Executive Summary: Key Legal and Evidentiary Issues

• Starbucks admitted to terminating the plaintiff without cause; the dispute centered on the appropriate notice period and resulting damages.

• The Court determined the reasonable notice period was 8 months, based on Bardal factors including age, role, and length of service.

• Starbucks argued the plaintiff failed to mitigate due to inactivity during two periods, but the Court accepted evidence of ongoing depressive disorder.

• Bonus entitlement was denied based on a clear contractual exclusion for employees terminated for reasons other than death, disability, or retirement.

• The plaintiff successfully recovered damages for lost CPP contributions, RRSP contributions, and out-of-pocket group benefit expenses.

• Claims for bonus pay and vacation entitlement during the notice period were dismissed due to clear contractual language and precedent.

Facts of the case
Roderick MacDonald was employed by Starbucks Coffee Canada Inc. as a store manager beginning in 2015. In 2021, he relocated from Toronto to Fredericton, New Brunswick, to continue in the same role. In October 2022, following a workplace incident and an internal investigation, Starbucks determined he had breached its anti-harassment policy. However, Mr. MacDonald was ultimately dismissed on a without-cause basis on November 10, 2022. He was initially provided with four weeks’ pay in lieu of notice and offered additional severance in exchange for signing a release, which he declined. At termination, his salary was $76,604.40 annually.

Mr. MacDonald filed a claim for wrongful dismissal, seeking damages for insufficient notice, loss of bonus entitlements, and fringe benefits. Starbucks did not dispute the dismissal was without cause but argued for a shorter notice period and contended Mr. MacDonald failed to mitigate his losses.

The reasonable notice period
Applying the Bardal factors—age, tenure, position, and employability—Justice Morrison found that Mr. MacDonald was entitled to 8 months’ notice. The judge rejected Starbucks’ argument that a 5 to 7-month period was appropriate and found the plaintiff’s role and employment history justified a longer period. The Court noted that while the plaintiff relocated voluntarily, it occurred in the context of store closures in Toronto, indicating limited job security at his original location.

Mitigation and mental health evidence
A key issue in the case was whether Mr. MacDonald failed to mitigate his damages by not seeking new employment. Starbucks pointed to two periods—between November 2022 and February 2023, and again from May to September 2023—during which the plaintiff made limited job search efforts. Mr. MacDonald argued that his depressive disorder (PDD) significantly impaired his ability to work. Although he did not submit expert medical evidence, the Court accepted his lay testimony, prescription records, and proof of ongoing therapy. Justice Morrison found the evidence credible and held that Mr. MacDonald did not fail to mitigate, noting that his mental health struggles reasonably limited his job search capacity.

Bonus entitlement
Mr. MacDonald claimed entitlement to bonus payments under Starbucks’ Retail Store Management Incentive Plan (RMIP). Starbucks relied on the RMIP’s eligibility provisions, which barred bonus payments to employees terminated for reasons other than death, disability, or retirement, and further disqualified employees found to have engaged in misconduct. Mr. MacDonald argued that earlier bonus plan terms were less restrictive and had not been properly replaced, but the Court found that both old and new RMIP versions contained misconduct clauses and that Mr. MacDonald had notice of the change.

Applying the Matthews and Paquette test, the Court found that while the bonus was an integral part of Mr. MacDonald’s compensation, the RMIP contained clear and enforceable language excluding entitlement following termination without cause where misconduct was found. Because Starbucks had exercised its contractual discretion to designate his behaviour as misconduct, the Court held that Mr. MacDonald was not entitled to bonus compensation during the notice period.

Fringe benefits and statutory entitlements
The Court awarded the following damages for lost fringe benefits:

• CPP contributions: $3,754.45, as agreed upon by both parties.

• Group benefits: $1,513.47, based on psychotherapy and prescription drug expenses during the notice period.

• RRSP contributions: $2,042.80, based on Starbucks’ standard 4% employer contribution.

Mr. MacDonald also sought payment for accrued vacation time and for lost vacation pay during the notice period. The Court rejected this claim, relying on recent New Brunswick precedent (Richard v. Matrix SME Canada ULC) that holds terminated employees are not entitled to vacation pay during the notice period in addition to full salary, to avoid double recovery. The Court found no convincing evidence that he had significant unpaid accrued vacation at termination and dismissed the claim.

Outcome
Justice Morrison awarded Mr. MacDonald a total of $52,251.02 in damages, plus interest. This included 8 months’ salary less the 4 weeks already paid, as well as CPP, group benefits, and RRSP amounts. Claims for bonus pay and vacation entitlements were denied. No costs were awarded, pending a future hearing on that issue. The decision underscores the importance of clear contractual bonus exclusion clauses, credible mitigation evidence, and the balancing of mental health factors in post-dismissal conduct.