The Cowichan Tribes dismissed Jennifer George, associate director of the band's Lalum'utal' Smun'eem Child and Family Services agency, in May 2013 partly because of what happened at a pub in the community of Duncan about three months earlier.
A band investigator's report, submitted as evidence in B.C. Supreme Court, accused George of being intoxicated, verbally harassing another member and threatening to take away her children.
The alleged victim, Anita Seymour, also accused George of slapping her in the face and calling her ugly. Seymour was dating the father of two of George's grandchildren and is also the sister of the band's human resources manager.
B.C. Supreme Court Justice Ronald Skolrood said in a ruling posted online Wednesday that the band breached George's contract of employment before dismissing her.
"Cowichan Tribes has failed to prove that Ms. George physically assaulted Ms. Seymour, threatened to take away her children or was dishonest during the investigation," Skolrood said.
What was established, added Skolrood, was that George was intoxicated and warned Seymour not to interfere with visits between her grandchildren and their father, which George had admitted to doing so all along.
The judge noted in his ruling that George also described herself as a "functional alcoholic" who never missed work because of her condition.
Skolrood ordered the band to pay George $123,580 and $35,000 in general and aggravated damages, although the judge declined to award punitive damages to the woman who began working for the band in 1980.
Dean Crawford, lawyer for the Cowichan Tribes, said in an email that his clients are still reviewing the decision and have no comment.
Jacqueline Horton, George's lawyer, said the incident has taken a toll on her client and even divided the community.
"Obviously, we're quite delighted with the result," she said. "We're really pleased that the plaintiff's been vindicated of all allegations."
She said longtime employees should only be dismissed on "serious grounds."
Skolrood was highly critical of several band members, including Stephanie Peter, the tribes' human resources manager and Seymour's sister, who he said helped to draft the complaint letter against George.
"Ms. Peter appeared genuinely contrite about her dishonesty but that does not change the fact that she repeatedly lied, including under oath, about the key, central document that launched the process leading to Ms. George's dismissal," he said.
The band dismissed George with inaccurate and incomplete information and didn't give her a proper opportunity to explain or respond, the judge said.
Maureen Tommy, the band's general manager, prepared the termination letter before the council even voted to terminate George, Skolrood said.
He noted successors were put in place immediately after the tribes' council decided to terminate George and her director supervisor Lise Haddock.