Court File and Parties

COURT FILE NO.: CV-15-534996 DATE: 20160621 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DAHL MORRISON, Plaintiff AND: ERICSSON CANADA INC., Defendant

BEFORE: Madam Justice Darla A. Wilson

COUNSEL: Gurlal S. Kler, Counsel for the Plaintiff John P. Brown, Counsel for the Defendant

HEARD: June 7, 2016

Endorsement

1The Defendant brings this motion for an order dismissing this action pursuant to Rule 21.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, or, in the alternative, staying this action and for an order compelling the Plaintiff to proceed with an arbitration of his dispute against the Defendant, his former employer.

Background

2The Defendant Ericsson Canada Inc. (“Ericsson”) is a global telecommunications company which was founded in Sweden and has various affiliated companies around the world. The North American headquarters is in Plano, Texas.

3The Plaintiff, Dahl Morrison (“Morrison”) worked for a software company that was acquired by Ericsson in September 2012. Ericsson sent Morrison a letter offering employment dated November 7, 2013 (Exhibit A to the affidavit of Nolte sworn January 13, 2016), which Morrison accepted. This letter specified that Morrison would be subject to all applicable policies of the company, including the annual Sales Incentive Plan (“SIP”). On February 14, 2014, Morrison received an email from Ericsson confirming his position, and the email stated that the employment agreement was subject to the laws of the province of Ontario.

4The SIP provided a form of compensation for employees at Ericsson. In his affidavit Morrison confirms that he earned commissions as part of his annual compensation with Ericsson. The terms of the SIP were provided to the employees annually and participation in the program was not mandatory. It is not disputed that the offer and terms of the SIP for the years 2014 and 2015 were brought to the attention of the Plaintiff via email.

5On March 11, 2014, Morrison signed the goal sheet for 2014, agreeing to the terms of the 2014 SIP. On March 25, 2015 he signed the goal sheet for 2015, confirming his agreement to the terms of the 2015 SIP. The document stated, “By my signature below, I acknowledge and agree to the terms and conditions of my goal sheet and the Ericsson Inc. Sales Incentive Plan.”

6The 2014 SIP was attached as Exhibit C to the Nolte affidavit. It provided a comprehensive list of definitions, specified the eligibility of employees, and set out the manner in which the program operated. It included the following provisions, which are relevant for this motion:

E. Right to Interpret. At all times, the Sales Incentive Executive Committee has the sole and exclusive authority to interpret this Plan. The members of the Sales Incentive Executive Committee, whose decisions shall be final and binding, shall resolve any disputes under this Plan.

G. Dispute Resolution. The participant should bring any dispute or controversy arising under or concerning this Plan to his or her first-level manager. Should the issue not be resolved to the participant’s good faith satisfaction, then he or she may escalate the dispute to successive levels of management, in order, as necessary to resolve the issue. The decision of the Sales Incentive Executive Committee shall be final and binding on the dispute.

H. Arbitration. Should the participant be dissatisfied with the final outcome of the Dispute Resolution procedure, the participant and Ericsson agree that any dispute or controversy arising under or concerning this Plan (including the payment and amounts of commissions and bonuses) shall be settled by final and binding arbitration in the City of Dallas, Texas in accordance with the Commercial Arbitration Rules of the American Arbitration Association…. The participant’s and Ericsson’s signature upon the participant’s Goal Sheet reflects the parties’ agreement to be bound by this arbitration provision.

7On May 1, 2015, Morrison appealed three decisions to the SIP Executive Committee arising from his 2014 SIP treatment. On May 23, he was advised that his appeals were unsuccessful. On May 25, 2015, Morrison submitted his notice of resignation from Ericsson. He did not file a claim for arbitration.

8The Plaintiff Morrison issued this claim on August 24, 2015. It claims $180,137.01 in damages for unpaid commissions, $102,936 for damages for wrongful dismissal plus other claims for damages including $150,000 for aggravated and punitive damages.

Positions of the Parties

The Plaintiff

9Morrison submits that the agreement is not binding and reference is made to para. Q of the agreement which reads as follows:

Q. Employment Status. For US employees, nothing in this Plan shall be construed to change the participant’s at-will nature of employment with Ericsson and shall in no way limit the right of Ericsson to terminate a participant’s employment at any time, for any reason, with or without cause. This Plan shall not be evidence of any agreement or contract of employment.

10Morrison deposes in his affidavit that he understood that the terms and conditions of his employment with Ericsson, including the SIP, would be governed by the laws of Ontario. He states that he earned commissions on three different transactions pursuant to the SIP and he is owed these commissions, which total $180,000. As a result of the unfair and arbitrary treatment he alleges he received at the hands of Ericsson, Morrison decided to treat his employment as having been constructively dismissed, so he resigned. He commenced this action in Ontario.

11Counsel for the Plaintiff, Mr. Kler, noted that the claim includes other types of damages, so Morrison would have to return to Ontario in any event to proceed with those claims; it makes no sense to have a multiplicity of proceedings. Mr. Kler argued that it would be expensive for Morrison to travel to Texas for arbitration. In the affidavit of the Plaintiff filed in response to this motion, various factors which suggest that Ontario is the forum conveniens are set out. Morrison deposes, “I believe that it will cost me significantly more money to pursue this matter through the Texas Arbitration Process given the current value of the Canadian dollar.”

The Defendant

12Mr. Brown on behalf of Ericsson submits that the action ought to be dismissed; even if it is arguable that the dispute falls within the terms of the arbitration agreement, the proper approach is for the matter to proceed to arbitration and the action must be stayed. It is clear that the dispute that the Plaintiff has with the Defendant arises entirely from the contractual obligation and thus, it must proceed to arbitration first. The fact that Morrison seeks other damages does not mean the action ought to proceed. Rather, the law is clear that once parties agree to arbitrate a dispute, the jurisdiction of the court is ousted and the parties must proceed with the arbitration.

