WAL-MART IS PUNISHED FOR A WRONGFUL DISMISSAL OF AN EMPLOYEE                                                          

This is an extremely long article. However, in my respectful opinion, it an important one because it tells you about what you  can do if you are wrongfully dismissed from your job. 

The victim in this article was a very astute and intelligent employee (Wal-Mart calls them Associates) and was given various promotions right up the position of one of Wal-Mart’ vice presidents. She was earning hundreds of thousands of dollars a year along with stock options. And then for reasons which made no sense to her, they began cutting down her responsibilities and even wanted her out of Canada and asked her to choose what country she was prepared work in. When it finally became obvious to her really stupid superiors that she wasn’t happy with any of the options they offered her, she was terminated.  Then she went after Wal-Mart and got even.  I mean she really got even.

Back in the 1960s, I was fired from four jobs despite the fact that I did no wrong to justify my dismissals. The first one was when I worked for a magazine publisher as a collector of accounts. My boss asked me to train a new man coming into our department. After I trained him, I was fired. The new man was the manager’s son. The second time I was fired, the owner gave me a contract to sign. He signed it also. A week later, he asked me to bring it in as he wanted to make an adjustment in my favour. When I handed him the contract, he ripped it up in front of me and said, “You’re fired.” The third time I was fired, I was working for a collection agency. The second man in charge accused me of being rude to a clerk in the court. It wasn’t me that make that call. The fourth time I was wrongfully fired was when I was fired by a former employer of the previous firm I spoke of. He by then had his own firm. He was pumping me for the names of my previous employer’s clients. I told him that it would be improper on my part to do that. He subsequently fired me.

In those days, there was no one I could go to in order to file a complaint. I couldn’t afford to hire a lawyer. Nowadays, employers who wrongfully fire an employee, do so at their own risk. Nowadays, the penalties for wrongfully firing an employee can be very, very severe and rightly so.

As the nation’s largest retailer, second-largest corporation, and largest private employer (with 1.3 million workers), Wal-Mart made headlines this past year at an unprecedented rate. All too often, these headlines revolved around Wal-Mart’s infamous employment practices.

Wal-Mart’s anti-union stance made headlines once again. After workers at a Wal-Mart store in Québec successfully unionized, Wal-Mart announced that it would close that store, citing “economic reasons.” Québec’s labor relations board rejected Wal-Mart’s argument and found that Wal-Mart’s mass firings were illegal.

 Tthe International Labor Rights Fund filed a class-action lawsuit against Wal-Mart for violating workers’ rights in foreign countries, alleging that Wal-Mart denied minimum wage, required overtime, and punished union activity. In some cases, workers alleged they were beaten by supervisors. If certified, 100,000 to 500,000 workers could be included. Specifically, the suit alleged that one Bangladesh worker worked seven days a week from 7:45 a.m to 10:00 p.m. without a day off in six months.

In another instance, Wal-Mart was accused of failing to provide adequate safety equipment (gloves) for its fabric cutters and seamstresses overseas. According to one report, in Wal-Mart’s cost-benefit analysis, it was cheaper to wash workers’ blood from clothing before shipping the clothing overseas for sale than it was to provide them with gloves.

Now I will tell you about the instance in which Wal-Mart  wrongfully fired one of its employees in Canada. I will give you the facts of the case from what I have read in the transcript of the judgment. I will write the facts in the past tense.  As I said earlier, the plaintiff in this interesting case had risen to the heights of responsibility with enormous financial rewards with Wal-Mart and then she was dashed to the ground by her employer when they fired her.

In August, 2002, Ms. Gail Galea was hired by Wal-Mart Canada Corp. (“Wal-Mart”, as distinct from Wal-Mart International, Walmart Corporation or Wal-Mart U.S., or any Wal-Mart corporation or business operating in another country). 

From the time she started working at Wal-Mart on September 3, 2002, Ms. Galea proved herself to be a rising star in the Wal-Mart firmament.  Unfortunately, Ms. Galea’s star was not placed as high, or burned as bright in Wal-Mart’s eyes by January 29, 2010.  Her employment was terminated ten months later, on November 19, 2010.

 Ms. Galea brought this action against Mal-Mart to recover damages for all amounts she claimed she was owed by virtue of her employment, and resulting from the manner of her termination.  She made her claim for contractual damages under a Covenant Not to Compete Agreement (the “NCA”) she entered with Wal-Mart in 2005 which she considered to be an employment contract.  She also sought moral damages for the manner of how Wal-Mart had dismissed her, and punitive damages.

Punitive damages, (also known as exemplary damages) are damages that are designed to punish the wrongdoer. In addition to punishing a particular defendant for particularly bad behavior, punitive damages are intended to deter other people in the defendant’s position from acting badly.

 In its Amended Statement of Defence, Wal-Mart admitted that Ms. Galea was terminated from employment without cause, effective as of November 19, 2010.  The case for trial was therefore about damages that were to be awarded to Ms. Galea.

On August 23, 2002, Ms. Galea accepted Wal-Mart’s offer of employment for the position of District Manager-in-Training, commencing September 3, 2002. Ms. Galea testified that she agreed to join Wal-Mart to work under the leadership of Mario Pilozzi, President and CEO of Wal-Mart, whom she greatly admired.                                                                                                    

The compensation that Wal-Mart agreed to pay Ms. Galea at the time of hire was set out in a letter dated August 14, 2002 (the “employment letter”), and included the following:                          

1.   An annual base salary of $120,000.

2.   Eligibility to participate in the full-range of Wal-Mart’s employment benefits as described in the enclosed materials, as they may be amended by Wal-Mart from time to time, and subject to terms of qualification and/or waiting periods. Those benefits included the following:

3.   Management incentive bonus program, plan number 7. This incentive bonus would be effective for fiscal year ending January 31, 2003, on a prorated basis.

4.   Associate/spouse discount card

5.   Participation in Wal-Mart’s deferred profit sharing plan.

6.   Three week’s annual vacation.

7.   Coverage under Wal-Mart’s comprehensive benefits program as those benefits may be amended from time to time.         

   8.   Participation in Wal-Mart’s registered retirement plan.

9.   A leased company car and mileage reimbursement, pursuant to company policy.

The employment letter stated that Ms. Galea would be a member of management. The employment letter was signed by Paul Ratzlaff, Vice President of the People Division.

   Wal-Mart recognized Ms. Galea’s skills and her long term development potential. Shortly after she was hired, Ms. Galea was promoted to District Manager for District 9. In a letter from Mr. Ratzlaff dated February 19, 2003, Wal-Mart increased her annual base salary to $125,000 commencing March 3, 2003. She would continue to have a leased company car provided to her. She would continue to be eligible to receive the management incentive bonus (plan number 7) up to 30% of her base salary.  So began her long climb upwards in Wal0Mart.

On October 2, 2003, Ms. Galea was promoted yet again to Regional Manager for Region 2. In a letter dated October 10, 2003, Wal-Mart recognized her 16 years of retail experience, and assigned her seven stores that would report directly to her.

                                                                                                                           On May 1, 2004, Ms. Galea was promoted to Regional Vice-President, and moved from an M7 to an M8 pay band.  She was also eligible for the management incentive bonus that would entitle her to up to 40% of her base annual salary as an annual incentive. All other benefits to which she was entitled as a member of management were carried forward.                                                                                                                                   

Ms. Galea received further accolades for job performance that year. On June 17, 2004, she was selected to join a select group of associates for the Targeted Management Accelerated Program (TMAP). In a letter from John Mensner, then President and CEO of Wal-Mart International, TMAP was described as a high potential program that targets female associates with the capacity and desire for a senior executive role in three to five years. The letter went on to advise Ms. Galea that selection into TMAP came with great responsibility and high expectations. She was expected to work with the President of Wal-Mart in her country, and with its People Director in order to:

1.        Create a development plan based on her specific needs to be monitored by her People director                                                    

2.     Take on a more visible leadership role within her organization,

3.       Prepare to take on the next role within Wal-Mart International.                                                                                               

   By September 2005, Ms. Galea was considered as a high value employee. Wal-Mart transferred Ms. Galea to the position of General Merchandise Manager, on a mutually agreed upon date. In a letter from Mary Alice Vuicic, Vice President of People Division at Wal-Mart dated September 9, 2005.  The terms of Ms. Galea’s new position of General Merchandise Manager were spelled out as follows:                                                                                                                                                                                 (a) She would report to the Senior Vice President, Merchandise and Sales.     

                                                                            

(b) Her annual base salary would be $215,000, inclusive of a $15,000 car allowance.                                                              

(c) The annual incentive plan would allow her to earn up to a maximum of 40% of her base salary for the fiscal year ending January 31, 2006.                                                                       

(d) Wal-Mart’s management would recommend to the stock incentive plan committee under the Wal-Mart Canada Stock Incentive Plan of 1998 (as amended or replaced by Wal-Mart in its sole, absolute and unfettered discretion from time to time) that she be awarded stock options at such committee’s discretion under and subject to the terms of the stock option plan.                

(e) She would be required to execute and deliver to Wal-Mart three copies of a covenant not to compete agreement together with one copy of the statement of ethics policy appended to the letter.                                                                             

(f)   The letter dated September 9, 2005 from Ms. Vuicic provided that the contents of the offer and its attachments must be kept strictly confidential and could not be disclosed to anyone other than Ms. Galea’s immediate family, legal advisor and financial advisor.                                                                                                                                                                                                                                                                                                                          

Ms. Galea accepted the position of General Merchandise Manager by signing a copy of the letter from Ms. Vuicic on September 9, 2005, and by signing the NCA which she delivered back to Wal-Mart.                                                                       

Ms. Galea’s elevation to General Merchandise Manager was a defining event in Ms. Galea’s career at Wal-Mart.  It was significant to Ms. Galea not only because it moved her to the next echelon in the management structure, but also because Wal-Mart required her to sign the NCA to receive the promotion and related benefits. The NCA restricted Ms. Galea from other employment with mass retailers other than Wal-Mart for a period of two years should her employment at Wal-Mart end, regardless of the cause or the reason for termination. The NCA required Ms. Galea to preserve and keep confidential information she learned during her employment with Wal-Mart.

The terms of the NCA were of central importance to her action against Wal-Mart because Section 2 provided for “transition payments” that Wal-Mart would be required to  pay to Ms. Galea in the event Wal-Mart terminated her employment without cause. Wal-Marts’ obligations to make transition payments are therefore set out in their entirety were as stated in the document;                                                                                                                                                       

 TRANSITION PAYMENTS.  In the event Wal-Mart terminates the Associate’s employment without cause, Wal-Mart will, for a period of two (2) years from the effective date of such termination continue to pay the Associate his or her base salary and any incentive payable in accordance with the Annual Incentive Plan in effect on the date of termination, and its portion of health and dental benefits premiums in accordance with such plans as are in effect on the date of termination. The payments described above are referred to in this Agreement as “Transition Payments.” The period of time during which Transition Payments are made are referred to in this Agreement as the “Transition Period.” The Transition Payments shall be subject to such withholding and/or deductions as may be required by law and subject to the following conditions and offsets:                                              

(A)   Transition Payments will not be payable if the Associate’s employment is terminated by Wal-Mart for cause.                

