Reduces Jury's Punitive Damages Awards from $1.1 Million to $110,000

Most Ontario employers are aware that they are required by law to implement workplace violence and harassment policies. However, the recent decision of the Ontario Court of Appeal in Boucher v Wal-Mart Canada Corp. and Pinnock, 2014 ONCA 419 (CanLII), highlights that a failure to adhere to those policies in a fair and even-handed manner can prove costly to an employer. Fortunately for Wal-Mart, the Court of Appeal decided that a jury's record awards of $1.1 million in punitive damages for workplace bullying were excessive. Nevertheless, in addition to damages for constructive wrongful dismissal, the Court approved a damages award of more than $400,000 to the harassed plaintiff/employee Meredith Boucher, finding that the magnitude of the award demonstrated how offended the jury was by the employer's treatment of one of its employees.

Background

Boucher ascended through the ranks during her nine year career at Wal-Mart and in 2008 was promoted to Assistant Manager at a store located in Windsor, Ontario. Soon thereafter Jason Pinnock, the Manager of the Windsor location, selected Boucher to be his Lead Assistant Manager.

Pinnock and Boucher had a positive working relationship until Boucher refused to alter a temperature log to improve the location's pending evaluation. Consequently, Pinnock subjected Boucher to formal discipline and made it his goal to berate, admonish and humiliate her until she resigned. Among other conduct, Pinnock was found to have regularly insulted Boucher in front of coworkers and in private, calling her such things as "a (expletive) idiot" and asking her such things as "are you (expletive) stupid?"

Attempting to engage Wal-Mart's "open door policy", Boucher brought her concerns about Pinnock's behaviour to the attention of higher management. Management investigated the complaint. However despite corroborative accounts from several employees, not only did Wal-Mart conclude that Boucher's allegations were unsubstantiated, it notified her that she would be "held responsible" for making an unsubstantiated complaint.

Following another incident, in which Pinnock grabbed Boucher by the elbow in front of a group of coworkers and told her to prove to him that she could count to ten by reciting the numbers aloud, Boucher resigned. After her resignation, Boucher brought an action against Wal-Mart for constructive dismissal and against Pinnock for intentional infliction of mental suffering.

The Trial

The action was tried before a judge and jury. The jury found that Boucher had been constructively dismissed and awarded her damages equivalent to 20 weeks' salary, the notice period specified in her employment contract. The jury also awarded Boucher $1.46 million in other compensatory and non- compensatory damages: against Wal-Mart, $200,000 in aggravated damages for the manner in which Boucher was "dismissed" and $1 million in punitive damages and, against Pinnock, $100,000 for intentional infliction of mental suffering and $150,000 in punitive damages.

Wal-Mart and Pinnock appealed their liability and the amount of damages awarded by the jury. Boucher cross-appealed seeking an award for future loss of income.

The Court of Appeal

The Court was deferential to the jury on the findings of liability. It also held the jury's awards for intentional infliction of mental suffering and aggravated damages were reasonable and justified given the facts of the case. The Court concluded that Wal-Mart "paid lip service" to its open door and violence and harassment policies. By failing to enforce these policies and bring an end to Pinnock's misconduct, the Court found that Wal-Mart's actions justified a separate and substantial award for aggravated damages.

However, the Court held that the jury's record-high awards in an employment law context for punitive damages were too high. Punitive damages are intended to condemn particularly reprehensible behavior and to deter others from engaging in similar conduct. They are awarded when compensatory damages are an inadequate remedy to redress the offence committed. Ultimately the Court found that in light of the total amounts awarded to Boucher, those purposes were served with lesser punitive awards. The Court reduced the punitive damages awards against Pinnock from $100,000 to $10,000 and against Wal-Mart from $1 million to $100,000.

Despite the 90% reduction in punitive damages, neither defendant got off easy. In addition to 20 weeks' salary, $410,000 in damages were awarded against the defendants – $110,000 against Pinnock for which Wal-Mart is vicariously liable and $300,000 against Wal- Mart itself. Boucher's cross-appeal for future loss of income was dismissed because she was held not to have suffered a loss of earning capacity. The Court still has to rule on the issue of costs. As of this writing, the parties are considering whether to seek  leave to the Supreme Court of Canada.

What this means for employers

It is one thing for an employer to have workplace violence and harassment policies. It is quite another to enforce them even- handedly. It is important that managers, supervisors and all other  employees are fully trained on their workplace responsibilities. It is also imperative that workplace investigations are conducted fairly and impartially, and that only in the clearest of cases of bad faith complaints should an employer threaten or impose sanctions against a complainant.

Stefanie Di Francesco