Carleton Douse v. William E. Coutts Company Limited operating as Hallmark Canada, 2009 HRTO 1254

Human Rights Tribunal of Ontario

B E T W E E N:

Carleton Douse

Applicant

-and-

William E. Coutts Company Limited operating as Hallmark Canada

Respondent

DECISION

Adjudicator: Ken Bhattacharjee

Date: August 13, 2009

Citation: 2009 HRTO 1254

Indexed as: Douse v. Hallmark Canada

appearances BY

Carleton Douse, Applicant ) Deanne Douse, Representative

William E. Coutts Company, Limited ) James Heeney, Counsel operating as Hallmark Canada, Respondent )

INTRODUCTION

1The purpose of this Decision is to address the respondent’s request to dismiss the Application on the basis that the applicant signed a full and final release.

BACKGROUND

2The applicant filed an Application under s. 34 of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”), on December 9, 2008, which alleges that the respondent discriminated against him with respect to employment because of his race, colour and ethnic origin.

3Specifically, the applicant self identifies as Black and alleges that the respondent refused to provide him with an education benefit for his son, never gave him a bonus but gave bonuses to less productive “non-ethnic” employees, and laid him off but retained “non-ethnic” employees with less years of service and less stellar work performance than him. He admits that he received a severance package and signed a release, but states that he was distraught, had no idea what he was signing, and was unaware that he signed away his right to pursue a human rights claim.

4The respondent filed a Response on February 17, 2009, which requests early dismissal of the Application on the basis that the applicant signed a full and final release with respect to the same matter.

5Specifically, the respondent alleges that it closed the manufacturing plant where the applicant worked and terminated the employment of over 200 employees, that it offered the applicant a severance package in exchange for signing a release, that the applicant unsuccessfully attempted to negotiate a greater severance payment, and that after considering the severance package for 2½ months the applicant accepted it and signed the release. The respondent states that the applicant expressly released the respondent from any human rights complaints, and acknowledged that he had the opportunity to seek independent legal advice prior to accepting the severance package and signing the release.

6The hearing of the respondent’s request for early dismissal of the Application took place on July 15, 2009. The applicant testified and I heard opening and closing submissions from both parties. The respondent did not call any witnesses.

EVIDENCE

7The applicant worked as a manager for the respondent from 1995 to 2008. In his last year of employment, his salary was approximately $71,000. On June 4, 2008, the respondent closed its manufacturing plant in Toronto and terminated the employment of more than 200 employees, including the applicant.

8The respondent made written severance offers to all employees whose employment was terminated. The respondent offered the applicant a package, which included pay in lieu of notice ($17,496.18), statutory severance pursuant to the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “ESA”) ($18,954.20), and additional severance ($29,889.31). The offer enclosed a two-page release. The offer stated that the applicant would receive pay in lieu of notice and statutory severance pursuant to the ESA regardless of whether he signed the release, but in order to receive the additional severance payment he was required to sign and return the release.

9The release stated that in consideration for the payment outlined in the written offer, the applicant released the respondent from employment-related claims, including human rights complaints:

I ACKNOWLEDGE that having knowledge of my rights under the Ontario Human Rights Code (the “Code”) I have no complaint of any kind arising under the Code. I have not been subjected to any form of discrimination and warrant that I have not commenced any complaint and undertake not to commence any complaint under the Code.

10The release also stated that the applicant was provided with the opportunity to review the respondent’s offer and the release with a lawyer:

I CONFIRM that I have been afforded an opportunity to review and obtain independent legal advice with respect to the details of this Final Release and Indemnity and the settlement relating thereto. I also confirm that I am executing this Final Release and Indemnity voluntarily and without duress.

11The respondent also offered the applicant the opportunity to continue working during the shutdown period. The applicant accepted the offer and continued to work.

12On June 20, 2008, the applicant delivered a letter to the respondent, which acknowledged that he had “always received fair treatment, good working conditions, and fair wages” at the company, but requested a higher severance payment because he was fifty years of age and had four children to support.

13The applicant’s last day of work was June 27, 2008. The respondent provided the applicant with a “revised” offer, but it was based on his additional days of work during the shutdown period, and was not in response to his June 20 letter. On July 21, the respondent delivered the applicant a letter, which formally rejected his request for a higher severance payment. The letter stated that the respondent provided all employees with a severance offer based on a formula, and it was therefore not in a position to offer the applicant, or any other employee, a higher severance payment.

14On August 16, 2008, the applicant signed the release and returned it to the respondent. There is no dispute between the parties that the respondent paid the applicant the entire amount ($66,339.69) outlined in its offer to him.

