Court "whacks" Honda with $500,000 in punitive damages

Judge blasts automaker's handling of employee who suffered from chronic fatigue syndrome

The Supreme Court of Canada once said it takes a “large whack” to wake up a wealthy and powerful defendant to its responsibilities.

Honda Canada Inc. now knows what that “large whack” feels like after the Ontario Superior Court of Justice ordered it to pay $500,000 in punitive damages — reportedly the stiffest penalty in an employment case in Canadian history — to one of its former employees. And that was on top of 24 months’ notice, including a nine month extension of the notice period — also known as Wallace damages — for the way the termination was handled.

Justice John McIsaac of the Ontario Superior Court of Justice didn’t pull any punches in harshly criticizing the auto manufacturer’s treatment of a long-term employee who was suffering from chronic fatigue syndrome (CFS.)


Kevin Keays started work with Honda shortly after it bean operations in Alliston, Ont., in 1986.

He spent about 20 months on the production line and then joined the quality engineering department, which was responsible for the implementation of newly designed components into the vehicles being manufactured at the facility.

Justice McIsaac said it was “without debate” that Keays was a dedicated and conscientious employee. Keays was prepared to make his employment at Honda his life work and to be the best employee he could.

But Keays started to experience health problems shortly after he started working for Honda. This impacted his ability to attend work regularly and to satisfy the “lean” operation mandated by Honda’s business philosophy. Despite receiving glowing reports for most of his work categories, he was continually receiving negative assessments in relation to his attendance.

His health deteriorated to the point that he was off on disability from October 1996 until December 1998. His disability benefits were terminated in December 1998 following a work capacity evaluation conducted on behalf of London Life. Keays described this process as a farce. The court said he was wrongly terminated from his disability benefits.

Keays returned to work when the benefits were cut off and, as predicted by his physician, Dr. Morris, began to experience work absences within one month after his return to full-time work. In August 1999 he missed four days and, as a result, was “coached” by way of a written report — the first step in Honda’s progressive discipline process.

When Keays repeated his complaint of being unable to live up to Honda’s attendance expectations because of his illness, he was told there was a special program available that exempted qualified employees from attendance-related progressive discipline based on a disability recognized by the Ontario Human Rights Commission.

Keays obtained the form for the program, had it completed by his doctor and returned it to Honda. The court said he “seized this opportunity as a drowning person grabs a piece of flotsam.”

But this new accommodation posed problems for Keays. Under the program, Honda required that any absences be validated by a doctor’s note for each and every occurrence. The court was critical of this requirement for a number of reasons.

Employees at Honda with more “mainstream” illnesses were not subject to this requirement. They did not have to obtain such notes before returning to work. And given the nature of his disability, the requirement to have absences validated might have the unintended effect of lengthening the time he missed work.

Court critical of Honda’s doctors

When Keays brought his concerns about the policy to his superiors, he was stonewalled, the court said.

“This frustration generated stress which aggravated his symptoms and increased his absences,” the court said.

Dr. Morris predicted that Keays could be expected to miss four days a month because of his illness. Unfortunately, due to the increased stress, he was absent six times in October. Since this exceeded his doctor’s estimate of four days, Honda asked him to see Dr. Affoo, one of the company’s medical staff.

The meeting with Dr. Affoo was a disaster. Justice McIsaac said the meeting had “extremely negative consequences.”

Keays said Dr. Affoo threatened to move him back to the physically demanding production line, which he feared would cause an extreme exacerbation of his condition.

Keays brought his concerns about the “threat” to the attention of his superiors. They said there was no intention to move him back to the production line “at that time.” But the court said the possibility of a removal back to the line remained a real threat given Honda’s reluctance to acknowledge the validity of his disability and his need for reasonable accommodation.

In January and February 2000, Keays missed 14 days, significantly surpassing the predictions of his doctor. Keays was getting nowhere with his request to have Honda reconsider the issue of getting medical notes for every single absence.

“These were not only discriminating in that they imposed a burden or barrier that was not faced by ‘mainstream’ employees, they were creating longer absences than mandated by his condition,” said Justice McIsaac.

Honda doesn’t like dealing with third parties: court

Keays decided to hire a lawyer to attempt to mediate his concerns with Honda, frustrated by the lack of progress and the stonewalling he was getting from management about his disability.

