Thursday 13 November 2014

Don’t publicly disclose your payout settlement                       

Many employees who leave their employment for various reasons are offered a settlement so that they won’t sue their former employer for any reason whatsoever. If they accept the settlement, they do so on the understanding that they are not to disclose the payout to anyone other than their lawyers.

This is a very important case to refer to if you are ever offered a settlement. Download this case so you will know what you can do and what you can’t do when you agree to accept a settlement.  

For many years, Jan Wong was employed as a journalist at The Globe and Mail a large newspaper in Toronto, Canada. In September 2006, she was directed by her employer to write an article on the assassination of a student at Dawson College in Montreal.  The Globe and Mail published the article written by her.  Following its publication, she was the subject of personal attacks in the media and elsewhere.  She told her employer that these attacks prompted the onset of a severe depression which seriously undermined her mental health.

 As a consequence, she was off work between October 2006 and the spring of 2007.  She returned to work briefly in April 2007, but, shortly thereafter, she suffered a severe setback.  She was then off work again for a lengthy period due to her bouts of depression.  
The Globe and Mail refused to pay sick leave for the applicant between June and November of 2007.  In May 2008, The Globe and Mail ordered the applicant back to work notwithstanding the applicant’s contention that she was still medically disabled.  The Globe and Mail is said to have contended that the applicant was neither sick nor unable to work.  When the applicant did not return to work as directed, The Globe and Mail terminated her employment.                                                                                                               

As a consequence of the termination, her Union launched unpaid sick leave and wrongful termination grievances.  These grievances proceeded to arbitration on July 9, 2008, before the Arbitrator.  Mediation sessions ensued over the next few months with the Arbitrator acting as mediator.  With the assistance of the Arbitrator, a settlement was eventually reached by all parties concerned. This settlement was reflected in the MOA (Memorandum Of Agreement) which was dated September 24, 2008 and which was signed by The Globe and Mail, the Union and the applicant.
 The settlement included The Globe and Mail’s acknowledgement that Jan Wong was ill and unable to work from June 11, 2007 to November 13, 2007.  As a consequence, The Globe and Mail agreed to pay her a lump sum representing the amount she would have been entitled to for sick leave during this period.  The Globe and Mail also agreed to pay her a second lump sum representing two year’s pay in the amount of $209,912.00.  It should be noted, in this regard, that she had been employed by The Globe and Mail for twenty-one years prior to her termination.  It is this second, and larger, lump sum that she was subsequently ordered to repay to The Globe and Mail by the Arbitrator.

There was a specific, and somewhat unusual, provision in the MOA that arose from the fact that she had intended to write a book about her experience suffering from depression in the workplace.  She was therefore concerned about her right to speak frankly about her experience.  As a result, the MOA contained the following provision:
The Grievor agrees that until August 1, 2009, she will not disparage The Globe and Mail or any of its current or former employees relating to any issues surrounding her employment and termination from The Globe and Mail.  The Globe and Mail agrees that until August 1, 2009, to not disparage the Grievor.
The MOA also contained a provision regarding confidentiality.  It provided that the parties agreed “not to disclose the terms of this settlement” with certain specific exceptions that are not relevant in her appeal.  The MOA further contained a provision regarding the consequences of any breach by the applicant of the confidentiality provision and of the non-disparagement provision.  Paragraph #8 of the MOA read:
Should the Grievor breach the obligations set out in paragraphs 5 and 6 above, Arbitrator Davie shall remain seized to determine if there is a breach and, if she so finds, the Grievor will have an obligation to pay back to the Employer all payments paid to the Grievor under paragraph 3.
It is common ground that the paragraph references above should not have been to paragraphs 5 and 6 but, rather, ought to have been to paragraphs 6 (confidentiality) and 7 (non-disparagement).  The obligation to pay back the payments paid under paragraph 3 refers to the second lump sum payment of two years’ salary in the amount of $209,912.00.
Jan Wong did write a book entitled Out of the Blue.  She contracted for the book’s publication with book publisher Doubleday, with whom she had a longstanding business relationship.  In October 2010, Doubleday began advertising on its website the pending publication of the book for availability in May 2011.  Concurrently, Chatelaine magazine, in advance publicity, published an article in which the applicant commented on The Globe and Mail’s reasons for firing her.  The Globe and Mail objected to Jan Wong’s characterization of the reasons why it had fired her and contacted Doubleday to express its concerns.
As a result of the issues raised by The Globe and Mail, Doubleday chose not to publish the book.  In fact, it terminated its publication contract with the applicant.  As a result, the applicant elected to self-publish the book, which she did in May 2012. 
Following the book’s publication in May 2012, The Globe and Mail immediately applied to the Arbitrator for a determination that twenty-three phrases in the book breached the MOA’s confidentiality provision.  The Globe and Mail sought an order that Jan Wong forfeit and repay to it the second lump sum, representing two years’ salary, paid to her under the conditions she agreed to in the MOA.
The Arbitrator held a hearing on The Globe and Mail’s application on May 30, 2013.  The Arbitrator released her decision on July 3, 2013.  In her decision, the Arbitrator concluded that at least four of the twenty-three impugned phrases in the book did breach the MOA because they disclosed the fact that a payment had been made by The Globe and Mail to Ms. Wong.  Those four phrases were:

