CITATION: Lopez v. EMD Inc. (Canada), 2017 ONSC 7716

COURT FILE NO.: CV-14-518337

DATE: 20171222

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N :

MICHAEL LOPEZ

Plaintiff

– and –

EMD INC., CANADA

Defendant

Jamie Van Wiechen

for the Plaintiff

Daphne Fedoruk

for the defendant

HEARD: June 19, 20, 21, 2017

FAVREAU J.:

Introduction

[1] The plaintiff, Michael Lopez, was employed by the defendant, EMD Inc., Canada ("EMD"), as Manager and Head of Quality Operations, from December 14, 2009 until October 2, 2014, when he was terminated with notice. At the time of his termination, relying on the termination clause in Mr. Lopez's employment contract, EMD made a payment in lieu of notice equivalent to Mr. Lopez's entitlement under the Employment Standard Act, 2000, S.O. 2000, c.41 (“ESA”) and continued his benefits for four weeks. Prior to trial, EMD made an additional payment to Mr. Lopez and he has now received the equivalent of sixteen weeks in lieu of notice.

[2] Mr. Lopez seeks three and a half months of additional notice and punitive damages. Mr. Lopez claims that the termination clause in his employment agreement with EMD is invalid, and that he is entitled to 7.5 months of notice at common law. He further claims that the treatment he received during the course of his employment and following his termination warrants an award of punitive damages. In contrast, EMD relies on the termination clause and argues that in any event it has met its common law notice obligations. EMD also argues that Mr. Lopez has failed to mitigate his damages and that he is not entitled to punitive damages.

[3] For the reasons that follow, I find that the termination clause is valid, and Mr. Lopez has received the notice to which he is entitled. I also find that this is not a case warranting an award of punitive damages.

Facts giving rise to the action

[4] At trial, the parties provided an agreed statement of facts and called a number of witnesses. The only witness for the plaintiff was Mr. Lopez. The defendant called Dr. Peter Grosser, (Mr. Lopez's immediate supervisor for a period of time) and Megan Iannone (a human resources employee at EMD involved in Mr. Lopez's termination), and on consent of the plaintiff also provided an affidavit sworn by Eric Mailleux (Mr. Lopez's immediate supervisor at the time of his termination).

[5] Mr. Lopez was born on September 30, 1961. He obtained a BSc in Biochemistry from the University of Toronto in 1983, a BAS from a business program at York University in 1995, and an MBA from the University of Western Ontario in 1999. Prior to his employment with EMD, Mr. Lopez held a number of positions with different pharmaceutical companies.

[6] EMD is a multinational pharmaceutical company.

[7] Mr. Lopez was hired by EMD as Manager and Head of Quality Operations in December, 2009, and started working on December 14, 2009.

[8] In their agreed statement of facts, the parties agreed that Mr. Lopez's job functions and responsibilities included the following:

1. Leadership of the Quality Operations team in Canada.

2. Responsibility for quality and compliance of EMD Canada's biotechnology, pharmaceutical, NHP and medical device products in the Canadian market.

3. Close collaboration with Health Canada, Merck Corporate Office (global), Merck manufacturing sites (global) and Merck vendors and suppliers (global).

4. Efficient operation of EMD's Quality Management system.

5. Submissions to Health Canada, including Establishment License renewals (Drug and Medical Device).

6. Site Inspection Preparation and Readiness.

7. Host of Health Authority inspections, Merck Corporate audits and Merck supplier audits at the Canadian site.

[9] At the time of his dismissal, two employees reported to Mr. Lopez and he oversaw the work of an external consultant.

[10] Initially, Mr. Lopez reported directly to Dr. Grosser. However, sometime in late 2013 or early 2014, EMD changed its reporting structure after which Mr. Lopez reported directly to Mr. Mailleux who was based in Geneva, Switzerland. After this change in the reporting structure, Mr. Lopez maintained a "dotted line" reporting relationship with Dr. Grosser.

