Workplace Sexual Harassment

Mediation

  Many thanks are extended to Barry Fisher, Toronto Mediator & Arbitrator, for his contributions to this chapter.

Mediation as a Settlement Vehicle

Many years ago, when mediation was suggested as a mandatory step in the process of civil litigation, many civil litigation counsel, bemoaned the need for yet another process which would no doubt, add to their client’s costs and set up yet another delay in what was already a seemingly endless array of motions, productions, discovery, undertakings which were required to get their client’s case before a real decision maker.

This being said, mediation actually has proven to be amazingly successful in resolving cases. Fisher’s study, in fact, showed that 80%of employment cases settled at mediation. Of the remaining 20% that did not settle at the mediation, 95% of those cases settled at some later point.

Mediation offers an opportunity of early third party review, which can often lead to settlement when invested costs are comparatively low.

This is particularly so for sexual harassment cases, which have complexities far beyond those of a “normal” wrongful dismissal case. Issues such as the employer’s liability, most often in serious dispute and the frequently contrary and passionate positions of the alleged victim and the suspected offender attach to these cases an air of vivid distinctiveness.

The Interested Parties

Sexual harassment cases, as noted, present distinct dynamics at variance from the typical termination case. This is true due to several factors, some of which are legal and others which are practical. This remains so, no matter whether the case is brought by a civil action with a human rights claim included, or by a straight civil tort action.

In human rights cases in Ontario, there is a deeming provision which makes the employer responsible for human rights violations in the workplace. Sexual harassment claims are exempted from this deeming provision. That being said, there are exceptions in human rights law which may make the employer responsible, such as a reprisal claim and a poisoned work environment.

In civil cases, the employer can held liable strictly for the offensive conduct of its employee based on the principle of vicarious liability. This, however, is a difficult case to make out.

In addition, the alleged offender is usually sued personally in the human rights complaint and/or the civil action.

For these reasons, the interested parties are often (1) the plaintiff, generally the alleged victim, (2) the personal defendant, typically a co-employee, the alleged offender and (3) the employer. The plaintiff may or may not be still employed. Similarly the personal defendant may also remain employed. The personal defendant may be counterclaiming against the alleged victim for defamation or be cross claiming against the employer for contribution or indemnity or even third partying another employee of the company.

Alternatively, the plaintiff may be the alleged offender, the person terminated by the employer. This person often sues the employer and the alleged victim, often still an employee, a person sued for the purposes of discovery.

For these reasons, there will frequently be at least three sets of legal counsel. The overlapping issues between these parties can be complex. For example, in the first example in which the plaintiff is the victim, the personal defendant may well be supportive of the vicarious liability claim as this will likely remove, on a practical basis, not on a legal one, financial responsibility upon him or her.

In the same context, the employer often has no knowledge of who is right or wrong as often the case is based on competing allegations of fact, without corroboration. It will need the factual support of the personal defendant, the very same party which is trying to shift legal responsibility to it.

The point of these varying dynamics is that the respective interests present unusually complex interplays between the parties.

An Overview

In the modern litigation context, lawyers should reflexively consider, when starting a lawsuit, not only how to plead a case at trial, but more importantly, how to prepare the best possible case for settlement at mediation.

The case should be prepared carefully to plead the tort basis of a sexual harassment case, usually as intentional infliction of mental distress or battery or assault or all possible claims. In Ontario cases, It will likely also plead a breach of the Human Rights Code and add the necessary companion claim.

The purpose of the mediation and hence that of the mediator is facilitate resolution of the dispute between the parties to the litigation.

As is the case with any settlement, an early resolution of the controversy will save future legal costs and provide a certain result. The inherent risk of litigation and the adverse consequences of losing a case are eliminated. Peace of mind is an important by-product of a settlement. Most litigants do not like litigation and are eager to settle.

In addition, a negotiated compromise allows for terms of settlement which a judge in court cannot provide. Such items, as a letter of reference or an agreed payment of damages in the best format for tax consequences and the requirement to repay employment insurance benefits are good examples of the benefits of an agreed resolution which may not be available before a judge in court.

Mediation at an early stage provides a significant advantage of identifying the vulnerability of the case when the invested legal energy and costs are relatively modest.