(B)   In the event that the Associate is demoted or reassigned so that he or she ceases to be a key employee, the Associate will no longer be bound by the covenant not to compete set forth in Paragraph 3 below and will cease to be eligible for any of the benefits or payments (e.g., Termination Payments) provided by this Agreement;                                                     

(C)   No Transition Payments will be payable if the Associate voluntarily resigns or retires from his or her employment with Wal-Mart;                                                          

(D)   Given the availability of other programs designed to provide financial protection in such circumstances, Transition Payments will not be payable under this Agreement in the event of the Associate’s death or disability. If the Associate should die during the Transition Period, Transition Payments will cease at that time, and his or her heirs will have no entitlement to the continuation of such payments. Transition Payments will not be affected by the disability of the Associate during the Transition Period;

E)   Violation by the Associate of his or her obligations under Paragraph 3 or Paragraph 4 below, or any other act that is materially harmful to Wal-Mart’s business interests, during the Transition Period will result in the immediate termination of Transition Payments in addition to any other remedies that may be available to Wal-Mart.                                          

(F)   Transition Payments will be payable on such regularly scheduled paydays as may be adopted and instituted by Wal-Mart for its other salaried associates;

(G)   Receipt of Transition Payments will not entitle the Associate to participate during the Transition Period in any benefit plans or programs maintained by Wal-Mart which are not specifically mentioned in this paragraph 2.

(H)   The Associate acknowledges and agrees that the receipt by the Associate of Transition Payments shall fully satisfy any and all claims of the Associate with respect to his or her employment with Wal-Mart or the  termination thereof, including but not limited to notice, pay in lieu of notice, wrongful dismissal, severance pay, termination pay, bonus, overtime pay, incentive compensation, interest, vacation pay, or any claims under applicable employment standards, workers compensation, and human rights legislation, and the Associate hereby releases and forever discharges Wal-Mart with respect to any and all claims relative to same effective upon the Associate’s initial receipt of any Transition Payment.

(I)      Despite the foregoing, in no event shall the Associate receive less than his or her minimum entitlements, if any, to notice or pay in lieu of notice under applicable employment standards legislation if his or her employment is terminated without cause.

  Ms. Galea understood the NCA would operate in absolute terms. Section 3 would make her unemployable because it would virtually shut her out of working at any mass merchandising retailer in Canada or the United States. This was the only business she knew. Although remedies for any breach of the NCA by either party were listed under Section 5, she knew that Wal-Mart was powerful and she would not have the means to fight back.

  Ms. Galea also testified that she understood that the term “Transition Payments” under Section 2 under the NCA was a promise that Wal-Mart was making to take care of her if she was ever terminated and required to wait out the two years. Ms. Galea understood from conversations with Ms. Vuicic and Mr. Pilozzi around the time the NCA was signed that if she was ever terminated from her employment without cause, she would receive the full extent of her compensation package at the time for the two years she did not compete by working with Wal-Mart’s competitors.  Ms. Galea stated that this was her understanding of what was intended by the parties when she signed the NCA.

Wal-Mart did not call any evidence during the trial about any ofther circumstances surrounding the making of the NCA. Ms. Galea’s career trajectory continued upwards after she was appointed as General Merchandise Manager. By spring 2006, she had attracted the attention of the Bentonville executive team and head office of Wal-Mart International.  Wal-Mart International is the executive arm of the Wal-Mart organization that oversees all Wal-Mart companies and business worldwide, except for Wal-Mart U.S.  Wal-Mart Canada Corp. reports to Wal-Mart International when required.  All head office operations for the Wal-Mart organization are generally based in Bentonville, Arkansas.

 In a letter dated May 18, 2006, from Craig Herkert, President and CEO of the Americas for Wal-Mart, Ms. Galea was told that she had been selected by Mr. Pilozzi in Canada and the Bentonville executive team to continue her participation in the Accelerated International Management (AIM) program.  The AIM program targeted high potential Associates who aspired to senior management roles for development. Ms. Galea was advised that she could expect to receive communications from Mary Alice Vuicic to participate in her development plan.  Once the development plan was finalized, it would be shared with Bentonville and communicated to Mike Duke’s executive team. Mike Duke was CEO of Wal-Mart International at the time.

 Ms. Galea felt honoured by this recognition. She felt her career path was moving in the direction according to her plans. She believed that her inclusion in the AIM program was consistent with her development towards a key management role at Wal-Mart.

To further to her goals, Ms. Galea applied in 2007 for membership in the Leadership Foundation, a division of the International Women’s Forum. The Leadership Foundation was composed of women in leadership positions from government and business across the world. It included Hilary Clinton, Condoleezza Rice and Roberta Bondar as faculty members.

At the trial, Ms. Galea described the application process as intense, quite rigorous and challenging.  She was interviewed by a panel as part of the application process. Ms. Galea was accepted by the Leadership Foundation, which was the first time anyone from Wal-Mart had been recognized in this forum.   Ms. Galea believes that it reflected well on Wal-Mart for her to be selected.

 Ms. Galea made specific reference to pages 6 and 7 of the application to the Leadership Foundation in her evidence, which were pages completed by Mario Pilozzi, then President and CEO of Wal-Mart Canada. In answer to question 2 on page 7 of the leadership application, Mr. Pilozzi gave the following answer to the reference question:

The Leadership Foundation Fellows program is an initiative to help prepare women for top level leadership. Where do you see the applicant in her profession five years from now? What is her potential?

ANSWER: Gail is now the Vice President and General Merchandise Manager over home and seasonal. She is responsible for approximately 25% of the company’s business (from a merchandising point of view. Gail has the potential to move at least two levels (of management) up – Senior Vice President and Chief Merchandising Officer, and with education, experience and coaching, she could someday run a Wal-Mart country operation.                                                                              

 On March 20, 2008, Ms. Galea received a note from Mike Huffaker, Chief Operating Officer of Wal-Mart Canada to show his appreciation of her contribution towards the last two and a half years. In that note, he stated as follows: “Don’t ever forget you are one of the Top Talents not only in Canada but the entire World! I wish you continued success in your WMT career and its truly been great working with you. Take care.”

David Cheesewright became the President and CEO of Wal-Mart Canada in November or December 2007. By the summer of 2008, Ms. Galea was reporting to Sylvain Prud’homme, Senior Vice-President Merchandising, who in turn reported directly to Mr. Cheesewright.

  On August 6, 2008, Ms. Galea received a letter from Wal-Mart Canada Corp. signed by Mr. Prud’homme, SVP Merchandising, and David Cheesewright, President and CEO. This letter read:

“You are a valued part of our leadership team. In your role leading the General Merchandise Team, we have been very pleased with the depth of experience and sound business acumen that you have brought to bear. In recognition of your leadership and your continued contributions, we are pleased to offer you the opportunity as Vice President of General Merchandising for a position upgrade to M9. Effective August 1, 2008, you will be eligible for a lump sum bonus of $30,000. Additionally, your position at your current salary of $272,000 will be upgraded to an M9 with improved short-term and performance share program potential. Please see the attached salary worksheet for your consideration. Gail, we are thrilled to be offering you this upgraded position. We believe that you will find this action that we are taking as an indication of the confidence that we have in your abilities and in the successful contributions that you will make in the future as part of the senior leadership team.” unquote

The letter from Wal-Mart Canada dated August 6, 2008 offered Ms. Galea a promotion to Vice-President, General Merchandise, and attached a salary worksheet for her consideration. This worksheet showed that her base salary increased from $237,000 as General Merchandising Manager to $272,000 as Vice President, General Merchandise at the M9 level effective August 2, 2008. Together with the addition of a lump sum bonus of $30,000, the increase to her potential incentive rewards under Wal-Mart’s management incentive program and performance share program, her maximum compensation range increased from $474,000 to $642,000  if Wal-Mart met specified targets.

  Ms. Galea was responsible for general merchandising at Wal-Mart Canada in her new position as Vice President, General Merchandise. She was responsible for sales, financial performance and profit and loss at Wal-Mart Canada. She was responsible for 40% of the sales, and 42% of the total profit for Wal-Mart Canada in the speciality parts of its business. This included pharmacy, electronics, and the home side of the business. She had 16 people reporting directly to her, and 400 people reporting indirectly through them.

Ms. Galea was also responsible for global sourcing for Wal-Mart Canada to purchase products from around the world to sell to the customers of Wal-Martover all. The McKinsey Group was a consulting firm hired by head office in Bentonville to develop a merchandising project. Mr. Cheesewright as President and CEO of Wal-Mart Canada made the decision to have the project implemented in Canada first. He therefore struck an internal group to study this restructuring initiative, and to determine how to get higher efficiencies out of Wal-Mart’s stores in Canada.

Wal-Mart International continued to recognize Ms. Galea’s performance and her leadership potential. On April 9, 2009, Mike Duke sent an email to 14 women across the entire Wal-Mart organization to announce the formation of the President’s Global Council of Women Leaders, and to invite those 14 people to be a member of the Council. The email was copied to a number of other people in senior management positions, including David Cheesewright. The email read, in part, as follows:

“You were selected to participate in this group of 14 senior women leaders from around the world based on your performance and abilities. As a member of the council, you will advise senior leadership and act as a catalyst in the identification, development, advancement and retention of women to more global, senior leadership roles within our company. We’ll also look to you to provide perspectives on critical business and customer issues.” unquote                                                                                                                                                No other member of this Council was appointed from Canada other than Gail Galea. Ms. Galea took this appointment to the President’s Global Council as recognition of her abilities by the highest levels of management within Wal-Mart International and Wal-Mart U.S.                                                                                                                                                                       Wal-Mart International further recognized Ms. Galea’s skills and contribution to Wal-Mart in September 2009, when Doug McMillon created an executive development program for Wal-Mart International. Mr. McMillon had succeeded Mike Duke as CEO of Wal-Mart International.  Mr. Cheesewright reported to Mr. McMillon.                                                                                                                                                                                                     

 Gail Galea and another employee, Sean Clarke were the only two people appointed from Wal-Mart Canada to participate in the new executive development program.

On September 14, 2009, Jim Thompson, Senior Vice-President, Operations and Merchandising made an announcement that the Global Procurement team for Wal-Mart worldwide would report directly into Canada. This meant that the procurement team would be reporting directly to Ms. Galea. This was the first step in the process of realigning the sourcing function for Wal-Mart globally. Ms. Galea was to report directly to Jim Thompson with respect to developing skills for global procurement.                                                                                                                                                           For the year ending January 31, 2008, Ms. Galea received a performance appraisal that was completed by Jim Thompson. She was given a score of 3.8 overall on this performance appraisal, which falls into the category “exceeds expectations” according to the grading system shown on this document.        

Mr. Prud’homme was her immediate supervisor to whom she reported directly at year end on January 31, 2009. The performance appraisal for FYE09 graded her again overall at 3.8 out of 5. The overall grade of 3.8 again fell within the “exceeds expectations” category under the Wal-Mart grading system.

  Mr. Cheesewright wrote a letter dated March 6, 2009 to Ms. Galea to thank her for her contribution to the company’s overall performance in FYE09. He advised her that she had made the Management Incentive Bonus plan for the first time in five years and that the home office bonus plan reached a payout level of 83%. The letter continued by advising her that her bonus for FYE09 would be $113,189.26.  Her total bonus, including $9,055.14 for vacation, pay, would be $122,244.40, and that payment would be deposited directly to her bank account.

On October 28 and 29, 2009, Ms. Galea attended a global Chief Merchandising Summit in Tokyo. This summit was attended by Chief Merchandising Officers of Wal-Mart companies in other countries.

Ms. Galea exchanged emails with Doug McMillon of Wal-Mart International on November 2, 2009 after she had returned home from the CMO summit in Japan.  Around that time, she met with Duncan McNaughton, who had been hired as Chief Merchandising Officer to replace Mr. Prud’homme. Mr. McNaughton had a background in the food industry and therefore had the insight to assist Wal-Mart in developing its food and grocery lines.