[11] At the time of his termination, Mr. Lopez's annual overall remuneration was $154,904.54, calculated based on a salary of $118,247.74, an annual bonus of $23,649.55 and the value of his benefits at $13,007.25 (representing 11% of his base salary).

Employment contract

[12] On the commencement of his employment with EMD, Mr. Lopez signed an employment agreement that included the following termination clause:

EMD Serono may terminate your employment without cause upon giving you the applicable statutory notice, termination pay and/or severance pay to which you may be entitled.

You agree that EMD Serono may deduct from any payment of salary instead of notice under this provision your benefit plan contributions that were regularly made by you during the term of this Agreement in accordance with the terms of all benefit plans to be maintained under this provision for the minimum period prescribed by law.

You confirm that the termination provisions above, and specifically, the notice and pay in lieu of notice provisions above (sic) are fair and reasonable and are necessary to protect both parties. You further agree that, upon termination of your employment under the provisions of this Agreement, you will not be entitled to any additional notice, pay in lieu of notice or compensation whether under statute, at common law or otherwise. Therefore, you agree that upon termination of your employment under the provisions of this Agreement, you will have no action, cause of action, claim, complaint or demand against EMD Serono or any other person as a consequence of such termination and that you will not file or commence any such action, cause of action, claim or demand against EMD Serono.

Employment and termination

[13] Much of the work performed by Mr. Lopez during his employment with EMD was project based. Mr. Lopez received performance appraisals throughout his time at EMD. Generally, his ratings were very positive.

[14] At trial, Mr. Lopez gave evidence about a number of incidents that occurred during his employment, primarily involving Dr. Grosser. Given that Mr. Lopez was terminated with notice, these incidents are only relevant to the issue of whether Mr. Lopez is entitled to punitive damages. Accordingly, the evidence on these incidents and their significance is reviewed below in the section dealing with punitive damages.

[15] Mr. Lopez's evidence is that, at the time of his dismissal, he was taken completely by surprise.

[16] Just prior to his termination, Mr. Lopez had been working on a project dealing with the tracking of medical devices that was close to completion. It was a challenging project, but by the end of September 2014, the project was 90% complete, and Mr. Lopez had prepared a report on the project. At that point, there were two to three weeks left to complete the project.

[17] On October 2, 2014, Dr. Grosser invited Mr. Lopez to a meeting about the project. Mr. Lopez brought copies of his report to the meeting, but when he entered the meeting, Ms. Iannone was also present in the meeting room. Mr. Grosser told Mr. Lopez that he had lied about the purpose of the meeting, and that Ms. Iannone was going to talk to him about a termination package. The termination was immediate and Mr. Lopez was asked to leave the premises and provide his blackberry that day.

Payments made following termination

[18] Initially, after Mr. Lopez was terminated, he was paid $9,095.98, which represented a lump sum payment in lieu of notice of the amount he was entitled to receive under the ESA, and his benefits were maintained for a four week period.

[19] In June 2017, well after the commencement of this litigation, EMD made a further payment of $30,308.00 to Mr. Lopez, broken down as follows:

Weekly total compensation x 16 weeks (base + bonus) $43,666.15

Benefits at 11% of base for 12 weeks $3,000.00

Less ESA amount already paid ($9,095.98)

Less consulting fees earned in November 2014 ($8,893.67)

Unpaid expense ($1,631.50)

Total $30,308.00

Efforts to find employment following termination

[20] Mr. Lopez's evidence is that he commenced looking for work immediately after his termination.

[21] He did some work as a consultant shortly after his employment was terminated, in November 2014, for which he was paid $8,893.67. Mr. Lopez claims that a portion of that amount was paid to a consultant and that there were expenses associated with the work, and therefore his income was actually $5,070.50.

[22] On January 23, 2015, Mr. Lopez received an offer of employment from another pharmaceutical company, Experchem Lab. The offer was for a position of Manager, Quality & Regulatory Affairs. The base salary was $120,000, with 3 weeks of vacation and a "bonus based on the company and your performance". Mr. Lopez did not accept the offer. His evidence was that the work was not a good fit for his skills because it involved quality control in the laboratory setting rather than in regulatory matters. In addition, he did not believe that the compensation was comparable to what he received from EMD. In particular, there was less vacation and there was uncertainty over the bonus he would receive. He was also concerned that the company itself may not be stable; it was small and he understood that it might be for sale. At that time, Mr. Lopez was also in discussions with a company in Asia about a potential job opportunity.