•         … I can’t disclose the amount of money I received.
•         I’d just been paid a pile of money to go away …
•         Two weeks later a big fat check landed in my account.
•         Even with a vastly swollen bank account …
Let me say from the get-go, those four statements out of all the statements in her book is what did her in. They are the most expensive statements she has ever made in her life. It is the epitome of stupidity.
As a result, the Arbitrator concluded that Ms. Wong had disclosed a term of the settlement and thus had breached the confidentiality provision in the MOA.
She appealed that decision. The issues were:
It was against that background that the appeal judge addressed the many issues raised by Ms. Wong in her written submissions.  As will be seen, not all of these issues were the subject of submissions at the hearing of her appeal application but, nonetheless, the judge said that he would address each of them.  The issues were:
 (i)     the applicable standard of review;  (ii)   standing and procedural unfairness;  (iii)  the remedy of equitable relief;  (iv)  the issue of a breach of the MOA;  (v)  reasonable apprehension of bias;  (vi) the availability of affidavit evidence;  (vii)  the appropriate remedy, and;
(viii)   costs.

(i)         standard of review
While little time was spent on this issue in oral argument, in his factum, Wong`s lawyer submitted that there is no standard of review applicable in this case because the issues raised involve breaches of the rules of natural justice and the duty of procedural fairness.  He also submitted that, on the issue of whether there was a breach of the MOA, the standard of review is correctness because the finding of a breach is a question of law. 
He further submitted that the issue of the appropriate remedy, if a breach is established, should be reviewed on a standard of correctness because the granting of equitable relief is not a matter within the expertise of arbitrators. 
The lawyer for The Globe and Mail submitted that, on the substantive issues, the applicable standard of review is reasonableness.  The respondents (lawyers for The Globe and Mail) also submitted that no procedural unfairness or breach of natural justice occurred so the applicable standard of review, if any, for those matters does not arise on the facts of this case.
 The judge agreed with the respondents that the applicable standard of review on the issue of whether there was a breach of the MOA was reasonableness.  At its core, the issue in this case was the interpretation of a settlement agreement arising out of a labour grievance.  It is precisely the type of task in which labour arbitrators engage with great frequency.  Labour arbitrators therefore have significant experience in deciding such issues.  While the agreed that no standard of review was applicable, where there was a breach of the rules of natural justice or procedural fairness. He did not accept that any such breaches arose in this case.  Further, the fact that the arbitrator was asked to award equitable relief does not take her decision in that regard outside of the reasonableness standard.  Arbitrators are often required to decide such issues, where they arise in conjunction with a labour award, and thus they are matters that are closely connected to the core function of labour arbitrators.
The judge approached Wong`s application, therefore, on the basis that, ultimately, her lawyer will have to demonstrate that the decision of the arbitrator was not a reasonable one in order for her to be successful.
(ii)        standing and procedural unfairness
A preliminary issue arises because both respondents contended that the applicant (Ms. Wong) has no standing to bring this application for judicial review.  The respondents say that the MOA is a labour arbitration matter to which only The Globe and Mail and the Union are parties and only those two parties have standing to seek review of the Arbitrator’s decision.  The respondents therefore submitted that the judicial review application should be summarily dismissed.
In that regard, the respondents referred to various cases where the principle of exclusive representation has been enunciated They quoted from them.
Ultimately, however, where the subject matter of the challenge that it is proposed to bring in the courts is the very essence of the primary function of union representation -- the interpretation or application of the collective agreement -- the decision is for the union to make and it cannot be challenged, regardless of the procedural method adopted, except by way of a complaint made under s. 47.3 L.C. or by a proceeding based on the general principle of civil liability, as discussed earlier.
That was a Supreme Court of Canada case involving Noël v. Société d’énergie de la Baie James.
While the judge in Wong’s case accepted that Noël establishes a general principle that ordinarily only the employer and the union are parties to the proceedings in a labour arbitration, that general principle is not absolute.  As the decision in Noël itself observes, there are exceptions to this general principle.  Those exceptions were later summarized in Yee v. Trent University The judge quoted from that case.
“However, the case law has identified three exceptional situations in which an individual may have standing to pursue arbitration or judicial review: where the collective agreement confers a right on the individual to pursue a matter to arbitration, where the union takes a position adverse in interest to the employee, and where the union’s representation of the employee has been so deficient that the employee should be given a right to pursue judicial review.”

