Ontario Court of Appeal Slams Walmart’s “Reprehensible” Treatment of Employee
Christine Davies examines the Ontario Court of Appeal’s landmark decision concerning an employer’s obligation to act in good faith
Meredith Boucher was an assistant manager at the Walmart store in Windsor, Ontario. After she refused to falsify a log for her supervisor – the store manager – he disciplined her and became abusive, using profane language and demeaning and belittling her in front of others. At times, he would call other employees in so that he would have an audience while he berated her.
Boucher complained to Walmart’s management pursuant to the chain’s “open door” policy. Walmart has a number of such policies, including an anti-harassment policy, which purport to reflect a concern for its employees’ well-being. However, instead of helping her, Walmart ignored evidence of employee witnesses (including other managers) who confirmed that the manager was acting in an abusive manner, and concluded that the complaints were unsubstantiated. To add insult to injury, Walmart alleged that Boucher’s complaints were aimed at undermining the manager’s authority and that she would be disciplined for making the complaints.
After a final incident of humiliation, Boucher stopped working and claimed that Walmart had constructively dismissed her. Boucher led evidence at trial that the poor treatment she received had caused her temporary stress-related health problems. At trial, the jury agreed she had been constructively dismissed and ordered Walmart to pay Boucher 20 weeks’ salary (as specified in her contract), plus $200,000 in aggravated damages and $1,000,000 in punitive damages. The jury further ordered damages against the store manager personally in the amount of $100,000 for intentional infliction of mental suffering and $150,000 in punitive damages. Walmart and the manager appealed the decision.
The Court of Appeal dismissed the appeal, although it reduced the punitive damages awards. The Court had no trouble upholding the jury’s finding of liability, holding:
Pinnock’s conduct was flagrant and outrageous. He belittled, humiliated and demeaned Boucher continuously and unrelentingly, often in front of co-workers, for nearly six months.
Pinnock intended to produce the harm that eventually occurred. He wanted to get Boucher to resign. To do so, he wanted to cause her so much emotional distress or mental anguish that she would have no alternative but to quit her job … Pinnock was “overjoyed” when Boucher resigned because he had achieved his goal.
The Court of Appeal upheld the damages award against the store manager for intentional infliction of mental suffering, and the aggravated damages award against Walmart, finding that this was warranted based on the unfair and inadequate way it dealt with the manager’s misconduct and Boucher’s complaints (although one judge, in a partial dissent, would have reduced the aggravated damages component of the award).
Although the Court held that the trial judge had incorrectly instructed the jury in respect to punitive damages, it held that the jury’s other findings reasonably supported the conclusion that Walmart had breached its “duty of good faith and fair dealing,” which the Court of Appeal held was sufficient to ground the claim for punitive damages. The Court specifically agreed with the jury that Walmart’s conduct was “reprehensible”. However, noting the high amount for aggravated damages and the fact that Walmart did not profit from its wrong, the Court reduced the punitive damages award to be paid by Walmart to $100,000. The Court also reduced the punitive damages award against the manager to $10,000 to reflect the large amount already ordered against him.
The Court dismissed a cross-appeal by Boucher, in which she claimed that Walmart should be required to pay her future loss of earnings until her planned date of retirement. The Court rejected this contention, finding that the plaintiff had suffered no loss of earning capacity and that any future losses were not compensable.
The Court of Appeal’s finding that Walmart owed and breached a duty to Boucher of good faith and fair dealing is a significant development. Previously, the Supreme Court has held that the duty of good faith and fair dealing in the employment relationship is a feature of the contractual relationship. This content of this duty may require the employer to take steps to protect employees’ interests in the workplace. In this case, the Court held that Walmart failed to act fairly and in good faith in the manner of Boucher’s dismissal, specifically in the following respects:
… Wal-Mart’s refusal to take Boucher’s complaints about Pinnock seriously, its dismissal of those complaints as unsubstantiated despite substantial evidence to the contrary, its unwillingness to discipline Pinnock or intervene to stop his continuing mistreatment of Boucher, its threatened reprisal against her, and its contravention of its workplace policies. Although Wal-Mart may not have deliberately sought Boucher’s resignation, on the evidence led at trial that the jury undoubtedly accepted, Wal-Mart’s actions and its inaction were reprehensible.
This decision establishes that courts will require employers to treat their employees in a decent manner (including with respect to workplace harassment and the enforcement of internal corporate policies designed to protect employees), failing which they may face significant monetary liability. The decision also serves as a cautionary tale for supervisors who may find themselves subject to significant personal liability for their abuse of employees.