Overview
Daniel Lublin and Glenn Brandys secured a $2.5 million judgment in favour of the plaintiff at a summary trial, for the value of Restricted Share Units (“RSU”) wrongfully withheld by the employer, plus damages for constructive dismissal and aggravated and punitive damages.
Background
- The plaintiff, a Chief Development Officer, had negotiated significant RSU awards as part of his compensation when joining the defendant, a large lithium mining company with its main operations in Brazil.
- When the plaintiff exercised the RSU awards after they vested, the employer delayed delivering the shares for the first RSU award and never delivered the shares for the second RSU award. Only after litigation commenced, the employer for the first time took the position the plaintiff was no longer entitled to the second RSU award, for purported performance issues.
- The employer also effectively replaced the plaintiff in his role, having transferred his duties and responsibilities to a newly hired executive and effectively cut him out of company communications.
- Shortly before summary trial was scheduled to commence, the employer’s counsel was removed as lawyers of record and the employer failed to attend the trial.
Case Details
Daniel Lublin and Glenn Brandys argued that:
- The plaintiff was entitled to the value of the RSUs if the employer delivered the shares following exercise as set out in the employment contract and RSU award agreements.
- The employer effectively replaced the employee with a newly hired executive constituted constructive dismissal, entitling the plaintiff to reasonable notice.
- The summary trial should proceed in absence of the employer, who failed to attend.
The Court’s Decision
The Court agreed with the plaintiff and made the following decision:
- The plaintiff was granted leave to proceed to prove its case at summary trial notwithstanding the employer’s failure to attend, as there was clear evidence the employer was aware of the trial date.
- The employer breached the terms of its contracts with the plaintiff when it failed to deliver him the shares for the RSU awards.
- The plaintiff was entitled to damages for his constructive dismissal based on the employer’s transfer of duties to the newly hired employee, which effectively replaced him.
- The plaintiff was entitled to aggravated and punitive damages for the employer’s egregious conduct in refusing to honour its contractual obligations regarding the RSUs and taking the steps designed to constructively dismiss the plaintiff.
- The employer’s conduct in the litigation warranted costs being awarded to the plaintiff on a substantial indemnity basis.
Results
The plaintiff was awarded:
- $1,898,350 for breach of contract with respect to failure to deliver the full value of the RSUs.
- $100,000 in damages for constructive dismissal.
- $250,000 for aggravated and punitive damages.
- Legal fees on a substantial indemnity basis.
Key Takeaway
An employer cannot avoid key components of compensation to an employee just because they are in shares or other equity-based awards, where those obligations are captured by clear contractual language. Further, a defendant’s conduct in refusing to honour the terms of an employment contract and equity award agreement, and in constructively dismissing an employee, can lead to significant aggravated and punitive damages awards.
In addition, a defendant runs the risk of a trial proceeding in their absence if they refuse to attend, where a plaintiff can clearly establish the defendant had advance notice of the trial date.
Why contact Whitten & Lublin Employment Lawyers?
This case highlights how the experienced employment lawyers at Whitten & Lublin get results for their clients. Not only did Daniel Lublin and Glenn Brandys successfully argue the case that resulted in their client being awarded $2,248,350 but they also successfully argued that the trial should proceed in the absence of the defendant’s presence.
If you are facing complex litigation challenges, contact Whitten & Lublin. Call 416 640 2667 or contact us online to book a confidential consultation.
Click here to view the court’s decision.
