Employee’s Lawyer May Examine Company President in Wrongful Dismissal Litigation Process

Written on behalf of Peter McSherry

An employee who was wrongfully dismissed has won their motion to interview the company’s president as part of their case

Nezhat-Mahal v. Cosmetica Laboratories Inc. revolves around a significant issue that occurred at a cosmetics company. The company, Cosmetica Laboratories Inc., is a custom cosmetics and skincare lab that develops and manufactures products and is located in the city of Toronto. The employee was with the company for 25 years, most recently as the Vice President of Research and Innovation.

Approximately 1.7 million units of the Rare Beauty Weightless Touch Liquid Foundation were produced and shipped to retailers.  There was a severe oil leakage impacting the product, which the company claimed the plaintiff was responsible for and failed to properly address it. The company terminated the plaintiff’s employment, and the employee brought a wrongful dismissal action shortly thereafter. As part of the wrongful dismissal action, the employee sought to examine the company’s president in the course of the discovery process.

What are examinations for discovery?

Examinations for discovery are a common step in the civil litigation process. Usually, these are oral examinations where the lawyer for one party asks questions of another party who is sworn or affirmed to be truthful. The purpose of these examinations is for parties to exchange information in advance of trial. Parties usually exchange documents in advance of oral examinations for discovery and sometimes afterwards in response to undertakings.

Under Rule 31 of the Ontario Rules of Civil Procedure, parties may examine any party in the civil proceeding with an adverse interest. Generally, this means the plaintiff’s lawyer can ask the defendant questions, and the defendant’s lawyer can examine the plaintiff. If the plaintiff has claims against two defendants, the plaintiff’s lawyer can examine both defendants. There can be other adverse parties, such as a “third party” that have adverse interests that can also be examined.

In most employment cases, the plaintiff is the employee, and the defendant is often a corporation. The Rules of Civil Procedure state the following about corporate examinations:

(a) the examining party may examine any officer, director or employee on behalf of the corporation, but the court, on motion of the corporation before the examination, may order the examining party to examine another officer, director or employee; and

(b) the examining party may examine more than one officer, director or employee only with the consent of the parties or the leave of the court.

What this means is that the plaintiff is entitled to examine one individual who they believe is appropriate. If the corporation disagrees, they can bring a motion asking the court to substitute the representative for a different representative that the company has chosen.

The plaintiff can also bring a motion seeking the court’s approval to examine more than one representative. For example, this can be useful in a case where the former manager has some key information and the human resources representative also has critical information. Sometimes examining both individuals will be important for the case. In other circumstances, the information can be obtained in writing through obtaining undertakings (promises to provide information or documents).

Who does not enter the examinations for the discovery phase of litigation?

While examinations for discovery are a common step in the litigation process, these examinations do not occur in every case. Many employment law cases settle before the formal litigation process begins or at settlement conferences or mediations that can occur before examinations for discovery. Many employment law cases, particularly those about reasonable notice, are also likely to be resolved through summary judgment motions, which usually occur without examinations for discovery.

Under the Rules of Civil Procedure, many claims under $200,000 can proceed under the Simplified Procedure rules. While examinations for discovery are still a step under this process, they are time-limited and can be significantly shorter than examinations under the regular procedures.

When will courts intervene to substitute the representative of the corporation?

As we discussed above, the presumption is that the opposing party selects the representative of the corporation (i.e. the employee can choose the company’s representative). The courts are reluctant to intervene to do a substitution, and the onus is on the corporation to prove that the selected person is inappropriate.

In making its determination, the court considers three factors:

1. Is the person selected sufficiently knowledgeable?
2. Would it be oppressive to the corporation (i.e. would it require excessive efforts to bring that person up to speed on the relevant information, would there be an onerous number of undertakings, etc.); and
3. Would the substitution prejudice the examining party?

In the Cosmetica Laboratories Inc. case, the court ultimately decided that the plaintiff’s request to examine the company’s president was appropriate. The president was the plaintiff’s supervisor and signed the termination letter. Whether the company had just cause to dismiss was at the heart of the dispute.

With respect to the inconvenience, the court looked at other cases when the president was being examined, including a case when the President of BCE was required to be examined. Presidents of corporations are not immune from examination. The evidence in this case about how busy the president was may have been exaggerated. There is no indication of malice on the part of the plaintiff.

Would there be prejudice to the plaintiff in making a substitution is the last factor to consider. Here, the court held that had the corporation been allowed to substitute a more junior employee, that would have prejudiced the plaintiff as that employee was not involved in the decision to terminate the plaintiff’s employment.

Contact Peter A. McSherry Employment Lawyer in Guelph for advice on just cause dismissals

If your employment has been wrongfully terminated, you should carefully consider your options. Many employers terminate without proper consideration of the facts, which might result in a claim for wrongful dismissal.

At Peter A. McSherry Employment Lawyer, we provide each of our clients with a full assessment of their case. We also regularly assist employers in managing difficult employment situations by providing strategic advice on compliance with employment laws and risk management. Contact us at 519-821-5465 or by e-mail to schedule a consultation.