[23] Ultimately, the opportunity in Asia worked out. Mr. Lopez accepted an offer of employment with Medytox on March 24, 2015, and began his employment on May 18, 2015. The compensation he receives from Medytox exceeds what he received at EMD.

Issues and Analysis

[24] Mr. Lopez' claim against EMD gives rise to the following issues:

1. Whether the termination clause in the employment contract is enforceable;

2. If the termination clause is not valid, the common law notice period to which Mr. Lopez is entitled;

3. Whether Mr. Lopez met his obligation to mitigate his damages; and

4. Whether Mr. Lopez is entitled to punitive damages.

Termination Clause

[25] Mr Lopez argues that the termination clause in his employment contract is not enforceable because it is ambiguous and could be construed as an attempt to contract out of the ESA, and that he is therefore entitled to statutory notice.

[26] The common law requirement to provide reasonable notice can be rebutted where the employer and employee enter into a contract that unambiguously excludes the statutory minimum payments and benefits under the ESA: Matchinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986 at para. 20.

[27] However, to be valid, such a provision must comply with the minimum requirements under the ESA. Any apparent attempt to contract out of the minimum standards is invalid as provided for in 5(1) of the ESA.

[28] Recently, in Wood Fred Deeley Imports Ltd., 2017 ONCA 157, at para. 28, the Court of Appeal emphasized that any ambiguity in a termination provision is to be resolved in favour of the employee given the unequal bargaining power between the parties:

The importance of employment and the vulnerability of employees when their employment is terminated give rise to a number of considerations relevant to the interpretation and enforceability of a termination clause:

• When employment agreements are made, usually employees have less bargaining power than employers. Employees rarely have enough information or leverage to bargain with employers on an equal footing: Machtinger, p. 1003

• Many employees are likely unfamiliar with the employment standards in the ESA and the obligations the statute imposes on employers. These employees may not seek to challenge unlawful termination clauses: Machtinger, p. 1003

• The ESA is remedial legislation, intended to protect the interests of employees. Courts should thus favour an interpretation of the ESA that "encourages employers to comply with the minimum requirements of the Act" and "extends its protections to as many employees as possible", over an interpretation that does not do so: Machtinger, p. 1003.

• Termination clauses should be interpreted in a way that encourages employers to draft agreements that comply with the ESA. If the only consequence employers suffer for drafting a termination clause that fails to comply with the ESA is an order that they comply, then they will have little or no incentive to draft a lawful termination clause at the beginning of the employment relationship: Machtinger, p. 1004.

• A termination clause will rebut the presumption of reasonable notice only if its wording is clear. Employees should know at the beginning of their employment what their entitlement will be at the end of their employment: Machtinger, p. 998.

• Faced with a termination clause that could reasonably be interpreted in more than one way, courts should prefer the interpretation that gives the greater benefit to the employee: Ceccol v. Ontario Gymnastics Federation (2001), 2001 CanLII 8589 (ON CA), 149 O.A.C. 315, Family Counselling Centre of Sault Ste. Marie and District (2001), 2001 CanLII 4698 (ON CA), 151 O.A.C. 35.

[29] In this case, Mr. Lopez argues that the termination clause is ambiguous in two ways, and could thereby be read as an attempt to contract out of the ESA minimum standards. First the use of the words "applicable statutory notice" does not make clear what is and is not intended to be included, and therefore it is not clear that benefits are included. Second, by making reference to the "statutory notice", it is not clear that the intention is to provide Mr. Lopez with the minimum statutory notice; there is no explicit exclusion of a higher amount.

[30] In response, the defendant argues that the second paragraph in the termination clause makes clear that Mr. Lopez was to receive benefits during the notice period, and that, while a reference to minimum standards is not necessary, the use of the word "minimum" in the second paragraph is a clear indication that the intent was to provide the minimum notice available under the ESA.

