Companies must watch their behaviours when dismissing employees — and even until case is closed
By Howard Levitt
In Galea v. Wal-Mart Canada Corp., Ontario Superior Court Justice Michael Emery found that Wal-Mart’s conduct was “misleading at best, and dishonest at worst.” He awarded Gail Galea $250,000 in moral damages and $500,000 in punitive damages. Galea had been fired without any allegation of cause in 2010. Through various delays, which Galea could not have been pleased with, the case only reached trial now.
Galea began her career with Wal-Mart in 2002 and was quickly promoted through the ranks to vice-president, general merchandising by 2008. Throughout her time, she was consistently praised, rewarded and groomed for leadership.
That is why what happened next appeared entirely out of the blue.
In January 2010, then-president and CEO of Wal-Mart Canada, David Cheesewright, sat Galea down, took away her V-P title, and told her that he “did not know what to do with her.” Confused, Galea was simultaneously told that her role no longer existed, but that she was still valued.
Thus began the long goodbye.
Galea was moved into an ad hoc position with no defined duties. From there, empty promises of international positions were made although no offers from any Wal-Mart Companies in India, Brazil, Chile, or the U.K. materialized. Hollow reassurances were made about Galea’s value as an employee and future with the company.
Ten months later, Galea received a letter stating that it was in her best interest that her employment be terminated immediately.
Galea sought two sets of damages in her claim. The first stemmed from the wrongful dismissal. The second, for moral and punitive damages, flowed from Wal-Mart’s conduct before, during and after her termination. In addition, she sought moral damages for the mental distress and aggravating circumstances Wal-Mart caused over the course of the litigation, including trial.
In December 2017, Justice Emery awarded Galea $200,000 for the mental distress that Wal-Mart knew its actions would cause her. He found the 10 months Galea was left to fend for herself in vain was unduly insensitive. He awarded an additional $50,000 in moral damages for Wal-Mart’s post-termination conduct, which included its discontinuation of her transition payments and health and dental benefits short of its contractual obligations, as well as its uncooperative behaviour throughout the litigation.
Justice Emery indicated that a higher award for punitive damages was required to deter Wal-Mart from conducting itself similarly in the future. He found that Cheesewright’s “callous indifference” and “reprehensible conduct” was made on behalf of the company and awarded $500,000. This is the highest award for moral damages in employment law in the country and one of the largest amounts for punitive damages.
This decision will almost certainly be appealed, and overturned. In 2014, in Boucher v Wal-Mart Canada Corp., the Ontario Court of Appeal reduced an award of punitive damages against a Wal-Mart manager from $150,000 to $10,000, and against Wal-Mart itself from $1 million to $100,000. The Court of Appeal in that decision found that the significant compensatory damages alone were sufficient retribution to the plaintiff and were substantial enough to denounce and deter Wal-Mart’s conduct. As well, the award was disproportionate to that awarded for more egregious conduct.
Perhaps it was Wal-Mart’s past history and its economic power that caused Justice Emery to award such a cumulatively high amount. If that was the rationale, it provides a windfall for employees who are treated badly by larger corporations.
Two key differences between these Wal-Mart decisions is that, in Boucher the misconduct lasted less than six months, whereas Galea was subject to mistreatment for almost a year within the workplace, and another several years through Wal-Mart’s behaviour in the course of litigation. Secondly, the employer-employee power imbalance and the fact that Wal-Mart did not set out to force Boucher to resign, were key factors in reducing the punitive damages. By contrast, Justice Emery explicitly found that Wal-Mart’s actions were intended to “dismiss or denigrate” Galea to the point where she might resign.
That being said, employers in a non-union environment generally have the right to implement personnel changes within the workplace and to structure management authority as they see fit, without it leading to extraordinary damages beyond the costs of a wrongful or constructive dismissal. For now, this decision signals the significant financial risk corporate employers may face when they fumble through executive personnel changes and fail to place themselves into the minds and emotions of the impacted employee.