Court File and Parties
COURT FILE NO.: CV-17-585600 DATE: 2018/08/22 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: TRICIA CLAYTON, Plaintiff AND: SPS COMMERCE CANADA LTD., Defendant
BEFORE: MASTER RONNA M. BROTT
COUNSEL: Jeffrey Goodman, Karina Pylypczuk, for the Defendant/Moving Party Fax: 416-362-9680 Michael Stitz, for the Plaintiff/Responding party Fax: 647-693-8655
HEARD: June 20, 2018
Endorsement
[1] The plaintiff commenced employment with Toolbox Solutions Inc. in March 2002. The plaintiff alleges that while she was employed there, a colleague, Mr. Gerald Vandenberg (“Mr.V”), repeatedly made sexually suggestive and inappropriate comments to her. The defendant SPS Commerce Canada Ltd. (“SPS”) acquired Toolbox Solutions Inc. in January 2016. Shortly thereafter a Vice President at SPS advised the plaintiff that she would be reporting to Mr. V. When she registered her displeasure, SPS changed the reporting structure. In September 2016 the Vice President advised her that she would have to report to Mr. V. The plaintiff alleges that shortly thereafter, Mr. V began to bully her.
[2] In or about January 2017 the plaintiff was issued a Performance Improvement Plan (“PIP”). She requested time to respond to the PIP and she raised harassment allegations against her supervisor.
[3] SPS conducted an investigation of the plaintiff’s harassment allegations and without interviewing the plaintiff, they found that her allegations were unsubstantiated. The results of the investigation were communicated to the plaintiff on February 15, 2017. She received nothing in writing.
[4] On February 23, 2017 the plaintiff was advised that she would not be receiving her annual salary increase because she was on a PIP. That same day she began a pre-approved medical leave of absence to donate her kidney to her brother.
[5] On or about May 3, 2017 the plaintiff advised SPS that she was ready to return from her medical leave. She was told that the PIP would continue and she would continue to report to Mr. V. The plaintiff retained counsel who requested a severance package. SPS then retained outside counsel. From May through the summer of 2017 there was correspondence and telephone communication between counsel. They discussed, inter alia, the results of the SPS investigation and the reasons why the plaintiff had been placed on a PIP. Counsel for the plaintiff urged SPS to comply with the Ontario Human Rights Code and Occupational Health and Safety Act and to conduct a new or continued investigation with a more thorough investigation and a written conclusion. Plaintiff’s counsel provided names of additional witnesses for SPS to contact. As well, counsel discussed the plaintiff’s willingness to consider a severance package from SPS.
[6] On or about November 1, 2017 the plaintiff commenced this litigation and in the Statement of Claim the plaintiff pleads the contents of some of counsels’ conversations.
The Motion
[7] On this motion SPS seeks to strike paragraphs 33 to 40 of the Statement of Claim on the basis that the plaintiff has pleaded without prejudice settlement discussions between counsel which are protected by settlement privilege.
[8] Rule 25.11 provides that a court may strike all or part of a pleading on the basis that the pleading may prejudice or delay the fair trial of the action, is scandalous, frivolous or vexatious, or is an abuse of the court process. It is well established that it is improper to plead without prejudice settlement discussions. In Interleasing Inc. v Ontario (Minister of Finance), [2009] O.J. No. 4714 at para 10, the Divisional Court set out the three conditions that must be present for settlement privilege to apply:
- A litigious dispute must be in existence or within contemplation.
- The communication must be made with the express or implied intention that it would not be disclosed in a legal proceeding in the event negotiations failed.
- The purpose of the communication must be to attempt to effect a settlement.
[9] The courts seek to protect from disclosure communications made with a view to resolve disputes. Without such protection few parties would enter into frank discussions as they would worry that those discussions could be used against them in future. The privilege protects not only monetary or specific offers but all communications which take place for the purpose of trying to avoid litigation.
Was the litigation in existence or within contemplation?