[31] As referred to above, in Wood v. Fred Deeley Imports Ltd., supra, the Court of Appeal made clear that courts are to be careful to recognize the unequal bargaining power between employer and prospective employee, thereby resolving any ambiguities in favour of the employee.

[32] However, this principle cannot be stretched to the point of finding ambiguity where none exists. In Oudin v. Centre Francophone de Toronto, 2015 ONSC 6494 (Sup. Ct.) at para. 51 (aff'd 2016 ONCA 514), the Court cautioned against avoiding an objective interpretation of the parties' intentions:

The first task in contractual interpretation is to interpret the contract with a view to ascertaining the objective intention of the parties. This is done by considering the language used by the parties in the context in which it is found. The goal is not to imagine how the contract can be construed at its conclusion with a pre-determined goal of finding a means to avoid it entirely because one side finds it less generous than desired. The goal is always and everywhere to determine what was intended on a true and fair construction of the contract. Then, and only then, can that construction be held under the light of s. 5(1) of the ESA to ascertain whether the parties intended to contract out of one or more employment standards prescribed by the ESA. If, and only if, a fair construction of the contract leads to the conclusion that such was their intention, then that attempt to contract out is rendered void by s. 5(1) of the ESA.

[33] Similarly, in Cook v. Hatch Ltd., 2017 ONSC 47 (Sup. Ct.), at para. 25, this Court held that "[w]e are to look for the true intention of the parties, not to disaggregate the words looking for any ambiguity that can be used to set aside the agreement…"

[34] Cases where the courts have found that termination clauses are unenforceable include:

• In Wood v. Fred Deeley Imports Ltd., supra, the termination clause stated that the employer was not required to make any payments other than "payment in lieu of notice and severance pay". The Court found that this clause was unenforceable because it contracted out of the employer's obligations under the ESA to continue benefit contributions during the notice period.

• In Carpenter v. Brains II, Canada Inc., 2015 ONSC 6224 (Sup. Ct.), the termination clause provided that the employer in "the event of termination of employment, except where such termination is for just cause, will provide you with notice (or salary in lieu thereof), and severance pay [if applicable]" under the employment standards legislation. In that case, the Court held that the termination clause was unenforceable because it again could be read as an attempt to contract out of the employer's obligation to continue to pay benefits during the notice period.

• In Dwyer v. Advanis Inc., 2009 CanLII 23869 (ON SC), [2009] O.J. 1956 (Sup. Ct.), the termination clause provided that "should it be determined that if there is not a fit between your skills and the requirements of the job your employment will be terminated and you will receive severance as determined by the applicable Employment Standard Act". In that case, the Court held that the clause was ambiguous because it was not clear whether entitlement was limited to what is provided by the ESA and "nothing more".

[35] In contrast, no ambiguity was found in the following circumstances:

• In Clarke v. Insight Components (Canada Inc.), 2008 ONCA 837, the Court of Appeal found that there was no ambiguity in a termination clause that provided "Your employment may be terminated without cause for any reason upon provision of reasonable notice equal to the requirements of the applicable employment or labour standards legislation." The Court rejected the argument that the words "reasonable notice" caused ambiguity, holding that they had to be read in the context of the sentence as a whole which referred to the applicable employment standards legislation.

• In Stevens v. Sifton Properties Ltd., 2012 ONSC 5508 (Sup. Ct.), this Court found no ambiguity in a provision very similar to the one in this case that provided that "The Corporation may terminate your employment without cause at any time by providing you with notice or payment in lieu of notice, and/or severance pay, in accordance with the Employment Standards Act of Ontario". In that case, the Court explicitly rejected an argument advanced in this case to the effect that the failure to refer to the ESA notice as a minimum creates ambiguity because it allows for the possibility of a higher amount of notice.

