In Stribling v. Starbucks Coffee Canada Inc. (“Stribling”), the Ontario Superior Court of Justice confirmed that a settlement agreement can become legally binding through clear and unequivocal email correspondence, even where a formal release has not yet been signed.
Background
In Stribling, the plaintiff was employed by Starbucks Coffee Canada (“Starbucks”) for a total of nine non-consecutive years between 2010 and 2023. Towards the end of his tenure with the coffee shop, Starbucks alleged he had performance issues and failed to comply with company policy. In response to one particular performance concern related to a disability, Starbucks suggested that the plaintiff request an accommodation. However, before it could consider the request, he took mental health leave.
When he returned to work several months later, the plaintiff spoke with his manager, who advised him that the accommodation process had been temporarily paused and would need to be restarted. During that conversation, the plaintiff allegedly disclosed that he had health conditions that were preventing him from performing his duties. Starbucks subsequently placed him back on leave and notified him that he could return to work once he had provided updated medical documentation confirming he could perform his essential duties and setting out any necessary accommodations.
While on involuntary leave, the plaintiff challenged Starbucks’ assertion that he had reported being unable to perform his duties and demanded to return to work. In response, on August 11, 2023, Starbucks wrote to him to detail its ongoing concerns with his performance and to present him with two clear options:
- Return to work in full capacity on September 1, 2023, subject to the requirement to provide updated medical documentation and to be placed on a performance improvement plan, or
- Accept a mutual separation package and voluntarily leave his employment with Starbucks effective September 1, 2023.
Under the latter option, Starbucks offered to issue a Record of Employment indicating a departure on a without cause basis and to provide the plaintiff with eight weeks’ pay in exchange for agreeing to several conditions, including waiving reinstatement, refraining from disparaging Starbucks, maintaining confidentiality, returning company property, and signing a full and final release before receiving payment. Although the plaintiff accepted Starbucks’ offer by email on September 1, 2023, he failed to sign the release and subsequently challenged the settlement’s very existence and enforceability by commencing wrongful dismissal proceedings against his former employer.
Decision
In this case, Starbucks brought a motion for summary judgment seeking the dismissal of the plaintiff’s action and the enforcement of the settlement.
For his part, the plaintiff asserted that no valid agreement had been formed, that Starbucks had provided no valid consideration and further, that a mistaken reference to “for cause” termination in the settlement documents amounted to a repudiation of the settlement.
The Court ultimately ruled in Starbucks’ favour, finding that the employer’s offer was clear and specific enough to create a legally binding agreement, and that the plaintiff’s acceptance was valid and unequivocal. Although additional paperwork still needed to be completed, the Court determined that this did not undermine the existence of the agreement itself. Instead, it found that the plaintiff’s refusal to sign the release amounted to a failure to comply with an already existing agreement, rather than proof that no agreement had been formed.
The mistaken reference to “for cause” termination included in Starbucks’ initial settlement documents was treated as an administrative error rather than evidence that the employer intended to abandon the deal. Notably, Starbucks corrected the mistake promptly after it was brought to its attention. As a result, the Court concluded that a reasonable person would not view this error as the employer refusing to honour the agreement.
On the issue of consideration, the Court found that the eight weeks’ pay offered to the plaintiff was of sufficient value to support the settlement. In addition, Starbucks’ failure to issue payment immediately was linked to the plaintiff’s own refusal to fulfill his obligations under the agreement.
Finally, the Court rejected the plaintiff’s argument that he had accepted the offer under financial duress. While he claimed financial pressure due to personal expenses, there was no evidence that Starbucks acted improperly or used coercion. Instead, the Court noted that Starbucks provided him with options, gave him time to consider the offer, and allowed him to seek legal advice before making his decision.
In the end, the Court dismissed the plaintiff’s action and ordered him to execute the full and final release.
IN OUR VIEW
Stribling is a reminder that settlement agreements can become binding through clear acts of acceptance, even if a formal release is never signed. This is an issue that can arise from time-to-time and it is helpful to have clear guidance from the Court on this subject.
For employers, this decision highlights several practical lessons:
- Clearly setting out all essential terms of a potential settlement right in an offer to settle can prove worthwhile.
- Providing employees sufficient time to review an offer and to seek legal advice can help defend against future claims of duress where something similar to this situation arises.
- Maintain detailed written records of negotiations, including all offers and acceptance.
- If mistakes in settlement documents occur, address and correct them promptly.
Ultimately, the case reinforces that where parties clearly agree on essential settlement terms, courts are likely to enforce that agreement even if one party later attempts to renege.
For more information, please contact Kyle Shimon at 343-996-4932 or Ayushi Dave at 343-996-8945.