Inside an $800,000 wrongful dismissal award

Big award from jury

On June 29, 2012, a panel of eight jurors in Prince George, B.C., handed in its verdict in the case of Larry Higginson v. Babine Forest Products Ltd. and Hampton Lumber Mills Inc., following a three-week wrongful dismissal trial. The jury awarded sawmill worker Larry Higginson compensatory damages of $236,407 and punitive damages of $572,814. At the time, the punitive damage award set a high-water mark for punitive damages flowing from a wrongful dismissal in Canada.

How did this case end up before a jury — a rare occasion in employment law cases? Why such a high damage award? Chris Forguson of Tevlin Gleadle Strategists, who represented fired worker Higginson in the trial, shares his account of the case.

A British Columbia lumber company has been ordered by a jury to pay long-term employee Larry Higginson more than $800,000 in compensatory and punitive damages for wrongful dismissal

The trouble for Higginson began after the Babine sawmill in Burns Lake, B.C., for which Higginson had worked for more than 30 years, was purchased by Hampton Affiliates in late 2006. Hampton Affiliates is based in Portland, Oregon.

Long-term employment relationship became strained after sale to new owner

Shortly after Hampton Affiliates acquired Babine, Higginson was asked to sign a new employment contract which replaced his common law severance rights with the minimum severance rights set out in the B.C. Employment Standards Act — eight weeks. He refused.

Thus began an odyssey that would see Higginson endure repeated pressures from Babine, including being asked to leave management meetings he had traditionally attended, being required to meet specific uptime requirements that other supervisors were not required to meet, and being presented with a negative written performance appraisal without being given the opportunity to discuss his performance with his manager.

In one instance, Higginson was criticized for failing to meet an electrical uptime requirement for the mill. He then spent an entire weekend reviewing the uptime data and eventually forced his manager to admit that this criticism was unfounded and he had in fact met the requirement. The uptime requirement was then raised.

Higginson refused to buckle under this pressure. In October 2009 Babine fired him for cause.

The particulars of the just cause reasoning included nine separate allegations. Higginson took the position that all of the criticisms were untrue and had been concocted. The factual dispute regarding the cause allegations would necessitate a lengthy trial.

Higginson’s termination letter was signed and delivered by a Babine supervisor that had been on the job for less than three months. Higginson alleged that the decision to terminate his employment was actually made by the mill manager, the sole representative of Hampton Lumber Mills in Canada, and the same person who had asked him to sign away his common law severance rights.

Hampton Lumber Mills disputed this up to and throughout the trial. Its involvement allowed Higginson to plead a separate tort against Hampton: inducing breach of contract.

Then Higginson waited. And as he waited, most of the witnesses that Babine and Hampton would require for their cause defence either quit or were fired. Other witnesses that had direct evidence of the circumstances of Higginson’s firing were themselves fired and were free to speak their minds without fear of reprisal.

By the time of the trial, the companies called four witnesses to give direct evidence. Only one of these witnesses still worked for the operation.

Jury trial a unique circumstance

Jury trials are uncommon in wrongful dismissal cases. They tend to lengthen the required trial (which makes the trial more expensive) and the party requesting a jury trial must pay the jury fees at the commencement of the trial. This can be several thousands of dollars depending on the length of trial.

In British Columbia, without agreement between the parties, it is improper to provide the jury with guidance as to the appropriate range of damages, so it becomes a bit of a wild card.

Higginson elected a jury trial for two reasons: first, he was confident that the average person in Prince George would be familiar with the operation of a sawmill and would be able to see the cause allegations as either frivolous or concocted. Second, Higginson was seeking punitive damages, which are rare in employment cases. Until recently, the law required a wrongfully dismissed plaintiff to plead and prove a separate tort distinct from the wrongful dismissal, which is a breach of contract.

In this case, Higginson had the grounds to establish a separate tort against Hampton Lumber Mills because Hampton was not his employer. Ultimately, the jury found that Hampton had in fact committed this tort.

Juries more generous

Punitive damages are a form of punishment. They are not meant to compensate the plaintiff but rather to punish the defendant for egregious behavior. Higginson’s sense that a jury would find the employer’s behavior to be egregious was justified. Punitive damage awards by judges tend to be more modest than jury awards. Often they are insufficient to warrant the extra complexity of attempting to prove egregious conduct. However, large jury awards are susceptible to being reversed by appellate courts as excessive.

In a recent decision from Alberta — Elgert v. Home Hardware Stores Ltd. — a jury had awarded a fired employee $300,000 in punitive damages. The Appeal Court (in a 2-1 decision) rolled that award back to $75,000. Considering the extra cost of proving the elements necessary for a punitive damage award and the cost of the appeal, Elgert may not have gained much with his successful claim for punitive damages.

There is a place for jury trials in employment litigation but only in certain situations. A jury trial can be a way for wrongfully dismissed employees to get a large award if the circumstances are serious enough. However, without the proper factual basis, a jury trial can be much more expensive than a trial with a judge alone. If a wrongful dismissal trial proceeds with a jury, employers should be prepared for the possibility of a big award, but also a good chance on appeal to reduce that award.

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