• In Cook v. Hatch Ltd., supra, this Court found that there was no ambiguity in a termination provision that stated that "[t]he notice period shall amount to one week per year of service with a minimum of four weeks of the notice required by the applicable labour legislation". The Court rejected an argument that the failure to make explicit reference to benefits rendered the clause invalid, holding at para. 41 that:

To my mind it is a peculiar idea that a contract that is silent as to a statutory requirement, through that silence is said to show an intention to contract out of what the legislation directs. Surely in this circumstance "silence gives consent". Otherwise in using a termination clause to limit the notice requirement to what the applicable legislation requires, the contract would have to acknowledge all that it agrees to, as well. In this case the termination clause refers only to notice of termination; that is all it seeks to limit. It does not refer to, deal with, or attempt to avoid any other requirement under the Employment Standards Act or any other legislation.

[36] In this case, I do not accept that the terms of the termination clause are ambiguous or attempt to contract out of the minimum standards in the ESA. Mr. Lopez's arguments depend on reading the first paragraph in isolation. Based on that paragraph alone, it could be inferred that the notice did not include the provision or payment of benefits because there is no reference to benefits. However, in my view, the approach is akin to the disaggregation of the language in the contract cautioned against in Cook v. Hatch Ltd., supra.

[37] The first paragraph cannot be read in isolation. The second paragraph explicitly addresses the issue of benefits, making clear that benefits will continue for the minimum statutory period as deductions will be made for those benefits during the relevant period.

[38] Similarly, I don't accept that the failure to refer to the minimum notice period in the first paragraph creates ambiguity. On its own, the reference to the "applicable statutory notice" in the singular makes evident that what is intended is the minimum period required by statute. In any event, the reference to "minimum" in the following paragraph makes evident that the intent is for the minimum statutory period as applied to both the payment in lieu of notice and period of time during which benefits will continue to be paid. Given the presence of both paragraphs, it would be a stretch to say that the termination provision in this case is ambiguous.

[39] Accordingly, I find that the termination provision is valid and enforceable. Given that Mr. Lopez was initially paid in accordance with the minimum requirements under the ESA and that, in fact, since then he has been given the equivalent of sixteen weeks' notice, I find that he has received the notice he was entitled to under the termination provision.

Length of Notice

[40] In the event that I am incorrect in finding that the termination provision is valid, I now turn to consider the common law notice to which Mr. Lopez would be entitled.

[41] Following his termination, it took Mr. Lopez 7.5 months to start his new employment with Medytox. He claims that this is the notice he is entitled to at common law. In contrast, the defendant takes the position that Mr. Lopez's common law notice entitlement should be equivalent to one month for each year of service, which would be 5 months’ notice.

[42] The case law provides that there is no formula for determining entitlement to common law notice. Rather, the court must consider a number of factors and have reference to comparable cases: Nasager v. Northern Reflections Ltd., 2010 ONSC 5840 (Sup. Ct.), at para. 10. The factors to consider include the character of the employment, the length of service, the age of the employee and the availability of other similar employment, taking into consideration the experience, training and qualifications of the employee: Wiens v. Davart Tools Inc., [2014] O.J. No. 3787 (Sup. Ct.), at para. 166.

[43] In support of their respective positions, both sides have presented cases they say are similar to Mr. Lopez's situation.

[44] I accept the defendant's submission that Mr. Lopez's situation is more akin to circumstances where courts have awarded one month of notice for each year of employment: see for example Wiens v. Davart Tools Inc., supra, at paras. 168-169; Pede v. Plaza Pontiac Buick GMC Inc., 2011 ONSC 698 (Sup. Ct.), at para. 29; and Ducharme v. Cambridge Stamping Inc., 2008 CanLII 19499 (ON SC), [2008] O.J. No. 1666 (Sup. Ct.) at para. 13.

[45] In this case, Mr. Lopez had been employed for less than five years. While he is in a management position, he only had two other employees reporting to him. While no specific evidence was led on the general availability of work in his area, it is evident from his mitigation efforts that there was some employment available in his field at the relevant time.

