Sunday 20 October 2013

Hotel Employee Gets Early Check-out from Ontario Lawsuit

If an employee works in the United States for a multinational corporation with its corporate head office in Ontario, can that employee sue her former employer in the Ontario courts for wrongful dismissal and violations of the Ontario Human Rights Code when she gets fired?

While the typical law answer will always be "it depends," in a decision released earlier this year, Sullivan v. Four Seasons Hotels Limited (2013), 2013 ONSC 4622, 116 OR (3d) 365, the Honourable Justice Sandra Chapnik of the Ontario Superior Court of Justice held that at least one employee could not.

What Happened

Sullivan concerned the case of an employee of the Four Seasons Hotel, which as some may know is based in Toronto. From 2002 until 2007 the plaintiff employee was employed by the Four Seasons Hotel, Toronto, as Director of Sales. In 2007 she entered into an employment agreement with Nevis Resort, a resort that operates using the Four Seasons Hotel and Resorts trademark. She was employed by the Nevis Resort as Director of Sales and operated out of the New York satellite office where the resort’s sales team was based. The plaintiff worked as Director of Sales for the Nevis Resort from July 30, 2007 until September 29, 2011, at which time she was terminated, effective the following day.

Ms. Sullivan brought her case in the Ontario courts, claiming that Ontario had sufficient jurisdiction to hear and decide her case. She claimed that since she was originally employed in Ontario and that she was simply transferred within the Four Seasons' family to New York, technically this was an Ontario employment law case. Ms. Sullivan further claimed that she was would be prejudiced if she was forced to litigate her matter in New York state.

For its part, the employer took the position that in 2007 Ms. Sullivan's Ontario contract of employment had come to an end. She had asked to transfer to the United States, and when she secured employment at Nevis Resort entered into a new contract of employment with an American employer pursuant to New York law. Four Seasons thus took the position that New York was the more appropriate forum for the case to be heard.

Four Seasons accordingly brought a preliminary motion before the Ontario court, asking for the case to be dismissed. After reviewing the case Justice Chapnik agreed with Four Seasons' argument, forcing Ms. Sullivan to 'check-out' from her Ontario case earlier than she expected.

Judge's Reasons for Decision

In deciding whether the case should continue in the Ontario court, Justice Chapnik was required to answer two questions: (1) did the Ontario court have jurisdiction to hear the case at all; and (2) if the court did have jurisdiction, was it nonetheless inconvenient for the case to be heard in Ontario?

In addressing the argument that the American employer was simply a conduit for Four Seasons, an Ontario employer, Justice Chapnik referenced the recently decided case of Yaiguaje v. Chevron Corporation, [2013] O.J. No. 1955, in which, at paragraph 95 of his decision, Brown J. held that the following:
The fact that a parent corporation operates a number of world-wide companies as an integrated economic unit does not mean that separate legal entities will be ignored absent some compelling reason for lifting the corporate veil. Ontario courts have not adopted the "group enterprise theory" of corporate liability. I adopt, as an accurate statement of the law prevailing in Ontario on this point, the following statements by the United Kingdom Court of Appeal in Adams v. Cape Industries Plc.:
There is no general principle that all companies in a group of companies are to be regarded as one. On the contrary, the fundamental principle is that "each company in a group of companies ... is a separate legal entity possessed of separate legal rights and liabilities ..."
Our law ... recognizes the creation of subsidiary companies, which though in one sense the creatures of their parent companies, will nevertheless under the general law fall to be treated as separate legal entities with all the rights and liabilities which would normally attach to separate legal entities. [Footnotes omitted; Emphasis added by Chapnik J..]
On the facts of this case, however, Justice Chapnik found that Four Seasons in Toronto, did have effective care and control over Ms. Sullivan. As noted by Her Honour, it was in Toronto that her employment agreement was prepared and the move to New York was properly characterized as a "transfer." Justice Chapnik thus found that the Ontario courts had jurisdiction to hear the case.

In turning to the question of whether Ontario was the appropriate forum for the case to be heard, Justice Chapnik placed particular emphasis on the nature of the plaintiff's complaints. Given that the claims were not only for wrongful dismissal, but also concerned claims of violations of her human rights, Justice Chapnik noted that oral evidence from those with whom Ms. Sullivan worked in New York would be crucial. Given that those witnesses were based in New York, New York, Justice Chapnik held, was the more appropriate forum for the case to be heard.


It is difficult to glean any guiding principles for employees of multinational corporations from Justice Chapnik's decision and readers are cautioned to read too far into it. While Justice Chapnik's reasons are sound and well positioned, the challenge for others is that they are - like almost also jurisdictional cases - based primarily on the individual facts of the case.

Almost all jurisdictional cases will be decided on the facts of the case. In this case, the key deciding factors were (a) Ms. Sullivan's claims of mistreatment and (b) the fact that any such mistreatment would have been witnessed by those in a foreign jurisdiction.

Takeaways for Employees

The takeaway for Ontario workers working abroad is that sometimes even though it may appear that you are working for Ontario employer, you may not be able to avail yourself of the Ontario courts and legal system. It is important to note that note only could Ms. Sullivan not pursue her case in the Ontario courts, she would not be able to prevail herself of Ontario law, including the Ontario Human Rights Code.

If you are an Ontario worker working outside of Ontario and believe that you may have a case under Ontario law, it would be exceptionally prudent to seek a professional legal opinion before starting any such case here. The professional and experienced employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you. Employment lawyer Sean Bawden has been certified as an expert witness in Canadian law by the Massachusetts Department of Industrial Accidents. (Merlini v. Canada, Mass. DIA #35748-09)

Takeaways for Employers

The takeaway for Ontario employers is that it would be wise to be clear with your employees which jurisdiction's law will govern any disputes between employer and employee during the course of, and more importantly at the termination of, employment. A central issue in Ms. Sullivan's case was that she believed that she was working for an Ontario employer on transfer. Perhaps had the employer been more clear the dispute could have been avoided.

If you are an Ontario employer employing workers outside of Ontario, it would be exceptionally prudent to seek professional legal advice as to the wording of any employment contract respecting those employees. The professional and experienced employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to you. Kelly Santini LLP is a member of the USLaw Network.

As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.

Sean Bawden, publisher of the law blog for the suddenly unemployed, can be reached by email at or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, and part-time professor at Algonquin College teaching Trial Advocacy for Paralegals. He is a trustee of the County of Carleton Law Association for 2013.

No comments:

Post a Comment