[10] The court must consider “whether a reasonable person with the same knowledge of the situation as one or both parties would find it unlikely that the dispute would be resolved without it.”
[11] SPS asserts that because the plaintiff had failed to return to work after her leave of absence, had requested a severance package and had retained a lawyer who sent a demand letter, it is clear that a litigious dispute was in the contemplation of both parties.
[12] When an employee alleges workplace harassment and/or is put on a PIP, there is of course, a possibility of litigation. When plaintiff’s counsel sent the first email on June 4, 2017 it did not reference litigation but rather focused on SPS’ failure to comply with its statutory obligation to provide a safe work environment. Because of an employer’s ongoing duty to investigate, a reasonable person would not necessarily conclude that litigation was imminent. A reasonable person would likely conclude that the employer would comply with its statutory obligations and then the plaintiff, a long-term employee, could possibly return to work.
The communication was made with the express or implied intention that it would not be disclosed to the court in the event negotiations failed
[13] SPS relies on numerous “without prejudice” communications as well as SPS counsel’s indication to plaintiff’s counsel on their first telephone call wherein she advised, and plaintiff’s counsel agreed, that she wished to engage in without prejudice settlement discussions prior to sharing any information with him.
[14] The plaintiff’s asserts that her communications can be divided into two;
- The possible severance package which the plaintiff concedes was without prejudice; and
- The sexual harassment investigation and SPS’ justification to place the plaintiff on a PIP.
[15] On September 13, 2017, in accordance with their statutory obligation, SPS confirmed with the plaintiff that SPS had conducted a further investigation including interviewing the two witnesses whose names had been provided by her lawyer. This was the first time SPS provided the plaintiff with any written document regarding the first or continued investigation. In their correspondence to the plaintiff dated September 13, 2017 they write that the external investigator “has completed its report and recommendations which has been provided to us (SPS) for our review.”
[16] The information contained in the investigative report is factual – and was conducted as part of SPS legal and statutory obligations. It was not an offer, nor a compromise, nor a settlement negotiation. An employee’s right to a sexual harassment investigation cannot be negotiable. Accordingly it does not attract the protection of settlement privilege.
[17] SPS’ conduct during the sexual harassment investigation is highly relevant and both counsel must have understood its relevance should litigation ensue. All employers have a duty to comply with their statutory and common law obligations. Significantly, it would appear that SPS’ counsel took the position that all of the communication between counsel was on a without prejudice basis, but only after SPS reopened the investigation. The letter of September 13, 2017 following the further investigation refers to communication between both counsel. A letter that an employer is statutorily obliged to provide to an employee cannot be without prejudice communication. It is therefore clear that SPS understood that that communication was not without prejudice.
The purpose of the communication must be to attempt to effect a settlement
[18] SPS asserts that the purpose of the communications was to reach a possible settlement. The discussions and communication between counsel were ongoing while the plaintiff refused to return to work and had requested a severance package. It is the view of SPS that the second (or further) investigation was done for the sole reason that it wished to settle the case and allow the plaintiff to be more comfortable whether she chose to return to work or to reach an agreeable severance package.
[19] I agree that the outcome of some of the discussions between counsel may have led to a severance package and therefore were attempts to effect a settlement. On the other hand, the purpose of the communications in relation to the investigation and PIP was to compel SPS to comply with its statutory obligations.
[20] The communications and conduct of counsel that have been pleaded in relation to the investigation and PIP are directly relevant to the plaintiff’s claims for constructive dismissal and bad faith. The employer cannot shield these facts surrounding their duty to investigate claims of workplace harassment by asserting privilege. The employer’s duty is statutory in nature and the public must be assured of good faith.
[21] Given that the three conditions for settlement privilege have not been met, the defendant’s motion is dismissed.
[22] The parties agreed that they would attempt to agree on the issue of costs. If they are unable to do so within thirty days, they shall write to me to either request a one half hour telephone case conference or to advise that they have agreed to deliver brief (1 – 2 pages) written submissions within thirty days. No reply submissions may be filed without leave.