Saturday, 1 February 2020

"It ain't over till it's over." - Yoga Berra's Profound Answer to Employment Law's Vexing Question

"It ain't over till it's over." According to a very quick Google search, the very height of what passes for research in 2020, Yogi Berra first uttered the phrase about baseball's 1973 National League pennant race.

While he almost assuredly never intended to do so, Berra has provided the quintessential answer to one of employment law’s most vexing questions – as it applies to stock option plans, when does an employee’s employment terminate?

In O'Reilly v. IMAX Corporation, 2019 ONCA 991 (CanLII), a decision authored by the Chief Justice of Ontario, the Honourable George R. Strathy concerning the interpretation and application of an employee stock option plan, Ontario’s top court held that the words “when employment terminates”, did not establish, in unambiguous terms, when the date of termination was nor when employment terminated. Applying the rule of contractual interpretation established by the Court of Appeal in the case of Gryba, (i.e. in the absence of unambiguous terms to the contrary, the terms of a contract should be presumed to refer to lawful termination rather than unlawful termination ) the court held that, when it comes to employment, it ain't over till it's over.

Commentary

If one has found the interpretation of contractual termination clauses to be an exercise in parsing words, then one is truly in for a treat when it comes to interpreting equity plans, such as stock option plans.

The problem in the O’Reilly case is highlighted at paragraph 52 of the court’s reasons for decision, where Chief Justice Strathy notes, “While the language in all the plans at issue in this case extinguish the respondent’s right to exercise any unvested awards as of the date of “termination” or when employment “terminates”, they do not establish, in unambiguous terms, when the date of termination is or when employment terminates.” By comparison, language that has been held to be clearer with respect to when an employee’s entitlement terminates has included the phrase “ceases to perform services for”.

What the court strains to say in its decision in O'Reilly is: When drafting an equity plan, if you wish to avoid the vesting of equity awards during the common law notice period, then both: (a) say so, and (b) be absolutely crystal clear about when the entitlement terminates. A further, much more subtle message should be to not wrongfully dismiss your employees in the first place, but one digresses.

Sunday, 26 January 2020

Quit While You're Ahead and Leave the Numbers Out of It

Quit while you’re ahead and leave the numbers out of it. Those are the fundamental lessons from the decision of the Court of Appeal for Ontario in Rossman v. Canadian Solar Inc., 2019 ONCA 992 (CanLII).

In yet another case concerning a contractual termination clause, the Court of Appeal for Ontario held that adding the words “Benefits shall cease 4 weeks from the written notice” after language guaranteeing that the employer would comply with the ESA not only violated the terms of the ESA on its face but created ambiguity as to the employer’s true intentions.

Commentary

The case is a useful primer on the fundamental principles governing contractual termination clauses. In his reasons for decision, MacPherson J.A. sets out what he calls the “leading ‘umbrella’ cases in employment law” (see paragraphs 16-24 of the court’s reasons for decision), which is worth a read for anyone new to this issue.

As I read the Court of Appeal’s decision, the reason the termination clause failed is because of the placement of the ‘ESA guarantee.’ I get the sense that, had the employer’s guarantee to provide minimum statutory entitlements followed the ‘four-week’ clause, then perhaps the court would have upheld the provision. It’s tough to say though.

The lesson that I think one can glean from this decision is that if an employer wants to put a limit on something, then they would be prudent to refrain from using actual numbers.

Sunday, 12 January 2020

CCLA Candidate Statement

Hi. My name is Sean Bawden and I am running for re-election as a trustee of the County of Carleton Law Association. I practice law as a member of the in-house legal department of Canopy Growth Corporation (NYSE: CGC; TSX: WEED), a multi-faceted cannabis company headquartered in Smiths Falls, Ontario, with offices located in, amongst other places, the Kanata Research Park.

The primary reason I am seeking re-election as a trustee is because I believe that every member of the legal community who lives and/or works in the city of Ottawa should be a member of the CCLA. I believe a diversity of views makes the CCLA stronger and better.

When I say that “every member of the legal community” should be a member of the CCLA, I mean every member of this community regardless of:

  • The language in which you practice / la langue dans laquelle vous pratiquez.
  • How you are licensed: Whether you are a lawyer or a licensed paralegal.
  • When (or indeed even if) you were called to the bar. Students should be members too.
  • What you do: Which is to say, your individual practice area.
  • Where you do it: Whether you work in private practice at a multinational, national, regional, or small firm; or you work as a sole practitioner; or you work in-house for a giant, multinational corporation or as a member of a national, international, provincial, or regional organization; or you’re a crown attorney, an employee of (or independent contractor to) the federal Department of Justice, the provincial Ministry of the Attorney General, or the City of Ottawa’s legal department; or some other incredible place of work of which I am presently unaware.