If there is a weakness in the case, it will likely be apparent at the mediation, which will prompt a frank discussion between lawyer and client, which will be assisted by the views of the mediator.

Mediation also is an excellent opportunity for the clients to speak about what really concerns them. Their comments or opinions may not be “legally relevant” in a courtroom, but nonetheless, may give the mediator greater insight into how to get a deal.

Sometimes the biggest challenge facing the mediator is how to actually close the deal. An experienced mediator has a number of tools that he or she can draw upon to close that last 10% difference in respective positions. This is when a deep understanding of the psychological aspects of the negotiation process and of the parties can assist in getting the ball into the end zone.

Mandatory Mediation in Ontario

Mediation is mandatory for employment disputes in the City of Toronto, City of Ottawa, and County of Essex (Windsor).

The procedure for mandatory mediation in these jurisdictions is governed by Rule 24.1 of the Rules of Civil Procedure.

Rule 24.1.03 requires that the mediation be held within 180 days of the “first Defence”, save a court order to the contrary.

The “First Defence” is defined to be a Notice of Intent to Defend, a motion in response to the Claim, other than a motion to challenge the court’s jurisdiction or the Statement of Defence.

The judge’s consideration to grant an extension will involve a debate on the complexity of the matter, whether either party intends to move for summary judgment and whether the mediation is more likely to succeed if the 180 day period is to be extended.

Failure to hold the mediation within the 180 time limit has no real consequence unless one of the parties complain as Rule 24.1.09(3)(b) provides that an extension consent in writing to the postponement.

Forming a Settlement Position

Drafting the Claim

As noted above, the settlement objective from the plaintiff’s perspective should be developed when the case is started by the drafting of the claim. The planning must begin then and implemented at mediation.

Claims made for damages for loss of dignity and injured feelings whether under the Human Rights Code and similarly tort damages are not taxable. Neither claim will lead to EI repayment. The exemption for EI repayment in a tort claim requires that the case be supported by medical evidence. Claims for future income claims are also not taxable, whereas a plea for past lost income will be taxable. Knowledge of these issues will all assist in the allocation of settlement dollars at mediation.

A tort claim in battery in often the best plea as the damages are strict as damages for emotional distress re presumed. A plea should also be made, where there is a criminal conviction, in Ontario, under the Victims’ Bill of Rights, in the case of a sexual assault or an attempted one, which again presumes emotional distress damages.

The damage claim for lost income will generally include an income claim from the date of termination forward to the date of settlement or hearing and a prospective claim forward, presuming reinstatement is not pursued. Reinstatement should, however, be included in the case.

Exaggerated claims should be avoided. The opposing party will read the pleadings and will enraged by factually untrue and outrageous allegations.

A claim for reinstatement should also be considered, again when there is real and substantive factual support for a human rights breach. The settlement of the reinstatement claim by payment of allocated dollars to this remedy may lead to a reduction of EI repayment sums.

Punitive, Aggravated and Mental Distress or Moral Damage Awards

There are many issues which must be considered when advancing such claims for damages for emotional suffering in a tort claim or a human rights allegation. Keep in mind that punitive damages are generally not recoverable in a human rights case, although such a claim can be made in a tort case.

Counsel should be careful that the damage claims are realistic and hence within the damage range of the case being asserted. Emotions are usually intense in claims of this nature.

There is no reason to inflame them. Should the pleading take a particular position for the strategy of settlement, then it will be wise to advise the opponent just that off the record.

There are many cases finding that medical evidence is not mandatory to support a human rights damage claim for injured feelings. A similar Supreme Court decision came to the same conclusion in a tort claim. Nonetheless, as an injured victimized plaintiff, a comprehensive medical report will do much to persuade the defence counsel that the claim is a serious one and is intended to be pursued.

Tax Free Damage Claims

For a review of this issue, see the Tax summary.

In Honda or moral damages claims, the Court was required to find that there was a duty of good faith in the manner of the dismissal which was breached. Therefore, from a CRA perspective, these damages are in respect of the dismissal and therefore constitute are tiring allowance, that is, they are taxable.

