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Wal-Mart’s “deplorable” pre and post termination conduct results in a sizeable $750,000.00 moral and punitive damages award

punitive damagesRecently, in Galea v. Wal-Mart (2017 ONSC 245) the Ontario Superior Court released a decision in a wrongful termination matter involving a Wal-Mart Executive Gail Galea (“Galea”) and the “reprehensible” termination conduct of Wal-Mart. In addition to the usual wrongful termination damages such as salary, benefits, bonuses, etc., the Court awarded a whopping $750,000.00 in moral and punitive damages combined.

The saga began in late January 2010 when Galea’s promising career as a high ranking managerial employee appeared to hit her ceiling. Galea’s unnecessarily long and drawn out termination began when she was informed that she was being removed from her role as Vice-President, General Merchandise.

Rather than provide her with concrete alternative position offers, Wal-Mart stated that they “did not know what to do with her” but provided no indication that her employment was on the line. With Wal-Mart doing little to show they were actively seeking an appropriate position for Galea and despite representations from the CEO that he would assist her any way he could, she commenced the nearly 10 month journey of seeking employment within the company on her own and there was no evidence that the CEO, Mr. Cheesewright, ever did assist her. Through her efforts and networking, discussions ranged from moving her to India, Brazil, Chile, Arkansas and the United Kingdom.

With none of her leads resulting in any viable opportunities, after nearly 10 months of employment limbo, Galea was finally given her notice of termination.

At the time Galea signed onto her position as Vice-President, General Merchandise, the terms of her employment were governed by a contract which included a 2 year non-compete agreement (“NCA”). Given that Galea would not be able to work for at least two years for any mass retailers other than Wal-Mart, the NCA stated that if she were to be terminated without cause, Wal-Mart would provide her with “transition payments” made up of her base salary, employee incentives, and benefits premiums for the duration of the 2 year NCA. Following her termination, Wal-Mart breached its contractual obligation and ceased the aforementioned transition payments after only 11.5 months.

The Court’s award for moral damages:

As mentioned above, the Court awarded an impressive $250,000.00 for moral damages inclusive of $50,000.00 for post-termination conduct.

The presiding judge found Wal-Mart’s conduct misleading and dishonest, by withholding the information that Galea was facing imminent termination. The Judge wrote: “To keep her in suspended animation was unduly insensitive conduct. The ten months she was left to seek a new foothold qualifies as a manner of dismissal that caused Ms. Galea mental distress and qualifies her for aggravated damages”.

In regards to the post-termination conduct, the Judge did not take kindly to Wal-Mart’s abrupt cessation of the transition payments agreed to, and Wal-Mart’s conduct during the litigation. In particular the Judge found that “Wal-Mart was purposely dilatory in instructing its counsel to provide disclosure and to conduct examinations for discovery, including the legal obligation to provide answers and supporting documents to fulfil undertakings on a timely basis”.

The Court’s award for punitive damages:

In rendering the decision to award Galea $500,000.00 in punitive damages, the judge heavily considered Galea’s vulnerability in contract to “Wal-Mart’s indifference to the litigation process and the manner of dismissal on termination, and over the course of the action”. The Judge held that: “Wal-Mart’s conduct both before termination and since termination towards Ms. Galea has been, in a word, deplorable. It is conduct deserving of a higher award for punitive damages”.

The Judge issued this sizeable award for punitive damages as not only a very significant slap on the wrist to Wal-Mart for their conduct, but also as a deterrent for any future misconduct – “ A higher award for punitive damages is required to deter Wal-Mart from conducting itself in a similar fashion against employees in Ms. Galea’s position in the future, in Ontario or elsewhere in Canada”.

Takeaways:

  1. When conducting a workplace restructuring resulting in job eliminations, if employers are going to offer alternative comparable employment- such offer should be done at the same time as or prior to the elimination of an employee’s current role. This requires pre-planning and thoughtfulness in advance.
  2. Employers who make offers to assist employees in finding alternate positions within the company need to ensure that they in fact honour this representation.
  3. If a role is eliminated and there is no comparable alternative role to offer, then employers need to proceed to terminate an employee’s employment in a timely, open, and honest manner and in compliance with any contractual obligations that exist between the parties.
  4. While no employer enjoys participating in the litigation process, there are rules which govern the process and which must be abided by – failure to do so will cost employers as it did in this case.

Of further interest and note is that Wal-Mart has not filed an appeal in relation to this decision. Could it be that the Company has learned its lesson?

By Patrizia Piccolo, Rubin Thomlinson LLP

Rubin Thomlinson LLP

Employment law firm at Rubin Thomlinson LLP
Rubin Thomlinson LLP is a Toronto-based employment law firm dedicated to finding optimal legal solutions to challenging workplace issues. Rubin Thomlinson provides expert counsel to employees and employers on all legal issues pertaining to the workplace such as hiring, retaining and terminating employees; executive compensation and contracts; accommodation issues; and workplace human rights. Rubin Thomlinson is also considered a leading authority in the area of workplace harassment, and workplace investigations and reviews. Read more.
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