The Ontario Teachers’ Pension Plan Board has lost its appeal of a decision ordering it to pay more than $1 million to a former senior investment employee.
The 2015 Superior Court ruling in Lin v. OTPPB ordered the Teachers’ pension plan to compensate former employee David Lin $1,002,905 in damages, the majority comprising bonuses under the company’s short- and long-term incentive plans from 2010-12.
In its ruling last week, the Ontario Court of Appeal dismissed Ontario Teachers’ appeal. “Briefly, there is nothing in the trial judge’s comprehensive and detailed reasons for judgment that discloses an error that would justify interference by this court,” wrote Justice Katherine van Rensburg.
Read: Cornwall retirees out of luck in battle over benefits
The wrongful dismissal suit arose from Ontario Teachers’ decision to fire Lin, a director who managed global funds and Asian investments, in March 2011 for cause.
“I think it’s a reminder that allegations of just cause are hard to prove,” says Brian Wasilyw, an employment and labour lawyer at Sherrard Kuzz LLP.
According to the 2015 court ruling, the pension plan claimed Lin had breached its code of business conduct and his obligation to keep investment information confidential by sharing a a private placement memorandum — described by van Rensburg as a “promotional document” inviting Ontario Teachers’ to invest in a particular fund — with a friend who worked in the same industry.
“There’s a huge element of trust in terms of the company and employer putting trust on employees to keep that information confidential,” says Wasilyw, citing the confidentiality concern at the heart of the case.
“The concept is clearly that if it’s not kept confidential, it can do harm to business. The rational behind it is that the company has an ownership interest in that information and must rely on its employees to keep it confidential.”
The appeal court, however, took issue with Ontario Teachers’ assertion of confidentiality in this case. “Much of the information contained in the [memorandum] could be found in a number of publicly available sources and through market research,” wrote van Rensburg.
Part of the case centered on the difference between a private placement memorandum and confidential information memorandums, which, according to van Rensburg, “contain sensitive financial information not generally available in the public domain.”
“There was no question that a [confidential information memorandum] is a confidential document, but whether an unsolicited [private placement memorandum] received by Teachers’ was confidential was very much in dispute in the litigation,” van Rensburg noted.
Read: Employers must have just cause to fire federally regulated workers: Supreme Court
In asserting its argument, Ontario Teachers’ cited the memorandum’s cover letter that stated its classified nature.
The trial judge, however, found the document’s wording was insufficient in furthering the pension plan’s argument.
And according to the appeal court ruling, Ontario Teachers’ conduct towards the document didn’t reflect its confidential nature. The pension fund kept a copy of the memorandum despite a request to return it in the absence of an investment, van Rensburg noted.
“Further, Lin was given a copy of the [memorandum] in his termination meeting and his offer to return the document at the end of the meeting was declined. These factual findings indicating that Teachers’ itself did not treat the document in the manner anticipated by the [memorandum]’s claim to confidentiality are both unassailable and inconsistent with the appellant’s argument that the trial judge overlooked or ignored the expectation of confidentiality between Teachers’ and the proponent.”
Read: Alberta LTD ruling offers lessons about exclusions for pre-existing conditions
It’s often tricky for companies to fire employees with cause because there’s no middle ground, according to Ellen Low, an employment lawyer at Whitten & Lublin.
“If they have no just cause, it’s risky because then they owe the employee everything he would have been entitled to had they simply just terminated his employment on a without-case basis,” she says.
And because of Lin’s role, Ontario Teachers’ is on the hook for a considerable amount of damages, says his lawyer, Chris Dockrill. Such high damages awards aren’t uncommon for investment professionals as they receive a significant part of their compensation in bonuses and incentives, he adds.
Toronto employment lawyer Howard Levitt noted the case is also significant for the finding that employees fired don’t have to prove bad faith in order to get damages at the higher end of the range. “That’s a significant argument that’s going to be argued in every single cause case going forward,” he says.
“Employees don’t have to prove bad faith anymore. They can just prove the very fact the cause was alleged. If they win on cause, they win. That’s a massive victory for employees who are fired for cause and a huge disincentive for employers who allege cause unless they are very, very certain they will win.”
Ontario Teachers’ refused to comment about the case but said it respects and accepts the appeal court’s decision.
Read: Human rights ruling on miscarriage puts employers on notice