Law firm partners can bring human rights claims, adjudicator rules

The Human Rights Tribunal of Ontario has rejected a law firm’s attempt to dismiss a founding partner’s human rights claim after finding significant distinctions in Ontario’s Human Rights Code from the B.C. statute considered by the Supreme Court of Canada in McCormick v. Fasken Martineau DuMoulin LLP.

“I accept the intervenor [Ontario Human Rights Commission]’s proposition that the right to ‘contract on equal terms’ and the ‘right to equal treatment with respect to employment’ in the Code cannot be construed to protect an associate lawyer who is employed in a large law firm from pregnancy (gender) based discrimination but automatically deny her that same protection the day that she enters into a partnership agreement with that same law firm,” wrote adjudicator Yola Grant in her July 29 interim decision in Swain v. MBM Intellectual Property Law LLP, a law firm with offices in Ontario, British Columbia, Alberta, and Quebec.

“It seems to be the first clear decision with respect to a law partnership post-McCormick,” says Gillian Hnatiw, a partner at Lerners LLP whose practice areas include commercial litigation and professional regulation.

The ruling dealt with human rights protections under Ontario’s Human Rights Code versus the McCormick decision that rejected a partner’s complaint about his law firm’s mandatory retirement policy on the basis of British Columbia’s human rights statute that emphasized protections for employees. Ontario’s statute, according to Grant, “is not contingent on establishing ‘employee’ status. The language of section 5 of the Code is broad and general in that it provides a right to equal treatment ‘with respect to employment.’ Unlike the case in British Columbia where ‘employee’ is defined in the Code, the phrase ‘in respect of employment’ is not defined in the Ontario Code.”

Swain involves a human rights complaint brought by Margaret Swain, a founding partner of MBM who’s a former spouse of one of the personal respondents in the case, Randy Marusyk. She alleges that prior to her removal from the firm, there were rumours that she had certain psychological illnesses that affected her performance and relationships and that she derived certain benefits because of her status as former spouse. She claims her removal involved various prohibited grounds under the Human Rights Code, including gender, family status, and perceived disability. None of the allegations have been proven.

The respondents, which included the firm as well as two personal respondents, Marusyk and Scott Miller, sought to dismiss the case on a number grounds, including lack of jurisdiction and overlap with civil claims brought by Swain. In her July 29 ruling, Grant dismissed the respondents’ requests on most of the issues, but accepted the application to defer the human rights case pending the conclusion of one of the civil claims.

Ranjan Agarwal, one of the Bennett Jones LLP lawyers who represented Swain, says the recent decision is an important one as it “confirms what many of us in the Ontario human rights bar believed: s. 3 of the Ontario Human Rights Code, which prohibits discrimination with respect to the right to contract, makes the Supreme Court of Canada’s decision in McCormick v. Fasken Martineau DuMoulin LLP virtually inapplicable in this province.”

As part of the interim decision, Swain considered the issue of whether the Human Rights Code could protect a law firm partner in the social area of contract. On that issue, Grant noted the need for a liberal interpretation of the legislation and rejected the notion put forward by the respondents that the right to contract on equal terms applies only to contract formation rather than the duration of it. “The question of whether the applicant, as an equity partner in a firm, is entitled to invoke the protection of the Code must be answered in the affirmative,” she wrote.

“There is no authority for the proposition advanced by the respondents in its written submission that this protection should be construed narrowly to apply only to the ability to enter into a process of contract formation,” she added.

For Agarwal, while the decision is significant for law firm partners and other professionals given Grant’s findings on the contract issue, her comments about employment status were also important given the range of employment relationships within law firms. “The rise of non-equity partners and salaried partners means that the tribunal must engage in a fact-finding exercise, focused on control and dependency, to determine whether the applicant is in an employment relationship,” he says.

“What we were really trying to focus on was that the Human Rights Code should govern people when they are at work,” says Tony Griffin, counsel for the commission. While it was another lawyer at the commission, Reema Khawja, who argued its case before the tribunal, Griffin says one of the key goals of intervening was the point that McCormick “was not the final answer for a question that comes up in Ontario that involves a person who is under the rubric of a partnership.”

While Swain is an interim decision, Hnatiw says it’s “potentially significant.”

“It’s a really interesting decision,” she says, noting the key issue in Swain was the statutory interpretation of the Ontario legislation’s protection against discrimination with respect to contracts as well as its lack of a definition of employee.

“Taking it on its face, it applies to professional partnerships. The obvious issue that comes to mind is mandatory retirement,” she says.

Scott Miller, co-managing partner at MBM, declined to comment on the case, but he did point to Grant’s deferral of Swain’s matter. “Moreover, the tribunal correctly noted that, if and when the stay is ever lifted, there remains a significant issue whether the matter will proceed given the alleged complaint faces problems juxtaposed against the limitation period for bringing such an action,” he said.

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