ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-12-453330

DATE: 20130703

BETWEEN:

JAN PETROOK,

Plaintiff,
Responding Party on the Motion

– and –

NATUZZI AMERICAS, INC.,

Defendant,
Moving Party on the Motion

Andrea J. Sanche, Counsel for the Plaintiff

Peter J. Pliszka and
Zohaib I. Maladwala, Counsel for the Defendant

HEARD: JUNE 7, 2013

endorsement: greer J.:

[1] The Defendant, Natuzzi Americas, Inc. (“Natuzzi”), an Italian furniture company, moves under Rule 21.01(c) of the Rules of Civil Procedure for an Order to stay the Action of the Plaintiff, Jan Petrook (“Petrook”) or dismiss it, on the grounds that the court has no jurisdiction over the subject matter of the action. In the alternative, and if necessary, Natuzzi asks for an order extending the time for delivery of Natuzzi’s statement of defence, and suspending the effect of the Notice of Action Dismissed dated November 7, 2012, until thirty days following the final determination of this motion proceeding. Natuzzi says this action is duplicative of a pending legal proceeding brought in North Carolina. It also says that North Carolina is the more appropriate forum for the legal proceedings to take place.

[2] Jan Petrook, the Plaintiff (“Petrook”), says the Motion should be dismissed and that her action should be allowed to proceed in the Province of Ontario. She commenced her action in Ontario on May 10, 2012, three days after Natuzzi had commenced a legal proceeding in North Carolina for a declaration of Natuzzi’s and Petrook’s rights under the contract. That State is where Natuzzi’s North American headquarters is situate. Natuzzi was aware that Petrook intended to bring her on an action in Ontario, when it took that step.

Some background facts

[3] Petrook is a resident of Ontario and has been for 33 years. In the early 1980’s she met Hans Kau (“Kau”), a furniture retailer who owned several retail furniture stores in Ontario and who was the Canadian sales agent for Natuzzi, an Italian company with its North American headquarters in North Carolina. She says he offered her a “…position selling Natuzzi products in Ontario.” She accepted that position. She says that after Kau lost the rights, she began working directly with Natuzzi. She says:

I understood that in hiring me, Natuzzi wanted to capitalize on sales in Ontario, which is a lucrative market, and wanted a direct employee in the independent retail market rather than an agent like Mr. Kau, who had his own furniture stores and was not dedicated to only selling and promoting Natuzzi product.

[4] At the beginning on their relationship, Petrook did not sign an employment contract. She says she worked out of her home office in Toronto and was directly supported by Natuzzi’s sales support team. She says she travelled the entire province selling Natuzzi’s products. She took her instructions from Natuzzi’s head office in North Carolina and she was under its supervision. She says she performed all her work in Ontario and went to North Carolina about twice per year for meetings and furniture shows.

[5] Petrook says that Natuzzi provided any administrative help she needed and they sent her catalogues and other information about products she would be selling in Ontario to her customers. The Natuzzi staff entered all orders placed by her Ontario customers and all adjustments were made by them.

[6] Petrook says her role changed gradually due to cut-backs in North Carolina and elsewhere in the United States. She took over much of the administrative role as well as the sales role. The customers in Ontario paid their accounts in Canadian dollars through a bank account Natuzzi had with the Bank of Montreal in Canada. She says this was the business arrangement for 27 years.

[7] In 2001, Natuzzi presented Petrook with an “Engagement Agreement” in November of 2001, while she was attending a meeting in North Carolina. She signed it in Ontario on November 13, 2001, and it was sent back to North Carolina by e-mail or fax. Again, in 2009, Natuzzi presented Petrook with a new Agreement to sign.

[8] On March 20, 2012, Petrook says she was wrongfully terminated by Craig Ruse, Natuzzi’s Regional Vice President of Sales for the North region. This dismissal took place in a coffee shop at Pearson Airport, while Ruse was travelling on to Montreal. She says after 27 years of service, she was given 10 days working notice of her termination.

The Engagement Agreements

(a) November 13, 2001

[9] Some of the components of the contract are that Petrook is referred to as a “Contractor” and as “an independent sales representative”. She is to be paid on a commission basis. The Agreement terminates upon receipt of, “written notice” as given by either party. There are 13 short paragraphs in this contract, ending with the “Miscellaneous” paragraph. It contains the following term as part of that paragraph:

…This Agreement shall be governed by the laws of the State of North Carolina applicable to agreements entered into and performed within that State.

