Defamation lawsuit filed by employer after worker sued for constructive dismissal
“Employers shouldn't be using defamation actions against employees on a tactical basis to defend against legitimate cases brought against them in good faith by employees – anti-SLAPP legislation exists specifically to protect workers against tactical cases brought against them for the sole purpose of preventing them from pursuing their case or intimidating them.”
So says Rich Appiah, principal of Toronto labour and employment law firm Appiah Law, after an Ontario court dismissed a defamation lawsuit brought by an employer against a former employee, ruling that the employer’s legal action contravened legislative provisions designed to protect freedom of expression on matters of public interest and was also a bad-faith attempt to intimidate the employee.
“Employers have to have a real justification for bringing cases against workers to avoid the protection that anti-SLAPP legislation provides,” says Appiah.
The worker was a truck driver for Contrans Tank Group and a Chinese immigrant. While he worked for Contrans, he noticed that the company unilaterally reduced the hours and layovers that he reported on the time sheets he submitted, on a regular basis.
The worker brought the paycheque irregularities to management’s attention and it reimbursed him the shortfalls, but only with his persistent reminders – he sent 30 emails to management over nine months about the matter. The shortfalls on his paycheques continued over time and totalled more than $4,500, so he consulted with Contrans truck drivers and came to believe that immigrant employees were more likely to experience the pay reductions. As a result, the worker concluded that pay shortfalls was a systemic and intentional practice by the company targeting immigrants and other minorities.
Worker resigned
The pay shortfalls caused the worker significant stress, to the point where his mental health deteriorated and he decided to resign from his position. He was owed more than $1,600 in unpaid wages, which the company eventually paid after the worker retained legal counsel and sent a demand letter.
In the fall of 2021, about one month after receiving his outstanding wages, the worker contacted Contrans’ in-house legal counsel and said that “my responsibility is let your drivers, your customers and public know Contrans isn’t an honest company.” He included a letter stating that the company had insisted he sign a new agreement in order to get his outstanding pay, he intended to sue, and threatening to communicate with Contrans’ drivers, the media, customers, and competitors if he didn’t get a letter of reference, an apology, and compensation.
In June 2022, the worker filed an action seeking damages for constructive dismissal and discrimination. Shortly after, he emailed several former co-workers advising them of what he believed was Contrans’ payroll reduction practices and asking them to check their paycheques. He sent another email saying that Contrans had refused to pay his legal costs that he incurred while contacting the company and hadn’t provided him with a letter of reference.
Contrans sent the worker a “cease and desist” letter regarding his communications to its employees on July 28. In October, the company filed a lawsuit of its own, seeking damages for defamation and injunctive relief to prevent the worker from communicating with the company's employees or disclosing its financial information.
In June 2023, the worker filed a motion to dismiss Contrans’ defamation suit under s. 137.1 of the Ontario Courts of Justice Act, which protects expressions on matters of public interest and discourages litigation as a means to limit such expression.
Defamatory statements
The court found that, while the worker’s emails and communications regarding alleged payroll irregularities and potential discriminatory acts could be defamatory, they constituted expressions on matters of public interest under s. 137.1 of the act and that Contrans' defamation lawsuit met the definition of a strategic lawsuit against public participation (SLAPP), which aims to silence individuals through litigation.
The court determined that the worker had provided enough evidence to support a valid defence of truth, noting that he outlined repeated pay discrepancies and his genuine belief that these reductions disproportionately affected immigrant employees. At the early stage of litigation, without full discovery, there was insufficient evidence to dismiss the worker’s claims as baseless, the court said, noting that the worker’s evidence was “consistent with a recurrent problem with the calculation of his pay during his employment” and Contrans provided no evidence that didn’t conduct itself in the manner of which the worker alleged.
There was some merit to Contrans’ claim, as the worker’s communications could have the effect of lowering or diminishing the company’s reputation in the community, says Appiah.
“But Contrans needed to demonstrate that the worker had no valid defense in the proceeding, and unfortunately for the company, it didn't tender any evidence to demonstrate that the defenses to defamation upon which the worker could rely were unavailable to him,” he says. “One critical defense to defamation claims is that the defamatory statements are true - while the worker tendered evidence by way of a sworn statement, [Contrans] provided no evidence at all, other than to deny the alleged defamatory comments alleged, so the court had no evidence to rebut what the worker had alleged against the company.”
Contrans attempted to discontinue its lawsuit without costs in May 2024, just weeks before the worker’s anti-SLAPP motion was scheduled for argument. However, the court ruled that such a discontinuance was ineffective under s. 137.1(5) of the act, which prevents further steps in litigation once an anti-SLAPP motion has been filed. Allowing Contrans to withdraw the case at that stage would unfairly deprive the worker of his legal remedies, including the potential for damages, the court said.
Intimidation tactic
The court further determined that Contrans initiated the lawsuit “to silence and/or intimidate” the worker,” noting that the company didn’t seek an injunction for months after filing its claim but only moved to discontinue the action once faced with defending its position in court.
“The court was quite reasonably concerned by the fact that [Contrans] waited until the very last minute to try and discontinue its action against the worker after the worker had already incurred the financial cost of litigation and stress up to that point,” says Appiah. “If the company had an inkling that its case against the against the worker wasn’t going to succeed, then it ought to have attempted to withdraw its case much earlier in the proceeding.”
It was also telling that Contrans didn’t take immediate action against the worker when he initially threatened to communicate his allegations to others, particularly since the defamation action sought injunctive relief, says Appiah.
“It really demonstrated to the court that the company only became concerned about the worker’s conduct when it was faced with legal action from which they could be held liable for damages,” he says.
Contrans was ordered to pay the worker $5,000 in punitive damages for pursuing the defamation litigation in bad faith. Additionally, the worker was granted full indemnity costs for both the motion and the proceeding.
Anti-SLAPP legislation
Employers need to be aware that claims against them could constitute expressions that are entitled to protection under anti-SLAPP legislation, and such expressions don’t have to be of interest to the world at large for it to be a matter of public interest, says Appiah.
“The court held that it's enough that some segment of the community - in this case other workers - would have a genuine interest in the subject matter of the expression, so that broad definition of expression can and will protect employees from a lot of litigation by employers,” he says. “Employers also need to be cognizant of the fact that for decades, courts have recognized the vulnerable position that employees are in and there’s a power imbalance between employers and employees that will guide decisions on whether or not employees should be protected by anti-SLAAP legislation.”
