Canadian Employment Law Today

Sales reps must pay former employer $130,000 for breach of fiduciary duty Brothers started own business and solicited former employer's customers, including while one brother was still employed with the company BY JEFFREY R. SMITH AN ONTARIO company has been award- ed more than $130,000 from two former employees who went into business for themselves and solicited its customers, the Ontario Superior Court of Justice has ruled. Jason Reia was hired as a commissioned sales representative in 1995 by Computer Enhancement Corporation (CEC), a ven- dor of memory products for computers in Mississauga, Ont. CEC didn't manufacture parts, but rather served as a broker or mid- dleman for its customers. Jason had autonomy in putting together his own sales deals, with some terms such as credit limits approved by CEC's owner. He wasn't involved in management meetings or have any employees reporting to him. Over time, Jason became the "face of CEC" and was the only person at the company that most of his customers dealt with. Jason Reia didn't sign an employment contract when he was hired, but was asked to sign a non-competition and non-solicitation agreement on Jan. 3, 1996. e agreement stipulated that exclusive product knowledge and information that he gained during his employment with CEC would not be used to the detriment of the company or disclosed to a third party. He was also required to avoid being directly or indirectly engaged with a competitor of CEC or solicit any customers or clients of CEC for six months following the termination of his employment. Jason's younger brother Jeffrey began working as an inside salesman for CEC in April 2000, assisting Jason and two other CEC sales representatives. He signed the same non-competition and non-solicitation agreement as Jason. In 2005, Jeffrey and his wife registered an unincorporated business called JC Options. e business was registered in his wife's name, but Jeffrey operated it. Jeffrey began bidding on contracts with CEC customers while still employed as a salesperson with CEC, using his inside knowledge to under- bid CEC. He was able to secure six contracts using this practice between 2005 and 2009. In early 2009, CEC lost a sale to one of its major customers and learned that JC Op- tions won the bid. It found out Jeffrey Reia operated JC Options and fired him on Feb. 15. Jeffrey continued to compete with CEC with his own company after that. Jason continued with CEC for a little while after his brother was fired, but decided to leave CEC and go into business with Jeffrey at JC Options. Before he quit, they incorpo- rated JC Options with the two brothers as directors. CEC filed a claim against JC Op- tions for damages and an injunction, and Ja- son formally quit his CEC position. CEC filed another claim against the Reia brothers for violating the non-competition/ non-solicitation agreements they had with the company, both during and after they left their employment with CEC. It was success- Canadian Employment Law Today | 3 Canadian HR Reporter, a Thomson Reuters business 2016 Cases and Trends ONE on page 7 » Employment law blog Canadian Employment Law Today invites you to check out its employment law blog, where editor Jeffrey R. Smith discusses recent cases and developments in employment law. The blog includes a tool for readers to offer their comments, so discussion is welcome and encouraged. The blog features topics such as creed as a human right, workplace policies, employees on social media, and employee leaves. You can view the blog at www.employmentlawtoday.com. CREDIT: MOOMSABUY/SHUTTERSTOCK

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