(b) The 2009 Agreement

[10] This contract is very similar to the 2001 contract. There is a change in the Commission paragraph, The No Employment clause has now become the No Compete clause, with some additional changes to the paragraph. In the Miscellaneous paragraph, the same line about the Agreement being governed by the laws of the State of North Carolina is present. What is left out at the end of this paragraph, that is in the 2001 contract is the sentence, “This Agreement shall supersede all prior agreements, amendments thereto and course of dealing between the parties.”

Position of Natuzzi

[11] Natuzzi takes the position that Petrook worked for it as an independent contractor. They say that the contract between them is governed by the laws of the State of North Carolina.

[12] Natuzzi says that the issues raised in the Ontario Action are subsumed within the North Carolina Action. The determination of the North Carolina Action, it says, will “render the Ontario Action redundant.” It further says that “…a balancing of the relevant factors clearly demonstrates that Ontario is a forum non conveniens and North Carolina is the clearly more appropriate forum for this action.”

[13] Natuzzi says that Petrook admits that she read and understood the contracts she had signed and knew that the contract said that it would be governed the laws of North Carolina.

[14] Natuzzi argues that most of the relevant witnesses reside in the United States. It lists them as Gaetano De Cataldo, Executive Vice President of Natuzzi, who resides in North Carolina. The second witness is Craig Ruse, Vice President of Sales and Marketing (North Region) who now lives in Chicago, Illinois. The third witness is Joseph Mussallem, Natuzzi’s President from 2010 to October 2012, who also resides in North Carolina. The fourth witness is Dale Zimmerman, a former Natuzzi employee who currently resides in the State of North Dakota (no city given). Natuzzi argues that if the Ontario action is not stayed, the cost of Natuzzi’s defence would escalate, having to bring all these witnesses to Ontario to participate in the Trial.

[15] Natuzzi says that it would have to arrange commissioned evidence for witnesses no longer employed by it and would have to bring on a separate application to the U.S. Court for an Order recognizing the Ontario Court’s Letters of Request that those witnesses to give evidence out of court. This, it says, would prejudice the company and add substantial additional expense and possibly delay the trial. In addition, since the contract says the governing law is that of North Carolina, if the trial is conducted in Ontario, the parties would incur the expenses of retaining lawyers as expert witnesses to attend and give evidence about the law of North Carolina.

[16] Natuzzi says that a multiplicity of proceedings should be avoided in litigation. If the action goes forward in Ontario, there would still be the action in North Carolina. This, is says could give rise to conflicting judicial decisions, which could have a “negative impact” on Natuzzi, given its many contractors in various places in the United States and Canada.

The position of Petrook

[17] Petrook says that Natuzzi moved with undue haste to start its own action in North Carolina, after it knew that Petrook was bringing on an action in Ontario. Her counsel had exchanged correspondence with Natuzzi’s U.S. counsel and asked an indulgence to seek advice on substantive legal questions before Petrook started an action in Ontario. That professional indulgence was obviously not granted, and now Petrook is faced with this Motion to stay or dismiss her action.

[18] Petrook says her action is about employment law in Ontario, not North Carolina. She says she worked for Natuzzi in Ontario for 27 years and was a very successful sales person. She is not the only sales person Natuzzi has in Canada. She says this action in Ontario could have an impact on them as well, if any of them is also wrongfully dismissed by Natuzzi in the same manner she was dismissed.

[19] Petrook takes the position that Ontario can assume jurisdiction in this action and that Ontario is the proper forum for an employment law case. She sees herself as a dependent contractor or an employee of Natuzzi with no benefits. She performed no work in North Carolina and she obtained administrative support from the head office in North Carolina. She was paid in Canadian dollars with Natuzzi’s commission cheques to her drawn on a Canadian bank. She sees Ontario as the proper forum for her action to be heard.

[20] Petrook reported to regional managers who came to see her in Ontario for meetings. Sometimes they accompanied her on sales calls across the province.

[21] Petrook says that there is no clear or reliable evidence as to where the contracts were formalized. They were signed by Natuzzi respectively 13 and 17 days after she signed them. She says Natuzzi could have drafted a forum selection clause into the contract if it wanted one. There is none in the contract.

[22] Petrook sees Natuzzi as carrying on business in Ontario. She has evidence that between 1985 and 2012, Natuzzi earned approximately $40,000,000 in sales revenues in Ontario. Natuzzi has not disputed that fact.

