Canada: Gail Galea As THE Face Of Moral And Punitive Damages

Last Updated: May 11 2018
Article by MacDonald & Associates

Gail Galea ("Gail") began her career at Wal-Mart in 2002. Hailed as a "rising star", and one of the mega-corporation's MVP's, it wasn't long before she was known for her vigour, and her appetite for success. By 2010, Gail was expected to be appointed the role of Chief Merchandising Officer ("CMO") for Wal-Mart Canada. She had all sorts of executive support behind her. She saw her name in flashing lights, and reasonably so – by 2008, she'd attend the Global Chief Merchandising Summit in Tokyo, and her grooming for the CMO role would shortly begin. That was, until a bleak meeting in January of 2010.

A brief history of Gail's rise and fall to stardom goes something like this. In February 2003, Gail was promoted to the role of District Manager. By October, she became Regional Manager, Region 2. By May 2004, she had moved on up to Regional Vice President and by June, she was hand-picked for a nationwide training program targeting female associates with a "capacity and desire for senior executive roles in 3-5 years". In September 2005, she was promoted to the role of General Merchandise Manager, and on acquiring the role, she was asked to sign a Covenant Not to Compete Agreement ("NCA"), which essentially provided, should the corporation terminate her employment at any time, without cause, Gail would be entitled to 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.. In exchange, Gail would be bound by a two-year non-compete – which would make her entirely unemployable.

In September 2006, Gail was targeted by Wal-Mart's head office operations in Arkansas, for further professional development. By 2007, she applied for, and was accepted, as the first Wal-Mart executive to ever receive membership to the Leadership Foundation, a division of the International Women's Forum to which Hilary Clinton, Condoleezza Rice and Roberta Bondar were all faculty members. In the application, then President and CEO of Wal-Mart had this to say about Gail:

"Gail has the potential to move at least two levels of management up – to Senior Vice President and Chief Merchandising Officer. With education, experience and coaching, she could some day run a Wal-Mart country operation"

Before long, the letters from Wal-Mart's COO, President, and CEO's in 2008, praising and admiring her work, would begin to pour in. By 2008, Gail was responsible for 40% of Wal-Mart's total sales, and 42% of its total profits in speciality Canadian parts. In April 2009, she was recognized as the only Canadian member of the President's Global Council of Women Leaders. In 2008, and again in 2009, Gail received scores of "exceeded expectations" in all of her performance appraisals. And by October of that same year, she attended the Summit in Tokyo.

Gail got back from the Summit and prepared both her mind and future for what was to come. She'd become CMO and would reach her ceiling (for now). Little did she know, she would soon be pulled into her CEO's office, demoted, and told that the corporation was about to take on a 'corporate restructuring'. Despite the bleak (at best) meeting of January 2010, Gail was informed that she continued to be a "valued member" of Wal-Mart and that a new role would be found for her. Only one month later, all promises faded, and Gail was appointed the role of Senior Vice-President Merchandising, Strategic Initiatives – a demotion. What followed for the next 10 months is what Justice Emery accurately described in his decision as Wal-Mart's "deplorable" conduct. Over the course of 2010, the corporation began to lower Gail's employee performance ratings without foundation, making her entirely ineligible for promotion. Despite her efforts in securing similar, or any, employment in the company across the world – her fate was predetermined. Within 8 months, she attended an 8-week pre-planned trip to Harvard University, for training. Upon her return, her personal effects had been removed from her office, and her phone disconnected. Within a week, Gail was offered a choice – demotion, or severance.

Gail began collecting severance on November 19, 2010. As agreed to in the NCA of 2005, her severance continued on a salary-continual basis, and Gail did not compete. However, the payments came to a raging halt, without explanation, after just 11.5 months –12+ months less than the agreed to time period contained in the NCA.

The Decision

On December 7, 2017, Justice Emery of the Ontario Superior Court of Justice delivered his written reasons in the litigation that lasted over 8 painful years. Gail was awarded $250,000.00 in moral damages; $500,000.00 in punitive damages; and her entitlements under the NCA, as well as benefits and other incentives relating to her employment. Justice Emery not only awarded the largest damage award in history, but he was candid in his judgment – including many of the arguments raised by Gail's counsel, Natalie C. MacDonald of MacDonald & Associates. Justice Emery found that Wal-Mart had engaged in conduct so egregious, it had to be punished.

Moral Damages:

Relying on the leading decision of Honda Canada Inc. v. Keays (2008 SCC 39), Justice Emery affirmed that moral damages are available to a plaintiff where an employer has breached its duty of good faith in the manner in which the employee was dismissed, and the employer has engaged in conduct during the course of dismissal that was "unfair or misleading or unduly insensitive, and [failed] to be candid, reasonable, honest and forthright with the employee". Where it was within the reasonable contemplation of the employer that the manner of dismissal would cause the employee mental distress, an employee would be entitled to moral damages. In addition, where the wrongful conduct of the employer caused the employee mental distress well beyond the degree of hurt which would accompany any normal dismissal, moral damages were appropriate.

While it has long been recognized that an employer's conduct pre-termination and post-termination are properly the subject of an award for moral damages, Natalie C. MacDonald brought a motion before the Court to have Wal-Mart's litigation conduct considered in the award. Although litigation conduct until now has been dealt with during the costs stage of litigation, Justice Emery held that "an exception [could] 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." For the first time in Ontario's history, litigation conduct was considered appropriate in quantifying an award for moral damages.

