Author: barryfisher

Decision Tree Analysis is simply a process of analyzing an issue on the basis of a step by step basis while applying the principles of probability.

In its simplest terms think of a coin flip. Every time you flip a coin, there is a 50% probability that it will come up heads.

But if you are trying to predict the probability of two consecutive coin flips coming up heads, then you multiply the two probabilities. Thus 50% X 50% = 25%. In other words, there is a 25% chance of a coin flip coming up heads two times in a row or a 75% chance that that will not happen.

Many lawsuits can be analyzed using this same methodology.

Imagine the following fact situation:

The plaintiff was fired, and the employer is alleging just cause.

The Plaintiff’s lawyer believes that she has a good chance of beating the just cause issue and puts her chances at 75%.

Of course, that means that there is a 25% chance that just cause is upheld and the case is therefore worth zilch.

Assuming that just cause is upheld, an additional issue is that there is an employment contract which if enforceable, would limit the plaintiff’s recovery to $10,000. Given the uncertainty of the law on this issue, the Plaintiff’s lawyer thinks that her chances of defeating the contract are only 50%.

If she can both beat the just cause argument and get around the contract, the next issue is whether or not the $25,000 bonus will be included in the award. If the bonus is included, the case is worth $100,000. If the bonus is excluded, the case is only worth $75,000. Again, given the uncertainty in the law, the lawyer estimates a 50 % risk factor to this issue.

So, what are the chances that the Plaintiff will recover $100,000 at trial?

Step One : $100,000 X 75% = $75,000 ( Just cause risk )

Step Two: $75,000 X 50% = $37,500 (Termination clause risk)

Step Three: $37,500 X 50% = $18,750 (Bonus inclusion risk)

Another way is to simply multiply the probabilities as follows:

75% X 50% X 50% X $100,000 = $18,750

Thus, the chances of winning $100,000 are only  18.75%.

However, there are also the following probabilities to consider:

1. There is a 25% chance of getting nothing if just cause is upheld.
2. There is a 37.5 % chance of getting only $10,000 if just cause is not upheld but the termination provision is found to be valid.
3. The probability that the outcome will be $75,000 is the same as it is for $100,000

Thus :

The chances of getting nothing                25%

The chances of getting $10,0000               37.5%

The chances of getting $75,000                 18.75%

The chances of getting $100,000               18.75%

Total                                                               100%

Now assume that the mediation hits an impasse and the defendant’s last offer is $66,000. The plaintiff’s last offer is $82,500.

Assume that the plaintiff’s lawyer is on a contingency fee and that the plaintiff does not have adverse cost insurance. Also assume that the plaintiff owns a house with plenty of equity.

Note that neither of the offers actually reflect a possible court outcome. This is good because it shows that each side is already evaluating risk, however they just disagree on how to do it.

As a mediator I would have this discussion with the plaintiff.

“Well, we have certainly come a long way today, considering that before we started the mediation, the employer had offered you only $5,000, which is what we call in the trade “nuisance money”.  Whether you like their number or not, $66,000 is not nuisance money.

Your ex-employer has said that the most they will pay you today is $66,000.

We know that if you are successful on all counts you will get $100,000 and if you don’t succeed on all counts, you could get either $75,000 or $10,000 or zilch.

At $66,000 you are $34,000 short of your objective. But not really. First of all, because of your contingency fee arrangement, that $33,000 difference is really only $24,750 because of the 25% fee arrangement. Moreover, that $24,750 is subject to tax withholding of 30%, which means the real difference to you of not getting an extra $33,000 is only $17,325.

Let’s take a closer look at the 25% nightmare scenario, in which you get zilch. Now, I know that with that outcome you will not owe your own lawyer anything. But I also know that your lawyer has explained to you that if you lose, the Court will in all likelihood order you to pay part of the costs of your former employer. She has told you that this would likely be around $50,000. As you have a house with real equity, your ex-employer could ultimately collect the costs award.

So here we have it. You a decent chance of getting $17,325 more money in your pocket if you win in Court. But if you lose in Court and get zilch, you have lost two amounts, the $50,000 you have to pay to the defendant and the $66,000 you could have had if you accepted their offer.

In other words, if you go to trial and lose completely (of which there is a 25% chance) you will be out $116,000.

Next, what are the consequences of losing $116,000 to you? In many cases, it would involve losing your home or a large portion of your retirement fund.

Let’s assume that odds of you getting $17,325 more in your pocket are the same as you losing $116,000.

In Vegas, only a high-risk poker player would take that bet.

So, what are my instructions?”

Using the same data, this is the conversation I would have the owner of the defendant.

“Well, we have certainly come a long way today, considering that before we started the mediation, the employee had offered to settle $250,000, which is what we call in the trade “crazy money”.  Whether you like their number or not, $82,500 is not crazy money.

I fully appreciate that this settlement is real money to you as you own this company. I appreciate that you got to where you are today because in part you are a good businessman.

Let’s analyze this issue the same way you would analyze any other business problem, because that is exactly what this litigation is.

