Non-Disparagement Clauses: Quebec’s Superior Court Rules that the Employer’s Reputation Prevails

December 7, 2018

On October 9, 2018, the Superior Court of Quebec rendered its decision in a case involving an employer ("Employer") and its President ("President") in a claim against a former employee ("Former Employee") in connection with negative comments published anonymously on a website called RateMyEmployer.ca. [1]

The court confirmed the validity of the waiver of freedom of expression implied by the signature of a non-disparagement clause. In addition, it is a good illustration of the consequences to which an employee is exposed in the event of a breach of such a clause. In the case examined, the Former Employee was ordered to pay $10,000 in compensation for the moral prejudice caused to the Employer and $1,000 in exemplary damages.

Context

In this case, the Former Employee’s position was abolished and concurrently, the parties signed a release providing for the payment of a reasonable termination indemnity to the Former Employee in consideration of a series of obligations, including a non-disparagement undertaking. In other words, a clause under which the Former Employee undertakes not to make negative or disparaging comments about the Employer.

Subsequently, the evidence demonstrated that the Former Employee knowingly published negative, exaggerated, false, unfounded, and distorted information about the Employer online.

Decision 

The contractual obligation of confidentiality and non-disparagement:

The Superior Court first addressed the angle of the violation of the obligations contained in the release by reminding us that the duty of loyalty includes the protection of the employer’s reputation. Although such a clause entails a partial waiver of one’s right to freedom of expression and opinion protected by section 3 of the Charter of Human Rights and Freedoms ("Charter"), the judge refused to see this as grounds for non-applicability. Indeed, the court recalls that it is possible to waive a right protected by the Charter under certain conditions. For reference purposes, the court stated the following on the subject:

[31]Qui plus est, pour apprécier la légitimité de la renonciation, les facteurs suivants se trouvent généralement pris en compte : (1) la nature du droit ou de la liberté en cause; (2) la possibilité, pour le demandeur de renoncer à ce droit ou à cette liberté; (3) la manière selon laquelle le demandeur y a renoncé; (4) la mesure dans laquelle le demandeur pouvait y renoncer; et (5) l’effet de la renonciation. Pour être valable, la renonciation doit être claire, non équivoque, éclairée, libre et volontaire.

In the court’s opinion, after analysis, it is indeed permissible to waive a freedom of expression and opinion in this context. This means that a negative, disparaging, false and defamatory comment about the Employer constitutes a contractual violation.

The defamation

As it appears from the foregoing, the court approaches this case under the concept of contractual liability. That being said, although section 1458 of the Civil Code of Quebec prohibits cumulative and alternative conclusions and enshrines the primacy of the rules of contractual liability where a contract exists or is alleged, an analysis from the perspective of defamation from an extra-contractual perspective is also carried out. Furthermore, the President’s claim can only be extra-contractual.

With respect to the Employer’s recourse, although the judge had already admitted that the Former Employee’s conduct constituted contractual misconduct, the analysis was also conducted from a defamation perspective. Because of the misrepresentation of the facts, the Former Employee’s comments departed from the standard of conduct that a reasonable person would adopt in similar circumstances. Therefore, this constituted a wrongful harm to the Employer’s reputation.

The damages 

Although the Superior Court recognizes that this type of conduct constitutes a fault, both from a contractual and extra-contractual point of view, it should be noted that compensatory damages are awarded sparingly. This case illustrates that it is very difficult to prove pecuniary losses related to these types of comments.

One must therefore rely on moral damages. In that respect, the court discusses the Court of Appeal’s conclusions in Boyle v. Loto-Quebec, stating that it is not necessary to demonstrate monetary losses on this count. The same court also established a range of damages between $10,000 to $30,000 in the event of damages to the reputation of a legal person. In the case at hand, after case law analysis and after weighing the related criteria, the court awarded $10,000 in moral damages, the lower limit of the range.


[1] 2018 QCCS 4374

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