[46] Mr. Lopez relies on a chart of cases from a database suggesting that the average length of notice for someone in Mr. Lopez's circumstances is 7.85 years. I note that in many of the cases in the chart, the notice period is actually one month for each year of service, while a handful of cases have longer notice periods. It is not clear to me that cases with longer notice periods are equivalent to Mr. Lopez's circumstances. For example, in one of the decisions in the chart, Edwards v. Irwin, [1993] O.J. No. 450 (Gen. Div.) where approximately two months’ notice per year of service was awarded, the terminated manager had been supervising 150 employees.

[47] Accordingly, in my view, if the termination clause had been invalid, 5 months would be a period of notice at common law.

Mitigation

[48] Again, the issue of mitigation is only relevant if my finding that the termination provision is valid is incorrect.

[49] The defendant takes the position that Mr. Lopez failed to meet his obligation to mitigate his damages as he should have accepted the offer made by Experchem in January 2015. I accept Mr. Lopez's position that he was not required to accept this offer in order to mitigate his damages.

[50] There is no dispute between the parties that Mr. Lopez had an obligation to take reasonable steps to mitigate his damages. The only point of disagreement is whether it was reasonable for Mr. Lopez to not accept the offer of employment with Experchem.

[51] The plaintiff relies on the decision of the British Columbia Court of Appeal in Forshaw v. Aluminex Extrusions Ltd. (1989), B.C.L.R. (2d) 140, at para. 17, to argue that reasonableness must be assessed from the perspective of what a reasonable person would do in Mr. Lopez's position to protect his own interests:

The duty to "act reasonably", in - seeking and accepting alternate employment, cannot be a duty to take such steps as will reduce the claim against the defaulting former employer, but must be a duty to take such steps as a reasonable person in the dismissed employee's position would take in his own interests - to maintain his income and his position in his industry, trade or profession. The question whether or not the employee has acted reasonably must be judged in relation to his own position, and not in relation to that of the employer who has wrongfully dismissed him. The former employer cannot have any right to expect that the former employee will accept lower-paying alternate employment with doubtful prospects, and then sue for the difference between what he makes in that work and what he would have made had he received the notice to which he was entitled.

[52] In my view, it was reasonable for Mr. Lopez to refuse the offer from Experchem. There was a constellation of factors that influenced his decision, including the fact that the responsibilities did not align with his experience, that there was some uncertainty over the amount of his bonus, and that the company itself appeared to face uncertainty.

[53] Apart from whether Mr. Lopez should have accepted this offer, the evidence makes clear that he was diligent in seeking employment immediately following his termination, and that he even did some contract work as a consultant soon after the termination.

[54] Accordingly, if the termination clause did not apply, I would have found that Mr. Lopez met his obligation to mitigate his damages.

Punitive Damages

[55] The plaintiff argues that he is entitled to punitive damages on the basis that he was harassed and intimated during the course of his employment and on the basis of the manner in which he was treated following the termination of his employment. In addition, he claims that the termination was instigated at Dr. Grosser's behest in retaliation for a complaint Mr. Lopez had made about him.

[56] I am not satisfied that the plaintiff has made out the high threshold for an award of punitive damages.

[57] The principles to be applied in determining entitlement to punitive damages in the employment law context were helpfully summarized in Dwyer v. Advanis, 2009 CanLII 23869 (ON SC), [2009] O.J. 1956 (Sup. Ct.) at para 48:

1. Generally, damages are not available for the actual loss of a job or for pain or distress suffered as a consequence of being terminated.

2. Damages resulting from the manner of dismissal will be available if the result from the circumstances described in Wallace where the employer engages in conduct during the course of dismissal, that is "unfair or is in bad faith by being, for example, untruthful, misleading or unduly restrictive".

3. These damages should be awarded through an award that reflects actual damages rather than by extending the notice period.

4. It is no longer required that such damages be independently actionable.

5. Punitive damages are restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own. Courts should only resort to punitive damages in exceptional cases.

[58] Mr. Lopez relies on events that occurred during the course of his employment and following his dismissal in support of his claim for punitive damages. I find that none of these circumstances either in isolation or cumulatively meet the high threshold for an award of punitive damages. While Mr. Lopez was frustrated by some incidents involving Dr. Grosser and he was understandably upset about his termination, there is no basis for finding EMD behaved with malice or in a manner that was so outrageous that it deserves punishment.

