In a recent Ontario Superior Court of Justice decision, Sunwing Airlines Inc. v. Mora, [2021] O.J 4782, an employer who terminated an employee for just cause for receiving over $500,000 in kickbacks, obtained a punitive damages award against the employee in the amount of $200,000, a costs award of $210,000 plus the award of damages for the kickback received.
Kickback Scheme
Sunwing Airlines Inc. (“Sunwing”) alleged that Amilcar Mora (“Mora”), an employee of Sunwing from 2007 to 2017, received over $500,000.00 in kickback from one of its contractors in Cuba, Sylvie Leduc (“Leduc”) from 2012-2017.
Sunwing learned about the kickback scheme when Leduc disclosed the kickback scheme to Sunwing on April 2017. Mora was subsequently terminated with cause on May 15, 2017.
Mora filed a wrongful dismissal action against Sunwing on the ground that the kickback scheme is a figment of Leduc’s imagination and thus was wrongfully terminated by Sunwing.
Facts
Sunwing entered into an independent contractor agreement with Leduc on September 10, 2010. Under the 2010 contract, Sunwing paid Leduc $50 USD per-flight on flights to Varadero, Cuba and $45 USD per-flight on flights to other Cuban airports.
On November 1, 2011, the Director of Commercial Operations of Sunwing, Sonya Sekulic (“Sekulic”) renegotiated the terms of the contract with Leduc to a six months contract and changed the previous per-flight payment arrangement into a fixed $52,000.00 USD per year salary.
In May of 2012, Leduc started reporting to Mora and disclosed to him that she did not like the new fixed salary arrangement and wanted to return to being paid on a per-flight basis.
Mora told Leduc that she should renegotiate her contract from a fixed salary to $80 per-flight payment after her six month contract expires. Mora told Leduc that for each $80 per-flight payment, she pays him $30 in a form of kickback.
Accordingly, Leduc asked for $80 per flight as instructed by Mora, to which Sunwing agreed.
From 2012 until 2017, Leduc paid Mora $30 out of $80 per-flight in the form of kickback and kept detailed contemporaneous records of the kickback withdrawals that were made. By January 2017, the total amount of the kickback scheme was $527,885.00.
On April 2017, Leduc disclosed the kickback scheme to Sunwing. During Mora’s termination meeting on May 15, 2017, Mora admitted to Sunwing about the kickback scheme. Sunwing terminated Mora with cause and instructed Mora to repay the money within 24 hours. Mora agreed and signed both the promissory note and receipt that he would repay the money back to Sunwing. However, Mora flew out to Miami the next morning on May 16, 2017.
The Decision
Based on the evidence before it, the Court found that Mora was part of the kickback scheme and that Sunwing had just cause to terminate Mora’s employment. The Court awarded Sunwing $537,855.00 in damages and dismissed Mora’s wrongful dismissal claim.
In a supplementary decision, the Court ordered a constructive trust over Mora’s property, given that Mora had used the money from the kickback scheme to pay off her mortgage payments. The Court further ordered a $200,000.00 punitive damages award against Mora. The Court stated as follows:
“To not award punitive damages would send a message that if you steal from your employer you only have to pay it back. If this was in the criminal system, he would go to jail.”
The Court further awarded a costs award against Mora in the amount of $210,000.00.
Takeaways
Employers with employees that engage in misappropriation of funds or a kickback scheme will have recourse beyond merely terminating them with cause. This case demonstrates that a punitive damages award and a hefty cost award is available against an employee who steals from their employers.
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Please note that this article is for informational purposes only and does not constitute legal advice.
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