The issue in Wong’s case was complicated by three salient facts.  First, this it was not the Union who had to pay back the second lump sum, if there was a breach of the MOA.  It was Ms. Wong that must do so.  Second, all of the significant terms of the MOA are expressly directed at limiting her rights.  Nothing in the MOA restricts anything that the Union might do with the sole exception that it agreed, as part of the settlement, to withdraw the grievances.  Third, Ms. Wong signed the MOA.  Presumably the purpose in having her sign the MOA was to ensure that there could be no subsequent argument that the she was not a party to the MOA and therefore bound by its terms.  While the respondents say that it is not unusual in the settlement of labour grievances to have the grievor sign the settlement, that reality does not detract from the likely reason for that practice.

The Supreme Court made the critical point that an employee “cannot be left without a remedy. Yet, if the respondents were correct in their submissions on standing, there is an argument that, for all practical purposes, Ms. Wong would be left precisely in that predicament once the Union decided that no judicial review application would be brought from the Arbitrator’s award.
The respondents countered this concern by making two points.  One was that, while Ms. Wong may technically be a party to the MOA, that does not make her a party to any proceeding by way of judicial review.  The other point made by the respondents was that excluding Ms. Wong from standing to bring a judicial review application from the award does not leave her without a remedy.  If Ms. Wong was of the view that the Union failed to represent her fairly in the proceedings before the Arbitrator, and this failure of fair representation led to the adverse result, she still had a remedy.  She could have brought an application before the Ontario Labour Relations Board for a breach of the Union’s obligation of fair representation. 
The Act says in part;
A trade union or council of trade unions, so long as it continues to be entitled to represent employees in a bargaining unit, shall not act in a manner that is arbitrary, discriminatory or in bad faith in the representation of any of the employees in the unit, whether or not members of the trade union or of any constituent union of the council of trade unions, as the case may be.
The respondents asserted that, if Ms. Wong was of the view that her Union had failed to properly and adequately put her case before the Arbitrator, her sole remedy was to seek the assistance of the Ontario Labour Relations Board (OLRB).  They argued that Ms. Wong does not have standing to bring a judicial review application to the Superior Court.  The respondents said that the remedy that they said Ms. Wong is restricted to is not a toothless one.  They pointed to the fact that under section 96 of the Labour Relations Act, 1995, the OLRB has broad jurisdiction to “determine what, if anything,” the Union should be ordered to do if the conclusion is reached that the Union failed to fairly represent Ms. Wong.  All of that said, however, the respondents did acknowledge that one thing that the OLRB could not do is set aside the Arbitrator’s award.  Only the Superior Court could grant that relief.
The judge returned then to the central issue and that was whether the applicant ciuld bring herself within any of the three exceptions set out in Yee so as to give her standing to bring this judicial review application.  He said that the first exception did not apply because the collective agreement did not confer a right on an individual to pursue a matter to arbitration.  In terms of the second exception, Ms. Wong could not rely on this exception in her lawyer’s factum and her lawyer expressly placed no reliance on it during the course of the hearing.  This then left only the third exception, that was where the union’s representation of the employee was so deficient that the employee should be given a right to pursue judicial review.  The possible application of this third exception leads into the companion issue raised under this heading and, that is, the applicant’s contention that the Union’s representation of the applicant was “so deficient” as to amount to a breach of the rules of natural justice. 
