‘An aura of lawlessness’: Court highlights company’s ‘legally incorrect positions' on key issues
IBM Canada has been ordered to pay a former employee $215,000 in legal costs on top of a $682,151 wrongful dismissal award, after an Ontario court found the company maintained positions it knew to be wrong in law and abandoned them only under pressure, weeks before trial.
Justice Ira Parghi of the Ontario Superior Court issued the costs endorsement on May 6, 2026, finding that IBM had taken "entrenched, legally incorrect positions on key issues and abandoned them only late in the day."
“IBM’s conduct, in maintaining a position that runs contrary to clear jurisprudential authority, has an aura of lawlessness about it. One can understand that strong positions may be taken and zealously advanced in litigation. But when a position turns out to be utterly at odds with the law, the litigant advancing the position ought to have pause for thought. So should its counsel.”
IBM denies wrongful dismissal
IBM's pleaded position throughout the litigation was that it had not wrongfully dismissed Jason Adelman at all. That position held until IBM's opening arguments at trial, when the company acknowledged for the first time that Adelman was owed reasonable notice, proposing 20 to 22 months. The court awarded 24.
Critically, when IBM amended its defence in October 2025, just weeks before trial, the amended pleading still maintained that Adelman was not owed notice.
The more pointed criticism concerned IBM's position on damages for cancelled restricted stock units (RSUs) and stock options, which represented 40 per cent of the total award. IBM had argued throughout the litigation that its equity award grant terms extinguished Adelman's right to those damages — a position directly contradicted by binding appellate authority in Milwid v. IBM Canada Ltd., a case IBM itself had lost, defended by the same counsel, in 2023.
At examinations for discovery in March 2024, Adelman's counsel expressly raised Milwid and asked IBM to identify any differences between Adelman's equity grant terms and those in that case. IBM's response, delivered after 15 months and eight follow-ups, was: "No differences noted at this time."
The court was unsparing in its decision: "The only reasonable interpretation of IBM's response was that it was acknowledging that the contractual language at issue in this matter was identical to the language in Milwid. That language did not support IBM's position either in Milwid or in this case."
IBM never argued Milwid was distinguishable. "It offered no substantive explanation at all," the court found. "It simply forged ahead with a position that it must have known it would be unable to defend at trial."
Position shifts after punitive damages
IBM formally changed its position on the equity issue only after Adelman sought to amend his pleading to claim punitive damages — and even then, the concession was conditional on Adelman being found entitled to reasonable notice, a position IBM was simultaneously still denying.
The court concluded IBM's strategy appeared designed to pressure a settlement below what Adelman was legally entitled to.
"It is difficult for me to see how IBM's strategy of insisting until the 11th hour that Mr. Adelman had no entitlement in respect of the equity, and then softening that position only in the face of the punitive damages claim, and only weeks before trial, could have been rooted in anything other than a desire to pressure Mr. Adelman to accept a settlement for something less than what he was entitled to at law."
IBM argued at the costs hearing that Adelman had failed to sufficiently demand that IBM comply with Milwid. The court rejected that outright.
"The law is the law. Binding appellate authority is just that... IBM had a duty to comply with the law with or without a 'demand' from anyone else. IBM appears to be saying that Mr. Adelman, the victim of IBM's conduct, ought to have protested more loudly. I reject this claim."
Background: wrongful dismissal award
The costs decision followed a January 2026 trial judgment in which Justice Parghi awarded Adelman $682,151 in wrongful dismissal damages. Adelman had joined Platform Computing in 2004 — IBM later acquired the company and recognized his start date — and rose through the ranks over nearly 19 years to become executive director of strategic partnerships.
He was terminated without cause on Jan. 6, 2023, at age 59, with two weeks' notice. His employment letter contained no termination provisions.
The court awarded 24 months' reasonable notice, citing Adelman's senior executive role, his long service, his age, and the bleak job market he faced. Despite applying for 100 positions, receiving four interviews, and doing consulting work for two companies, he had earned no employment income in the nearly three years since his dismissal — a fact IBM conceded he could not be faulted for.
Adelman’s base salary, pension, and benefits damages for the notice period totalled $532,975. The court also awarded him a $24,227 bonus for 2022, his final full year of employment, finding IBM had denied it simply because he had left before bonuses were paid out — a conclusion IBM's own internal compensation documents made "could not be clearer."
The remaining $269,508 of the damages award related to the improperly cancelled RSUs and stock options. IBM had cancelled equity scheduled to vest in February 2024 on the basis that Adelman was no longer an active employee.
The court calculated damages based on Adelman's own investment history — he had held previously vested equity for an average of 402 days before selling — finding that approach more accurately reflected "the real value of Mr. Adelman's RSUs and stock options would have been, had IBM not wrongfully dismissed him."
The $215,000 in costs — inclusive of legal fees, disbursements, and HST — is to be paid within 30 days, bringing the total amount owed to Adelman to $897,151.