Ruling on the issue, Justice Emery held that over the final 10 months of her employment, Gail was made to suffer repeated humiliation – starting with the announcement of her re-assignment in January 2010. Wal-Mart made the decision to dismiss Gail 10 months before it announced the reality of its decision to her and by keeping her in "suspended animation", it engaged in unduly insensitive conduct. In the interim, Gail valiantly sought alternative international positions, and was destined to fail. She was not only removed from her well-deserved role and demoted, but was literally precluded from advancing her opportunities as a result of the unfairly downgraded performance ratings which negatively affected her international opportunities. Wal-Mart's performance reviews placed Gail in a "not currently promotable" category – setting her up for failure. In a final note, she was offered no explanation as to why Wal-Mart had ceased her salary payments.

In assessing Wal-Mart's litigation conduct, Justice Emery held that Wal-Mart acted as an "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". Furthermore, a series of documents relating to her performance reviews were not duly produced, and when produced, demonstrated that the performance ratings post-2010 were arbitrary. Wal-Mart did not answer undertakings until the eve of trial. The company was ultimately indifferent to "Ms. Galea or engaged in delay tactics, causing mental distress exceeding normal stress and hurt feelings that accompany a dismissal". The Court awarded $200,000.00 to Gail for Wal-Mart's pre and post-termination conduct, and an additional $50,000.00 for Wal-Mart's litigation conduct. Justice Emery had this to say:

[276] 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. See Antidormi, at para 155. 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.

[277] 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.

[278] Galea is awarded $200,000 for moral damages. This amount is consistent with the decision of the Court of Appeal in Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 (CanLII) that upheld an award in that amount for aggravated damages.

It is important to note that the Court did not view Wal-Mart's decision to remove Gail's role and responsibilities in January 2010 as constituting bad faith. Rather, the treatment that she received from Wal-Mart between February and November 2010, amounted to overt evidence to make a finding of bad faith.

On the Punitive side:

Awards for punitive damages are rare, and are only awarded where a defendant's conduct is malicious, intended to injure the plaintiff, and offends the Court's sense of decency. Justice Emery, relying on the leading Supreme Court of Canada decision Whiten v. Pilot Insurance Co. (2002 SCC 18), found that Wal-Mart's conduct leading up to dismissal was, "callous, highhanded, insensitive and reprehensible, deserving of an award for punitive damages. ....Wal-Mart did not just set [Ms. Galea] up to fail, but it built her up, and then let her down." Wal-Mart acted in a mean-spirited way during the 10-month period pre-dismissal, by removing Gail from an important position, promising her new career prospects, and acting in a manner to defeat such aspirations which it had given to her. In addition, Wal-Mart had altered her performance ratings without foundation.

In applying Whiten, Justice Emery described the principle of proportionality as relating to the blameworthiness of the defendant's conduct. In order to assess that blameworthiness and maintain the proper perspective, it was necessary to assess the degree of vulnerability of Gail, as well as the harm or potential harm directed to her. Other considerations included the need for deterrence, and other penalties paid by the defendant. Finding that the power imbalance including the ability of Wal-Mart's then CEO to correct Gail's performance ratings unilaterally, and his final act offering her a "choice" between a probationary position as Vice President E-Commerce or taking her severance, was beyond doubt. Wal-Mart's indifference to the litigation process and the manner of dismissal on termination and over the course of the action further "highlight[ed] her vulnerability in significant ways". Ultimately, the Court found no distinction between Gail's claim for punitive damages against Wal-Mart for the reprehensible conduct of then President and CEO, and her claim for moral damages. The decisions post-January 2010 were all made on behalf of the company, and the fact that they occurred at such a high level within the executive offices at Wal-Mart and with such visibility amplified the damages necessary to chastise the company. With respect to its litigation conduct, Wal-Mart's behaviour in "starv[ing] the plaintiff into a trial", was reprehensible. Justice Emery considered the earlier decision against Wal-Mart in which punitive damages were awarded (note: Boucher v. Wal-Mart Canada Corp. (2014 ONCA 419)). He ultimately found that in this case, Wal-Mart's conduct was even more egregious, and Gail deserved a higher award.

In addressing the defence relying on Boucher advanced by Wal-Mart, Justice Emery found that the conduct in question occurred at the highest executive level in Canada, and a high punitive award was necessary to deter Wal-Mart from conducting itself in a similar fashion against its employees in the future. Despite its large revenue, 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." In his final ruling, Justice Emery awarded $500,000.00 as against Wal-Mart for its egregious conduct.

Conclusion:

Although it has been a ride (8 years at that) many things post-Galea are clear. With respect to moral damages, Justice Emery has made it apparent that courts may consider an employer's conduct during litigation in assessing moral damage awards applicable in a given case. In addition, when an employer's egregious conduct warrants both punishment and deterrence – as it so vividly did in this case – punitive damages are acceptable, despite similarities in the facts applicable for both awards. Higher damage awards may be warranted where a dismissed employee held a more senior executive role, and the defendant's corporate behaviour visibly demonstrates a need to "chastise". All in all, the decision of Galea v. Wal-Mart Canada teaches us one major thing: employers must deal with their employees in good faith and dismiss them fairly, otherwise, as of 2018, there will be a Galea-sized price to pay.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions