COURT FILE NO.: 17-72886
DATE: 2018/06/05
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ERIC NORGREN
Plaintiff
AND
PLASMA POWER LLC,
ADVANCED PETRO TECHNOLOGIES LLC
ADVANCED PETRO TECHNOLOGIES CANADA 1, ULD
CRU ENGINEERING LLC
AXENIC POWER LLC
PLASMA TECH HOLDING LLC
XDI HOLDINGS LLC
Defendants
BEFORE: Justice Marc R. Labrosse
COUNSEL: Phillip R. White, Counsel, for the Plaintiff
Craig J. Stehr, Counsel, for the Defendants
HEARD: May 16, 2017
AMENDED DECISION
Correction notice: This document is a new version of the decision released on June 5, 2018. The text of the original decision was corrected on August 31, 2018, with a correction of the date on which the matter was heard. See attached amendment.
ENDORSEMENT
OVERVIEW
[1] The Plaintiff Eric Norgren brings this motion for summary judgment for the payment of the compensation he claims is owed to him pursuant to a three-year fixed term of employment contract with the seven named Defendants. Alternatively, the Plaintiff seeks wrongful dismissal damages from the Defendants for failure to have provided him with reasonable notice of his termination.
[2] Pursuant to an offer for employment dated May 11, 2015, the Plaintiff was originally employed as Vice-President, Project Capital and Financing by the Defendant Plasma Power LLC. In this role, the Plaintiff was in charge of securing long-term, multi-million-dollar project financing for all of the Defendants who, with the exception of the Defendant Advanced Petro Technologies Canada 1, ULC (“APTC”), are located in the United States. The Plaintiff describes the Defendants as a group of companies working in the field of business technology development and commercialization for energy and waste remediation.
[3] On October 29, 2015, the Plaintiff signed a second offer for employment with APTC which confirmed that the Plaintiff was now employed as Vice-President, Project Capital and Financing of APTC. The second offer for employment is silent on its effect on the May 11, 2015 offer for employment from Plasma Power. It is not disputed that APTC was created as a Canadian corporation at least in part to benefit from grant financing.
[4] Both offers for employment are essentially identical in their terms:
(i) base salary of $166,000 USD;
(ii) for each project that accomplishes a construction release through a finance package established by the Plaintiff’s efforts, he will receive a bonus of $150,000 USD;
(iii) 1% of all liquidity and investment in our enterprises which have been developed solely through the Plaintiff’s efforts;
(iv) the agreement will “time out in 3 years and the goals will be reset”; and
(v) the Plaintiff’s title was to be VP, Project Capital and Financing.
[5] The Plaintiff was dismissed without cause in a letter sent to him by APTC on March 10, 2017.
ISSUES
[6] The issues in this matter are as follows:
(1) Is this case an appropriate case for summary judgment?
(2) Are the Defendants the Plaintiff’s common employers?
(3) Is the Plaintiff’s employment governed by a fixed term contract of employment?
(4) If the Plaintiff’s employment is governed by an indefinite term of employment, what is the reasonable notice owed to the Plaintiff;
(5) Is the Plaintiff owed accrued vacation pay and in what amount?;
(6) Is the Plaintiff owed stock options or an equity interest from the Defendants?
Issue 1: Is this case an appropriate case for summary judgment?
[7] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that summary judgment shall be granted where there is no genuine issue for trial. In determining whether there is a genuine issue requiring a trial, Rule 20.04(2.1) grants certain fact‑finding powers and Rule 20.04(2.2) allows for a mini‑trial to be held to receive oral evidence from one or more parties.
[8] On a motion for summary judgment, the Court must first determine if there is a genuine issue requiring a trial based only on the evidence before the Court. If there appears to be a genuine issue requiring a trial, the Court should then determine if the need for a trial can be avoided by using the fact‑finding powers under Rules 20.04(2.1) and 20.04(2.2).
[9] The leading case on the use of summary judgment is Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at para. 49, where the Supreme Court of Canada stated:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
[10] As set out in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 33, “if the court cannot grant judgment on the motion, the court should decide those issues that can be decided, … identify the additional steps that will be required to complete the record… seize itself of the further steps required to bring the matter to a conclusion.”
[11] In Peticca v. Oracle ULC, [2015] O.J. No. 1985, Myers J. observed, at para. 2, that “[w]rongful dismissal cases with no cause alleged are an area that is particularly well suited to summary judgment. The principal facts required to assess the notice period … are generally not in issue”.
[12] Generally, the adequacy of a terminated employee’s mitigation efforts and the quantification of pay in lieu of notice do not amount to genuine issues requiring a trial. See: Adjemian v. Brook Compton North America, [2008] O.J. No. 2238 (S.C.J.) at paras. 21-23.
[13] While the Defendants seek the dismissal of the motion, they did not strongly oppose that the issues be finally dealt with by way of summary judgment. There was a concern raised that in this case, the Court must weigh the very different intentions of the parties at the time of signing the offers for employment. This requires the weighing of evidence and the Court does not have the benefit of hearing viva voce evidence to assess the credibility of the parties.
[14] Although I appreciate the concern raised by the Defendants, I do not agree. After considering the evidence as presented by the parties, Rule 20.04(2.1) contemplates that a judge shall consider the evidence submitted by the parties and unless it would be in the interest of justice to hold a trial, the judge may weigh the evidence, evaluate credibility and draw any reasonable inference from the evidence.
[15] In these circumstances, both the Plaintiff and the representative of the Defendants were cross-examined on their respective affidavits and the parties have brought me to the relevant portions of their evidence given on cross-examination. Furthermore, the Defendants’ counsel agrees that all the relevant evidence is before me and that a trial will not provide additional evidence.
[16] When considering the weighing of evidence, both parties rely on post-termination evidence to set out their respective stated intention when they entered into the offers for employment. There is limited weighing of the evidence to be done as there is essential no evidence which would support their respective intentions. There is no corroborating evidence to support their evidence with the exception of some of the evidence from the cross-examination of the opposing party that is relied upon by each party. Essentially, there are no important credibility issues and the facts are not significantly in dispute. It is basically a question of contractual interpretation.
[17] In the end, I am of the view that this is exactly the type of case that the Supreme Court of Canada had in mind when it decided Hryniak. The facts are not significantly in dispute, all the relevant evidence is available to the Court on this motion, each party has challenged the evidence of the other through cross-examination and the weighing of evidence is essentially secondary to the issue of contractual interpretation. While there are certainly issues to be decided by the Court that could require a trial, I conclude that the need for a trial can be avoided by using the fact‑finding powers under Rule 20.04(2.1). Deciding the issues by way of summary judgment is appropriate in this case.
Issue 2: Are the Defendants the Plaintiff’s common employers?
[18] The function of each of the corporate Defendants in the overall group of companies was not in dispute. The parties describe the function of each corporate member in the following manner:
(a) Plasma Power, LLC specializes in waste remediation;
(b) Advanced Petro Technologies, LLC (“APT”) specializes in solutions for oil recovery;
(c) APTC was the Canadian entity incorporated to provide access to Canadian grants or subsidies and was used for marketing and sales efforts in Canada;
(d) Cru Engineering, LLC acts as a labour pool for the other corporate Defendants;
(e) Axenic Power LLC (now Plasma Tech Holdings) holds intellectual property for Plasma Power;
(f) XDI Holdings, LLC holds intellectual property for APT.
[19] The Defendants rely on the established law that common ownership structure is not conclusive of a common employer and that the Plaintiff must demonstrate that there was effective control over the employee by all of the alleged common employer companies.
[20] The leading case on common employer is Downtown Eatery (1993) Ltd. v. Her Majesty the Queen in the Right of Ontario et al., 2001 CanLII 8538 (ON CA), [2001] O.J. No. 1879 where the Court of Appeal for Ontario stated that the Plaintiff can establish common employer where there is a highly integrated or seamless group of companies which together operated what was effectively one business and one employer: see Downtown Eatery at para 34.
[21] While I accept that the evidence of the employer/employee relationship between the Plaintiff and the various Defendants is not evident on the face of the offers for employment, I believe that it is when considering the substance of the work performed by the Plaintiff on behalf of the various corporate Defendants and the manner in which they operate seamlessly as one business.