Ms. Galea was assigned to work with Mr. McNaughton for twelve months. She had met Mr. McNaughton in Tokyo. Mr. McNaughton was to groom her to take on the role of Chief Merchandising Officer as his successor.

Upon her appointment to work with Mr. McNaughton, she would report directly to him.  Mr. Cheesewright told her that this was part of her “professional development”.

In the second quarter of 2000, Doug McMillon asked Ms. Galea to participate in Wal-Mart’s first Executive MBA (EMBA) program. The EMBA program would take place for eight weeks at Harvard University in the summer of 2010.

                                                                                                                                                             

In order to follow the metrics for any entitlement under a Wal-Mart incentive plan, it is important to understand that Wal-Mart’s financial performance is measured at the end of each fiscal year. The fiscal year end for Wal-Mart Canada is January 31. A particular year is identified by the year in which the fiscal year ends. For instance, the 12 month period between February 1, 2010 and January 31, 2011 would be known as FYE 2011.                                                                                                                      

Heading into January, 2010, Ms. Galea was entitled to receive compensation in addition to her base salary from four different incentive programs offered by Wal-Mart:

The 1998 Stock Option Program, later replaced by the 2008 Long Term Incentive Program (2008 LTIP) that contained terms for the operation of the Performance Share Program (2008 PSP).                                                                                                                                                                                                                             

The Management Incentive Bonus, or MIP, was part of Ms. Galea’s compensation from the date she was hired. This bonus was described as a benefit that shall be finally determined by Wal-Mart in its sole, absolute and unfettered discretion, for the fiscal year ending January 31, 2003. If the program were to pay out at its maximum, Ms. Galea’s entitlement would be 30 percent of her annual base salary in 2003 based on the measurement criteria which could be amended from time to time.

Ms. Galea gave uncontradicted evidence that she was entitled to an annual contribution towards the DPSP equal to 4 percent of her annual salary, bonus and vacation pay.   Will Wilson, Director, Associate rewards at Wal-Mart admitted at trial that Ms. Galea was entitled to this annual contribution towards the DPSP on her behalf. Mr. Wilson further admitted that Wal-Mart did not pay out the balance of Ms. Galea’s DPSP account within 90 days, as required by the plan.

The ERP came into effect on February 1, 2005. Although the ERP did not exist when she was hired in 2002, Ms. Galea gave uncontradicted evidence at her trial that Wal-Mart made contributions into the ERP on her behalf annually. Ms. Galea received an ERP statement each year.  The statement advised  Ms. Galea that she would receive the closing balance of her ERP account when her employment with Wal-Mart ends for reasons other than gross misconduct, or total and permanent disability, within 90 days of the date on which her employment ended.

  When Ms. Galea was hired in August 2002, she became eligible for the full range of Wal-Mart’s employment benefits under the terms of the employment letter. One of those benefits consisted of participation in Wal-Mart’s stock option plan. This plan gave Ms. Galea the opportunity to purchase Wal-Mart stock at a reduced price. The Stock Incentive Plan of 1998 clearly provided the opportunity as an incentive to certain Wal-Mart employees such as Ms. Galea.

Mr. Cheesewright wrote to Ms. Galea on July 4, 2008, as the Chief Executive Officer to inform her that Wal-Mart Canada was proposing a new plan, the Wal-Mart Canada Long Term Incentive Plan 2008 to replace the 1998 Stock Option Plan. In this letter, Mr. Cheesewright described the benefits which key employees including Ms. Galea would receive which were; 

“In place of the stock options previously awarded to you under the Old Plan, as a member of the M8 pay band, you will now be eligible under the Proposed Plan to an annual award of performance shares (“PSPs”) in an amount equivalent to 40% of your annual base salary, assuming all performance thresholds are met. In simple terms, this means that rather than simply benefiting from any increase in the market value of shares for which you hold stock options (as under the Old Plan), under the Proposed Plan you will be granted actual shares that vest within specified periods (less any required statutory deductions), provided that certain pre-determined corporate performance targets are achieved.” unquote                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

Ms. Galea understood this letter to mean that under the 2008 LTIP, she would receive actual shares in Wal-Mart Canada under the Performance Share Plan (“PSP”) within the 2008 LTIP instead of the options which required her to actually purchase shares.  She further understood from Mr. Cheesewright’s letter that she would retain the options she had already been granted, and that she would receive shares issued by Wal-Mart Canada from the time the 2008 LTIP took effect.

Anticipating the year ahead, Ms. Galea expected that she would eventually be appointed as Chief Merchandising Officer for Wal-Mart Canada. However, a meeting with Mr. Cheesewright on January 29, 2010 would change those expectations forever.

At around 12:00 noon on January 29, 2010, Ms. Galea was asked to meet with Mr. Cheesewright. As she also reported to Mr. Cheesewright at the time, she thought this was to be a routine meeting. Instead, Mr. Cheesewright informed Ms. Galea that he was removing her from her role as Vice President, General Merchandising, and relieving her of responsibilities associated with that role.  Ms. Galea recalls that he told her that he did not know what to do with her.  He told her he was considering an ex patriate assignment for her as one option. This would mean that she could be assigned to a Wal-Mart subsidiary in another country.

Ms. Galea was shocked by this decision. She understood from what Mr. Cheesewright said to her at that meeting that her role did not exist at Wal-Mart Canada any longer. However, she also understood from him that she was still valued by the company.

 Mr. Cheesewright discussed how Ms. Galea might be reassigned to the Wal-Mart subsidiary in India, which was a small market for Wal-Mart International at the time. He also discussed how she might be assigned to a Wal-Mart subsidiary in Brazil. This reassignment could take place six to nine months later. 

                                                                              

From this meeting, Ms. Galea understood that Wal-Mart Canada was in the process of reorganizing. She understood that Mr. Cheesewright was eliminating her role, and that Wal-Mart was hiring younger talent. Wal-Mart would have to figure out what job she was best suited for, and wanted to do things in sequence. Mr. Cheesewright also advised Ms. Galea that Doug McMillon at Wal-Mart International, Duncan McNaughton and Bob Hakeem all knew about the meeting they were having.

To Ms. Galea, this decision meant that there was no space for her in merchandising at Wal-Mart Canada, as Mr. Cheesewright was making room for younger people to fill merchandising positions.

Ms. Galea went home and met with her family and she told them about her meeting with Mr. Cheesewright. She understood that a huge cultural change was taking place at Wal-Mart Canada. She decided that she would consider a lateral transfer to the Wal-Mart subsidiary in Brazil.                                                                            

On February 1, 2010, Ms. Galea met with Mr. Cheesewright once again. She informed Mr. Cheesewright that India would not be an appropriate assignment for her family or herself as the culture there was very different and distinct. However, she advised Mr. Cheesewright that she would be interested in pursuing the opportunity in Brazil, and requested a better understanding about the job.

                                                                                                             

Mr. Cheesewright told her at the meeting on February 1 that he was sorry for making her feel the way she was made to feel, and that the conversation had not gone well on January 29^th. He told her that they would have had a different conversation that day if Wal-Mart did not value her performance and abilities. He told her that Doug McMillon had sent him an email stating that he did not want to lose her.                                                                                                                                                                                                            

Ms. Galea spoke with Mr. McMillon over the telephone on February 3, 2010. He told her that Wal-Mart International had an international shortage of merchandising talent. He told her that the Wal-Mart associate in Brazil was struggling and he suggested that she reach out to Eduardo Solorzano.

                                                                                                                                Ms. Galea acted on Mr. McMillon’s recommendation and spoke with Mr. Solorzano by telephone. Mr. Solorzano told Ms. Galea that any role she might play would just be a consultant role.  Subsequently, Ms. Galea spoke with Hector Nunez, CEO of Wal-Mart’s operations in Brazil.  He told her that the role would not be progressive.  It would have no people reporting directly to her and no responsibility for profit and loss. The position would have her assisting Marcelo Vienna, Chief Merchandising Officer for Wal-Mart Brazil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

On February 3, 2010, Ms. Galea also met with Bob Hakeem. At that time Mr. Hakeem was the Manager of Human Resources of Wal-Mart Canada. Mr. Hakeem asked Ms. Galea what countries she would like to work in if he could arrange an ex patriate assignment for her.                                                                                

Ms. Galea met again with Mr. Cheesewright on February 4, 2010. He informed her that he intended to continue developing her career. He mentioned  there might be an opportunity for her in Chile. In the meantime, she was to continue developing her skills at Wal-Mart Canada.

 By this time, Ms. Galea felt like she was floundering because she had the distinct impression Wal-Mart Canada was trying to decide what they were going to do with her.

On February 5, 2010, Mr. Cheesewright advised Ms. Galea that she was being assigned to work with Ed Kolachynski, head of Global Procurement services at Wal-Mart U.S. to support her transition. This would involve working part time with Wal-Mart’s head office in Bentonville, Arkansas. Alas, this position involved no actual defined duties or responsibilities.

On February 7, 2010, Ms. Galea spoke with Duncan McNaughton, to whom she had reported directly to before she began reporting directly to Mr. Cheesewright.  Ms. Galea understood from her discussion with Mr. McNaughton that she was to be appointed as Senior Vice-President Merchandising-Strategic Initiatives, and would resume reporting directly to him. She understood from Mr. McNaughton that the organization was being flattened. She understood from her conversation with Mr. McNaughton that she was still a valued resource and talent at Wal-Mart Canada, and that this was the best way for her to advance in the company.

On February 8, 2010, Mr. Cheesewright announced Ms. Galea’s new position at a general meeting for all Associates at head office for Wal-Mart Canada.  At the same time, Wal-Mart released an internal memo to all Associates, including those who had not attended the meeting.

The announcement described Ms. Galea’s new role as Senior Vice-President Merchandising-Strategic Initiatives, and that she would report to Mr. McNaughton. The announcement described how in addition to this new role, Ms. Galea had been offered an opportunity to work with Wal-Mart International in the months to come as part of her career plan to gain global experience.  In that role, Ms. Galea would be working with Ed Kolachynski, head of Global Procurement. In addition, Ms. Galea would utilize her operations and merchandising experience in supporting Sean Clarke with new format development.

Ms. Galea later testified that she was embarrassed by this announcement in front of five or six hundred people who worked at Wal-Mart Canada. The announcement signified that she had gone from a member of the senior executive team to a supporting position. The five or six hundred people present at the meeting when the announcement was made were members of head office staff. All of the people who had reported directly to Ms. Galea were present, as well as those who reported indirectly to her.

Ms. Galea attended the year beginning meeting and met with Mr. McNaughton to gain clarity about her current role in the Wal-Mart organization. At that meeting, she was asked to spend some time with Mr. McMillon and through him, to develop relationships through global sourcing.

  On February 17, 2010, Ms. Galea met again with Mr. Cheesewright who told her at that time that hers was a complicated situation. He told her that “her case is so unique it was a Harvard case study in the making”. Ms. Galea did not know what Mr. Cheesewright meant by that comment.

By February 19, 2010, Ms. Galea had not been assigned any further role or responsibilities. Mr. McNaughton told her that he really did not know what her role was to be. He recommended that it was better for her to meet with Mr. McMillon of Wal-Mart International. It was still Wal-Mart Canada’s intention to develop her, although by this time she had no idea what was meant by development.

 Between the the year beginning meeting in February 2010 and mid-June 2010, Ms. Galea had several meetings where she discussed possible opportunities with Wal-Mart affiliates in Brazil, Chile and with Asda, the Wal-Mart affiliate in the United Kingdom. She also travelled to Bentonville to work on global sourcing strategies with Mr. Kolachynski.