[59] Mr. Lopez's evidence is that he initially got along well with Mr. Grosser, although he found it difficult to meet with him in person. Many of their communications were through BBM messages, and Mr. Lopez found some of Mr. Grosser's messages abrupt. Mr. Lopez testified that, over time, his relationship with Mr. Grosser deteriorated. He was frustrated by the fact that he was not able to meet regularly in person with Mr. Grosser and also with the tone of some of Mr. Grosser's messages, which he stated were often in capital letters.

[60] Mr. Lopez also relied on a number of specific incidents in support of his claim for punitive damages.

[61] One incident occurred in 2010 or 2011, at a time when Mr. Lopez was home sick with a kidney infection. While Mr. Lopez had notified Dr. Grosser via email that he was ill, Mr. Grosser sent a BBM message to Mr. Lopez telling him to send out some products, and stating that he did not care what it took to get the products out. Mr. Grosser's evidence is that he was not aware at the time that Mr. Lopez was home sick because he had not yet read his email and that he apologized when he found out. Mr. Lopez was upset that Dr. Grosser treated him this way given that he was ill, and sees the fact that Dr. Grosser had not checked his email as an example of Dr. Grosser's inattention.

[62] Mr. Lopez testified that, on another occasion, Dr. Grosser asked him to organize a meeting with a group of employees. There were some difficulties in getting one of the employees to attend, and Mr. Lopez's evidence is that Dr. Grosser swore at him, saying "you fucked up, you really fucked up". Dr. Grosser denies saying this to Mr. Lopez. Regardless, Mr. Lopez acknowledged that this was the only time Dr. Grosser used swear words directed at him and that it was unusual for him to do so. At most, this was an isolated incident and was not part of a pattern of conduct.

[63] Mr. Lopez testified that things came to a head in May 2014. At that time, Mr. Lopez was working on a medical devices tracking project involving Health Canada. It was Mr. Lopez's understanding that his team was supporting the project rather than leading the project. The project was behind schedule, and it was Mr. Lopez's perception that the problems predated his involvement. However, in May 2014, Dr. Grosser called a group meeting, and said to Mr. Lopez in front of a number of other EMD employees "You must fix this. It's your problem." A few days following this meeting, Mr. Lopez sought to speak in private to Dr. Grosser at which time Dr. Grosser told Mr. Lopez that he should "be careful". That same morning, two EMD employees had been let go, and Mr. Lopez took this as a threat.

[64] Dr. Grosser's evidence was that he asked Mr. Lopez to take charge of the project because another person involved in leading the project was needed for other work. He was surprised by Mr. Lopez's negative reaction to the request, because it seemed reasonable and was not meant to be punitive. In respect of the follow up meeting, Dr. Grosser acknowledged telling Mr. Lopez to be careful, but he did not intend the comment as a threat. His recollection is that he also told Mr. Lopez that with international reorganizations in the company, there were some changes in expectation and that their work might be scrutinized differently. Dr. Grosser testified that he believed he was giving Mr. Lopez helpful advice.

[65] Mr. Lopez's evidence is that he took the issue up with Mr. Mailleux and others at EMD. He even prepared a draft email that he shared with Mr. Mailleux making a formal complaint, but that Mr. Mailleux counseled him to go no further with the matter.

[66] In further support of the claim for punitive damages, Mr. Lopez asks that the court draw an inference that the termination was instigated by Dr. Grosser for the purpose of retaliating against him in relation to complaints Mr. Lopez made about Dr. Grosser.

[67] The defendant put forward affidavit evidence through Mr. Mailleux to the effect that he did not see this incident as a formal complaint that needed to be escalated, and also that Mr. Lopez's termination was decided at a higher level in the company and was not motivated by this incident. For his part, Dr. Grosser testified that he was not even aware of the communications between Mr. Mailleux and Mr. Lopez about the incident until after Mr. Lopez was terminated.