[23] Petrook’s termination took place at Pearson Airport in Toronto, at a coffee shop where Mr. Ruse, Natuzzi’s regional representative in Ontario, gave her the news. She was not brought to the head office in North Carolina to effect this termination.

[24] Petrook says that there is great prejudice to her if her Ontario action is struck or stayed. All her witnesses are here in Ontario. The Plaintiff, her husband, John Phillips (a former sales representative), a second sales representative, two or more customers in Ontario, and the Plaintiff’s sister (a Natuzzi sales representative in British Columbia) will all give evidence at Trial. Seven of these witnesses are resident in Ontario, twice as many as Natuzzi will have.

[25] Petrook says the forum conveniens is Ontario, not North Carolina. She says there is a high onus on Natuzzi to prove otherwise. She points to the fairness required in setting the matter down for Trial in the most convenient location and the efficiency of the Ontario system in dealing with employment matters. She says she did no business in North Carolina and all her work was here in Ontario. All her customers are here. She is paid here in Canadian dollars.

[26] In addition, Petrook says that there is no Employment Standards Act in North Carolina. She says, if needed, our Court can apply North Carolina law to the interpretation of the contract in our province. Both legal systems are common law systems. Petrook says that her North Carolina lawyer has advised her that North Carolina would recognize any Ontario judgment rendered by an Ontario Court.

Analysis

[27] Mr. Justice Laskin, in David Young v. Tyco International of Canada Ltd. 2008 ONCA 709, in paras. 28 to 31, notes that there are three principles that should guide the motion judge’s exercise of discretion, when determining which jurisdiction should be applied on a forum non conveniens motion. Firstly, that the standard to displace the plaintiff’s chosen jurisdiction is high. Secondly, the balancing of the relevant factors should aim to achieve the twin goals of efficiency and justice. Thirdly, such cases are typically brought early in the proceedings, to the motion judge should adopt a prudential, not an aggressive, approach to fact finding. In applying those principles and in my review of all of the facts and law presented to me, in my view, Natuzzi’s Motion must be dismissed for the reasons which follow.

[28] The 2 contracts in question are simple documents of 2 pages in length each. An interpretation of these contracts, in either jurisdiction, would not be complex legally.

[29] While Natuzzi quickly brought on a proceeding in the Court in North Carolina for a declaratory judgment, it was aware that an action was being brought on in Ontario in the employment law context.

[30] The burden is on Natuzzi to show why the court should decline to exercise its jurisdiction and displace the forum chosen by the plaintiff. This principle is noted in para. 103 in the recent Supreme Court of Canada decision, Van Breda v. Village Resorts Ltd. 2012 CarswellOnt 4268, 2012 SCC 17, J.E. 2012-788, 212 A.C.W.S. (3d) 712, 343 D.LR. (4th) 577, 91 C.C.L.T. (3d) 1, 17 C.P.C. (7th) 223, 10 R.F.L. (7th) 1, 429 N.R. 217 O.A.C. 201, [212] 1 S.C.R. 572, 114 O.R. (3d) 79 (note). That paragraph reads in part:

The defendant must identify another forum that has an appropriate connection under the conflicts rules and that should be allowed to dispose of the action. The defendant must show, using the same analytical approach the court followed to establish the existence of a real and substantial connection with the local forum, what connection this alternative form has with subject matter of the litigation. Finally the party asking for a stay on the basis of forum non conveniens must demonstrate why the proposed alternative form should be preferred and considered to be more appropriate.

In para. 105, the Supreme Court says:

…the doctrine focuses on the contexts of individual cases, and its purpose is to ensure that both parties are treaty fairly and that the process for revolving their litigation is efficient.

[31] There, the Court also lists a non-exhaustive list of factors to be considered by the court when examining which forum is the most convenient. The list includes:

(a) the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigation in the court or in the alternative forum;

(b) the law to be applied to issues in the proceeding;

(c) the desirability of avoiding multiplicity of legal proceedings;

(d) the desirability of avoiding conflicting decisions in different courts;

(e) the enforcement of an eventual judgment; and

(f) the fair and efficient working of the Canadian legal system as a whole.

[32] In my view, Ontario is the appropriate forum for this employment law case to be heard. The plaintiff lives here, has worked here for Natuzzi for 27 years, and has no connection to North Carolina other than visiting it for meetings a few times per year. She is paid in Canadian dollars through a Canadian bank. Natuzzi has a substantial sales business in Ontario.