And here are my three reasons why:

Ottawa is our home. There is no shortage of organizations competing to represent the interests of the legal community. And while those organizations all do excellent work, no other organization exists to address the unique interests of this singular community. What joins our seemingly disparate group of legal professionals is a common thing: we all either live, work, or do both of those things within the city limits of Ottawa. Construction on Elgin Street impacts those working at 160 Elgin as much it does those working at 161 Elgin. While issues of national or provincial importance are no doubt of concern, sometimes it’s important to ensure proper local access to library resources; that’s why it’s important for everyone to be a member of their local organization.

Diversity is our strength. I believe that Ottawa is uniquely positioned to bring together some of this country’s best legal minds. Ottawa is a bilingual city, the seat of the federal government, the home of the Supreme Court of Canada, the site of one of Canada’s top law schools, and the headquarters of many of this country’s leading tech companies and non-governmental organizations. As different as our jobs and roles may be, we have shared interests regardless of for whom we act or what we do. Pressures brought about by the Supreme Court’s decision in R. v. Jordan to complete criminal trials within a certain time frame puts pressure on the family and civil courts. And, because uncertainties about a robust and accessible civil court system can cause businesses to consider where to locate or expand, corporate lawyers who may have only donned those black court gowns for their call to the bar need to care about such issues. If the CCLA wishes to ensure that it is properly representing the interests of the various legal communities, then it needs a variety of voices both as members of the organization with whom the organization can consult and as members of the board of trustees.

The CCLA is a demonstrated advocate for issues affecting the local bar. As can be seen from this list of advocacy initiatives, the CCLA has advocated on behalf its members with respect to a variety of issues including, but not limited to:

  • Legal Aid Budget Cuts
  • LSO Access to Justice Committee Request for Input
  • Pro Bono Law Help Centres Closures
  • Title Insurance

My goal is to encourage every single lawyer, paralegal, law student, and paralegal student who lives and/or works within the city of Ottawa to join the CCLA. I am running to bring to the CCLA my perspective as an in-house civil litigator (and alumnus of the Ottawa private civil bar). I thank you for your attention and hopefully for your support.

My name is Sean Bawden, and I approved this message.

Saturday, 11 January 2020

Keeping Babies in Bathtubs – ONSC Maintains Termination Clause Notwithstanding Contractual Issues

If an employment agreement contains one provision concerning the way by which one’s employer could terminate the agreement/employment with cause and a separate provision addressing the way by which the employer could terminate without cause, and the “for cause” provision is deemed to be illegal, then does that mean that the provision concerning “without cause” terminations is also illegal? Put another way, if the bathwater is polluted should we jettison the baby sitting in it? In Waksdale v. Swegon North America Inc., 2019 ONSC 5705, Justice Edward M. Morgan of the Ontario Superior Court of Justice (Toronto Region) held that just because one contractual provision is bad, doesn’t mean that one must overlook those provisions that are good.

Commentary

This case is helpful to employers, especially where certain, irrelevant aspects of their employment agreements are susceptible to attack. There has been a campaign, as of late, by plaintiff’s counsel to seek to find any technical non-compliance with the ESA and then argue that such non-compliance should void the entire employment agreement, even if other, relevant aspects of the contract are perfectly legal. The Waksdale case affirms the common sense principle that simply because one can find fault with one aspect of an agreement does not mean that an employee will necessarily be able to void the entire contract. Or, to go back to what I said before – just because the bathwater is dirty doesn’t mean we should lose the baby.

Sunday, 5 January 2020

Thank You!

Thank you!

On December 31, 2019, this blog was inducted into the Canadian Law Blog Awards Hall of Fame. As noted by the organizers of the “Clawbies”:

Every year, we add several names to the Clawbies Hall of Fame. Publications must have at least three prior Clawbie awards for consideration. Once they have joined the Hall of Fame ranks, they are no longer eligible for future Clawbies, but can show off their achievement with the official Clawbies Hall of Fame badge.

Four-time Clawbies winner Sean Bawden’s job title has changed, but the quality of his blogging hasn’t. Sean won a “best new blog” Clawbie in 2012, and seven years later he’s in the Hall of Fame. Congratulations on your formidable track record, Sean!

When I started blogging in 2012, when I was then an associate at what was then known as Beament Green, now Beament Hebert Nicholson LLP, I had no real sense of where this blog, nor I, would go. Seven years later it is a bit of an understatement to say that my “job title” has changed. And to note where I am now would also be to overlook the six and one-half years that I spent at Kelly Santini LLP.

I have written self indulgent reflective pieces before, so I won’t add to that now.

Once again, thank you for reading.

Sean