As this case stands, your lawyer has said that largely because of the issue of just cause, this trial will probably take 5 days. Since we are at the beginning of a long litigation process, your lawyer has told you that to take this case to the end of a 5-day trial will cost you around $115,000.

Now I know that if you were to win on the issue of just cause (which we agree you have a 75% chance of not achieving) then the Court would probably award you about 60% of your legal fees or $69,600. That means, that assuming you could collect that from the plaintiff, the cost of winning would be around $46,400.

Let’s look at the cost of losing. Lets even assume that it is not a complete loss and you win on the issue of excluding the bonus. That means you would pay as follows:

Judgement                                                                  $75,000

Costs to your lawyer                                                $115,000

Partial costs to plaintiff’s lawyer                           $69,600

Total:                                                              $259,600

Even if you only lost on the issue of just cause and won everything else and the Court awarded the Plaintiff no costs, this would still cost you:

Judgement                                                                    $10,000

Costs to your lawyer                                                $115,000

Total                                                                            $125,000

So, a complete win will cost you                           $46,400

Losing partly will cost you                                     $125,000 to $259,600

Settling today could cost you at most                     $82,500

The only way you can do better than $82,500 is to win outright, which your lawyer has told you has a 75% chance of not happening.

What are my instructions?”

In Villa v Association of Professional Engineers of Ontario ( 2020 CarswellOnt 1042) Master Jolley had this to say about the Plaintiff’s request to dispense with mandatory mediation .

D. Motion to Dispense with Mandatory Mediation

45 The plaintiff wishes to avoid the cost of mediation as, in his view, the defendant is committed to its position and mediation will not be successful. It is these very situations where mediation often proves to be the most helpful. With the history of this matter and the slow progress being made by the parties left to their own devices, I find that mediation may assist the parties in framing the issues and discussing settlement. This request is denied.

The plaintiff was self-represented.

In Gibb v Pallieter Regional School Division # 26 ( 2020 ABQB 113) Justice Kubik dismissed the plaintiff’s constructive dismissal and harassment claim.

1. The trial was 7 years after the event.

2. The trial took 11 days.

3. The Plaintiff amended her claim at trial to increase her  claim  for punitive and aggravated damages to $700,000.

4. The Plaintiff found alternative employment almost immediately after she left this employer.

5. If the Plaintiff had been found to be constructively dismissed, her employment contract would have required the employer to pay her $35,750

In Samuel v Benson Kearley ( 2020 CarswellOnt 1125) Justice Charney awarded the plaintiff a 6 month notice period . Then he reduced the notice period to 4 months as a result of two pieces of evidence :

One, she did not even start looking a job until 4 months after her termination. The judge didn’t buy her ” shock and distress” argument.

Second, the defendant led evidence that a specialzed insurance website ( which the Plaintiff had used to get her the job in the first place ) had 38 comparable  jobs posted in the four months that the plaintiff did nothing to look for a job.

In light of this work, the Judge said that the ” the defendants have met their onus of proving that the plaintiff failed to mitigate her damages”.

In Slipp v Woodstock First Nation Economic Development Corp ( 2020 NBQB 020) Justice Petrie had to assess the notice period for a 56 year old Bingo Caller making $39,000 with 17 years service.

In deciding age quantum of reasonable notice, the judge said the following

In Rice v Shell Global Solutions ( 2019 ABQB) Eamon J. had a situation where an employee who had already worked for the defendant for about 8 years under a number of different fixed term and indefinite term agreements, was offered a new position which had the following language :

Your Assignment Length will be : 4 years.

She was let go without cause 10 months later and was provided with working notice and termination pay for another 3 months. She found new employment 7 months after her notice of termination.

The Judge had to decide what meaning to put to the reference to 4 years. This is how the Judge sets out the alternative interpretations

In Dengedza v CIBC ( YM2707-10905) Adjudicator Montieth in a CLC Unjust Dismissal complaint had to determine whether or not a former senior  investigator with the Bank was entitled to not have his mitigation earnings affect his 14 month notice award.

In his job at the Bank, the Complainant earned $62,379 for presumably a 40 hour work week. After his dismissal he worked 60 hours a week as an UBER driver and made $600 a week or $31,200/ year. This works out to $10/hour as opposed to the $30/hour that he was making at the Bank.

The Adjudicator then applied the test in Brake v PJ-M2R Restaurant ( 2017 ONCA 402) which stands for the proposition that post termination income that is “minimal, trivial or inconsequential ”  should not be considered as mitigation earnings.

Even though the UBER income was 1/3 of his Bank income, the Adjudicator found that these amounts were sufficently large enough to be characterized as amounts received in mitigation of loss.

My Comments :

I think the Adjudicator approached this analysis incorrectly.

He seemed to look at the weekly earnings without regard to the hourly rate. Sure, the Plaintiff earned about 50% of his former income on a weekly basis but that is only because he worked 50% longer every week.

Moreover, as the Complainant was making $4.00 less than the ESA minimum wage driving for UBER, it seems somewhat inappropriate to find that these UBER earnings did not qualify as ” minimal and trivial “.

