they arise. Those are the standards that apply to today’s workplace and departing from them increases the risk of high damages being awarded.