Osgoode Labour & Employment Law Society

Honda v. Keays

Background

The second case in last year’s epic employment law quadrilogy came on June 27, with the Supreme Court’s long awaited decision in the Honda v. Keays (or Keays v. Honda, as it started out as) saga.  I’ve previously written a couple of posts (here and here) about the fallout from Keays, so this is more of an overview of the drama surrounding the decision.

Keays had all the melodrama a human resources or employment law nerd could ask for:  a long service employee with an “invisible” disability, a showdown between an insensitive employer and a feisty human rights lawyer, the looming specter of indeterminate liability for an unprovable illness, and the possibility the Supreme Court could (finally) give guidance on how businesses and practitioners alike should be dealing with these impossible situations.

Of course, the Supreme Court did no such thing.  However, like any good trilogy, the conclusion was shocking, and left those who followed it with many unanswered questions.

The Keays Trilogy

The Phantom Menace or A New Hope?

It started in 2005 when McIsaac J. shocked the world by making the largest punitive damages award in employment law history – $500,000 against Honda Canada for its wrongful dismissal of Kevin Keays.  This award was intended to denounce Honda’s “protracted, deliberate, and outrageous corporate conspiracy” it plotted against a “dedicated, conscientious” but disabled employee of 14 years, Kevin Keays.  Keays suffered from chronic fatigue syndrome and was terminated for just cause after refusing to see the company doctor, who (incidentally?) denied the veracity of his condition.

McIsaac J.’s characterization of Honda’s conduct struck fear into many employers who felt their hands were tied when it came to “invisible” illnesses.  In contrast, disability rights groups across Canada, frustrated with the skepticism CFS and fibromyalgia sufferers faced, applauded the decision.

The Empire Strikes Back

The sequel to Keays came in the fall of 2006 when the Ontario Court of Appeal released its decision on Honda’s appeal.  Writing for the majority, Rosenberg J.A. found the trial judge had erred in awarding punitive damages on the same scale as the comparator case, Whiten v. Pilot Insurance.  In doing so, the majority cast doubt on a number of the trial judge’s findings of fact, including the allegation of a “corporate conspiracy” and claim that Honda had “waged war” against Keays for 5 years.  Consequently, the punitive damages award was reduced to $100,000, but all other aspects of the trial decision, including Keay’s length of reasonable notice and the 9 month “Wallace” extension, remained unchanged.

In a dissenting opinion, Goudge J.A concurred with the trial judge’s fact findings, noting they were egregious enough to justify leaving the punitive damages award intact.

Revenge of the Sith or Return of the Jedi?

On June 27, 2008, the Supreme Court rendered its decision in the final installment of the Keays trilogy.  Observers everywhere waited with baited breath, figuring this would be the most significant case since Wallace v. United Grain Growers in 1997.  What would happen to the punitive damages award?  Would Keays usher in a new era of reasonable accommodation?  How much more sympathetic could an already employee-sympathetic court get?

The Supreme Court’s decision was shocking, but not for the reasons you might think.  The decision was shockingly conservative.  Not only did the court wipe out the largest punitive damages award in employment law history, they also obliterated the entire concept of Wallace damages while they were at it (click here for more on this).

In essence, the Supreme Court reinterpreted the trial record to find that Honda had not acted maliciously in its confrontations with, and subsequent dismissal of, Keays.  Significant deference is usually given to trial judges’ findings, so to say it was unexpected that the Court would essentially re-characterize the entire case would be a huge understatement.  

The crux of this decision appears to have been Keays’ medical notes.  While at first legitimate and descriptive, over time they became vague and self-reporting, e.g. “Mr. Keays feels he cannot come to work today”.  Because of this, the Court found Honda had a right to be skeptical, and insisting Keays visit their doctor was not outside the realm of reason.  In other words, the Court recognized that self-reporting illnesses were ripe for abuse and basically said “no”.

For employers, the Supreme Court’s decision in Keays was a huge relief.  Not only did the Court suggest that they could be a little more bullish in challenging suspected malingerers, but the ominous threat of Wallace damages (should they get it “wrong”) was also eliminated.  But what about disability rights groups?  What had started with MacIssac J. championing the veracity of CFS and fibromyalgia ended with the the Supreme Court giving employers the tools to combat manage it.

Conclusion

At the end of the day, Keays went from an award of 14 months notice, 9 months Wallace extension, and $500,000 in punitive damages with a premium on his costs, to being left with nothing but 14 months notice and the burden of having to pay Honda’s undoubtedly huge legal fees.  He also went down in history for bringing about one of the most closely watched employment law trilogies in recent memory, but somehow I doubt that is much consolation.