Justice McIsaac said the decision to hire a lawyer by Keays was done as a last resort, because he legitimately felt his disability would result in his termination, disqualifying him from the LTD which had been wrongfully cancelled.

Hiring a lawyer also had another negative impact for Keays in Honda’s eyes — it was contrary to the company’s unwritten policy discouraging the participation of any third-party advocates on behalf of employees, the court said.

“As I understand it, the theory is that, because all employees are part of Honda, they do not need anyone to represent their interests,” said Justice McIsaac. “Their interests are Honda’s interests and all issues will be resolved ‘in-house.’ Based on this theory, Honda has been able to resist any attempts at unionization.”

The court said this approach obviously works for the vast majority of Honda employees, but it didn’t serve Keays very well. All of his grievances were falling on deaf ears and his symptoms were deteriorating. He was on the progressive discipline path that would eventually lead to termination.

“He had spent his entire adult life at Honda and felt his world was coming down on his head,” said Justice McIsaac. “He was absolutely alone and without resources. The deck was stacked against him and he was only a minnow compared to the Leviathan that Honda represented.”

Honda ignores lawyer

Keays’ lawyer fired a letter off to Honda on March 16, 2000, outlining his concerns along with an offer to work toward an appropriate resolution of the problem.

Honda chose to ignore that letter, though it did respond in another way, the court said. Five days later it unilaterally cancelled the Ontario Human Rights Commission accommodation and told Keays he had to meet with another company doctor because it no longer accepted the legitimacy of his absences. It said if he did not meet with the doctor, so the doctor could get to know him and understand his condition, he would be fired.

Honda said two company doctors believed Keays should be attending work on a regular basis. But the court said this “grossly” misrepresented the advice of the doctors.

At best, their opinion was that the Honda medical file contained no formal diagnosis of CFS.

“This was a slender reed upon which to construct a thinly veiled accusation that Kevin Keays’ claimed disability was a fraud and he was a malingerer,” said Justice McIsaac.

Since Honda refused to talk with his lawyer, Keays said he would not meet with the doctor until the company clarified the “purpose, methodology and the parameters of the assessment” the doctor would make in writing.

Honda refused to provide this clarification on the basis that Keays was told repeatedly, to his face, that this meeting was only a “getting-to-know-you” session. But the court said it did not understand why Honda would not confirm that in writing.

Company doctor didn’t believe CFS was a permanent disabililty

During trial, evidence came out that the second company doctor, Dr. Brennan, did not believe that CFS was a source of permanent disability “as most patients are significantly improved within three years of diagnosis.”

The court said that view was not consistent with data from the Centre for Disease Control (CDC) in Atlanta. According to the CDC, the actual percentage of patients who recover is unknown, and even the definition of what should be considered recovery is subject to debate.

Dr. Brennan was also of the opinion that CFS patients should resist fatigue with exercise and attendance at work because they are therapeutic.

Keays was terminated formally on March 29, 2000, for insubordination in failing to meet with Dr. Brennan. According to Dr. Morris, Keay’s doctor, he suffered a three or four month period of post-traumatic disorder as a result and he qualified for a Canada Pension Plan disability pension for his CFS.

The court’s decision

The court was very critical of the way Honda handled Keays’ disability. It said the order to meet with Dr. Brennan was not made in good faith or for legitimate corporate purposes, but was designed as a prelude to terminating him.

It said Keays could be forgiven for disobeying the order to meet with Dr. Brennan because he had a history of being mistreated by Honda in relation to his disability. He had been wrongfully terminated from his LTD benefits in December 1998. He had been hounded over absences despite having a legitimate reason for them.

The accommodation undertaken by Honda was problematic because of the “discriminatory and impractical” imposition of medical certification before being allowed to return to work. And then Honda unilaterally withdrew that accommodation.

“Given this constellation of abusive circumstances, I am satisfied that (Keays) had a significant reasonable basis to believe that Dr. Brennan would continue the refusal to recognize the legitimacy of his disability,” said Justice McIsaac.

As it turns out, the court said, Keays was correct to be wary of the meeting, considering Dr. Brennan’s narrow acceptance of CFS and his reluctance to recognize absences from work as a reasonable response to the condition.

The court said it was reasonable for Keays to hire a lawyer to help him. Justice McIsaac said the idea floated to Keays, of moving him back to the production line, was deliberately left by Honda as a “sword of Damocles” over his head if he did not shape up.