In order to expand her horizons in the event that she secured the role in Chile, Ms. Galea took Spanish lessons as she had been informed that the Wal-Mart affiliate would only be interested in someone who spoke fluent Spanish.

Ms. Galea went so far as to visit Chile in June 2010. This showed her interest and commitment to taking the assignment in Chile if it was offered to her.

 By the end of June, Ms. Galea was communicating with Mr. William (Bill) Simon, who had just been promoted to President and CEO of Wal-Mart U.S.  Ms. Galea informed Mr. Simon that she was interested in working with Asda in the UK. She was interested in the Chief Merchandising Officer role. She told Mr. Simon on June 29, 2010, that she was travelling to the United Kingdom the following week to meet with Andy Clarke, the President and CEO of Asda. She also told Mr. Simon that she had already spent a week with Enrique Ostale in Chile with the hope of acquiring the role of Chief Merchandising Officer there.

Throughout Ms. Galea’s exploration of international opportunities, Mr. Cheesewright was passive in assisting her to find a role. In the meantime, Ms. Galea took the opportunity to develop international contacts when she was in Bentonville from time to time to work with Ed Kolachynski. On one occasion, she spoke with Doug McMillon about her prospects with Asda.

Ms. Galea wrote to Mr. McMillon on July 19, 2010, to thank him for the guidance and insight that he had provided a week before. In that email, she told him how excited she was about the potential opportunity to work with a great business like Asda, and how she looked forward to further discussions with Andy Clarke in the UK.

Mr. McMillon responded the following day with an email that said “Hi Gail, I’ll help in any way that I can. I look forward to seeing your impact. Doug.”

Mr. Cheesewright and Mr. Hakeem travelled to Bentonville on or about July 22, 2010, for the annual Talent Review meeting for Wal-Mart International. This was the forum where the Presidents and heads of Human Resources from Wal-Mart companies around the world would meet and discuss matters of importance to Wal-Mart worldwide, and to identify those eligible for promotion for Wal-Mart operations and management. This meeting provided an opportunity for Mr. Cheesewright to speak with Mr. Clarke or with Chet Kuchinad who were attending from the UK about a possible role for her at Asda.

An Associate at Wal-Mart is ranked two ways for promotion potential. One way is the rating given by upper management on a performance grid, known as a People Asset Review, or PAR. After a PAR review, the name of the individual is placed into the appropriate box on a 9 box PAR grid determined by the upper management for the Wal-Mart company in that country. The PAR rating for an Associate is influential for management of the Wal-Mart company in a country to know the skill set and potential of the Associate for advancement.

The second is the Associate Opinion Survey (AOS) score, which is calculated by a complex grading system made up of answers to questionnaires completed by people who report directly and indirectly to the designated Associate.

Ms. Galea was familiar with the nine box grid that had been used by upper management at Wal-Mart since 2008. She knew that she had been rated at the Q1 or Q2 level according to the criteria for those boxes on the 2008 PAR grid the previous year.   These ratings made her promotable.  The rating of Associates on the grid was the reference guide that upper management would use when making decisions about that the best people to promote internally, or to make a recommendation to Wal-Mart affiliates in other countries for expatriate assignments. This grid was marked as Exhibit “J” at trial.

  Ms. Galea had met earlier with Susan Chambers, Executive Vice President of People at Wal-Mart International on a trip to Arkansas. She had taken the trip to Bentonville to meet with Brian Cornel, President and CEO of Sam’s Club, a Wal-Mart affiliate in the Wal-Mart U.S. organization. She left her meeting with Mr. Cornel expecting to receive a job offer from Sam’s Club.

It was from Susan Chambers that Ms. Galea learned for the first time that she had been moved from a Q1 rating on the 2008 PAR grid that she believed to be applicable at all material times in 2010, to a Q5 rating. She also learned from Susan Chambers that her AOS score had been recorded as 59, instead of the 65 she knew she had been given.

  

According to the guidelines used to interpret the meaning for each box on the 2008 PAR grid, a Q5 rating meant that she was not currently considered  promotionable.                                                                                                                                                         

In the  amended Statement of Claim, Ms. Galea had then pleaded that Mr. Cheesewright changed her rating on the applicable PAR grid from Q1 to Q5 without her knowledge.  Mr. Cheesewright admitted this fact.

The AOS score for Ms. Galea had been recorded at 59 in 2010. Previously, her AOS score had been 65. This was confirmed on her performance review on April 16, 2010. Ms. Galea requested that Ms. Chambers take immediate steps to have her AOS score reviewed and corrected.

Mr. Cheesewright was examined for discovery (a pretrial hearing)  as the representative produced by Wal-Mart on July 19, 2012.  At that examination, Wal-Mart had produced a 9 box grid for 2012 that was marked as Exhibit U3 at trial.  The box for the Q5 rating on this 2012 PAR grid reads “Consistent performer with potential for promotion.  Need more evidence to shop strong results/confirm potential.  Action: Targeted development related to current role challenges.”

On December 30, 2015, virtually days before this trial would commence, Wal-Mart Canada provided answers to undertakings. One of those undertakings was to answer a question relating to the production of the PAR grid in effect at Wal-Mart Canada in 2010. The following question and answer was given as that undertaking:

Q.     1136-1140 Produced “box grids” for years 2007, 2008, 2009 and 2010 if they are different that box grid Canada version 2012 at Exhibit 10

A.      No such documents for those years have been located, but they were likely the same or substantially similar.

  

When looking at the interpretation guide for the 2012 PAR grid, Ms. Galea noted that the Q5 terms for what the Q5 box signified had been changed from the grid she believed was in place in 2010. In any event, she was not at Wal-Mart Canada in 2012. She did not use this document during her years at Wal-Mart Canada.

The program at Harvard that Ms. Galea attended in 2010 lasted for eight weeks. This program was offered to 110 selected participants representing different industries from all corners of the world. Susan Chambers and Mr. Cheesewright had both suggested that Ms. Galea would find the Harvard program a positive experience.

 Before she left for Harvard, Ms. Galea met with Mr. Cheesewright on August 5, 2010 upon returning from Bentonville. She asked him why she had been changed from a Q1 to a Q5 rating on the PAR grid. Mr. Cheesewright did not respond to her question about the change of her PAR rating to Q5.  Mr. Cheesewright instead suggested she speak with Mr. Hakeem about the change to her AOS score.

Ms. Galea told Mr. Cheesewright at the time that she had met with Brian Cornel at Sam’s Club, and that the meeting had gone well. Mr. Cheesewright told her that she should be ready to go if Sam’s Club made an offer to her. He also informed her that the position with Asda Foods in the UK was still a possibility. Mr. Cheesewright then told her that the last six months had not gone the way he had hoped. He undertook to speak to an individual he knew about a possible role for her in the new dot.com business that Wal-Mart was developing.

By this time, however, Ms. Galea felt that eight years of her life had been invested in Wal-Mart Canada, and the respect that had been earned during those eight years had been taken away. She told the court that this had all been a very difficult time for her physically and mentally, and for her entire family.

Ms. Galea continued as a member of the Presidents Global Council for Women Leaders for Wal-Mart worldwide. Ms. Galea was one of three women who prepared a report that would be presented to Mike Duke and his direct reports at Wal-Mart International on the ex patriate program. This program addressed an issue identified within Wal-Mart that there was no program to repatriate those employees who had relocated to another country to work at a Wal-Mart affiliate.

While at the program at Harvard, Ms. Galea was on a conference call when she learned that Mr. McNaughton would be returning to the United States.

 Ms. Galea returned from the program at Harvard on November 1, 2010. Upon returning to the executive offices of Wal-Mart Canada, she discovered that her personal effects had been packed up and moved from her office to another office entirely. From that location, she would not have access to Mr. Cheesewright at all.   Even her telephone had been disconnected Ms. Galea was also omitted from the hotel room assignment list for a strategic planning meeting for management that Wal-Mart Canada was organizing off site.  She had routinely been included in this meeting in past years.

The strategic planning meeting organized by Wal-Mart Canada took place on November 4, 2010. Ms. Galea attended after her name had been added to the room allocation list. At that meeting, she met with Mr. Cheesewright and Mr. Hakeem to determine what her role and responsibilities were to be going forward. At that time, Mr. Hakeem told her to keep an open mind and that Wal-Mart Canada would have an offer to make to her. She was told to meet with Mr. Cheesewright and Mr. Hakeem when they had all returned from the strategic planning meeting.

On November 9, 2010, Ms. Galea attended a meeting with Mr. Cheesewright expecting to receive an offer of a position.  According to Ms. Galea, Mr. Cheesewright started the meeting off by telling her that she was one of the best merchandisers, and a high achiever, at Wal-Mart Canada. He stated that he was impressed by the way she had handled the last six months. He then suggested that they not talk about the past, but focus instead on the future.

Mr. Cheesewright explained that although Wal-Mart Canada had replaced the Chief Merchandising Officer twice in three years, he did not feel that she was ready for the job. He told her that he wanted her to run the E-commerce business, and to report to Sean Clarke.   Mr. Cheesewright then gave Ms. Galea a letter dated November 9, 2010 that offered her the position of Senior Vice President E-Commerce or the choice of accepting an offer of severance from her employment with Wal-Mart Canada.

 Ms. Galea was shocked at this letter. It directly contradicted the comments Mr. Cheesewright had made at the meeting. She considered the position of Senior Vice President E-Commerce to be a position that was not comparable to her experience.  It was a job offer extended on a probationary basis, and proposed entirely on terms that favoured Wal-Mart.

Ms. Galea went home and discussed the entire situation with her family.  To Ms. Galea, Mr. Cheesewright’s behaviour showed that Wal-Mart did not have confidence in her. The letter of November 9, 2010 gave her two options, neither of which she considered acceptable.

 Ms. Galea told Mr. Hakeem that she had received this letter.  She told him that this turn of events would have an impact on her whole family.  Her husband was in poor health, and she was the sole wage earner.  Mr. Hakeem gave Ms. Galea his personal telephone number and told her that he was open to discussion.

Mr. Hakeem subsequently sent Ms. Galea a text message and advised her that he would like to talk to her at home. During that call, Mr. Hakeem told her that Sean Clarke would not be staying in Canada with Wal-Mart and was moving to the United States. He told her that Shelly Broader would be her new superior at Wal-Mart Canada. Mr. Hakeem characterized her choice to stay with Wal-Mart as Senior Vice President E-Commerce as a high-risk decision, and told her that Ms. Broader did not want her in the organization.

 Ms. Galea understood from speaking with Mr. Hakeem that if she worked under Ms. Broader and reported directly to her, her position of Senior Vice President E-Commerce would be challenging and she would only be delaying the inevitable. Mr. Hakeem discussed these matters with Ms. Galea because he wanted her to have all of the information to make an educated decision.  He wanted her to make the best choice between the offers that Wal-Mart extended in the letter dated November 9, 2010.

Throughout this time, Ms. Galea stated that Mr. Cheesewright expressed his support, and his commitment to her success. In contrast, Mr. Hakeem was suggesting to her that accepting the position of Senior Vice President E-Commerce would not be a good one because Ms. Broader was not supportive of her. He recommended that she should take the opportunity to bow out gracefully.

 Ms. Galea also understood from Mr. Hakeem that her Q5 rating would be a hurdle for her promotion within Wal-Mart Canada or in the Wal-Mart organization, or to her advancement in the company generally.

