Canadian Employment Law Today

6 | February 12, 2020 Cases and Trends Canadian HR Reporter, 2020 he held senior vice-presidential roles for Cami- no and Global IFS. While working for Global IFS, Kranidis became increasingly unhappy. He felt he was being marginalized within the company. For instance, although his employ - ment agreement provided that he would re- port to the company's president, in early 2018, his reporting lines were unilaterally changed four times and his seniority reduced. In May 2019, Kranidis contacted Tate Asp Ac - cess Floors (Tate), a direct competitor of Global IFS, in response to a position Tate had posted. On July 22, Kranidis entered into an employ- ment agreement with Tate. Kranidis was expect- ed to start his new role as director of technical marketing on Aug. 26. On July 23, Kranidis sub- mitted a resignation letter to Global IFS, noting that his "company supplied computer" was in the office. He neglected to mention that he still had possession of a company laptop. After learning that Kranidis was soon to be employed at Tate, Global IFS retained counsel, who reminded Kranidis that he was bound by the non-competition, non-solicitation and confidentiality clauses found in his employ - ment agreement. When Global IFS became aware of the missing company laptop, counsel demanded the return of the laptop. Kranidis returned the laptop on Aug. 6 but only after at- taching a USB device to the laptop, as noted in a forensic report commissioned by Global IFS. With all this information in mind, Global IFS brought a motion for injunctive relief to enforce the restrictive covenants against Kranidis and his new employer, Tate. The Ontario Superior Court of Justice ultimately declined to grant the injunction, awarding costs to Kranidis and Tate on a partial indemnity basis. The court concluded that because the restrictive covenants were overly broad and did not protect only Global IFS's proprietary interests, the restrictive covenants were unenforceable and, as such, Global could not make a strong prima facie case for injunctive relief as was required by relevant jurisprudence. In spite of the fact that "Kranidis' conduct on his resignation raised questions as to his intentions," the court also found that the evidence did not support the idea that Kranidis misused confidential information to Global IFS's detriment. In short, Global IFS had not demonstrated irreparable harm, on a balance of probabilities, as was also required. The non-competition clause In this case, Global IFS failed to demonstrate that the non-competition clause in the agree - ment was enforceable, in part because the com- pany could not identify specific information, products or projects requiring protection. Glob- al IFS also could not provide sufficient justifica- tion as to why the clause's 12-month restriction made sense in the context of the industry. To demonstrate proprietary interest, Global IFS argued that its integrated business approach created a "unique market advantage" against its competitor Tate and that Kranidis had direct knowledge of it. Notably, Global IFS had email correspondence in its possession where Kranidis tried to sell himself to Tate by saying he could assist Tate with the integrated approach. Nevertheless, the court found that, although Kranidis was promoting his knowledge of the integrated approach in the email, Tate clearly did not find it to be useful nor valuable. The court additionally found the non- competition clause to be "ambiguous and too broad" because it restricted Kranidis from tak - ing any position at all in a competing business, including positions in which he would not ac- tually be competing. The non-solicitation clause Global IFS also failed to demonstrate that the non-solicitation clause in the agreement was enforceable. Global IFS did not have a proprie- tary interest with respect to Kranidis' knowledge of customers, given industry practices. Through examinations, the court accepted that custom- ers were not exclusive to Global IFS or Tate and did not always return to the same company. Contractors were large developers and would be known to everyone in the business. In the words of the court, the non-solicitation clause was "extremely broad" and did not clearly ad - vise Kranidis "which customers were off limits;" instead, it exhaustively restricted solicitation of "all customers, suppliers, licensees, subcontrac- tors or other business relations." For the court, the fact that Kranidis did not "actively, directly and aggressively solicit" clients was also of utmost importance. The confidential information clause Lastly, Global IFS failed to demonstrate that the confidential information clause was enforce- able. The clause was too broad and prohibited Kranidis from disclosing confidential informa- tion indefinitely. Most importantly, the clause covered information that would be considered part of Kranidis' general experience and under- standing of the industry. For these reasons, the clause was void. Kranidis was not the most sympathetic defen- dant. Forensics evidence supported the fact that he misled Global IFS upon his departure and saved company information on his personal USB stick. Kranidis also went so far as to upsell himself to Tate by promising the very informa - tion that Global IFS considered a unique busi- ness strategy. While the court found Kranidis' behaviour "questionable" at best, it still did not enforce the restrictive covenants against him, highlighting that employers are best advised to use carefully tailored restrictive covenants to protect their business interests. For more information, see: • Camino Modular Systems Inc. v. Kranidis (Oct. 28, 2019), File No. CV-19-625112 (Ont. S.C.J.). Niveda Anandan is an associate with Appiah Law, an employment and labour law firm in Toronto. She can be reached at (416) 900-3715 or niveda@appiahlaw.com. « from ANOTHER on page 1 No ownership of former employee's knowledge The restrictive covenants covered more than just the employer's propietary interests. CREDIT: WHO IS DANNY SHUTTERSTOCK

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