Canada: Arbitrator Orders Repayment Of Settlement Monies For Breach Of Confidentiality Undertaking

Last Updated: July 13 2013
Article by David Elenbaas

Confidentiality is a cornerstone of settlements: no more so than in the workplace. Unless it has a weak case, an employer is generally not motivated to settle without a confidentiality undertaking and an express agreement that the settlement is not an admission of liability. This cornerstone was recently put to the test in the as yet unreported July 3, 2013 labour arbitration decision: The Globe and Mail v CEP Local 87-M (the Jan Wong case).

Jan Wong is the well-known, former China correspondent for the Globe. She was controversial for, among other things, her "gotcha" style of journalism evidenced in her skewering of so-called celebrities in the Globe's Lunch with Jan Wong and later as a feature reporter. In 2006, Wong created a firestorm when the Globe ran her article "Get Under the Desk" in which she drew a link between the École Polytechnic, Concordia University and Dawson College shootings on the one hand, and the alleged marginalization of those in Quebec who were not pure laine (racially pure) on the other. Following the political and cultural backlash, the Globe backtracked and stated that it should not have run the article as written, while Wong received death threats and hate mail. She apparently began to suffer from depression and eventually went on an extended sick leave which itself became contentious between the newspaper and her.

Eventually Wong was dismissed by the Globe. In response she filed a series a grievances against the newspaper through her union. Those grievances were rolled into a 2008 settlement between the Globe and the union, to which Wong was a signatory. The minutes of settlement (MOA) included provisions confirming that (i) the terms of settlement were to remain confidential (with named exceptions such as Wong's immediate family), and (ii) in the event of a breach of the confidentiality obligations, Wong was to pay back the settlement monies.

In May 2012, Wong published a book entitled Out of the Blue in which she discussed her depression and her legal dispute with the Globe. In it she disclosed that "I had just been paid a pile of money to go away" and "two weeks later, a big fat check landed in my account". She also described the Globe as having "caved". The Globe, believing the settlement had been breached, sought repayment of the settlement monies. It brought the matter back on before the arbitrator who had been involved in mediating the settlement and who had remained seised to deal with any disputes arising out of it.

In the meantime Wong sought first to have intervenor standing at the hearing along with her union, and later standing to represent herself to the exclusion of the union, positions the arbitrator dismissed in interim awards (the latter decision being upheld by the Divisional Court in Wong's unsuccessful judicial review application).

When the matter was finally heard, the arbitrator ordered Wong to repay the settlement monies. The arbitrator rejected the union's arguments that the repayment provision was a penalty clause or unfair or unconscionable in the circumstances. She found that the settlement was freely entered into by and amongst experienced, sophisticated parties, including Wong. It had taken three months for the parties to negotiate the settlement and its terms. In fact, Wong used her own lawyer, in addition to union counsel, in concluding the MOA. In effect, the arbitrator found that Wong's breach of the confidentiality undertaking deprived the Globe of the benefit of the bargain it had struck.

Undoubtedly, many of Wong's "victims" will take great joy in her misfortune, albeit a setback brought on by her own desire to "tell her story". The Globe has issued a statement indicating that it took action on principle and upon repayment will be donating the settlement funds to the Centre for Addiction and Mental Health in Toronto. Wong, for her part, is reported to have called the decision unfair and alleged that the union "refused to present all defences against the claim". One suspects that the union will be pressed to seek judicial review and may itself be on the receiving end of a complaint of a breach of the duty of fair representation. This story, which came Out of the Blue, may well not be at an end.

What this means for employers

Employers often think that confidentiality undertakings in settlement agreements have little more than persuasive value. While not many employees would be as audacious as to go out and write a book spilling the beans, this decision reminds us that careful negotiating and drafting of a settlement agreement can leave a wronged employer with an effective remedy in the event of a breach.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

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David Elenbaas
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