Analysis

13Section 7 of the Arbitration Act, 1991, S.O. 1991, c. 17, states, “If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding.” Section 17(1) of the Arbitration Act gives the arbitrators power to rule on their own jurisdiction.

14I note at the outset that much of the argument of the solicitor for the Plaintiff was directed towards issues that would more properly be addressed on a forum non conveniens motion for a determination of the proper venue for an action. Such is not the motion before me; I am not tasked with the determination of how to exercise my discretion to assess the connections to competing forums. Rather, this is a motion that seeks to dismiss or alternatively to stay the Ontario action because there has not been an arbitration.

15On the evidence before me, it is clear that Morrison was made aware of the provisions of the SIP when he decided to accept the offer of employment from Ericsson. The SIP was an important part of his remuneration package, but an employee did not have to opt into the plan. The provisions of the SIP made it clear that the incentive payments were subject to the discretion of Ericsson. There was a specific procedure set out for dispute resolution: appeal to a manager; further appeal to successive levels of management; and finally a decision from the SIP Executive Committee which was final and binding. Following that decision, the employee agreed that the route of appeal was to final and binding arbitration in Dallas.

16Indeed, Morrison cannot argue that he failed to appreciate the terms of the SIP for dispute resolution because he followed the appeal procedure through the first three levels. From his evidence, he declined to follow the arbitration procedure because it was too expensive. No other reason is offered for his failure to proceed to arbitration.

17While Morrison argues that he ought to be entitled to proceed with his wrongful dismissal action in Ontario because it seeks other damages apart from the unpaid commissions, that does not address the issue of whether the action ought to be stayed for the failure to proceed to arbitration. I agree with the submission of Mr. Brown that the Plaintiff’s claim for wrongful dismissal damages is premised on a finding that he is entitled to the commission payments he asserts he is owed pursuant to the SIP. The fact that the employment agreement specified that the law of Ontario was to govern is of no assistance to Morrison on the motion before me.

18The language in the SIP is clear and unambiguous; Morrison agreed with the provisions. The language of s. 7(1) of the Arbitration Act is mandatory and requires the court to stay a proceeding when there is an agreement to arbitrate and the dispute is properly within the mandate of the arbitrator. There can be no doubt that disputes arising from the SIP and its interpretation and application are exactly the sorts of issues the arbitrator would deal with.

19In Dell Computer v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801, the Supreme Court of Canada dealt with an application to refer a dispute to arbitration and the issue of whether the court or the arbitrator has jurisdiction initially to rule on arguments concerning the validity or application of an arbitration clause. The court dismissed the suggestion that choosing arbitration somehow gives rise to a “foreign element” as suggested in the case before me by the solicitor for the Plaintiff. The court stated, at paras. 52-52:

To say that the choice of arbitration as a dispute resolution mechanism gives rise to a foreign element would be tantamount to saying that arbitration itself establishes a connection to a given territory, and this would be in outright contradiction to the very essence of the institution of arbitration: its neutrality. This institution is territorially neutral; it contains no foreign element. Furthermore, the parties to an arbitration agreement are free, subject to any mandatory provisions by which they are bound, to choose any place, form and procedures they consider appropriate.

I cannot therefore see how the parties’ choice of arbitration can in itself create a foreign element.

20The Dell Computer case offers helpful comments on the role of the court in the face of an agreement to arbitrate. Briefly put, the Supreme Court stated, at para. 150, that the jurisdiction of the Superior Court is ousted in the face of an arbitration agreement, save and except for some very limited exceptions: “There is consequently no question that, if the arbitration agreement is valid and relates to the dispute, the Superior Court has no jurisdiction to hear the case and must refer the parties to arbitration.”

21With respect to the ambit of the arbitrator’s jurisdiction the court noted, at para. 84, “I would lay down a general rule that in any case involving an arbitration clause, a challenge to the arbitrator’s jurisdiction must be resolved first by the arbitrator.”

22In Dancap Productions Inc. v. Key Brand Entertainment Inc., 2009 ONCA 135, 246 O.A.C. 226, the court dealt with a dispute under the Arbitrations Act. The court reaffirmed, at para. 32, “Where it is arguable that the dispute falls within the terms of the arbitration agreement or where it is arguable that a party to the legal proceedings is a party to the arbitration agreement then, in my view, the stay should be granted and those matters left to be determined by the arbitral tribunal.”

23In my opinion, the matters at issue fall directly within the terms of the SIP agreement, which requires that if a dispute arising out of the agreement cannot be resolved, the parties must arbitrate the dispute in Texas. The Plaintiff cannot avail himself of the appeal procedures specified in the agreement and when he does not like the decisions rendered, choose to abandon the final dispute mechanism that is set out and which he agreed to. The arbitration has not taken place because the Plaintiff has refused to participate. The fact that it might be inconvenient or expensive for Morrison to arbitrate in Texas is not a compelling reason to find that he ought to be permitted to pursue the Ontario action. Even if there were an issue of whether the dispute was properly sent to the arbitrator, which was not an argument advanced before me, the matter must be referred to the arbitrator for that determination. In my view, the issues Morrison complains of arise from his employment and in particular arise from the administration of the SIP program and as such, he must proceed to arbitration in accordance with the agreement.

Conclusion

24The motion of the Defendant is granted. The Ontario action is stayed and the Plaintiff is directed to proceed with arbitration of his dispute in accordance with the terms of the agreement he signed.

25If parties cannot agree on costs, I may be contacted.

D.A. Wilson J.