  A great deal of effort and argument was directed towards this issue during the course of the hearing but, notwithstanding all of that effort, the judge concluded that the basic premise did not find any traction in the evidence.  The record demonstrates that the Union advanced all of the legitimate arguments that could be made on the Ms. Wong’s behalf.  There were a number of other arguments that she wished to have advanced but counsel for the Union, for good and sufficient reasons, chose not to advance those arguments.  Counsel for the Union told her, on a number of occasions, that the Union would not advance some of the arguments that she wished to have made, and the reasons why those arguments would not be advanced.  In some instances, counsel for the Union concluded that there was no merit to her argument. 
In other instances, counsel for the Union concluded that the arguments could not find any foundation in the evidence, properly understood and correctly recited.  All of these issues were matters for the Union’s counsel to consider and decide upon. 
It is the counsel’s role, generally, in any piece of litigation to decide what should be argued and what should not.  Counsel is not obliged to advance an unmeritorious argument just because the client wants the argument made.  Indeed, it is counsel’s responsibility not to advance unmeritorious arguments.  That responsibility recognizes the dual obligations that counsel has—the obligation is to his/her client and the companion obligation to the court in counsel’s capacity as an officer of the court. 
This bifurcated role is even more evident in the labour relations context because, in that context, counsel’s client is not the grievor, it is the union.   Consequently, it falls to the union to decide how the proceeding should be advanced in terms of its overall responsibility, not just to the grievor, but to the other members of the union.  This point has been made in a number of cases that have been before the courts.
Ms. Wong’s counsel make a number of allegations regarding counsel for the Union that were all centered around her core position that the Union failed to adequately represent her.  The allegations include a failure to meet with Ms. Wong to properly prepare her for the arbitration hearing, the failure to adduce evidence, the failure to properly investigate certain allegations, especially regarding the conduct of The Globe and Mail and other matters.
In terms of a foundational context to evaluate Ms Wong’s lawyer’s  arguments in this regard, the judge began  by saying that he agree with the characterization given to this matter by counsel for The Globe and Mail  that this was basically a simple case.  The MOA bound Ms. Wong and The Globe and Mail to a settlement under which they were each required to do certain things.  The central issue for the Arbitrator to determine was whether the contents of the applicant’s book breached the confidentiality provision of the MOA. She concluded that it did.
The judge decided that Ms. Wong and her lawyer didn’t have any standing in his court which means that he would not hear any arguments from her lawyer.
I will get to the decision re the repayment to the newspaper by Ms. Wong.
The judge said, “It is unnecessary for me to address these [other] issues since I have concluded that the applicant (Ms. Wong) has failed to establish any error in the Arbitrator’s award. In my view, the Union did its best to accommodate the interests of the applicant.  It carefully considered her, and her lawyer’s, suggestions as to matters that should be argued.  The necessary arguments were subsequently made by the Union and were made fully and properly.”
The judge ruled that Ms. Wong has to return the $209,912.00  to The Globe and Mail since her application was dismissed.  The three judge’s hearing her application considered the parties’ submissions on costs.  They accept Ms. Wong’s lawyer’s point that there was overlap between the positions of the two respondents.  However, while The Globe and Mail took the lead on the main issue of the interpretation of the MOA, the Union was required to respond to the allegations of inadequate representation.  The judges noted  that the nature of some of those allegations could, on its own, warrant an increase in the quantum of costs awarded.  In the end result, they awarded costs fixed in the amount of $15,000 inclusive of disbursements and HST (taxes) to each of the respondents, payable within thirty days. 
Her foolishness of writing those four sentences in her book costs her not only the loss of the settlement but also the $30,000 she had to pay The Globe and Mail and her Union, and what she owed to her own lawyers who represented her. 

I hope my readers have learned from this case that it is real risky to tell anyone about your settlement other than your lawyer and or your spouse. If you want to blab about it, do so at your own risk.  

No comments: