A Halloween Nightmare: The employment relationship that was terminated for sexual harassment comes back to life (only to possibly be killed again!)

© Sean R.D. Murphy and Kelly VanBuskirk, K.C., October 25th, 2024

The October 17th, 2024 Federal Court of Appeal (FCA) decision in Canadian Pacific Railway Company v. Sauvé¹ shines a light on employers' thorny problems in workplace harassment and sexual harassment cases. In attempting to respond to an employee’s allegation that a manager had sexually harassed her, CPR conducted an investigation that resulted in the manager being fired. The manager made an unjust dismissal complaint that resulted in the CPR investigation being overturned. After a 12-day adjudication hearing, it was concluded that the manager’s relationship with the complainant was consensual. The manager was reinstated, but with a suspension for exercising poor judgment. That decision withstood a judicial review application, but the Federal Court of Appeal has now restored the firing. The Court of Appeal decision is a good reminder for employers that the handling of complaints made under their Respectful Workplace policies can be complicated and should be approached with care.

¹ Canadian Pacific Railway Company v. Sauvé, 2024 FCA 171 (CanLII), https://canlii.ca/t/k7c64

A short summary of facts

This case emerged from a common fact pattern: The manager, Mr. Sauvé, had been employed by CPR for 31 years when he was fired in July 2017. At the time of his dismissal, Mr. Sauvé had worked his way up the company’s ranks from labourer to a managerial position. In 2016, a female employee was hired as the supervisor of structures (the “Employee”) and reported to Mr. Sauvé. As is sometimes the case, the Employee and Mr. Sauvé developed a very close relationship that “took a romantic turn”. However, the romance ended in May 2017 and, as the Federal Court described it, “The evidence on the record shows that the end of the personal relationship between the parties had a significant impact on their professional relationship, affecting their mutual trust, communication, and ability to work as a team.” [Note: this is an important observation that replicates itself in many sexual harassment cases.]

As a result of the strain imposed on the workplace by the end of their romance, the Employee “ …contacted the employee assistance program. During this conversation, the person the complainant spoke to told her that she was being sexually harassed at work and that she had to stop blaming herself and encouraged her to contact the employer’s human resources [Note: This is another important and increasingly common element of sexual harassment cases. The complainant has told the story to a third party, whether a friend, a counselor, or some other person, and that person has decided that the complainant is a victim of sexual harassment. Incidentally, there is an arguable case for the wrongly accused person to sue the counselor for defamation.]

The Employee made a sexual harassment complaint against Mr. Sauvé. CPR investigated the complaint, decided that it was founded, and fired Mr. Sauvé in a few months later.

As a non-unionized, federally regulated employee, Mr. Sauvé was entitled to make an unjust dismissal complaint under s. 240 of the Canada Labour Code, Part III and he did so. The adjudicator who heard the complaint concluded that Mr. Sauvé “…had lacked judgment by entering into and maintaining a relationship with a person reporting directly to him and repeatedly expressing his feelings at the workplace and during work hours. However, the Adjudicator found that Mr. Sauvé had not made a mistake under the employer’s Harassment Policy and that, as a result, dismissal was not the appropriate remedy in this case. He therefore substituted a four-month suspension without pay for the dismissal.”²

CPR sought judicial review of the adjudicator’s decision. Essentially, CPR argued that the adjudicator was unreasonable in his decision to reinstate Mr. Sauvé. The Federal Court disagreed. Thereafter, CPR appealed the case to the Federal Court of Appeal. On October 17th, 2024, more than 7 years after Mr. Sauvé was initially fired, Justice Roussel of the Court of Appeal wrote that: “I would allow the application for judicial review and remit the matter to the same adjudicator if he is available to reconsider it. If he is not available, the matter may be remitted to another adjudicator.”³

² Canadian Pacific Railway Company v. Sauvé, 2022 FC 1758 (CanLII) at para. 17.

³ Canadian Pacific Railway Company v. Sauvé, 2024 FCA 171 (CanLII) at para. 56.

CPR’s trip through the Law’s Haunted House

Very briefly, CPR’s nightmarish experience in this case has roughly followed this path:

At the Federal Court of Appeal, two issues were in contention:
a. First, did the Adjudicator provide sufficient reasoning for their decision? and
b. Second, did the Federal Court inappropriately supplement the Adjudicator’s analysis of central issues?

c. Justice Roussel wrote for the Court and found that the Adjudicator’s decision was not supported by an analysis “[demonstrating] that he considered the relevant factual and legal constraints that could have borne on his decision.” Additionally, it was found that the Federal Court repeatedly and wrongfully assumed too much from the adjudicator’s decision. For instance, the FCA notes that while the adjudicator cites the Harassment Policy in his decision, he does not refer to the criteria of sexual harassment in his analysis or consider the application of those criteria to the facts at issue, which provides for a significant gap in his reasoning. The Federal Court, on the other hand, found that it would be inappropriate to assume that the adjudicator “could not ignore the existence of the sexual harassment criteria” despite acknowledging that the adjudicator does not refer to said criteria or the relevant case law.

The FCA finds this type of impugned reasoning present throughout the Federal Court’s review and states that it goes far beyond the boundaries set by the Supreme Court of Canada for reviewing courts, as enunciated in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. To summarize the FCA’s findings on this and to pull from the citations they quote, a reviewing court can “connect the dots on the page where the lines, and the direction they are headed, may be readily drawn,” it cannot, however, “fashion its own reasons in order to buttress the administrative decision,” they are reviewing.

To conclude, the FCA remitted the matter to the same adjudicator for several reasons, including the efficient use of public resources, the delays already incurred, the costs to the parties, and the need to resolve the dispute between the parties.

Lessons for employers:

1. Employers are required to have a Respectful Workplace Policy.

2. Office romances are often more problematic when they end than when they begin.

3. EAP counselors, doctors, and friends frequently wade into complex issues (such as “was your consensual relationship with your coworker harassment?”) and make pronouncements that lead to complaints.

4. Once a sexual harassment complaint is made in your workplace, you must investigate.

5. The investigation of the complaint could lead to discipline or dismissal.6. More and more frequently, investigation outcomes are being challenged in courts and tribunals.

7. A decision to dismiss an employee might be overturned.

8. Eventually, after several years, the decision-making might be returned to the first decision-maker (who was found to be wrong in their initial conclusion).

How’s that for a scary Halloween story?

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