An Ontario judge has awarded $750,000 in punitive and moral damages to a former Wal-Mart Canada executive — an award lawyers say is one of the highest in Canadian employment law history.
In Galea v. Wal-Mart Canada Corp., Ontario Superior Court Justice Michael Emery awarded $250,000 in moral damages and $500,000 in punitive damages to Gail Galea, who Wal-Mart Canada fired without cause in 2010.
This is the highest award for moral damages in employment law in the country and one of the largest amounts for punitive damages, says Galea’s lawyer, Natalie MacDonald.
“It’s symbolic of the court recognizing and appreciating the need to award punitive damages against an employer who conducts itself in the manner in which Wal-Mart did,” says MacDonald, who is the founding partner of MacDonald & Associates LLP and the author of Extraordinary Damages in Canadian Employment Law.
Wal-Mart Canada hired Galea in 2002. She served in a number of management roles and was promoted up to vice president, general merchandising.
She was considered a “rising star” in the company for years and expected to eventually be elevated to chief merchandising officer, according to the decision.
But at a meeting in January 2010, then-president and CEO of Wal-Mart Canada, David Cheesewright, told Galea he was removing her form her role and that he was considering reassigning her to a subsidiary in another country.
Emery found that Cheesewright had made the decision to “dismiss or denigrate” Galea to the point that she would resign. She was moved to an “ad hoc position that was essentially an international job search,” the decision said.
She was terminated 10 months after the January meeting.
“Wal-Mart’s conduct was misleading at best, and dishonest at worst, in the way the company treated Ms. Galea,” Emery said in the decision.
“Only Wal-Mart knew that Ms. Galea’s career was over long before she was actually terminated.”
Galea had signed a non-compete agreement, which applied to the two years after she was terminated and required Wal-Mart Canada to pay her a base salary for that time if she was fired without cause. The company, however, stopped paying her after 11.5 months.
Emery found Wal-Mart Canada’s conduct since firing Galea had been “deplorable” and that a high award for punitive damages was necessary to deter the company from treating employees this way in the future.
In his analysis of moral damages, Emery considered Wal-Mart Canada’s conduct before and after Galea’s termination, as well as its litigation conduct.
The judge found Wal-Mart Canada breached its implied duty of good faith it owed to Galea in the period between her January meeting with Cheesewright and when she was terminated, and that this had caused her mental distress.
Emery awarded $50,000 against the company for its litigation conduct, as it had either delayed the litigation on purpose or was indifferent to Galea’s claims. The judge found this conduct caused the plaintiff mental distress that “exceeded the normal stress and hurt feelings that accompany a dismissal.”
The company delayed answering its undertakings until the eve of trial and provided a “torrent of productions” over the course of trial that Emery found prolonged Galea’s anguish about the case.
When considering whether to award punitive damages, Emery found Wal-Mart Canada was “callous, highhanded, insensitive and reprehensible” when dealing with Galea in her last 10 months of employment.
Punitive damages are only awarded in exceptional cases when the court finds the behaviour of the defendant to be particularly malicious and deserving of condemnation.
MacDonald says the award is evidence that courts may be more willing to consider punitive damages when employers are found to have engaged in egregious conduct.
“One of the objectives in awarding punitive damages is to be able to serve the idea of deterrence,” she says.
She adds this might not necessarily be symbolic of a coming wave of high awards for punitive damages in this area, as these awards are still considered extraordinary.
Jonathan Dye, the lawyer representing Wal-Mart Canada in the matter, was not available for comment.