In other words the comparison should be based on the hourly rate, not on the weekly income. Effectively the Complainant was working 1/3 of his former rate . No Court would require an employee to mitigate his losses by taking a job at 1/3 of his previous rate, especially when that rate itself was below the minimum wage .

In effect the Complainant was punished for taking the crappy UBER job, and the Bank got a windfall because its former employee needed to eat and put a roof over his head.

Although there is no reference to this in the decision, it seems likely that as the Bank alleged just cause, the Complainant  probably did not get EI. Had he received EI, that amount would not have reduced his damage award, although in certain circumstances he may have had to repay some or all of it to the Government.

In Durant v Aviation A. Auto ( 2019 NBQB 214 ) Justice LeBlanc had a situation where a 34 years service advisor at a car dealership took secret videos of  female clients and shared them with co-workers. The Plaintiff’s explanation that he was doing it to protect the dealership was not accepted by the Judge.

The Judge considered the following factors in determining   whether there was just cause.

The nature and extent of Mr. Durant’s conduct on August 30, 2018, is  the following:

1. He surreptitiously took a first video of the female client in attendance at the Audi Moncton premises for improper purposes;
2. The first video was taken with his work issued tablet computer;
3. He surreptitiously took a second video and a photograph of the female client with his personal cellphone;
4. He showed the first video to several co-workers while making inappropriate comments, including mocking the female client;
5. He showed the second video to Audi Moncton employee Justin Guimond while making inappropriate comments about the female client;
6.   Over the course of the labour day weekend, he texted the photo of the female client on his cellphone to his co-worker, Mr. Donovan.

In deciding that just cause had been proven the Court made the following comments :

For the reasons already given, a consideration of the full range of misconduct leads to the conclusion that it was very serious.  That misconduct, the invasion of the female client’s privacy and the derogatory comments made during the subsequent viewings of the video, were incompatible with Mr. Durant’s employment obligations toward Audi Moncton.  No plausible explanation was offered for the misconduct and none is evident on an examination of the evidentiary record.

  Durant’s misconduct on August 30, 2018 is very serious as a stand alone incident but it is made more egregious considering that he had been warned of the inappropriate nature of similar conduct in the past, i.e. the warning letter issued in relation to the November 2014 incident and the discussion with Mr. Hambrook in January 2018.  In addition, after August 30, 2018, it came to light that the very behaviour shown by Mr. Durant on August 30, 2018, had occurred several times in the past. 

My Comments :

I take 3 things from this case :

1. The conduct of the plaintiff was obviously throughly obnoxious and disgusting.
2. His failed attempt to justify his behavoir, as opposed to apologizing for it, hurt his otherwise slim chance of winning.
3. The fact that he had been previously warned about similar behaviour sealed his fate.

One can see that if this was the first and only time in 34 years  that he acted in this fashion and if he accepted  responsibility from the beginning, the result may have been very different.

Patruniuk v Candu Energy ( YM2707-11352) Arbitrator Price in a CLC unjust dismissal case had a employee who repeatably refused to take a refresher course in basic radiation protection. Despite numerous meetings to hear his concerns, he still refused . Finally he  he was told by email that if he did not complete the training that day, he would be fired .

The employee did not see the email until after work on that same day .

He was fired the following day, which was a Friday

However, after finally seeking legal advise, the employee, on the Tuesday following his dismissal  emailed his employer an apology and agreed unconditionally to take the training, which was a one hour computer PowerPoint exercise.

The Complainant at the hearing wisely admitted that he had been insubordinate but simply argued that dismissal was not warranted but rather he should have received some lesser degree of discipline.

In deciding to reinstate the employee with a two month suspension, the Adjudicator took the following matters into account:

1. The insubordination was of of a minor nature which was only tangentially related to his job duties.
2. He did not openly challenge management in front of other employees.
3. The employee remained civil in his dealings with management.
4. The workplace encouraged employees to adopt a ” questioning attitude “
5. The Employer never used progressive discipline. The fact that upon termination he immediately apologized and agreed to take the training was seen as evidence of the fact that a lesser penalty would have modified his behaviour.
6. The employment relationship was not irredeemably fractured.

My Comments :

It must be remembered that reinstatement with a suspension is a remedy open to CLC Adjudicators, but not judges in a civil action.

This case also illustrates the wisdom of not trying to argue the impossible. Some  lawyers would have attempted to dream up some bizarre rationale for their clients behavoir and only when that argument failed, would they argue  for a lesser penalty.

It is a much better tactic to admit the wrong and argue the penalty. Judges and arbitrators so rarely see people taking responsibility for their misdeeds that when they actually encounter it, they will often exercise their discretion and do something to lessen the blow of the termination.

In O’Reilly v Imax Corp ( 2019 ONCA 991) the Court was faced again with the issue of what type of language in a bonus or stock option plan effectively denies the dismissed employee compensation for these elements over the notice period .

The exact wording under review was as follows