Summary
In a recent summary judgment decision, the Ontario Superior Court enforced a settlement agreement reached by email between Starbucks and a former employee, and dismissed the former employee’s claim for wrongful dismissal. In Stribling v Starbucks Coffee Canada Inc, 2026 ONSC 1030 (“Stribling”), the Court held that a clear offer, followed by an unequivocal email acceptance, formed the basis of a binding settlement agreement despite the employee never signing the agreement’s release.
The Facts
The Plaintiff was employed with Starbucks for nine, non-consecutive years between 2010 and 2023. In early 2023, Starbucks raised concerns regarding the Plaintiff’s performance, following which he commenced a health-related leave of absence. Shortly following his return to work in July 2023, Starbucks developed concerns that the Plaintiff was not medically fit to perform his role, and placed him on a paid leave of absence. Starbucks advised the Plaintiff that he could return to work once he had medical documentation clearing him to do so.
On August 11, 2023, Starbucks sent the Plaintiff a letter setting out its concerns with his performance and providing him with two options:
- Option 1: return to work on September 1, 2023 with updated medical documentation and be subject to a performance improvement plan.
- Option 2: a voluntary, mutual separation effective September 1, 2023, the terms of which were: he would be provided with eight weeks’ base pay, Starbucks would issue a Record of Employment stating that his dismissal was on a without cause basis, he would relinquish his right to reinstatement, he would not disparage Starbucks, he would agree to protect the confidentiality of the agreement, and he would return any Starbucks property in his possession. Finally, the offer stated that the Plaintiff’s receipt of any payment was conditional on his execution of a full and final release.
Following his receipt of the offer, the Plaintiff requested and received two extensions to consider the offer in consultation with his legal counsel.
On September 1, 2023, the Plaintiff emailed Starbucks stating that he had “decided to accept Starbucks’ offer, issued on August 11, of a mutual separation, including the details and compensation as listed” and indicated that he would sign the release once received.
Starbucks promptly sent the Plaintiff the release. However, in error, the documents provided by Starbucks included a termination letter indicating that the Plaintiff was being dismissed for cause. After the Plaintiff identified this error to Starbucks, it acknowledged its mistake and sent the Plaintiff corrected versions of the documents.
The Plaintiff, however, refused to sign the release and instead commenced a wrongful dismissal action with the Court, alleging that there had been no binding agreement in place. The Plaintiff further alleged that Starbucks had not provided consideration for the agreement, that the termination letter mistakenly alleging dismissal for cause was a repudiation of the agreement, and that Starbucks had exerted financial duress on the Plaintiff. In response, Starbucks brought a motion for summary judgment dismissing the action and requiring the Plaintiff to comply with the terms of the settlement agreement.
The Decision
The Court found that the August 11, 2023 offer letter contained clear, detailed terms intended to form a legally binding separation agreement. It further found that the Plaintiff’s September 1, 2023 email was a clear and unequivocal acceptance of that offer, as email is a valid mode of acceptance. The parties had therefore formed a valid agreement. The fact that the parties contemplated a formal release being signed afterwards did not prevent the agreement’s formation once the essential terms were agreed. As a result, the Court found that the Plaintiff’s failure to sign the release was a breach of the agreement, not evidence that no agreement existed.
The Court rejected the Plaintiff’s claims regarding repudiation and a lack of consideration. The temporary “for cause” language in the initial termination letter was treated as an error, which Starbucks promptly corrected, and did not constitute a repudiation of the agreement. Regarding the consideration, the Court held that Starbucks’ promise of eight weeks’ pay, conditional on the Plaintiff’s execution of the release, was adequate consideration. The fact that payment had not yet been made was, in fact, a result of the Plaintiff’s failure to perform his own obligations under the agreement (i.e., to sign the release).
The Plaintiff’s financial duress argument was also unsuccessful. The Court found that Starbucks had presented the Plaintiff with options regarding the continuation or termination of his employment and had allowed him time to discuss these options with his legal counsel. The Plaintiff failed to produce any evidence of pressure by Starbucks or any evidence of his own financial circumstances that would demonstrate he was under any financial duress.
In light of the above findings, the Court granted Starbucks’ request for summary judgment, and dismissed the action and ordered the Plaintiff to execute the full and final release.
Takeaways
The Court’s decision in Stribling is a reminder that settlement agreements do not require a signed release and can be binding upon email acceptance. It is, however, critical that employers ensure the following:
- The essential terms of the settlement are explicitly set out in the offer letter. This includes, for example, the effective date of the settlement, any compensation to be provided (wages, benefits, etc.), any confidentiality or non-disparagement provisions, and the requirement to sign a full and final release as a condition of payment.
- The employee has had an opportunity to receive legal advice. Providing opportunities for the employee to receive legal advice will help mitigate and defend against any future claims of duress or lack of informed consent. Therefore, as a matter of good practice, employers should document any evidence demonstrating that they have granted an employee with an opportunity to receive legal advice.
- If an error occurs in the execution of a settlement agreement, promptly notify the employee to identify the mistake and take immediate steps to correct it. Courts recognize that inadvertent errors can occur and will often refrain from holding parties to representations made in error, so long as the mistake is promptly disclosed and rectified.
Need More Information?
For more information or assistance with managing employee dismissals, please contact Alistair Chauhan at achauhan@filionlaw.com or your regular lawyer at the firm.