Ms. Galea made an effort to meet with Mr. Cheesewright and Mr. Hakeem to discuss the developing situation with respect to Ms. Broader and the offer of the Senior Vice President E-Commerce position. That meeting was never arranged because of scheduling difficulties. Mr. Cheesewright and Mr. Hakeem were never available at the same time to meet with Ms. Galea.

On November 19, 2010, Ms. Galea was scheduled to meet again with Mr. Hakeem. She had spent the last nine months performing tasks assigned to her by Wal-Mart. She had on-going concerns about her Q5 rating and what it meant. She wished to speak with Mr. Hakeem about her concerns with the position of Senior Vice President E-Commerce she had been offered, and how it provided no career path forward. She also wished to discuss the NCA to seek clarity about what she was entitled to receive under it.

Ms. Galea told Mr. Hakeem that she had met with Mr. Cheesewright about the job. She told him she was not considering the severance option because Mr. Cheesewright had encouraged her to accept the E-Commerce position whereas Mr. Hakeem had not. She felt conflicted. At this meeting she told Mr. Hakeem that she not only needed clarity, but needed him to make it work for her.

Later that day, Ms. Galea was called into Mr. Cheesewright’s office. Mr. Cheesewright informed Ms. Galea in a matter of fact way that she was being terminated from her employment with Wal-Mart Canada.

Ms. Galea was devastated by this statement. She could not understand how she could have spiralled downward from her place as a top performer. She could not reconcile how Mr. Cheesewright would consistently tell her that he supported her, and what Mr. Hakeem had been telling her from a practical perspective.

Mr. Hakeem did not attend this meeting in Mr. Cheesewright’s office. Ms. Galea therefore went directly to Mr. Hakeem’s office after Mr. Cheesewright had terminated her employment.  Mr. Hakeem then gave her a severance letter. Although that letter provides two options with respect to providing severance, it was agreed at trial between counsel because of the “without prejudice” nature of the letter that only the first paragraph was admissible in evidence. This paragraph read as follows;

“This will serve to confirm the details of our meeting today. As we have been unable to come to a mutual decision with respect to the employment options detailed in the letter provided to you on November 8, 2010, we have come to the difficult decision that it is in your best interest and in the best interest of the company that your employment be terminated effective immediately.”

Ms. Galea was mortified by what this letter portrayed. First, there had been no letter dated November 8, 2010. If Wal-Mart Canada meant to refer to the letter dated November 9, 2010, no options acceptable to her had been given as both choices were equally detrimental to her career.

Ms. Galea states that she never received a job description for the role of Senior Vice President E-Commerce. Nothing had come of the projects she had been given as Vice-President Merchandising –Strategic Initiatives.  There had been no job offers from any Wal-Mart affiliate she had actively pursued.  The Company had provided no viable options for her to stay employed. She now realized that Wal-Mart had just taken nine months to make the decision to let her go.

Wal-Mart Canada continued to pay Ms. Galea her base salary for the next 11.5 months, and then stopped. Wal-Mart provided Ms. Galea’s record of employment that erroneously recorded her last day of payment as November 4, 2011. Ms. Galea responded through her solicitor’s letter dated November 29, 2011, that she required a corrected record of employment with the correct dates. This letter also stated that Wal-Mart had cancelled all of Ms. Galea’s medical, dental and life insurance benefits without communicating termination of these benefits to her, or providing her with reasonable notice that it would be taking such steps.

Ms. Galea’s lawyers also stated in the letter dated November 29, 2011, that although the executive retirement plan statement provided to Ms. Galea indicated that she had received her incentive bonus for the year end January 2011 in the amount of $129,047, she had never received that money. Her lawyers also stated that they expected that amount to be paid immediately, with interest.  It is unclear from the evidence given at trial if that bonus was ever paid to Ms. Galea.

On December 19, 2011, Heenan Blaikie wrote a letter on behalf of its client, Wal-Mart Canada, to Ms. MacDonald, counsel for Ms. Galea. Enclosed in that letter were two cheques payable to Ms. Galea for $18,224.07 and $3,208.08, respectively for vacation pay, and the corrected record of employment for Ms. Galea dated December 9, 2011.                                                                                                                                                                                              

The damages that Ms. Galea claimed against Wal-Mart came from two sources. She sought one set of damages of a contractual nature that flow from the NCA as an employment contract.  The NCA provides that Wal-Mart would continue to pay Ms. Galea for two years if she was not dismissed for cause, and she abided by the terms of the NCA not to compete with Wal-Mart.  Ms. Galea was not dismissed for cause, and there was no evidence given that she breached any term of the NCA.

Ms. Galea claimed another set of damages at law for moral damages, and for punitive damages flowing from Wal-Mart’s conduct.  She seeks moral damages to compensate her for the mental and emotional distress caused by Wal-Mart’s breach of its duty as her employer to treat her as an employee in good faith, and to deal fairly with her in the manner of terminating her employment.  Wal-Mart’s liability for these damages arises from its conduct on and after January 29, 2010, to the actual date it terminated Ms. Galea’s employment on November 19, 2010.

 Ms. Galea also seeks moral damages for the mental distress and aggravating circumstances Wal-Mart has caused her over the course of the litigation, including the trial.

Finally, Ms. Galea has made a substantial claim for punitive damages to sanction Wal-Mart for its conduct throughout the termination process, including the litigation that followed.

 In her Amended Fresh as Amended Statement of Claim, Ms. Galea seeks the following relief;                                                                                                                                             

1.   damages in the amount of $1,750,000.

                                                                                                               

2.   damages in the amount of $144,282 representing the plaintiff’s bonus entitlement for fiscal 2010;                                 

3.   an accounting of the value of the performance shares that would have vested over the reasonable notice period, and judgment on that value;                                                                      

4.   an accounting of the value of 4% of the fiscal year end earnings in the plaintiff’s deferred profit sharing plan (the “DPSP”) for fiscal 2010 as well as the contributions that would have been made over the period of the plaintiff’s notice entitlement, and judgment for those amounts;                                                        

5.   an accounting for the value of 13% of the plaintiff’s salary and bonus for fiscal 2010 and judgment on that value in lieu of the plaintiff’s entitlement under the executive retirement plan ( the “ERP”);

6.   an accounting of the value of the ERP contributions that the plaintiff would have received over the reasonable notice period, and judgment on that value;

7.   moral damages in the amount of $1,000,000; and

8.   punitive damages in the amount of $1,000,000. Plaintiffs generally ask for more than they will actually be awarded.

                                                                                                                                                                                      The manner in which a person is terminated from her or his employment is as important as the employment itself. It is on termination of employment that a person is most vulnerable, and it is at that time that a person is most in need of protection.

In my view, there could be no greater power imbalance than Wal-Mart as the employer and Ms. Galea as an employee who not only promised to dedicate herself and her career to Wal-Mart, but also promised to forfeit any opportunity of a competitive position with another mass retailer for two years following her termination from employment, even if it was without cause.

Further, view, we should. hold that there is a general duty of honesty in contractual performance. This means simply that parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract. This does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirement not to lie or mislead the other party about one’s contractual performance. Recognizing a duty of honest performance flowing directly from the common law organizing principle of good faith is a modest, incremental step. The requirement to act honestly is one of the most widely recognized aspects of the organizing principle of good faith which seem to have been lacking on Wal-Mart’s part.

The principle requirement to act in good faith, including the duty to act honesty and reasonably in the performance of a contract, is in my opinion, fundamental in the context of employment relationships.  The principle of good faith is even more pronounced in the setting where an employer is terminating a person’s employment, and that termination affects the contractual rights of the departing employee.                                                                                                                                                                                                                                 

What Ms. Galea understood from what Mario Pilozzi and Mary Vuicic told her in 2005 is that Wal-Mart had the obligation under the NCA to “make her whole” for the two years of the transition period if she was terminated without cause, provided she did not compete or otherwise contravene the noncompetition provisions of the NCA. She trusted Mr. Pilozzi and Ms. Vuicic. It was because of quality people like them that she had joined Wal-Mart Canada in the first place. She understood that to be made whole meant that she would participate in all incentives provided to an employee of her level under any annual incentive plan. She read the term Annual Incentive Plan in the NCA as a collective term, and not in reference to a single document.

On the other hand; the position taken by Mr. Dye on behalf of Wal-Mart Canada relied on a literal reading of the term Annual Incentive Plan.  He argued that it requires a document with that title to provide entitlement to any incentive for Ms. Galea to receive over the transition period. He further said that Wal-Mart Canada further relies upon principles of general application, taken together with rules of contractual interpretation, to argue that Ms. Galea’s entitlement to participate under any incentive program is subject to the terms of the governing plan or contract. 

Ms. Galea’s evidence about her entitlement under the NCA based on what she was told at the time the NCA was signed is uncontradicted. Although Ms. Galea’s recollection of what Mario Pilozzi or Ms. Vuicic told her was ruled inadmissible at trial, her understanding from what she was told goes to the circumstances surrounding the formation and contractual intent behind the NCA .  

It is therefore relevant, and admissible  as evidence.  It was admitted as a fact that Ms. Galea was earning $288,565 a year as a base salary at the date of her termination.  Under the NCA, Wal-Mart was to continue paying Ms. Galea her base salary for two years, for a total of $577,130. Wal-Mart in fact continued to pay Ms. Galea her salary for 11.5 months into the transition period when it ceased making those payments, unceremoniously and without any form of notice.

  There was no dispute that Wal-Mart paid Ms. Galea her base salary and benefits for 25 pay periods, representing approximately 11.5 months after the date of termination.  Wal-Mart acknowledged that Ms. Galea was owed 54 weeks for the balance of the two year transition period, for a total of $299,644.

Further, the NCA specified that Wal-Mart would continue paying its portion of the premiums for health and dental benefits to cover Ms. Galea for the transition period. Ms. Galea gave evidence that she participated in the Wal-Mart group benefit plan for coverage of health – family, dental – family, long term disability, basic life, dependent life and basic accidental death and disability coverage. Wal-Mart continued to carry Ms. Galea and her family on the group plan for 11.5 months after termination.

  

 Ms. Galea sought 10 percent of her base salary to replace the benefit coverage by the group plan that should have continued for 12.5 months, being the balance of the transition period. This compensation would provide Ms. Galea with the funds necessary to purchase similar coverage from a private carrier.

 Ms. MacDonald, the representative from Wal-Mart’s lawyer made submissions to the court that the 10 percent used by Ms. Galea for the valuation of this claim is based on the approach taken by an Ontario Superior Court in Camaganacan v. St. Joseph’s Printing Ltd.,  In that decision, Justice Whitaker held that 10 percent of an employee’s base salary is a good approximation of what it would cost to replace group benefits under an employee group benefit plan.

 Wal-Mart took a different approach. First, Mr. Dye submits that the NCA only requires Wal-Mart to continue with payment of its portion of the health and dental benefits extended to Ms. Galea during her employment. Wal-Mart called Joseph Chan to give evidence relating to Ms. Galea’s coverage under the group plan for health and dental premiums. Other benefits for which Ms. Galea received coverage during her employment are not mentioned in the NCA. In fact, subsection 2(g) of the NCA expressly excludes any benefits other than those expressly listed. Wal-Mart also refers to the evidence given by Will Wilson and Joseph Chan that Ms. Galea was solely responsible for paying the full premium cost of long term disability insurance benefits.

