Aggressive litigation tactics fail employer in court

Sunira Chaudhri

Sunira Chaudhri

Toronto Employment Lawyer

It is rarely the right time for take-down, tear-down tactics when it comes to employees.

Canadian courts have been especially friendly to employees in 2023.

 

In recent weeks I have told you the stories of John Lynch and Gregory Milwid, two long-service employees who both received whopping wrongful dismissal awards (30 months and 27 months, respectively) when they took their employers to court.

 

The decisions sent reverberations around the private sector, prompting employers to tighten up employment contracts and revisit aggressive termination strategies.

 

Employee wins continue to roll in.

 

This week I want to tell you the story of David Donato, an experienced investment banker who was recruited to leave Mackie Research Capital Corporation to join PearTree Securities in July 2016. Peartree hired Donato to join as its president and co-head of banking with a lucrative compensation package that included a $240,000 base salary and variable compensation.

 

Donato was terminated about one-and-a-half years later, without cause, in January 2018. He sued Peartree for wrongful dismissal damages in excess of $3 million.

 

Peartree countersued Donato for more than $1.5 million claiming he breached the non-competition and non-solicitation clauses in his employment agreement when he reemployed at Sprott Private Wealth nine months after his termination. Peartree claimed, among other things, that Donato breached his fiduciary duties and used its confidential information in his reemployment with Sprott.

 

After a 10-day trial, Ontario Superior Court Justice Robert Centa awarded Donato wrongful dismissal damages (that worked out to just over $718,000) and dismissed Peartree’s counterclaim.

 

In Centra’s recent decision on costs of the trial, the court was clear that it sought to sanction Peartree’s “inappropriate behavior” in pursuing a claim against Donato for non-competition and for the very late disclosure in relevant documents.

 

In awarding Donato $830,761.75 in costs (more than his $718,000 award), the court stated: “PearTree conducted this litigation in an unforgiving, scorched earth, and bare-knuckle manner.”

 

Hindsight being what it is, Peartree, too, is surely revisiting it’s approach to employee terminations.

 

While the cost award and the trial loss will be a temporary sting, there are indirect and long-term impacts to an organization that elects to litigate forcefully and then roll the dice in court.

 

It is rarely the right time for take-down, tear-down tactics when it comes to employees. The consequences, can be dire. The stakes and the costs are getting higher.

 

Have a workplace issue? Maybe I can help! Email me at sunira@worklylaw.com and your question may be featured in a future column.

 

The content of this article is general information only and is not legal advice.

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