[33] All of Petrook’s witnesses are in Ontario. For her to have to ask them to fly to North Carolina on her behalf to give evidence would be a huge expense she could likely not afford. On the other hand, Natuzzi is an international company which will have only 4 witnesses to bring to Canada. Two of the four live in North Carolina and the other two have to fly somewhere to give evidence at Trial. The cost of sending them to Toronto may somewhat exceed that of flying to North Carolina but that is just the price of doing business. It would be a deductible expense for the company.

[34] An eventual Judgment in Ontario can be enforced in North Carolina. There would be little chance of conflicting decisions being made in Ontario, if other representative were terminated here. Even if a representative in another province is terminated, our legal system is such in Canada, which our Courts may follow or adopt the reasoning of cases decided in other provinces. Since North Carolina has no Employment Standards Act, an employment case arising out of that State, could be very unfair to Petrook.

[35] In Tisi v. Cornell Trading Inc. and Cornell Trading Ltd., a 2006 Ontario decision of Mr. Justice Perell of the Superior Court of Justice released August 29, 2006, Court File No.: 05-CV-302969PD3, he, in para.134 states the following:

In the circumstances of this case, a particularly weighty factor is the matter of juridical advantage. It was conceded that because Vermont is an “at-will jurisdiction” with respect to the principles of employment law, from an employee’s perspective, Ontario is a preferable jurisdiction to advance a claim. This factor weighs heavily in Ms. Tisis’s favour in the case at bar. See: Hodnett v. Taylor Manufacturing Industries Inc. (2002), 22 C.P. C. (5th) (Ont. S.C.J.).

In the case before me, this issue is also a weighty factor, given that Petrook’s case is also an employment law case.

[36] In Black v. Breeden, 2012 CarswellOnt 4272, 2012 SCC 19, the Supreme Court of Canada relied on the factors it had set out in Van Breda, supra. It, however, added another factor in para. 23, to be considered by the Court when the other jurisdiction is a foreign one, namely, “the fair and efficient working of the Canadian legal system as a whole.” This factor is also applicable in the case at bar. In employment cases, it is important to move the cases forward as quickly as possible, given that the plaintiff’s livelihood is at issue.

[37] If the terms of the 2 contracts, in question, have to be interpreted, Ontario courts are able to apply the law of North Carolina to contract interpretation, in that regard in Ontario. There is a principle in law, as set out in Vasquez v. Delcan Corp., 1998 14741 (ON SC), [1998] O.J. No. 2833 (S.C.J.) conflict of laws principles. There Madam Justice Swinton, in para. 31 states that Canadian courts respect express choice of the law to govern their contract, absent vitiating factors. In my view, the factors that I have set out above, vitiate the fact that the contracts specify that the law of North Carolina shall apply.

[38] In SVB Underwriting Ltd. v. Fairfax Financial Holdings Ltd., [2007] O.J. No. 518 (S.C.J.), Madam Justice Harvison Young stayed an Ontario action and found that New York City was the proper forum. She based her decision on the fact that geographical location was virtually irrelevant to the nature of the business that the parties carried out. There were no witnesses in Toronto, and no evidence before the court to indicate how the substantive law would significantly differ in each jurisdiction. In that case, the alleged loss was suffered in New York and there was no juridical advantage to having the case heard in Ontario. These factors are very different than the ones I have outlined respecting the case at bar.

[39] For the reasons noted above, I dismiss the Respondent’s Motion to stay the proceeding in Ontario or to dismiss it. The action shall continue in Ontario. An Order shall go accordingly. If Natuzzi requires an Order extending the time for delivery of Natuzzi’s statement of defence, and suspending the effect of the Notice of Action Dismissed dated November 7, 2012 until 30 days following the final determination of this Motion proceeding, such Order shall also go accordingly.

Costs

[40] Since Petrook was successful on the Motion, she is entitled to her Costs. If the parties cannot otherwise agree on Costs, they shall send written submissions to me within 30 days of this Order, no longer than 3 pages in length, plus case law and time dockets and a Bill of Costs. Petrook shall send her submissions to Natuzzi and it shall have 10 days within which to respond, and Petrook shall have 5 days thereafter to Reply, if necessary. All such submissions shall be sent to me at Osgoode Hall.

Greer J.

Released: July 3, 2013

COURT FILE NO.: CV-12-453330

DATE: 20130703

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JAN PETROOK,

Plaintiff,
Responding Party on the Motion

– and –

NATUZZI AMERICAS, INC.,

Defendant,
Moving Party on the Motion

ENDORSEMENT

Greer J.

Released: July 3, 2013