January 2000 was about the worst month for Keays. He suffered eight absences in the last two weeks alone. There were six more in February, and Keays knew his absences were having a significant impact on his department.

“The efficiency demands of Honda would not tolerate his absences and this was having a negative impact on employee morale,” said Justice McIsaac. “I accept that he was the target of taunts and ridicule of some of his co-workers, including a cruel cartoon that made a joke of his disability.”

Knowing the situation was deteriorating, he took the step of hiring a lawyer to help him save his job.

The court said the letter the lawyer sent to Honda was “the model of reasonable conciliation.” But Honda did not even have the decency to respond to counsel, said Justice McIsaac.

“They chose not to engage in any conversations with him, mediation or otherwise,” he said.

Company lawyers breach rules of professional conduct

Justice McIsaac was critical of Honda’s in-house counsel. Despite the fact that Keays had obtained counsel, in-house counsel for Honda participated in a meeting with Keays on March 21, 2000, when company supervisors had attempted to persuade him to reject the advice given by his lawyer.

The court said this was a “blatant” breach of the rules of professional conduct of the Law Society of Upper Canada.

“This contact was made in the face of a direct reference in counsel’s letter that Mr. Keays found it stressful dealing with these issues directly with Honda management and that future discussions were to be had with counsel, not Mr. Keays,” said Justice McIsaac.

Honda did not have cause to fire Keays

The court said terminating Keays was “totally disproportional” to the alleged insubordination because:

•Keays had been a dedicated employee doing important work for Honda for almost 14 years;

•his “default” did not involve any conduct displaying moral turpitude nor did it reflect any deficiency in his character;

•it was motivated by a legitimate business concern that his rights as guaranteed by the Ontario Human Rights Commission were being continually violated;

•it was not accompanied by any act of insolence nor was it disrespectful;

•Honda had available alternative means of discipline, up to and including suspension before it was required to use termination — the “capital punishment” of employment law; and

•there is no evidence that his refusal to see the company doctor disrupted or threatened to disrupt the production of vehicles.

In essence, the court said there was nothing to suggest Keays was in any way repudiating his employment contract. When medically able, he wanted to work. He was prepared to make a lifetime career at Honda so long as his human rights were respected.

“He wanted nothing more than to have that relationship maintained with an appropriate accommodation of his disability,” said Justice McIsaac. “He wanted so much to be a part of the Honda ‘team’ but the company’s fixation on efficiency prevented that wish from being realized.”

Notice period extended for bad faith

The court determined he was entitled to 15 months’ notice, but tacked on an additional nine months for Wallace damages. (For more on Wallace damages, see the related articles link at the bottom of this page.)

Keays said Honda’s manner of dismissing him was “hurtful, embarrassing, discriminatory and offensive.”

He said Honda deliberately misrepresented the positions of the company doctors for the purposes of intimidation and forcing him to meet with a doctor without providing clarification he asked for in writing.

The court said the evidence showed that Dr. Brennan had a “hardball” approach to workplace absences associated with illnesses or injuries. Honda said its order to meet with Dr. Brennan was benevolent and motivated by a wish to see Keays return to work on a full-time basis.

“In my view, this was about as benevolent as asking a lamb to go into the wolf’s den,” said Justice McIsaac.

The termination had a profound impact on Keays. He experienced a sense of loss for co-workers he would not be seeing again. This lasted for three to four months. By September 2000, Keays was, in the opinion of his doctor, totally disabled from any employment.

In determining Wallace damages, the court said it was prepared to factor in the unilateral cancellation by Honda of the accommodation. Justice McIsaac said he was satisfied that Honda did this in reprisal for his hiring of a lawyer.

Therefore the court tacked on the additional nine months, bringing the reasonable notice period to 24 months.

$500,000 in punitive damages

The court said punitive damages are exceptional and are only available if there is an “independent actionable wrong” and if the conduct of Honda was so egregious that it merits punishment.

Even then, if the compensatory damages have, by themselves, meted out sufficient punishment to Honda then the need for punitive damages would have evaporated.

Justice McIsaac said workers disabled by invisible impairments such as chronic pain and chronic fatigue face numerous problems.

“Just because Mr. Keays did not carry a white cane, use a hearing aid or get around in a wheelchair, did not make him any less deserving of workplace recognition of his debilitating condition,” he said.

He said the fact Keays had to continually “earn” any accommodation from a reluctant Honda ignores a fundamental principle of human rights law — that accommodation is a right, not an indulgence granted by one’s employer or an act of charity.

Keays had to earn the accommodation represented by the Ontario Human Rights Commission’s disability program. He had to earn each absence by presenting a note “like some child who is suspected of ‘playing hooky’ from school,” the court said.

“This was not only an assault on his personal dignity, it was not a ‘burden’ that was placed on (employees) with ‘mainstream’ medical problems,” said Justice McIsaac.

The court was very critical of Dr. Affoo’s suggestion that Keays might return to the production line.

“I find this to have been an act of gross insensitivity bordering on the unprofessional,” said Justice McIsaac.

Moving Keays back to the production line would have made the condition worse, because it was a more physically demanding job. It also could have constituted constructive dismissal, the court said.

When Keays took the step of hiring a lawyer to attempt to advocate for him, and then subsequently refused to meet with another company doctor, Honda imposed the “most drastic form of harassment possible — they terminated him,” the court said.

Justice McIsaac said punitive damages were called for in this case, calling them a “rational and necessary” response to Honda’s “outrageous” mistreatment of a long-time employee.

He said it was clear why Honda wanted to have Keays see Dr. Brennan.

“Keays’ physicians were the problem (in Honda’s eyes) because they would ‘certify’ his absences like Sydney Crosby signs autographs after a hockey game,” said Justice McIsaac.

To Honda, those doctors were the villains, because they perpetuated the “myth” that Keays had to be off work. In the company’s eyes, he simply needed to be hardened and Honda was the one to do it with the assistance of Dr. Brennan, their advocate of anti-absenteeism rights, the court said.

“The subterfuge practiced by everyone associated with Honda in attempting to intimidate him to seeing their occupational medicine specialist (Dr. Brennan) should make the blood boil of any right-thinking individual,” said Justice McIsaac.

He made the following rulings:

•Honda's misconduct was planned and deliberate and formed a protracted corporate conspiracy against Keays;

•Honda's intent in intimidating him and eventually terminating him was to deprive him of the accommodation he had already earned based on the information from Dr. Morris that Honda requested and accepted;

•Honda's outrageous conduct has persisted over a period of five years without a hint of modification of their position that Keays was the one in the wrong;

•Honda did not reveal an extremely damaging letter from Dr. Brennan dated Dec. 3, 2000 until the day 22 of trial (the letter that made clear Dr. Brennan’s views on the legitimacy of CFS);

•Honda was aware of its obligation to accommodate Keays’ illness and, accordingly, must have known it was wrong to terminate that accommodation without just cause and to terminate him as an act of retaliation for attempting to assert his rights;

•Honda has clearly benefited from their misconduct because they have rid themselves of an irritation that they viewed as a "problem" associate; and

•Honda knew that Keays valued his employment with them as one of the main definitions of his life and they knew that he was also dependent upon that employment for his disability benefits if he could no longer remain employed.

Justice McIsaac said Keays was a vulnerable victim because of his precarious medical condition and Honda knew this. The record was replete with his pleas that he was still sick and that he had done everything possible to address his illness.

Even Dr. Brennan, in cross examination, admitted there is a “sub-group” of CFS sufferers who never get better.

“Honda has given me absolutely no reason why (Keays) was never considered by them to be one of that group, which he obviously was,” said Justice McIsaac.

He said Honda’s wrongful termination turned Keays from someone who could function at work with accommodation into a “totally unemployable and dependent recluse.”

The court rejected an argument by Keays that other employees had been treated in a similar manner.

“For some reason that escapes me, (Keays) seems to have been targeted despite being an ideal employee except for his CFS-realted absenteeism and who was otherwise valued by Honda and other workers,” said Justice McIsaac. “It would appear to me that Honda ran amok as a result of their blinded insistence on production efficiency at the expense of their obligation to provide a long-time employee reasonable accommodation that included his own physician’s participation.

In determining punitive damages, he also took into consideration the fact that Honda could “easily” afford to hire its own medical and legal advocates and insinuate them into established patient and client relationships without impunity as to professional and ethical concerns.

He awarded punitive damages to Keays in the amount of $500,000.

Honda has said it plans to appeal the decision.

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