A major $750,000 victory in Galea v. Wal-Mart Canada Corp. highlighted an extraordinary year for Toronto employment lawyer Natalie MacDonald.
On Dec. 7, 2017, Ontario Superior Court Justice Michael Emery awarded $250,000 in moral damages and $500,000 in punitive damages to Gail Galea, a former Walmart Canada executive who was fired without cause in 2010.
The monetary awards came after an eight-year court battle and are the highest in Canadian employment law history, says MacDonald.
Hired in 2002, Galea served in several management roles before being promoted to vice-president of general merchandising. In 2010, she was removed from her role and informed she was being reassigned internationally, only to be terminated 10 months later.
Required to pay Galea two years’ base salary to satisfy her non-compete agreement, Walmart’s payments ceased after 11 months — actions described as “deplorable” by the judge.
The case is a significant one, according to MacDonald, founding partner of MacDonald and Associates, a boutique employment law firm in Toronto with three lawyers.
“This case is certainly very meaningful for me as it represents an argument that I have been consistently making on behalf of employees about the employers’ obligation to be honest, open, fair and forthright with employees.”
The decision also elevates punitive damages to a “much more persuasive” level to deter behaviours such as those exhibited by Walmart, she says.
“We now have the Galea case as a precedent… that if employers engage in this kind of behaviour, there are going to be strong financial and, quite frankly, public consequences to it,” says MacDonald.
“I have always considered myself a changemaker… and I would like to think that the Galea case is one part of the significant changes that I have hopefully brought to Canadian employment law, and continue to want to bring forward.”
Punitive, moral damages
A notable aspect of the decision was Emery deemed it necessary to award high punitive damages against Walmart as a means of deterring employers from acting in a similar fashion in the future, she says.
“All of the anguish, all of the stress, all of the abusive behaviour that Ms. Galea had endured over the eight years of litigation… to see her vindicated, and to see that a judge agreed with the arguments that we were making, was just completely satisfying for me,” says MacDonald. “Galea is an incredibly strong individual and the behaviour that she was subjected to by Walmart was behaviour which I argued — and Justice Emery agreed — would offend the court’s sense of decency.”
The decision also represented a significant departure from court decisions around moral damages since Honda Canada Inc v. Keays in 2008, she says.
“There was a real resistance from courts following that decision to essentially shy away from awarding moral damages on the basis that the courts feared that they were duplicating punitive damages.”
In Galea, the judge made it clear he was awarding the damages for separate reasons, says MacDonald.
“And I thought that was such a significant departure from what other courts had done by way of looking at it, as was the amount that was awarded — which of course was an extraordinary amount.”
Medical evidence no longer necessary
Galea v. Wal-Mart Canada Corp. stands as a new model for employers to ensure they are acting in an honest, open, fair and forthright manner, she says.
“It seems like such a simple concept. But, unfortunately, I do see in so many cases that it’s not adhered to,” says MacDonald.
“I feel that the courts in the past have not placed as much significance on that concept as Justice Emery did in the Galea decision.”
The decision recasts the concept of damages awarded for bad faith dismissal, held since Wallace v. United Grain Growers Ltd. in 1997 until the Keays decision, applying these principles to both the pre-termination manner of dismissal, and the employer’s post-termination actions — supporting a moral damages finding if an employer was to act in bad faith during the litigation process.
“(Keays) changed the manner in which those awards were provided in the sense they no longer provided Wallace damages by way of an extension to the notice period, but rather as a lump sum amount of damages,” she says.
“(Galea) recasts the test for Wallace in adding the component of reasonable foreseeability. This is just such an important concept for the courts.”
The case also removes the need of requiring medical evidence in support of a moral damages award, as the judge applied the principles of the 2017 Supreme Court of Canada case Saadati v. Moorhead — marking the first time the case has been applied to a case in Ontario, according to MacDonald.
“It really set a standard and ended the longstanding debate in Ontario, in particular, that medical evidence was required,” she says.
“Galea puts an end to that, and recognizes that it’s really the objective behaviour of the employer that’s at issue, and that the court should examine — as long as there is evidence from the employee of the mental distress.”
“It’s a really worthwhile and very valuable proposition to change the law with this kind of affirmation that we no longer need medical evidence to support a moral damages finding.”
Going forward, time will only tell how much the Galea case influences employment law in Canada.
“I do hope that it is one of my legacy cases,” says MacDonald.
“And I certainly believe that it has incredibly persuasive value, given that it was never, ever appealed by Walmart.”
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