Wal-Mart paid premiums that were based on a group rate pursuant to an agreement between Wal-Mart and the insurance provider for the employment benefit group plan coverage.  No witness for Wal-Mart told the court how much premiums would cost for Ms. Galea to pay for the purchase of health and dental coverage outside of those group rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Wal-Mart states that the only evidence of the actual value of the benefits that Wal-Mart terminated was given by Joseph Chan. According to Mr. Chan’s evidence, Wal-Mart’s portion of those premiums for health and dental coverage amounted to $66.04 per pay. The amount of this premium over 27 pays would therefore be $1,783.08, plus HST (provincial tax) for a total of $1,925.73                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Under Ontario law, a dismissed employee is entitled to damages for the loss of compensation plans over the course of a reasonable period of notice as they form part of the employee’s compensation, subject to contractual terms to the contrary.

 The entitlement under the MIP for Ms. Galea’s ten months of employment during FYE 2011, and during the transition period, raises a number of issues. First, there is the issue that the bonuses are payable in Wal-Mart’s sole, absolute and unfettered discretion each year.

The basic principle in awarding damages for wrongful dismissal is for both parties to recognize that the terminated employee is entitled to compensation for all losses arising from the employer’s failure to give proper notice. Among other things, damages for wrongful dismissal will typically include all of the compensation and benefits that the employee would have earned during the notice period.    If the payment of a benefit is an incentive bonus, then it comes down to a matter of discretion which means that discretion must be exercised properly, which  also means that the discretion must be exercised honestly and in good faith.

                                                                                                                                                                                                                                 

 Sixty years ago, I was given notice totaling thirty days and I was paid in full for the thirty days since I was still working for my employer before I left my employer.                                                                                                                                                                

The second issue concerns what ratio to apply to Ms. Galea’s base salary to determine the appropriate amount of any bonus payable for the years in question. Ms. Galea claims entitlement to a bonus at 62.5 percent of her base annual salary, or $180,353.13 a year. She refers to the letter from Mr. Cheesewright dated February 3, 2010 that speaks of changing her status to ensure that Wal-Mart offers a competitive remuneration plan for that year in her position as Senior Vice President – Merchandising. This position placed Ms. Galea in an M9 pay band, and increased her potential bonus under MIP from 50 percent to 62.5 percent. Fifty percent of her salary would equal $144,282.50, contrasted with the $180,353.13 she claims.                                                                     

Mr. Dye also referred to the contractual language found in the Management Incentive Bonus (Plan No. 7), the FYE 2006 Incentive Plan as well as the FYE 2011 Incentive Plan in effect on Ms. Galea’s termination. In the FYE 2011 Incentive Plan, the following clause appears:

To be eligible for payment of any incentive, the individual must be employed in the eligible position by Wal-Mart Canada Corp. on the last day of the employment plan year. No incentive will be paid to anyone who has left the company, for any reason, prior to the end of the incentive plan year, or to any individual working through his or her notice period. “For any reason” includes by resignation, by retirement, or by termination, whether lawful or unlawful, with or without cause, or with or without notice.

That hardly seems fair in my opinion. That would mean that if the employee is still working and bringing in money to Wal-Mart, during that termination period, they will not get the incentive bonus that was earned during that period of employment. Assuming that the pension plans can be read as requiring active service as a prerequisite for the accrual of pension benefits, it seems unpersuasive the argument that this precludes damages as compensation for lost pension benefits. This argument, it seems to me, ignores the legal nature of the plaintiff’s claim. The claim is not for the benefits themselves. Rather, it is for common law contract damages as compensation for the benefits the employee would have earned had the employer not breached the contract of employment. The employee had the contractual right to work and to be paid her salary and receive benefits throughout the entire notice period.

The trial judge ruled, “I conclude on the facts and on the law that Wal-Mart cannot deprive Ms. Galea of her bonus for the proportion of the year she worked during FYE 2011, and over the transition period. However, Ms. Galea must live within the limits of her pleading that claims the annual MIP bonus at 50 percent of her base annual salary. Pleadings matter. Therefore, Ms. Galea is awarded damages for Wal-Mart’s breach of the NCA that deprived her the MIP bonus for 9.6 months in 2010, and for the transition period under the NCA at 50 percent of her base salary. This bonus for those timeframes translates into $115,420 and $288,552 respectively.”

Ms. Galea also sought damages for Wal-Mart’s failure to pay her under the DPSP in breach of its contractual obligation under the NCA.

The judge also ruled, “ I am allowing Ms. Galea’s claim for the contribution towards her account in the DPSP that Wal-Mart should have paid for the 9.6 months she provided services in FYE 2011, and the two years she would be entitled to contributions towards the DPSP as an incentive. This claim is allowed for the same reasons I have found that Ms. Galea is entitled to her management bonus under the MIP. The DPSP was part of the compensation package promised to her in the employment letter dated August 14, 2002, and it was in effect on Ms. Galea’s date of termination.”

 The employment letter dated August 14, 2002, makes reference to annual contributions that Wal-Mart would make towards Ms. Galea’s personal account under a retirement plan. Ms. Galea takes the position that the ERP qualifies as a retirement plan as contemplated in the employment letter when she was hired. She certainly considered the ERP as an incentive plan in effect when she was terminated.

A retirement plan is designed not only to provide an employee with security at the end of their working years, it is also a retention tool that provides the employee with an incentive to stay employed by the employer as a reward for  loyalty and service.

The judge ruled, “Ms. Galea claims damages equal to 13% of the subtotal between her annual salary of $288,565 and her management bonus of $144,282, which equals $432,847 for an ERP contribution of $56,270 per year. Ms. Galea is therefore awarded damages for her entitlement to ERP for two years in the amount of $112,540, plus payment of her ERP from 2010 in the amount of $45,014 for the same reasons I found her entitled to receive for the damages for the loss of her MIP bonus.”          

                                                                                                                       

Ms. Galea’s claim for damages arising from Wal-Mart’s refusal to pay her for the stock options she had been granted but had not exercised up to the date of termination, as well as the performance shares she had been issued, totals $922,315.

The entitlement to stock options, or any plan under which stock options would be granted to an employee at Ms. Galea’s level, was not recognized in the employment letter dated August 14, 2002. However, Wal-Mart was operating a stock option program for Wal-Mart associates under the Wal-Mart Canada Inc. Stock Incentive Plan of 1998.

Wal-Mart confirmed Ms. Galea’s transfer to the position of General Merchandise Manager in its letter dated September 9, 2005. In that letter, Wal-Mart advised that its management would recommend to the Stock Incentive Plan Committee that she be awarded stock options at the Committee’s discretion, subject to the terms of the Wal-Mart Canada Stock Incentive Plan of 1998. At the same time, Wal-Mart required Ms. Galea to execute and deliver the NCA and a Statement of Ethics. Wal-Mart ultimately enrolled Ms. Galea in the Stock Option Program on the same day that she signed the NCA.                                                                                                                                                                                  On July 4, 2008, Wal-Mart replaced the Stock Incentive Plan of 1998 with the Wal-Mart Canada Long Term Incentive Plan. Under the LTIP, performance shares would be issued to designated employees, instead of stock options. The award for 2008 was “triple loaded”; Ms. Galea received a one-time award equivalent to three standard awards.  Those shares would vest over three consecutive years. PSP awards in 2009 and subsequent years would be the amount equivalent to 40 percent of the employee’s base salary. Wal-Mart described the purpose of the new PSP in the letter dated July 4, 2008, in a manner that “allows Wal-Mart Canada to better recognize and reward the significant impact of your efforts and contributions have on both the current and future success of our company.”

The Continuous Status of Ms. Galea as an Associate was key to her entitlement to exercise the stock options, or rights to redeem performance shares she had not exercised prior to November 19, 2010.  Those stock options and performance shares are shown on the Optionee Statement dated November 15, 2010.  Ms. Galea’s employment was terminated, effective November 19, 2010.  Her Continuous Status had been interrupted as that status did not include any notice or period of payment in lieu of notice upon termination of employment where the Associate does not provide services to Wal-Mart. The termination of that Continuous Status must be read in to the contractual language of the plan documents to determine if any of Ms. Galea’s rights survived termination.                                                                                                            

The 2008 LTIP contemplates the effect of the employee’s termination of employment in Article 5.8, where it states that:

Notwithstanding the foregoing, unless otherwise determined by the committee and specified in the applicable notice of plan award, upon termination of a recipient’s Continuous Status as an Associate any then outstanding options, restricted stock, restricted stock rights, stock appreciate rights or performance shares granted to such recipient in respect of which all restrictions were not satisfied prior to the recipient’s date of termination of Continuous Status as an Associate shall immediately be cancelled and forfeited and all rights and interests in respect thereof of the recipient or his or her beneficiary shall thereupon terminate, in all cases, for no consideration.

Each notice of plan award that Ms. Galea received under the 2008 LTIP contains a paragraph that provides that, subject to a provision for the event that a recipient’s Continuous Status as an Associate terminates, vesting shall be effective on the last day of the applicable Performance Period, provided that the recipient’s Continuous Status as an Associate has not terminated on or before that date. The clause that provides for the event where the recipient’s Continuous Status as an Associate terminates states that:

(b)  For any reason other than the recipient’s death, al PSPs granted hereunder that have not vested on or before the date on which the recipient’s Continuous Status as an Associate ceases and all rights with respect to such PSPs shall be forfeited by the recipient and shall terminate.

  Each notice of plan award was issued in the form of an offer.  Ms. Galea signed each notice of plan award for 2008 on November 6, 2008, as well as the notice of plan award for 2009 on January 22, 2009 and June 16, 2009 to accept those terms.

In Veer v. Dover Corporation (Canada), the Court heard the appeal of an employer who had been ordered by the trial judge to pay damages for stock options held by the dismissed employee over the term of the notice period. On dismissing the appeal, the court determined that entitlement to exercise stock options after dismissal from employment but within the notice period turns on the specific language of the stock option plan.

                                                                                                                                                                                                                                                                                      

Previous court decisions recognize that where the contractual language specifically contemplates that the right to exercise stock options or to redeem performance shares is not available during the notice period of a terminated employee, the court will give effect to that language to preclude damages for the loss of those stock options or the right to redeem. The terms of the stock option plan or the plan granting performance shares that allow for the cancellation or forfeiture of those stock options or shares upon termination of the employee’s employment will be enforced if the language is clear enough to give effect to those terms. These are the terms that the parties agreed upon, and the terms that the employee agreed to, come good times or bad. It is the recognition of the courts that the power to contract includes the power to provide for the cancellation or forfeiture of rights upon the happening of a given event.

The trial judge considered the above and ruled, “I find that the language used in the 2008 LTIP, and in the notice of plan awards that Ms. Galea had accepted are contracts between herself and Wal-Mart that contain specific language that is clear.  Once Ms. Galea’s Continuous Status as an Associate ceased, she no longer had rights to exercise outstanding stock options or to redeem performance shares that had not been vested.  By operation of the 2008 LTIP and the several notice of plan awards, all rights under stock options and performance shares were cancelled and forfeited under paragraph 5.8.  Therefore, her claim for that relief is dismissed.”

With respect to moral damages claimed by Ms. Galea, the recognition of a person’s employment by Chief Justice Dickson (Supreme Court of Canada) in the Wallace v. United Grain case heard in 1987, is reflected by the importance that the law gives to the manner in which a termination from that employment is made.  This importance gave rise to an employer’s implied duty of good faith and fair dealing in the course of dismissing an employee. It is available to a terminated employee for the court to award an extended period of notice if a finding was made that an employer had breached that duty.

The Supreme Court of Canada in Keays v. Honda Canada Inc., introduced the concept of moral damages that took the place of any extended period of notice as a remedy for employees being terminated.  The court reaffirmed the fundamental nature of the same principles discussed in Wallace, but characterized them as deserving of a distinct category of damages known as moral damages. 

