Rulings pt. 2: More orders from the court

Along with our featured top five rulings, here are five more that will also weigh on future boardroom decisions

STEWART V. ELK VALLEY COAL CORP.
COURT Supreme Court of Canada
ISSUE Limits on enforcement of workplace fitness for duty policies

When can employees who test positive for illegal drugs be dismissed without that dismissal constituting unlawful discrimination under human rights legislation? The answer, according to the Supreme Court, is when that worker is fired not for his/her addiction, but for violating a fitness for duty policy by attending work under the influence of drugs.

This ruling upheld a decision by the Alberta Human Rights Tribunal in the case of an employee of Elk Valley Coal Corp. who tested positive for cocaine use after the loader he drove was involved in a workplace accident. The employee admitted he used cocaine on his days off but had not told the company prior to his positive test. Had he done so, he would have been offered treatment. Absent this information, the Tribunal decided he was dismissed not because of his addiction but for breach of workplace policy prohibiting drug use. In agreeing, the Supreme said the Tribunal’s conclusion was reasonable.

RE HECLA MINING
COURT British Columbia Securities Commission; Ontario Securities Commission
ISSUE First ruling on a private placement during a hostile takeover fight under Canada’s new takeover bid regime

Last October, the Ontario and B.C. Securities Commissions held a joint hearing on Hecla Mining Co.’s hostile takeover attempt of Dolly Varden Silver Corp. Hecla argued that Dolly Varden’s proposed $6-million private placement—which was announced after Hecla indicated it would issue a bid, but before a formal offer—amounted to an “abusive defensive tactic” under Canada’s securities law, National Instrument 62-202. Ultimately, however, the commissions rejected Hecla’s argument, finding that the private placement “was instituted for non-defensive business purposes.”

John Emanoilidis, co-head of mergers and acquisitions at Torys LLP in Toronto, says the ruling is important because “regulators used the opportunity to develop an analytical framework and recognized that private placements may serve valid corporate objectives.”At the same time, the decision’s wording suggests “target boards will struggle to defend the legitimacy of a private placement during a hostile bid, unless it’s clearly serving an actual financing need.”

GOOGLE INC. V. EQUUSTEK SOLUTIONS INC., ET AL.
COURT Supreme Court of Canada
ISSUE Internet law and the reach/enforceability of Canadian court orders outside Canada

In this case, the Supreme Court upheld two lower courts’ rulings in support of an injunction ordering Google to stop showing (i.e., to de-index) the websites of pirates selling counterfeit versions of Equustek’s hardware in its worldwide search results. The SCC came to this decision despite several interveners—among them: the Attorney General of Canada, a media consortium of 15 companies including Associated Press, and Wikimedia, which is in charge of the online encyclopedia Wikipedia—arguing that such a ruling would amount to limiting freedom of speech.

Previously, Google argued that because it had no presence in B.C., the B.C. court had no jurisdiction over it. But those courts disagreed on the grounds that Equustek’s original lawsuit against the pirates was based in B.C. The Supreme Court concurred, stating: “The internet has no borders—its natural habitat is global. The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates—globally.”

Expect this ruling to have far-reaching implications in common law jurisdictions around the world, on issues such as privacy, intellectual property and harassment.

DOUEZ V. FACEBOOK INC.
COURT Supreme Court of Canada
ISSUE Enforceability of forum selection clauses in consumer contracts

A second case involving a global internet giant originating in B.C., this one involving a Facebook user’s complaint that the company’s use of her name and likeness in advertising without her consent was a breach of privacy. When that plaintiff also sought to bring the matter as a class action, Facebook argued for a stay on the grounds that a forum selection clause in its terms of use agreement requires disputes to be filed in California. However, the Supreme Court declined to enforce the forum selection clause and ruled that the class action should proceed in B.C. courts.

Considering that consumer forum selection clauses are widely used by businesses offering goods and services on the internet, this decision is expected to create significant uncertainty for many companies, in many jurisdictions.

BRITISH COLUMBIA (WORKERS’ COMPENSATION APPEAL TRIBUNAL) V. FRASER HEALTH AUTHORITY
COURT Supreme Court of Canada
ISSUE Evidence required to recognize causal link between workplace and employee illness

Occupational disease and causation is a developing area of law and it is expected that this decision will be one that comes to be frequently cited in future, according to lawyer Brian Murphy, a partner at McCague Borlack in Toronto. In the case, a group of seven B.C. hospital technicians who worked in the same laboratory were diagnosed with breast cancer; three of the seven blamed it on the equipment they work with and applied for Workers’ Compensation benefits. Their initial claim was rejected on grounds that there was insufficient evidence to link their cancer to their jobs. An Appeal Tribunal overturned that decision. However, that decision was struck down, in turn, on judicial appeal and at the B.C. Court of Appeal. Ultimately, however, the Supreme Court reinstated the Tribunal’s award of benefits, stating that the lower courts had misinterpreted how causation irrespective the standard of proof “may be inferred from the evidence.” On causation, Murphy states that the ruling “seemingly opens the door a little wider—and to a broader definition of occupational disease based on statistical inference and medical case clusters.”

Return to our main feature here: Rulings of engagement.”

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