15At the hearing, the applicant testified that the respondent’s decision to terminate his employment affected his ability to pay his mortgage, his bills and the education expenses of his children. He stated that he was distraught, and therefore did not understand what he was signing when he signed the release. Specifically, he stated that he did not understand that he was signing away his right to file a human rights Application, or that he had the right to seek legal advice prior to signing it.

16The applicant also stated that during the shutdown period he noticed that the respondent was offering some employees jobs elsewhere in the company, but that the offers were only being made to White employees. He stated that he did not raise this issue with the respondent prior to signing the release because he believes that the respondent would have terminated his employment immediately if he had done so.

17In cross-examination, the applicant admitted that both he and his wife had read the release. He also admitted that, although he did not know what the Code was when he signed the release, he did understand that he was acknowledging that had not been subjected to any form of discrimination. He also admitted that the release clearly stated that he had the opportunity to review the offer and the release with a lawyer. Finally, he admitted that he could have filed a human rights Application between June 27, 2008, which was his last day of work, and August 16, when he signed the release, but did not do so because he would not have received his additional severance payment, and would have suffered great financial hardship.

DECISION

18Section 23 (1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended, provides that a tribunal may make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes. This Tribunal has held that filing a human rights Application after signing a full and final release can constitute an abuse of the Tribunal’s process: see, for example, Sinnett v. Orlick Industries, 2009 HRTO 916 and Kailani v. Securitas Canada, 2009 HRTO 1183.

19In Pritchard v. Ontario (Human Rights Comm.), 1999 CanLII 15058 (ON S.C.), the Divisional Court set out at para. 17 some of the relevant factors to consider under the old Code when deciding whether a human rights claim is barred by the signing of a full and final release:

Undoubtedly, in some cases, an employee who has accepted a sum of money in exchange for a release of claims against a former employer, including human right claims, would be acting in bad faith in subsequently turning around and filing a human rights complaint. However, in other cases, the facts may show that the employee misunderstood the significance of the release, or received little or no consideration for it beyond statutory entitlements under employment standards legislation, or was in such serious financial need that she or he felt there was no choice but to accept the package offered.

20In the case at hand, the applicant raised two of the factors set out in Pritchard. Specifically, he alleged that he was distraught and did not understand what he was signing when he signed the release, and he was under economic duress and felt that he had no choice but to accept the severance package that the respondent had offered to him.

21I accept the applicant’s evidence that he was distraught after the respondent terminated his employment, but do not accept his evidence that he did not understand what he was signing when he signed the release. The applicant was a manager at the company for a lengthy period of time and it was obvious from his testimony at the hearing that he is a sophisticated individual. There was also no evidence that had a mental illness or disability that prevented him from understanding the release. Furthermore, this is not a case where the applicant was required to sign the release immediately following the termination of his employment. In fact, the applicant possessed the release for 2½ months, and both he and his wife read it over, before he signed and returned it to the respondent.

22Although the applicant, like most people who are not legally trained, may not have understood all the legal minutiae, he did comprehend the gist of the release. Specifically, the applicant admitted in his oral testimony that he understood that he was acknowledging that had not been subjected to any form of discrimination, and that he had the opportunity to review the respondent’s offer and the release with a lawyer.

23I accept the applicant’s evidence that he was facing financial difficulties, but do not accept that it reached the threshold whereby he had no choice but to accept the severance package and sign the release. In Kailani, supra at para. 35, the Tribunal stated:

Each case must be considered on its own merits and economic duress is a factor that may be considered. However, it seems apparent that the test for economic duress is high. Most people who have had their employment terminated are faced with economic difficulty. Financial difficulty alone cannot therefore be sufficient. If it were, almost every settlement arising out of the termination of employment could be violated.

24In the case at hand, the applicant testified that the respondent’s decision to terminate his employment affected his ability to pay his mortgage, his bills and the education expenses of his children. In this regard, however, his situation was undoubtedly no different than many, if not most, of the more than 200 other employees who were laid off at the same time as him. Furthermore, this was not a case where the respondent withheld or threatened to withhold the applicant’s statutory entitlements unless he signed the release.

25In my view, the applicant knew that he had a choice – a difficult choice, but a choice nonetheless: either (1) to release the respondent from any human rights claims in order to receive an additional severance payment immediately, or (2) to refuse to sign the release, file a human rights Application, and await the resolution of his Application to see if he would receive any monetary compensation. He chose the former, and, in my view, has to live with that choice.

26The respondent entered into an agreement with the applicant and complied with its terms. Specifically, it paid the applicant the sum of $66,339.69, including $29,889.31 of additional severance beyond the applicant’s statutory entitlements. In all the circumstances, it would be manifestly unfair to the respondent and an abuse of the Tribunal’s process to allow this Application to continue.

ORDER

27The Application is dismissed.