Chief Justice McLachlin (Supreme Court) defined moral damage must therefore begin by asking what was contemplated by the parties at the time of the formation of the contract. What did the contract promise?” The contract of employment is, by its very terms, subject to cancellation on notice or subject to payment of damages in lieu of notice without regard to the ordinary psychological impact of that decision. At the time the contract was formed, there would not ordinarily be contemplation of psychological damage resulting from the dismissal since the dismissal is a clear legal possibility. The normal distress and hurt feelings resulting from dismissal are not compensable.   

 Damages resulting from the manner of dismissal must then be available only if they result from the circumstances described in Wallace, namely 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 insensitive.

The application makes it unnecessary to pursue an extended analysis of the scope of any implied duty of good faith in an employment contract.  As long as the promise in relation to state of mind is a part of the bargain in the reasonable contemplation of the contracting parties, mental distress damages arising from its breach are recoverable. In Wallace, the Court held employers to an obligation of good faith and fair dealing in the manner of dismissal and created the expectation that, in the course of dismissal, employers would be “candid, reasonable, honest and forthright with their employees,” Since that time, then, there has been expectation by both parties to the contract that employers will act in good faith in the manner of dismissal. Failure to do so can lead to foreseeable, compensable damages. Since the Wallace decision, the Courts have recognized why an extended period of notice may be awarded upon wrongful dismissal in employment law.

Years ago when I was still practicing law, I represented a client who was given no termination period at all. Since he was wrongfully terminated without any justifiable reason, his termination period was extended to five months.  Since he was previously being paid five thousand dollars a month, he was awarded another five month’s pay. 

 In the course of the trial, Ms. MacDonald brought a motion to amend the statement of claim to increase Ms. Galea’s claim to moral damages from $100,000 to $1 million. Leave to amend the statement of claim in this respect was granted, on consent. Ms. Galea also sought leave to amend the statement of claim to plead that Wal-Mart’s duty of good faith and fair dealing in its manner of dismissal encompassed both pre-termination and post-termination conduct.

 After a contested motion, leave to amend paragraph 41 of the Fresh as Amended Statement of Claim was granted, but not to the extent of the allegation “including the defendants conduct throughout the litigation and the trial itself”. The statement of claim was further amended to include the following particulars as subparagraph 41(e) regarding the pre-termination and post-termination conduct:

The defendant failed to disclose, or insufficiently disclosed, relevant documents in its possession to the Plaintiff throughout the litigation, when it was reasonably within the contemplation of the Defendant that such failure to disclose, or insufficient disclosure would cause the Plaintiff to suffer mental distress, having regard to the timing and circumstances of the disclosure.

Where an employer has breached the duty of good faith and fair dealing in the manner of dismissing an employee, there is no reason to retain the distinction between “true aggravated damages” resulting from a separate cause of action, and moral damages resulting from conduct in the manner of termination. Instead, the court will rule that the damages attributable to the conduct of the manner of dismissal shall always be awarded                                                                                                                                                                                                                                       

The manner of dismissal causing an employee mental distress has now been recognized as the basis for moral damages. The court in Keays v. Honda concluded that if an employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, an award that reflects the actual damages caused may be made by the court. The court gave examples of such conduct upon dismissal of the employee that could result in compensable damages. Among them are cases where an employer attacks the employee’s reputation by making declarations at the time of dismissal, making misrepresentations regarding the reason for the decision, dismissal meant to deprive the employee of a pension or other benefit or right. Years ago, an employee who was fired, was paraded in front of his fellow employees while he was accompanied by the company’s security guards much to his extreme embarrassment. The court awarded him huge compensable damages for the stress he was forced to suffer from the embarrassment he was forced to bear.

 The fundamental nature of damages for conduct in the dismissal of an employee, including damages for psychological injury, is and remains compensatory. Moral damages relate to foreseeable damages to compensate an employee for injury or harm suffered by an employer’s conduct. The award of moral damages is distinct from any award for punitive damages, which are directed at the employer. The analysis regarding punitive damages relates to the employer’s conduct and concerns the disapproval of the court with respect to that conduct.                                                                                                                                                                                                                                                                                    Moral damages must not be confused with expenses caused by another party for the conduct of the action. That expense is not appropriate as a claim to consider for damages. Where the conduct complained of relates to the conduct of litigation, it should be sanctioned by an increase of the costs award and not as punitive damages.

The same might be said to exclude matters relating to litigation conduct from a claim for moral damages. That said, it is my view that an exception can be made for moral damages to respond where the evidence proves on the balance of probabilities that an employer has acted in bad faith, and that bad faith is manifested by the decisions and conduct of an employer or counsel acting on the employers’ instructions to frustrate or deny the rights of an employee.

Ms. Galea had claimed moral damages based on the pre-termination and the post-termination conduct of Wal-Mart to establish her claim for moral damages.

 Ms. Galea had alleged that Wal-Mart’s conduct was unfair or amounted to bad faith, as it was untruthful, misleading and unduly insensitive to her. In terms of pre-termination conduct, Ms. Galea submitted that rather than repositioning her for a career advancement, the time between January 29, 2010 and November 19, 2010, was simply a long goodbye.

  Ms. Galea further stated than in her view of her career history and level of accomplishment, it was within Wal-Mart’s contemplation that the time it took and the manner in which the dismissal was executed would cause her mental distress. Wal-Mart knew that Ms. Galea was the sole income earner in her family, and that she was raising two children who were still in school. Wal-Mart also knew Ms. Galea had devoted her working life for the last seven years to Wal-Mart and considered Wal-Mart her legacy employer.

Her lawyer submitted that Wal-Mart’s conduct after termination entitled her to receive moral damages. Wal-Mart continued to pay her a base salary, and to pay premiums for her health and dental coverage for 11.5 months after November 19, 2010, only to terminate both without notice. Upon commencing this action in 2011, Wal-Mart acted the unresponsive defendant who did not make full disclosure pursuant to the Rules of Civil Procedure to allow Ms. Galea to proceed with her claim in a timely fashion. Wal-Mart did not answer the undertakings that Mr. Cheesewright gave on its behalf at his examination for discovery in 2014 until mere days before the trial was to begin in January 2016. 

 Ms. Galea’s lawyer further argued that this conduct is the personification of an employer acting unfairly and in bad faith. He argues that the termination of her base salary and health and dental benefits, as well as the frustration of the litigation process to have her claims adjudicated, are part and parcel of Wal-Mart’s manner of dismissing her. This kind of conduct is linked to her claim that Wal-Mart has purposely frustrated her financial health, as well as her ability to pursue her rights as a dismissed employee who has entitlements under an employment contract. Wal-Mart’s conduct at termination has been unfair and taken in bad faith, contrary to its duty that was owed to her.

Ms. Galea believed that she was enjoying a stellar career at Wal-Mart by January, 2010.  She had attained a level in upper management, with deepening experience in sales and merchandising.  There was nowhere to go but higher.  Little did she know that Wal-Mart would stall her ascent, leaving her to fall with no-one there to catch her.

Ms. Galea reported to Duncan McNaughton, her coach and immediate superior for the first quarter of FYE 2011. Mr. McNaughton completed the performance appraisal for Ms. Galea in April 2010 on the form provided for senior management (executive) employees. The performance appraisal consisted of three sections, each broken down into component parts. In Section one for corporate beliefs and values, Mr. McNaughton graded Ms. Galea on the components that added up to overall rating for corporate beliefs and values of 4.1 out of 5. In Section two regarding performance objectives, Mr. McNaughton graded Ms. Galea on the various components of that part between 3.5 and 4.0, for an overall rating of 4.0.  Where Section 3 provided for overall comments, Mr. McNaughton made positive comments, recognized Ms. Galea’s achievements, including that she continue to improve her AOS which was improved that year to 65 overall from 59 the previous year, and highlighted various objectives for the coming year. In the overall performance rating, Mr. McNaughton gave Ms. Galea a 4.1 rating that represented the median within the category “exceeds expectations”.

The claim Ms. Galea was making for moral damages was based on how Wal-Mart defeated her from taking one of two distinct career paths. One was to earn a promotion to Chief Merchandising Officer for Wal-Mart Canada. The other was to acquire a transfer within the Wal-Mart International structure to a Wal-Mart company in another country. Ms. Galea is recorded as saying that she aspired to an ex patriate assignment in another country in the performance appraisal completed in April 2010 for FYE 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

During the trial, Ms. Galea gave evidence that she was led to believe that Wal-Mart was grooming her to someday head a Wal-Mart company in the world. This belief was founded on comments made by Mr. Pilozzi in Ms. Galea’s application to the Leadership Foundation in 2007, and continued into the years that Mike Duke was CEO of Wal-Mart International.

When Wal-Mart removed Ms. Galea from her position as Vice President, General Merchandising on January 29, 2010, she was removed from having people report directly and indirectly to her. She was removed from a position of managing sales representing 7 billion dollars for the Company. This removal and reassignment into an ad hoc position was first announced in front of the staff at Wal-Mart Canada in Mississauga on February 8, 2010, accompanied by a press release. Wal-Mart Canada would go on hire Shelly Broader to become Chief Merchandising Officer for Wal-Mart Canada.

 Wal-Mart did not dispute that it unilaterally removed Ms. Galea from her position as Vice President – General Merchandising. Nor did Wal-Mart dispute the fact that this change in position was made effective February 8, 2010. However, Wal-Mart disputes Ms. Galea’s assertion that this change in position in itself amounted to bad faith.

The judge’s response to that allegation was; “I do not view Wal-Mart’s decision to remove the role and responsibility of Vice President, General Merchandising from Ms. Galea on January 29, 2010 to constitute bad faith. Employers in a non-union environment have the right to implement personnel changes within the workplace, and to structure management lines as they see fit. An employee affected by such change may consider herself constructively dismissed if circumstances warrant taking that position.” unquote

Although Ms. Galea pleaded a claim of constructive dismissal in her initial statement of claim, the essence of her claim against Wal-Mart and the nature of the action itself was not based on constructive dismissal. An action for constructive dismissal only arises when an employee elects to resign. Ms. Galea never elected to resign, and remained an employee of Wal-Mart Canada until a termination letter was given to her on November 19, 2010.

 The treatment Ms. Galea received from Wal-Mart between February 8 and November 19, 2010 is another matter. She was made to suffer repeated humiliation, starting with the announcement of her re-assignment from Vice President, General Merchandising to that of a roving vice president of little substance. There was no opportunity provided within Wal-Mart Canada for her, and she received no offers from any Wal-Mart Company in India, Brazil, Chile or the U.K.

Mr. Cheesewright testified that he did not speak with Andy Clarke from Asda about Ms. Galea’s prospects at the Talent Review on July 22, 2010 in Bentonville. However, there was nothing to stop him from seeking Mr. Clarke out at the meeting. This would have been something he would do if he was sincere in supporting Ms. Galea’s efforts.  The fact that he did not and that he had changed her PAR rating that could have enhanced or diminished her prospects in the U.K. amounts to evidence of bad faith.                                                                                                                                                                                                                                           

  Wal-Mart took the position that it was Ms. Galea’s responsibility to find the right posting, having regard to her skills and the opportunities available at the time throughout the Wal-Mart International structure. There was no dispute that Mr. Cheesewright told Ms. Galea that she was a valued employee. He told her that the company would pay for a career coach, visits to Chile, the UK and the U.S. to explore opportunities within the Wal-Mart organization outside Canada, and for an eight week executive course at Harvard University.