The key, therefore, is to find a cause of action unrelated to the dismissal. This could include:

1. Pre-dismissal harassment, either human rights based or generalized; 2. Defamation; 3. Intentional or negligent infliction of mental suffering, if the stated goal is not to get the plaintiff to quit; 4. Harassment under Bill 168 (Occupational Health and Safety Act) or pursuant to a harassment policy; 5. Assault; 6. Intentional interference in contractual relations; 7. Inducing breach of contract, as is in this case the defendant is not the employer. 8. A claim for damages for the breach of the duty of honest performance of a contract, as set out in the recent Supreme Court of Canada case of Bhasin v Hrynew;

In most settlements, there will be a covenant that the employee is ultimately responsible for any tax assessments. Plaintiff’s counsel, should be careful in offering an opinion as the taxable consequence of such payment, as it is likely the unhappy client who is audited by the CRA will seek redress from legal counsel, barring this qualifier.

EI Issues

The Employment Insurance Act provides that if a person received EI, and later received a termination settlement, there is an obligation to repay EI.

For example if the person received EI for 6months and subsequently received a settlement that compensated for 6months income all the EI would have to be repaid.

There is a statutory duty upon the employer to deduct the EI sum payable, which can sometimes result in a delay of payment of all settlement funds, pending a clearance letter being received from HRSDC.

In summary, EI will not treat as earnings, that part of the settlement that is fairly shown to be any of the following:

1. Legal Fees; 2. Mental distress or pain and suffering if accompanied by evidence of medical care; 3. Reimbursement of job search, relocation or retraining expenses; 4. Damages for loss of dignity, self-worth and reputation; 5. A sum paid in exchange for a waiver of an existing right to reinstatement of employment.

Hence any sums paid for damages for injured feelings in a human rights case or damages for mental distress, note, when accompanied by medical evidence, will not create an EI repayment obligation.

Mediation Process

Opening Statements

The traditional model contemplates an opening statement from the mediator, followed by an opening by each counsel. This may appear to be a good idea on paper.

The parties are compelled to conduct mediation in the manner the mediator desires. Often in sexual harassment cases, there will be no need for a lengthy introductory session. The parties will be well acquainted with the issues in the case by the time it reaches mediation. There is no need to inflame the opposing party.

In reality, most employment law mediators prefer to proceed immediately to caucus. The reasons are many. Most clients, especially plaintiffs, fear the joint session, as they do not want to be face to face with their opponents. Lawyers tend to pontificate and tend to ramble on as if they were opening a trial. They may showboat in front of their client. Even if the opposing lawyer has some concrete criticism of the opponent’s case, it is typically disregarded. When clients speak, lawyers feel the need to be defensive in limiting what the client may say, which is not conducive to a meaningful settlement discussion.

For these reasons, many mediators move immediately to caucus, where the real work is always done. For this reason, mediations are now shorter and more effective than in the early days.

Separate Caucus

Whether or not you have a joint caucus, you are going to be spending most or all of the mediation in a separate caucus. In one room is the plaintiff, her lawyer and whoever else is on their team. In another room is the personal defendant’s team and its lawyer and often, in yet another room, the employer’s equivalent. The mediator will then conduct shuttle diplomacy between these parties.

Minutes of Settlement

Clients pay lawyers to get a deal. The deal is the ultimate work product that the client is paying for. Therefore, to leave a mediation without a fully executed and documented Minutes of Settlement is a kin to producing nothing, other than a potential lawsuit about whether there actually was a deal and what was the deal.

Most litigation involving mediations and mediators involve the issue of not properly documenting the deal. This should be avoided at all cost.

A mediation often feels like an emotional roller coaster. After the deal is struck, there is usually a mutual feeling of relief but a sudden tiredness sets in. Now, at the worst possible time, we are forced to become what most litigators hate the most: a solicitor.

Checklist on the Drafting of the Minutes

Of course, what is really important is the contents of the Minutes of Settlement. Here is a handy list of factors to be considered in the minutes.

Signatories to the Minutes

All parties who have obligations under the agreement should be parties to the Minutes of Settlement, even if they are not parties to the litigation. Therefore if the parent corporation of the defendant employer is obligated to do something, such as provide stock options, it should be a signatory to the deal.

The Settlement Sum- Set out Taxable and Non

The minutes should specify which items are taxable and which are not. Counsel should set out the agreed to tax treatment and the fact that no T4 will be issued for a mounts not required by law to have tax with held at source.