[68] Mr. Lopez's counsel argued that I should draw an adverse inference from the fact that the executives who EMD claims were involved in the termination decision were not called as witnesses at trial. In my view, even if I were to ignore Mr. Mailleux's affidavit evidence, there is no support for Mr. Lopez's speculation that his termination was an act of retaliation. Dr. Grosser did testify at trial, and his evidence was that he was not even aware of the complaint. I see no reason not to believe his evidence. In addition, by that point, Mr. Lopez did not report directly to Dr. Grosser, and the termination decision would not have been his in any event.

[69] In any event, besides incidents that occurred during his employment and the motives underlying his termination, Mr. Lopez relies on events following his dismissal in support of his claim for punitive damages.

[70] In addition, at the time of the termination, Mr. Lopez had some outstanding expense claims. There was evidence led at trial about delays in paying those expense claims following the termination. Mr. Lopez claims that he was asked for excessive supporting documents and that the expense claims were unnecessarily scrutinized. Dr. Grosser's evidence was EMD encountered difficulties in processing the expense claims because they were submitted well beyond the usual 30 days after they were incurred, and that some work was required in reconciling the expense claims. Even if there was delay, there is no evidence that the delay was motivated by any malice or was otherwise in bad faith.

[71] Mr. Lopez also relies on the manner in which his personal effects were returned following his termination. While it does appear that it took EMD some time to gather up all of his personal effects and deliver them to him, again I do not see any malice or bad faith in the manner in which this was done.

[72] In Honda Canada v. Keays, 2008 CanLII 11072 (SCC), 2008 SCC 29, at para. 68, the Supreme Court of Canada emphasized the exceptional circumstances required for an award of punitive damages in the employment context:

Even if I were to give deference to the trial judge on this issue, this Court has stated that punitive damages should "receive the most careful consideration and the discretion to award them should be most cautiously exercised" (Vorvis, at pp. 1104-5). Courts should only resort to punitive damages in exceptional cases (Whiten, at para. 69). The independent actionable wrong requirement is but one of many factors that merit careful consideration by the courts in allocating punitive damages. Another important thing to be considered is that conduct meriting punitive damages awards must be "harsh, vindictive, reprehensible and malicious", as well as "extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment" (Vorvis, at p. 1108). The facts of this case demonstrate no such conduct. Creating a disability program such as the one under review in this case cannot be equated with a malicious intent to discriminate against persons with a particular affliction.

[73] Quite reasonably, Mr. Lopez had high expectations about the manner in which he expected EMD to behave toward him and it is apparent that EMD did not always meet those expectations. However, even accepting Mr. Lopez's version of events, some abrupt emails and BBM messages, one or two isolated intemperate comment, the suggestion that not accepting a work assignment might jeopardize his job and the delay in paying his expenses and returning his personal items do not in isolation or even cumulatively rise to the level of conduct deserving of punishment or the court's condemnation. Rather, they fall within the range of normal workplace frustrations and conflict.

[74] Accordingly, in my view this is not an appropriate case for punitive damages.

Damages

[75] Given my finding that the termination provision is valid and that no punitive damages are warranted, there is no basis for awarding damages to Mr. Lopez.

[76] However, if I had found that the termination provision was invalid, as indicated above I would have found that Mr. Lopez is entitled to five months’ notice at common law, and that no deduction should be made as Mr. Lopez did not fail to mitigate his damages.

Conclusion

[77] For the reasons given above, the claim is dismissed.

[78] If the parties are unable to agree on costs, the defendant is to provide brief written submissions by no later than January 15, 2018, and the plaintiff by no later than January 31, 2018.

FAVREAU J.

RELEASED: December 22, 2017

CITATION: Lopez v. EMD Inc. (Canada), 2107 ONSC 7716

COURT FILE NO.: CV-14-518337

DATE: 20171222

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N :

MICHAEL LOPEZ

Plaintiff

– and –

EMD INC., CANADA

Defendant

REASONS FOR JUDGMENT

FAVREAU J.

RELEASED: December 22, 2017