In Boucher v. Wal-Mart Canada Corp., the Ontario Court of Appeal upheld high compensatory damages and reduced but did not eliminate punitive damages against an employer and its store manager, for constructive dismissal and intentional infliction of mental harm. In doing so, the Court highlighted what factors should be considered when deciding whether high punitive damages should be awarded.
Background
Meredith Boucher (“Boucher”), an employee of Wal-Mart for over ten years, was an assistant manager at the store in Windsor. Her immediate supervisor was the store manager, Jason Pinnock (“Pinnock”). After Boucher reported concerns over Pinnock’s behavior to upper management, including requests that she falsify a temperature log and use of inappropriate language, Pinnock became verbally abusive towards Boucher, and “belittled, humiliated and demeaned her, continuously, often in front of co-workers.”
Wal-Mart has in place several workplace policies designed to protect its employees, including policies encouraging confidential reporting of incidents, undertakings to investigate complaints and protect employees from retaliation due to their complaints, as well as a harassment and discrimination policy requiring employees to treat each other with dignity and respect.
After Pinnock was inappropriately notified of Boucher’s confidential meeting with upper management, he escalated his abuse of Boucher. A few months later, Boucher met with Wal-Mart senior management representatives again as she felt nothing had been done about her complaints. Boucher was told that Wal-Mart would investigate her complaints, but was warned that she would be held accountable if the complaints were found to be unwarranted.
Wal-Mart told Boucher that after investigating her claims, they found the complaints to be “unsubstantiated”, and that she would be disciplined as a result. In coming to their conclusion, Wal-Mart ignored numerous incidents of abuse witnessed by Boucher’s co-workers. Wal-Mart did not discipline Pinnock, provide any warnings or address his conduct other than verbally discussing his use of inappropriate language.
After another incident of abuse where Boucher was publicly humiliated and Pinnock grabbed her by the elbow, Boucher resigned. Wal-Mart paid her salary for eight months, which was more than what she was entitled to under her employment contract.
Boucher brought a lawsuit for constructive dismissal and damages. At trial, the jury awarded $100,000 for Pinnock’s intentional infliction of mental suffering and $150,000 in punitive damages. As Pinnock’s employer, Wal-Mart is vicariously liable for these damages. The jury also awarded $200,000 in aggravated damages and $1,000,000 in punitive damages against Wal-Mart.
Compensatory Damages
The Court of Appeal did not alter the jury’s monetary awards for Pinnock’s intentional infliction of mental suffering and Wal-Mart’s aggravated damages, even though they found that the trial judge made errors in instructing the jury. The Court found that even though the amounts awarded were very high for an employment law case, they were not “unreasonable.”
Punitive Damages
The Court of Appeal reduced the punitive damages against Pinnock and Wal-Mart. The Court found that punitive awards were justified, as Pinnock’s misconduct was “malicious, oppressive and high-handed,” and “represent[ed] a marked departure from the ordinary standards of decent behaviour.” Wal-Mart also committed an actionable wrong independent of the original claim, which is a requirement for an award of punitive damages.
The Court also emphasized that the punitive damages award, when added to any compensatory award, is “rationally required to punish the defendant and to meet the objectives of retribution, deterrence and denunciation.” The court found that the $100,000 compensatory damage awarded against Pinnock would be a sufficient deterrent to Pinnock and other senior employees, and reduced the punitive damages to $10,000.
In finding that the jury’s award of punitive damages to Wal-Mart was also too high, the Court considered the gravity and duration of Wal-Mart’s misconduct in comparison to previous instances where high punitive damages were awarded, such as Whiten v. Pilot Insurance Co and Pate Estate v. Galway-Cavendish and Harvey (Township). The Court reasoned that while Wal-Mart’s actions were reprehensible, Wal-Mart did not profit from their wrong, and did not set out to force Boucher to resign. The Court also concluded that the duration of Wal-Mart’s misconduct, which lasted six months, was relatively short. As Wal-Mart was already liable for aggravated damages, trial costs and was vicariously liable for Pinnock’s damages, the Court found that $100,000 instead of $1,000,000 was a more rational award of punitive damages to punish and deter Wal-Mart’s conduct.
Loss of Income
Boucher also claimed for future loss of income based on the assumption that she would have continued to work at Wal-Mart until her retirement at age 65. The Court rejected this claim. In doing so, the Court reiterated that damages from future loss of income claims must be based on loss of earning capacity, which Boucher did not suffer permanently. As well, Boucher’s employment contract did not guarantee her employment until retirement, and as such Boucher was not entitled to more than what was owed by the employment contract.
Lessons for Employers
Employers must do more than pay lip-service to workplace policies designed to protect employees. While having workplace policies in place can assist employees and help shield employers from liability, there will be little if any protection to either party from workplace policies that are not properly enforced and implemented. Employers should investigate thoroughly and promptly all workplace incidents, to reduce both their liability as a company for claims of constructive dismissal as well as potential vicarious liability for an employee’s wrongful actions. The Court of Appeal upheld the jury’s high compensatory damages, suggesting a possible upward trend in damages in employment law cases relating to workplace harassment and abuse. However, courts are still cautious about awarding high punitive damages unless they consider the employer’s misconduct to be so grievous and long in duration that the compensatory damage award and a small punitive award is not enough to satisfy the goals of retribution, deterrence and denunciation.
Lessons for Employees
There is an increasing intolerance by juries for both abusive conduct by co-workers and employers who do not properly investigate and react to reports of these incidents in accordance with company policies. However, while courts are willing to uphold reasonable but high compensatory awards, they are reluctant to award high punitive damages absent of evidence that the inappropriate actions of the employer were of sufficient gravity and duration to justify such an award. As well, future loss of income claims will be restricted by the period specified in the employment contract, unless there is a loss of earning capacity due to the wrongdoer’s tortious conduct.
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