Employment Insurance Repayment

As mentioned already, to deal with the EI issue, the agreement should either recognize no liability as the plaintiff did not receive EIor deal with the obligation to repay. A settlement based on a payment of general damages for pain and suffering, or in human rights vocabulary, “damages for humiliation or injured feelings” will not lead to an EI repayment. However, a payment of a past income loss concurrent with the EI payment, will create the converse.

It can take months to get a clearance letter from HRDC, and there is no reason to hold up the whole payment because of this delay. Persons on EI can go to their EI webpage and get a printout of all the EI that they have received to date. As the repayment to EI could never exceed the amount of EI actually received, if the employer hold backs the necessary amount to repay EI, then the bulk of the settlement funds can be dispersed immediately and the balance dealt with once the EI letter is received.

Note that any time there is a nob ligation to pay, a payment date should be agreed to. More disputes arise about settlements that do not specify pay dates than for any other reason.What is reasonable for a starving plaintiff is not the same as what is reasonable for a defendant who routinely drags out payments of all of its receivables.

Confidentiality Clause

It is best to deal with the issue of confidentiality right in the Minutes of Settlement because if it is left to the not yet agreed to Release, there could be an inadvertent breach in the time frame between the signing of the Minutes of Settlement and the Release. Moreover, clients actually read the Minutes of Settlement, but perhaps not the same attention is paid to the release.

If you want a confidentiality clause, then deal with the following issues:

1. Is it one way or does it cover all parties? 2. Who can the parties tell, which is typically the spouse, legal and financial advisors or as required by law? 3. Does it cover the only the terms of the deal or other matters as well? 4. Is there a defined consequence for a breach?

Here is a common clause:

The Plaintiff agrees to keep the terms of this settlement strictly confidential, save and except to his spouse, his legal and financial advisors or as required by law. The parties acknowledge that this is a fundamental term of this agreement and that absent this clause the defendant would not entered into these Minutes of Settlement.

A Covenant as to Fact

If you are relying on a specific assertion of fact made by the other party in coming to an agreement to settle, which you would not have agreed to if that statement was not true, you may want to include a warranty to that effect, which means if you subsequently determine that the other side lied about this fact, you could seek to set aside the settlement. Here are some examples:

The plaintiff here by warrants that the allegations as set out in paragraphs 7 to 12 of the statement of claim are made in he has neither received nor earned but has not yet received, any income from either employment or self-employment, directly or indirectly, from the date of his dismissal to the date of this agreement.

No Representation

If on the other hand, you want to insure that the deal could not be set aside based on the accusation that someone in the course of mediation was somewhat less than forthright, then the following clause is useful:

Each party confirms that they have relied solely on their own sources of information in arriving at their decision to settle this matter on the terms set out and therefore have not relied upon any statement or representation made by the other party in coming to their decision to settle this matter on the terms set out in this agreement.

End the Proceeding

The action must be disposed of by way of an order or the filing of Notice of Discontinuance. Specify who will take out the order. Here are two common clauses:

The Plaintiff shall file a Notice of Discontinuance after the settlement monies have been paid in full. The Defendant shall takeout a consent order dismissing the action without costs after the settlement monies have been paid in full.

Mediator Fees

Don’t forget the mediator fees. Either you share them or one party pays all. Here are some clauses:

Each party shall pay one half of the mediators’ fees. The Defendant shall pay all of the mediator’s fees.

Reference Letter

If part of the deal is to provide a letter of reference then try to agree on its terms at the mediation, failing which use words like “a positive letter of reference”. Also agree on who the author of the letter will be.

There is usually a clause saying that “all oral references will be consistent with the letter”. However, remember that the employer cannot control what comments every single employee may make. Therefore the corporate undertaking to abide by the reference letter is usually limited to the author of the letter or the HR department.

In other words, if the plaintiff gives as a reference someone at the defendant other than the author of the letter, then they are stuck with what that person actually says.

This issue can be dealt with as follows:

The Defendant shall provide the Plaintiff with a reference letter in the format ached. The plain tiff agrees to refer all reference requests only to Mr. Brian Jones, Director of Human Resources or his designee. Mr. Jones, or his designee, undertakes that all oral references will be answered in a matter consistent with the enclosed letter of reference. This undertaking does not apply to any other employee of the Defendant, past or present, who may be asked by the Plaint if for a potential employer to give a reference.