Mr. Cheesewright further testified that the PAR rating given to Ms. Galea of Q5 had been made by him. However, he stated that this did not affect her eligibility for hiring by a Wal-Mart company in another country. Wal-Mart’s lawyer argued that there was no evidence given at trial that executives in a Wal-Mart company in another country responsible for hiring even knew about Ms. Galea’s Q5 rating.

The judge said, “Where the evidence of Ms. Galea and Mr. Cheesewright conflict and credibility was an issue, I prefer the evidence of Ms. Galea. She took notes from January 29, 2010 onwards. Mr. Cheesewright did not. She followed every lead that could open an opportunity for her. Mr. Cheesewright would say he would assist where he could, but there is no evidence he ever did. While I accept his evidence that it is up to the Wal-Mart affiliate in each country to hire its own Associates, Mr. Cheesewright made representations to Ms. Galea that amounted to extending a good faith promise he never really kept.” unquote                                   

 Ms. Galea’s lawyer extended her client’s claim for moral damages to include post-termination conduct. On his client’s motion for leave (permission) to further amend her Amended Statement of Claim at trial, he relied on the decisions of two cases that dealt with the same issue. One of the two decisions was that of the decision of Justice Sanderson in support of amending her claim for moral damages based on post-termination conduct; to wit,  damages are not limited to the conduct of an employer as of the moment of the dismissal. It can also include post-termination conduct.

It would appear that the state of the law in Ontario does not require a plaintiff to lead medical evidence to make out a case for damages for mental distress in an employment context. The claim for aggravated or moral damages aree available to a claimant on all of the evidence given, including the subjective evidence of the plaintiff, provided that all other elements under the case law (previous decisions) are met.

The question of whether damages are available to a plaintiff for mental injury without expert evidence has been clarified by the Supreme Court of Canada recently in Saadati v. Moorhead.

The Supreme Court of Canada, in allowing the appeal and restoring the judgment of the trial judge, summarized the law in Canada with respect to the pre-condition for the recovery of damages for mental injury as follows:

“This Court has, however, never required claimants to show a recognizable psychiatric illness as a precondition to recovery for mental injury. Nor, in my view, would it be desirable for it to do so now. Just as recovery for physical injury is not, as a matter of law, conditioned upon a claimant adducing expert diagnostic evidence in support, recovery for mental injury does not require proof of a recognizable psychiatric illness. This and other mechanisms by which some courts have historically sought to control recovery for mental injury are, in my respectful view, premised upon dubious perceptions of psychiatry and of mental illness in general, which Canadian tort law should repudiate. Further, the elements of the cause of action of negligence, together with the threshold stated by this Court in Mustapha v. Culligan of Canada Ltd.,  for proving mental injury, furnish a sufficiently robust array of protections against unworthy claims. I therefore conclude that a finding of legally compensable mental injury need not rest, in whole or in part, on the claimant proving a recognized psychiatric illness. It follows that I would allow the appeal and restore the trial judge’s award.” Unquote

No evidence was given at trial about why Wal-Mart stopped its payment of Ms. Galea’s base salary or providing health and dental coverage under its group plan to Ms. Galea and her family without notice 11.5 months after she was terminated. There was no evidence given, and no issue made about whether Ms. Galea had complied with the provisions of the NCA not to compete with Wal-Mart for the entire two-year transition period. Wal-Mart could reasonably contemplate that the stopping of payments and insurance coverage would cause Ms. Galea mental distress.

The Trial judge in Mr. Galea’s trial also said, “In terms of other pre-termination conduct, I do not consider facts like Wal-Mart’s decision to hire Duncan McNaughton or Sean Clarke as members of management to whom Ms. Galea would report, despite her aspirations to become Chief Merchandising Officer, or even the hiring of Shelly Broader as CMO, as conduct relevant to Wal-Mart’s duty of good faith or fair dealing. These decisions are made by an employer in the normal course of running its business and fall outside any consideration of a claim for moral damages. They are therefore irrelevant as factors when determining whether an award of moral damages should be made.” unquote

 He continued; “Having regard to the evidence as a whole, I find as a fact that Wal-Mart breached its implied duty of good faith owed to Ms, Galea between January 29 and November 19, 2010, and that caused her mental distress. It is clear to me from the evidence that Mr. Cheesewright had made the decision by January 29, 2010 to dismiss or denigrate Ms. Galea to the point where she might resign. Thus began the long goodbye that would last until November 19, 2010. Ms. Galea was moved to an ad hoc position that was essentially an international job search. She was, as she puts it, left to “twist in the wind”. This conduct was unfair to Ms. Galea, and tinged with bad faith.” Unquote

“The mental distress that Wal-Mart knew its actions would cause Ms. Galea did not stop there. In the course of the litigation, Wal-Mart was either purposely dilatory (slow) in instructing its counsel to provide disclosure and to conduct examinations for discovery, including the legal obligation to provide answers and supporting documents to fulfil undertakings on a timely basis. Alternatively, Wal-Mart was indifferent to Ms. Galea’s claims. As a result, this purposeful delay or indifference caused mental distress for Ms. Galea that exceeded the normal stress and hurt feelings that accompany a dismissal.” Unquote                                                                                                                                                                                                                                                      

The judge also said, “I agree with the submissions of Ms. MacDonald that Wal-Mart’s conduct with respect to the pace and disclosure process in the litigation originating from Wal-Mart as the party as distinct from the instructions given to counsel for the conduct of the action itself, formed part of the manner of dismissal. Ms. Galea was entitled to a respectful and responsive approach to defending the action while Wal-Mart defended vigorously, not a deafening silence where indifference bordered on disdain towards her. Attrition is not friend of justice, nor should it appear to be.” Unquote

He then said. “It is for these reasons that I find that Wal-Mart’s conduct was misleading at best, and dishonest at worst, in the way the company treated Ms. Galea. Only Wal-Mart knew that Ms. Galea’s career was over long before she was actually terminated. To keep her in suspended animation was unduly insensitive conduct. The ten months she was left to seek a new foothold qualifies as a manner of dismissal that caused Ms. Galea mental distress and qualifies her for aggravated damages.Unquote”

Ms. Galea was awarded $200,000 for moral damages.

The judge also said, “I am also awarding moral damages to Ms. Galea for Wal-Mart’s post-termination conduct. I consider Wal-Mart’s decision to stop the continued payment of her base salary and the health and dental coverage to her and her family to be unduly insensitive, and to have caused her mental distress. I consider Wal-Mart’s delay in answering its undertakings until the eve of trial, and the torrent of productions made in the course of the trial, particularly in the face of Mr. Cheesewright’s answer to Question 1136 to 1140, capable of causing Ms. Galea  prolonged anguish about the case.   For these reasons, I award Ms. Galea a further $50,000 in moral damages for Wal-Mart’s post-termination conduct.” Unquote

Next, the judge said, “I am of the view that Wal-Mart’s conduct when dealing with Ms. Galea between January 29, 2010 and November 19, 2010 was callous, highhanded, insensitive and reprehensible, deserving of an award for punitive damages. Where I have made findings of fact to award contractual damages or moral damages to Ms. Galea leading up to the date of her termination on November 19, 2010, I do not rely upon any findings of fact after that date to award her punitive damages. However, all of Wal-Mart’s conduct that justifies an award of punitive damages occurred between January 29, 2010 and November 19, 2010 when Wal-Mart would make representations to Ms. Galea about her career prospects while making decisions that detracted from, or even defeated that purpose. It is not that Wal-Mart set Ms. Galea up to fail; it is that Wal-Mart built her up, only to let her down that much more. That corporate behavior  was not just unduly insensitive, it was mean. I  find as an essential element for an award of punitive damages that Wal-Mart’s breach of its implied duty of good faith and fair dealing towards Ms. Galea. This was an independent wrong.  ” Unquote

The judge ten said, “Having regard to all of the evidence given at trial and the submissions of counsel, I am of the view that the amount of punitive damages must be proportionate to other damages granted, rational to the facts, and appropriate to meet the objectives of denunciation and deterrence. This amount must be a fair and just award for punitive damages. Factors have been established to ensure that the court awards a sufficient amount to meet the objectives of the law in a civil case at the same time while ensuring that the size of the award does not offend the court’s sense of reason.” Unquote

 The principle of proportionality relates to the blameworthiness of the defendant’s conduct. In order to assess that blameworthiness and maintain the proper perspective, it is equally necessary to assess the degree of vulnerability of the plaintiff, as well as the harm or potential harm directed to her. Other considerations include the need for deterrence and other penalties paid by the defendant. These are the aspects of proportionality. In the context of an employment case, these aspects relate to the importance of the employment relationship and the vulnerability of an employee at the time of termination.

The judge said, A higher award for punitive damages is required to deter Wal-Mart from conducting itself in a similar fashion against employees in Ms. Galea’s position in the future, in Ontario or elsewhere in Canada. What would be an appropriate amount that is proportionate to the blameworthiness of Wal-Mart’s conduct, and the need for deterrence to make this known to Wal-Mart is something of a unique question.” Unquote

  Wal-Mart is the largest retail company in the world. Wal-Mart earned 135 billion dollars worldwide in 2016. Any award within recognized limits according to Canadian law would be an affordable amount for an award of punitive damages for Wal-Mart to pay. However, that is not really the measure to work from. The measure is what the appropriate amount of punitive damages should be to meet the objectives of denunciation and deterrence, in proportion to the other damages the court is awarding to the plaintiff that can be rationally justified.                                                                                                                                                           

The purpose for an award of aggravated or mental distress damages is different from the purpose for an award of punitive damages. In fixing mental distress damages, the court focuses on compensating the plaintiff for his or her mental distress relating to the manner of dismissal.  In fixing punitive damages, the court focuses on punishing the defendant’s wrongful acts “that are so malicious and outrageous that they are deserving of punishment on their own.                                                                                     

For these reasons, judgment is granted to the plaintiff Gail Galea as follows:                                                                

1.     damages for the annual salary she was receiving at the date of termination for two years, less $281,755.60 for salary paid: $299,644;

2.    damages for Wal-Mart’s portion of the health and dental benefits it was paying her behalf as of date of termination for 12.5 months under the NCA:  $3,851.46;

3.    damages for the MIP in the amount she would have received for two years under the NCA:  $288,552;

                                                                                                               4.    damages for the unpaid MIP she was to have received for FYE 2011 up to November 19, 2010 ($ $144,282 divided by 12 x 9.6 months): $115,420;

5.    damages for the contributions to the DPSP she would have received annually for two years under the NCA:  $36,342;

6.    damages for the unpaid contribution or balance of the DPSP she was to have received for FYE 2011 ($18,171 divided by 12 x 9.6 months): $14,534;

7.       damages for payments she would have received under the ERP for two years under the NCA:  $112,540;

8.     damages for the unpaid amounts she would have received under the ERP for FYE 2011 ($56,270 divided by 12 x 9.6 months):  $45,014;

9.     payment of any balance remaining in trust, or to the account of Gail Galea at Wal-Mart or any affiliate or agent for amounts granted, paid  or redeemed in the MIP, DPSP, ERP or their predecessor plans,  to which she was legally entitled to receive upon notice as of November 19, 2010. If there is a dispute about Ms. Galea’s prior entitlement under any plan, that issue may be spoken to at the next attendance before the court;

10.    Moral damages, including aggravated damages and damages for mental distress:  $250,000;                                         

11.    Punitive damages:  $500,000; and

12.    Such prejudgment interest as may be ordered. Court interest  

  seven percent of the judgement.

The total amount so far not including the interest is $1, 620,883.

Ms. Galea’s superiors acted as unruly children. She thoroughly spanked them hard.