[22] As previously stated, the various corporate Defendants had their defined roles in the overall group of companies, although the offers of employment are with Plasma Power and APTC. As set out in the offers for employment, the primary focus was to secure financing for projects and secure liquidity and investment “in our enterprises”. The intention is thus for the Plaintiff to secure financing and liquidity for several or even all of the corporate members of the group of companies. The Plaintiff was authorized to go out and seek financing for the various corporate Defendants and I am of the view that the Plaintiff has demonstrated that he had a reasonable expectation that the corporate Defendants were each a party to his offers for employment. When I consider the reasons of the Court of Appeal in Downtown Eatery at para 34, I am of the view that it is very similar to the manner in which the present group of companies are structured. Each has its own function, similar to divisions within a large company, and they are an integrated or seamless group of companies which together operated all aspects of Plasma Power and APT.
[23] Furthermore, the Plaintiff was to receive an equity interest in Plasma Power, Plasma Tech Holdings and XDI Holdings which demonstrates an ongoing relationship with these corporations which extends beyond the offers of employment. Finally, the fact that Mr. Norgren was given business cards for a number of the corporate Defendants and allowed to represent himself as being employed by them is further evidence that it was reasonable for him to consider them as parties to his offers for employment.
[24] I thus conclude that the named Defendants are for the purposes of the Plaintiff’s employment, a common employer.
Issue 3: Is the Plaintiff’s employment governed by a fixed term contract of employment?
[25] There is little dispute that the wording used in both offers for employment was far from ideal. The representative of the Defendants confirmed that he did not receive legal advice when drafting the offers for employment. Similarly, the Plaintiff did not consult with a lawyer before accepting the terms of the offers for employment.
[26] When considering the issue of term, the relevant words are: “This agreement will time out in 3 years and the goals will be reset”. Otherwise, there is no mention of the offer for employment being for a fixed term or an indefinite term.
[27] The evidence relied upon by each of the parties is post-termination and cannot be determinative of the intention of the parties at the time of execution of the offers for employment. The Plaintiff advances that he believed the offer for employment was limited to a term of three years and that at the end of the three years, there would be no ongoing obligations. Conversely, the defendant’s representative, Mr. Juranitch stated his intention in creating an indefinite term of employment and that the three year “time-out” would be a timeline to assess business-related goals.
[28] The Defendants rely on case law which stands for the proposition that in order to establish that a contract of employment is of a definite term, the language used must be unequivocal or explicit: see Ceccol v. Ontario Gymnastic Federation, 2001 CanLII 8589 (ON CA), [2001] 55 O.R. (3d) 614 at paras. 24-25. It is however acknowledged by both parties that the relevant cases on fixed term employment are those where the employer is trying to enforce a fixed-term and where the employee is at risk of losing common law or statutory rights.
[29] The Plaintiff also relies on the doctrine of contra proferentem and the Court of Appeal’s decision in Ceccol in support of its position that the issue of the three year term is ambiguous and that such an ambiguity should be interpreted strictly against the employer’s interest.
[30] While there is no dispute that the use of the term “timeout” in the Offers for employment lacks clarity, I am of the view that the Offers for employment must be read in their entirety in order to determine if there is sufficient ambiguity on the issue of a fixed-term or indefinite term. In my view, there is not. When read as a whole, there is nothing in the Offers for employment that may suggest that at the end of the three years, the employment would be over with the parties having no further obligations to each other. Even the notion of a timeout stands commonly for the proposition that there will be a pause or a short amount of time when an activity will stop but then resume.
[31] When the term timeout is considered in light of the Offers for employment in their entirety, there is no ambiguity as there is nothing to suggest that the Plaintiff’s employment would come to an end with no surviving obligations, either statutory or at common law. Had the Defendants advanced the same arguments at the end of the three year term, the Court of Appeal’s decision in Ceccol would have favored a conclusion of an indefinite term. It would be wrong to use a possible lack of clarity in the term “timeout” to ignore well-established jurisprudence that in order to find the existence of a fixed-term employment, the language must be unequivocal and explicit.
[32] I conclude that the Offers for employment were for an indefinite term.
Issue 4: If the Plaintiff’s employment is governed by an indefinite term of employment, what is the reasonable notice owed to the Plaintiff?
[33] Having determined that the Offers for employment were for an indefinite term, I am to consider the reasonable notice that would apply to the Plaintiff’s circumstances. In Bardal v. The Globe and Mail Ltd. (1960), 1960 CanLII 294 (ON SC), the Supreme Court of Canada has endorsed the following passage when considering the factors a court should consider in determining reasonable notice:
There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.
This passage was cited with approval by the Supreme Court of Canada while noting that these factors are not exclusive and that depending on the circumstances, other factors may be relevant: see Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC) at para 82.
[34] In the present circumstances, both parties have provided their submissions on the relevant criteria from Bardal with the Plaintiff suggesting that reasonable notice should be 12 months and the Defendants suggestion a lesser period of 4 to 6 months.
[35] The Plaintiff relies on the Court of Appeal’s assessment of reasonable notice in Love v. Acuity Investment Management Inc., 2011 ONCA 130 in applying the Bardal factors to support a notice period of nine months which must then be increased to take into account the stated intentions of the parties for a three year employment. The evidence of the expectations of the parties is seen in the sales cycle estimated by the Defendants’ representative at four months to two years and the three year period described in the Offers for employment. The Plaintiff relies on the analysis of Gluestein J. in Chambers v. Global Traffic Technologies Canada Inc., 2018 ONSC 2000. Finally, the Plaintiff relies on his significant compensation package and the fact that he reported directly to Mr. Juranitch, the CEO of Plasma Power, as being indicative of the importance of his role for the Defendants to justify a 12-month notice period.
[36] When considering reasonable notice, the Defendants acknowledge that the Plaintiff had a total of 23 months’ service between both Plasma Power and APTC. While the Plaintiff was involved in the set up and eventual dissolution of APTC as a director of that company, the Defendants contend that the Plaintiff did not hold any managerial authority and did not carry out any day-to-day executive functions. On this point, the Plaintiff relies on the direction of the Court of Appeal that the character of employment is a factor of declining relative importance: see DiTomaso v. Crown Metal Packaging LLP, 2011 ONCA 469 at para. 27.
[37] In the end, when considering the appropriate notice period for the Plaintiff, I rely on the following factors which I find relevant:
(i) a 53 year old employee terminated after 23 months. No issues were raised with respect to the Plaintiff’s experience, training and qualifications;
(ii) he was identified as the Vice-President, Project Capital & Financing for three of the corporate Defendants and reported directly to the CEO. While he did not have managerial role, he was a director and sole employee of APTC;
(iii) his employment and benefit package is qualified with a long sales cycle which created a reasonable expectation that his employment would not be short term. His 23 month period of employment was at the upper end of that sales cycle;
(iv) his salary can be considered high at $166,000 USD and was entrusted with seeking major financing opportunities for which he would be paid a significant bonus which included an equity interest; and
(v) it is not disputed that the nature of the Plaintiff’s employment allows for a finding that there is limited availability of similar employment considering his experience, training and qualifications. The Defendants do not raise any issue of mitigation for the first 8 months of the notice period.
[38] Finally, I have specifically considered the Plaintiff’s circumstances and nature of his employment in the context of the Court of Appeal’s analysis in Love v. Acuity Investment Management Inc. The Plaintiff circumstances are that he was employed for a shorter period, had a lower remuneration package and had not acquired the same type of ownership interest in the Defendants. He was not responsible for an important portion of the Defendants’ operations. On the issue of reasonable expectations on the term of employment, the Plaintiff’s sales cycle is not unlike the type of client-building relationship that one would expect from a senior vice president holding a senior level sales position.
[39] Considering the Plaintiff’s employment as a whole and particularly the term of employment, the lower remuneration package, the Plaintiff’s duties and nature of his responsibilities and the absence of a true ownership interest, I am of the view that the applicable notice period is lower than the nine month period determined by the Court of Appeal in Love.
[40] I conclude that the reasonable notice period is eight months.
Issue 5: Is the Plaintiff owed accrued vacation pay and in what amount?
[41] On the issue of accrued vacation pay, the Plaintiff relies on the absence of an established policy for vacation, the pre-termination correspondence of February 2017 setting out that he has 15 days of accrued vacation and the fact that his pay stub showed accrued vacation.
[42] The Defendant relies on the undocumented practice of APTC since its inception and the practice at Plasma Power. As for the paystub, the Defendants state that it incorrectly stated that there was vacation amounts owing.
[43] There is no triable issue on the issue of accrued vacation. The Defendants had no written policy in place and their reliance on errors on the Plaintiff’s paystub is rejected. The Defendants did not dispute the Plaintiff’s calculation that his outstanding vacation pay amounts to $10,215.00 USD. The Plaintiff is entitled to an award in that amount.
Issue 6: Is the Plaintiff owed stock options or an equity interest from the Defendants?
[44] The Plaintiff relies on the Equity Award agreements with Axenic Power LLC (now Plasma Tech Holdings) and XDI Holdings, LLC in support of his entitlement for the value of the equity interest to which he is entitled. The Defendants have valued the interest at $8,077.00 USD and this amount is not challenged by the Plaintiff.
[45] The Defendants state that the Plaintiff is not entitled to this amount given that he failed to sign the two Award Agreements sent to him in or about December 1, 2015 and January 1, 2016. However, the Defendants did not provide any evidence that the award were subject to the agreements being signed or that the Plaintiff was notified that his entitlement would be lost if he did not sign the Award Agreements. The Defendants acknowledge that the entitlement to the equity units stems from the Offers for employment and that they were identified in error as stock options.
[46] I conclude that there no triable issue on the Plaintiff’s entitlement to the equity units and that it was not a pre-condition for the Plaintiff to sign the Award Agreements. If such a pre-condition existed, it is not found in the Offers of Employment, there is no evidence that it was specifically required by Defendants when the Award Agreements were provided to the Plaintiff and the Defendants took no steps to notify the Plaintiff prior to termination that they were still waiting for his signature to give effect to the equity units.
[47] The Plaintiff is entitled to an award of $8,077.00 (USD) as his entitlement to equity units in the two corporate Defendants.
Conclusion
[48] For the reasons stated above, the Court concludes that the Offers for employment created indefinite term employment between the Plaintiff and each of the named corporate Defendants who are deemed to be a common employer. The Plaintiff is entitled to a finding of entitlement to eight months’ reasonable notice of termination less amounts received to date and an entitlement to vacation pay in the amount of $10,215.00 USD and payment for his equity units of $8,077.00 USD.
[49] In the event that the parties are unable to agree on the final calculation of the Plaintiff’s entitlement, I may be contacted and a conference call will be set up to determine what is in dispute and a process will be put in place to allow me resolve the dispute.
Costs
[50] If the parties are unable to agree as to the costs at these motions, the Plaintiff may file written submissions with the Court within 20 days of this decision, maximum 5 pages excluding attachments. The Defendants will have 20 days to respond, maximum 5 pages excluding attachments. Parties will respect Rule 4.01 of the Rules.
Justice M. Labrosse
Date: 2018/06/05
COURT FILE NO.: 17-72886
DATE: 2018/06/05
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ERIC NORGREN
Plaintiff
AND
PLASMA POWER LLC,
ADVANCED PETRO TECHNOLOGIES LLC
ADVANCED PETRO TECHNOLOGIES CANADA 1, ULD
CRU ENGINEERING LLC
AXENIC POWER LLC
PLASMA TECH HOLDING LLC
XDI HOLDINGS LLC
Defendants
BEFORE: Justice Marc R. Labrosse
COUNSEL: Phillip R. White, Counsel, for the Plaintiff
Craig J. Stehr, Counsel, for the Defendants
HEARD: May 16, 2017
ENDORSEMENT
Justice M. Labrosse
Released: 2018/06/05
AMENDMENT TO THE DECISION
On June 5, 2018, the above decision was released. It has been brought to our attention that the date on which it was heard should have read May 16, 2018 rather than May 16, 2017.
Correction has been effected and decision has been reissued.
Justice M. Labrosse
Released : 2018/08/31