Law Times

Law Times • march 2, 2009 FOCUS PAGE 11 uman resources man- agers personally may be held responsible for intentional infliction of mental distress — even in cases where their actions were arguably done within the course of their em- ployment, says a recent Ontario Court of Appeal decision. "That is very important to recognize," says Erik Marshall, an associate in the labour and employment group of Miller Thomson LLP. "I was always under the assumption that vi- carious liability meant that if you're within your employment then it's not really your fault, it's your employer who will pay. But this suggests otherwise." The court also confirmed in Correia v. Canac Kitchens that employers are not liable in neg- ligence if they conduct negligent investigations of employees, writes Marshall in a firm communiqué. "The Court of Appeal reasoned that policy considerations do not favour recognizing a duty of care on employers in these situations. "However [the court] warned that employers, HR managers, and private investigation firms risk tort liability for intentional inflic- tion of mental distress if they fail to conduct themselves appropri- ately when investigating employ- ees for suspected criminal activ- ity," he says in the communiqué. The case arose after Canac suspected that there was theft and drug dealing taking place at the company's plant. They retained a private investigation firm to look into it and, after an undercover probe identified several employees engaged in the activities. The PI firm, Aston As- sociates Investigations Ltd., also kept the police informed, but the police did not do their own investigation, says Marshall. Joao Correia, 62, a longtime employee, was taken into the company HR office where he was accused of theft and termi- nated for cause. He was then OCA weighs in on consequences of botched probe H BY GRETCHEN DRUMMIE Law Times taken to another office where the police arrested him for theft. It later emerged that Cor- reia was innocent. Through a series of mistakes, Canac's head of HR had confused him with another younger employee with a similar name, Joao Corriero. "This confusion occurred de- spite the fact that Aston's inves- tigative reports referred to the suspect as 'Joao Corriero' and described him as a man in his 'mid 20s,'" writes Marshall. The error went undetected because the PI firm's undercover agent had never been shown a photo of Correia to confirm his identity, which Canac had on file, nor had he been present to con- firm Correia's identity at the time of his termination and arrest. Plus, the police did no investi- gation and relied solely upon the PI's reports. The Crown prosecu- tor dropped the charge against Correia four months later after his lawyer was able to prove that this "was a case of mistaken iden- tity," says Marshall. By this time Correia claimed to have "suffered serious injury" and as a result he brought law- suits against Canac, Canac's head of HR, Kohler, Aston, As- ton's employees, and the police, says Marshall. Correia and his family claimed damages against all the defen- dants for negligent investiga- tion, malicious prosecution, false arrest, intentional infliction of mental distress, inducing breach of contract and intentional in- terference with contractual rela- tions. "Most of these claims were dismissed on summary judgment motions brought by all the de- fendants except the police defen- dants," writes Marshall. The Court of Appeal set aside the dismissals of the claims for negligent investigation against Aston and for the negligent infliction of mental distress against Aston, Aston's employ- ees, Canac, Canac's head of HR, and Kohler. "It is noteworthy that the Court of Appeal agreed with the motion judge's dis- missal of Correia's claims against Ball&Alexander Barristers & Solicitors Excellence in Employment & Labour Law • Counsel in Leading Cases • • Authors of Leading Book • Wrongful Dismissal Labour Relations Employment Law Human Rights Post Employment Competition Civil Litigation Appellate Advocacy Class Actions Employment Standards Administrative Law 82 Scollard Street, Toronto, Canada, M5R 1G2 Phone: (416) 921-7997 Fax: (416) 921-3662 web: www.staceyball.com www.kenalexander.ca Untitled-1 1www.lawtimesnews.com 4/7/08 9:02:11 AM Alan Farrer - Managing Partner | Desmond Dixon - Partner | David Neill - Partner For over 70 years Thomson, Rogers has built a strong, trusting, and collegial relationship with hundreds of lawyers across the province. As a law firm specializing in civil litigation, we have a record of accomplishment second to none. With a group of 30 litigators and a support staff of over 100 people, we have the resources to achieve the best possible result for your client. Moreover, we are exceptionally fair when it comes to referral fees. We welcome the chance to speak or meet with you about any potential referral. We look forward to creating a solid relationship with you that will benefit the clients we serve. THOMSON, ROGERS Barristers and Solicitors 416-868-3100 Toll free 1-888-223-0448 www.thomsonrogers.com YOUR ADVANTAGE, in and out of the courtroom says Marshall. "I think from an employer's perspective the biggest thing that came out of this case was that for the purposes of negligence an employer cannot be found to have conducted a negligent investigation." But the matter was allowed to From an employer's perspective the biggest point to note is that 'for the purposes of negligence an employer cannot be found to have conducted a negligent investigation,' says Erik Marshall. Canac, Kohler (Canac is a divi- sion of Kohler), and Aston for the torts of inducing breach of contract and intentional inter- ference with economic relations because none of the defendants' conduct was intentional," writes Marshall. "The main ones for employers to think about are the intention- al infliction of mental distress and the negligent investigation," proceed for negligent investiga- tion against Aston because "that's basically what they do as a com- pany; private investigation firms [investigate]. So the court found that it was foreseeable that if you wrongfully accuse someone after an investigation that they would be in trouble. And there is a prox- imate relationship between that company and the employee who was wrongfully accused." Now, for the policy consid- erations, this is where the court differentiated," says Marshall. "Because forseeability and prox- imity was a go for the company and the private investigation firm. However policy consider- ation said the matter should be stopped against the company but proceeded with against the private investigation firm. The reason was that private investi- gation firms conduct investiga- tions into theft all the time and there's very little oversight in the law for those activities so that's why they say for that policy rea- Ltd. that son alone this should go ahead. "However for the company the policy consideration was a case called Wallace v. United Grain Growers says companies do not have to have good faith reasons to terminate employees," he says. "The second policy reason which I think was the big one was that they didn't want to erode the rights basically or the importance of having criminal activity reported to the police by ordinary citizens such as an employer," he says. "I think they really didn't want to say that you can't report things to the police which may or may not be true. If you know it's untrue that's a problem, but if you have any kind of information about crimes I think the court was thinking you should be able to give tips to the police which is essentially what happens in a lot of the cases and sometimes it's wrong or not accurate, but that was a basic public policy reason that they said we shouldn't hold this against the company." What is interesting to note, he adds, "Is that employers often conduct mini in-house investi- gations into misconduct, yet still can't be held liable for the tort of negligent investigations." LT Trust [ Every time you refer a client to our firm, you're putting your reputation on the line. It's all about trust well placed.

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