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$750,000 in moral and punitive damages awarded to employee left to “twist in the wind”

moral and punitive damagesBefore 2017 comes to a close, the Ontario Superior Court of Justice has provided at least one last case that is sure to catch the attention of employers. In a decision issued on December 7th, Justice Emery issued an award of $750,000 for moral and punitive damages to a senior managerial employee who effectively found herself benched for almost 10 months prior to her actual date of dismissal.

The case in question is Galea v. Wal-Mart (2017 ONSC 245) and it recaps in exhaustive detail the work history of Gail Galea during her time with Wal-Mart Canada. Galea was hired as a District Manager-in-Training as of September 2002. From this point forward, she surged up the corporate ranks eventually holding the role of Vice-President, General Merchandise. Galea was also provided with superb performance reviews and told in a variety of formal and informal ways that she was destined to one day hold a top management role within the broader Wal-Mart group of companies.

In early January 2010, however, Galea’s career with Wal-Mart hit a brick wall. At this time she was removed from her role as Vice-President, General Merchandise as a result of corporate restructuring. Galea was informed that Wal-Mart “did not know what to do with her” but that she was still “valued by the company.”

So started an almost 10 month period of Galea attempting (largely on her own) to locate another role with Wal-Mart. During this time she was given vague leads for work with affiliates in Chile, Brazil, India and the United Kingdom. At other points she helped with temporary assignments at Wal-Mart’s main office in Arkansas. Galea also learned during these months that her most recent performance review had been altered after the fact from a promotion to non-promotion rating. Finally, events came to a head in November 2010 when Galea was given formal notice of termination by Wal-Mart.

Despite Galea having a contract with Wal-Mart for two years of pay in the advent of a without cause dismissal, Wal-Mart unilaterally (and without explanation) ceased making severance payments after only 11.5 months.

Moral damages

In light of this factual background, Justice Emery was highly critical of the conduct of Wal-Mart both during the final months of Galea’s employment and in how the company elected to conduct itself during the course of litigation. The Court stated:

…Wal-Mart’s conduct was misleading at best, and dishonest at worst, in the way the company treated Ms. Galea. Only Wal-Mart knew that Ms. Galea’s career was over long before she was actually terminated. 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.

I am also awarding moral damages to Ms. Galea for Wal-Mart’s post-termination conduct. I consider Wal-Mart’s decision to stop the continued payment of her base salary…to be unduly insensitive…I consider Wal-Mart’s delay in answering its undertakings until the eve of trial, and the torrent of productions made in the course of trial…capable of causing Ms. Galea prolonged anguish about the case.

The Court awarded Galea $200,000 in moral damages for pre-termination conduct of Wal-Mart and a further $50,000 for its litigation conduct.

Punitive damages

In addition to moral damages, Justice Emery also issued an award of punitive damages. This was set at $500,000 – an amount five times more than the last major punitive award given to Wal-Mart in a wrongful dismissal case (that of Boucher v. Wal-Mart Canada Corp, 2014 ONCA 419). In particular, the Court wrote:

…Wal-Mart would make representations to Ms. Galea about her career prospects while making decisions that detracted from, or even defeated that purpose. It is not that Wal-Mart set Ms. Galea up to fail; it is that Wal-Mart built her up, only to let her down that much more. That corporate behaviour was not just unduly insensitive, it was mean.

An appeal on the horizon?

At almost 100 pages, Galea is a hefty case with many facets not touched upon in the above summary. That said, it marks the latest in a trend of Ontario courts issuing ever higher awards for bad employer conduct in both dismissal and subsequent litigation. While the figure of $750,000 in extraordinary damages is certainly eye-catching, two factors must be kept in mind. First, Wal-Mart is one of the largest companies in the world, thus it can reasonably be expected to face higher moral and punitive damage awards than smaller employers. Second, the employee in question was a high-income earner which, given that extraordinary damages are often kept somewhat proportionate to ordinary damages, may play into the equation.

Nevertheless, Wal-Mart does have a history of successfully lowering extraordinary damage awards on appeal. In the prior case of Boucher, Wal-Mart obtained a reduced punitive damages award of $100,000 – one tenth that which had been ordered at trial. We will have to wait and see whether a similar appeal is forthcoming in Galea.

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Vey Willetts LLP

Employment and labour lawyers at Vey Willetts
Vey Willetts LLP is an Ottawa-based workplace law firm, serving individuals and employers across Eastern Ontario. They recognize that operating a business is complex and maintaining an efficient and legally-compliant workplace is a continuous challenge. The firm helps simplify legal workplace obligations so that employers can focus on what matters: their business. Learn more about Vey Willetts LLP by contacting Andrew Vey, or Paul Willetts or by visiting the firm’s website. Read more.
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One thought on “$750,000 in moral and punitive damages awarded to employee left to “twist in the wind”
  • Senta says:

    Thanks for the summary. Its extraordinary case and will very likely be appealed. Wal-Mart is known litigious company with great resources. While the moral and punitive damage award were eye catching, Galea was denied damages for stock options worth almost a million dollars. These stock options were to vest during the notice period and the judge reasoned that option contract was clear enough that the condition precedent of vesting, i.e., “continuous employment” was not met. I don’t agree with that conclusion as the employer should not be allowed to take advantage of a condition precedent that it, itself controls and prevented from happening. To determine whether an employee is employed on a specified date for stock option vesting purposes, the employment period includes the time included in the period of reasonable notice. That the employee was denied a working notice by Wal-Mart, it should not be held against her. Hopefully the court of appeal will have another opportunity to correct the muddle it has created in the area of stock options and notice period in wrongful dismissal cases.