The Release

All deals need releases, either as a separate document attached to the Minutes or included in the Minutes themselves. Here are two examples, one where the Release is available, and the other when it needs to be drafted. It is always prefer able to agree on the form of Release at the mediation itself.

If there are special clauses to be included, you must reference them or you run the risk that a judge determines that they are not part of a normal release.

If the defendant has filed a counterclaim or could have a claim against the plaintiff, then the release should be mutual. However where the defendant would normally not make any claim, as is often the case in a regular notice claim, then only the plaintiff releases the defendant. To insist on a mutual release will cause the defendant to think that the plaintiff committed some sort of fraud or theft which the defendant has not yet discovered.

The plaintiff agrees to sign the attached Release. The Plaintiff agrees to sign a Release in a form acceptable to both counsel. The release shall contain both a confidentiality clause as well as a tax indemnity clause. Defense counsel shall prepare the first draft.

Arbitration Process and Procedure

Why Arbitration

Until very recently it was as summed that the only way in which a party to a civil dispute, like a wrongful dismissal action, could have his or her dispute adjudicated upon was either before a judge or jury in a trial. However, there is another way in which the parties can proceed, which is by agreeing to arbitration. This process is as binding upon the parties as a court judgment.

One great advantage presented by arbitration is that the parties are able to litigate their differences without fear of the public revelation of the allegations between the parties. This is of particular significance where one or all parties are public figures or the allegations are unsavoury.

The process is kept confidential. There will be no decision released to the public media. On that issue, the parties should agree to use a non-identifying title of proceedings and other contents if there is a judicial review application.

A further plus is the ability of the parties to agree on the decision maker. There is no need to worry that the judge selected in the normal court process must be educated to the nuances of law. You will know the general disposition of the arbitrator and that he or she is well versed in the legal issues in dispute.

There is also a fixed starting date given and presuming that counsel estimate the number of days correctly, this can be a huge advantage to the parties and witnesses, particularly those persons who require to travel and are not connected to the parties in the litigation.

There may, if the parties desire, no appeal possible. The theory of the process is that the issue is intended to be finally decided. Yes, there is a judicial review theoretically possible but such a process is rarely successful, given the stringent test for a successful JR.

Although there are costs incurred in an arbitration that are not found in a civil action, namely the cost of the arbitrator and the room rental, the overall costs should be less or at least no more than a trial as the arbitration process tends to be more efficient and less paper intensive as a trial. Thus although disbursements may be higher, legal fees should be less.

The Arbitration Agreement

Once the parties have decided to proceed by way of arbitration, rather than litigation, it is necessary to prepare a written Arbitration Agreement.This is applicable whether the arbitration procedure was agreed upon at the beginning of the dispute or where the parties commenced traditional litigation and decided at some stage in that process to switch to the arbitration model.

The purpose behind the Arbitration Agreement is to set forth the ground rules under which the arbitration will be held. It is important to understand that the arbitration process is an extremely flexible one and to a very large degree can be whatever the parties want it to be.The statutory framework for the Arbitration Agreement is The Arbitrations Act,1991,S.O.1991,C.17.

The Arbitrations Act sets a number of “default” provisions with respect tot he terms and procedures of the arbitration; however, the parties can contract out of almost all of those provisions and create their own process.

As many civil litigation counsel probably are not familiar with arbitrations in the first place, likely the most comfortable format is the Arbitration Agreement that was modeled after the process they knew best,that is the litigation process as set out in the Rules of Civil Procedure.

The Model Arbitration Agreement is therefore founded on the Rules of Civil Procedure, but allows the parties to pick and choose which parts of the Rules apply and to create new procedures where the situation warrants.

For instance,the parties could choose to have discoveries just like in a lawsuit, dispense completely with discoveries or have limited discoveries. The choices provided in The Model Arbitration Agreement are only intended to inspire the desired alternatives. The options listed in this paper are not intended to be exhaustive, but rather are simply put forth as examples.[/vc_column_text][vc_empty_space height="80px"][vc_column_text]