Court Denies Injunction that Would Terminate Two Workers’ Employment

Written on behalf of Peter McSherry

Sometimes, when one party brings a lawsuit against another, they believe that they cannot wait for their day in court because their rights are being violated on an ongoing basis. In such circumstances, the wronged party may seek an injunction against the wrongdoer(s). If successful in having an injunction granted, the wrongdoing party will immediately be ordered to stop the offending behaviour, pending outcome of the case.

In the employment law content, injunctions often arise in the context of former employees who have since become employed by a new employer. If the old employer suspects that the ex-employee is utilizing confidential information inappropriately, or breaching contractual terms of ongoing duties of secrecy, or non-competition, it may move for an injunction to have that person immediately stop their behaviour. If such an injunction were to be granted, it could result in the employee being terminated from their new employment, pending full resolution of the case. Such consequences are extremely serious because they interfere with a person’s right and freedom to earn a living in whatever legal manner they choose. As such, injunctions may have extremely severe consequences in employment law matters.

Employees Leave the Same Old Employer for the Same New Employer

In Morgan Canada Corporation v MacDonald, Morgan Canada Corporation (“Morgan”) sought an injunction against two former employees “MacDonald” and “Di Nardo”, MacDonald’s wife “Caroline”, and Reefer Sales and Service (Toronto) Incorporated (“Reefer”), the company for which both MacDonald and Di Nardo had left Morgan.

MacDonald had worked for Morgan from 2011, when he began in a regional sales management role, until October of 2021, by which time he was the permanent Sales Director of Canada. Throughout the years and several promotions, MacDonald had never signed a non-competition agreement with Morgan. Di Nardo began working for Morgan in 2004 and was promoted to Technical Sales Manager in 2015, a role in which he remained until the end of his tenure with Morgan.

Reefer is a company that sells and services cooling systems for refrigerated trucks, while Morgan is in the business of manufacture and sales of refrigerated truck bodies. In the Spring of 2022, Reefer entered an agreement with CIMC Vanguard under which Reefer would begin to distribute truck bodies made by Vanguard, in direct competition with Morgan. Reefer sought out MacDonald for a sales role and, in April of 2022, MacDonald began working for Reefer as their Sales and Operation Manager of the Truck Body Division. When, several months later, the need for a sales representative arose, MacDonald recommended Di Nardo and put the parties in contact with one another. It should be noted that MacDonald did not participate further in the recruitment process. Shortly thereafter, Di Nardo accepted an internal sales position with Reefer. Importantly, Di Nardo would not be dealing with the sale of truck bodies.

Old Employer Sues New Employer Along with Ex-Employees

Several months after Di Nardo’s departure from Morgan, Morgan engaged a forensic investigator to review any electronic devices that had been used by MacDonald and Di Nardo during their tenure with Morgan. The investigator reported that MacDonald had sent his wife, Caroline, 32 emails from his work email. For his part, Di Nardo is alleged to have either received or copied his personal email, to his Morgan email, 4 times. Morgan determined that this was evidence of breaches by MacDonald and Di Nardo of their fiduciary and confidentiality obligations, and accordingly, commenced a lawsuit for the same matter. Shortly thereafter, Morgan commenced an application seeking an injunction against MacDonald, Di Nardo and Reefer which, if granted, would cause MacDonald and Di Nardo’s immediate unemployment.

Former Employees Defend Themselves

MacDonald explained the email sent from his Morgan account to his wife Caroline’s email address as a non-issue which arose during the time of the COVID-19 pandemic, when both he and Caroline were working from home. The two worked in separate spaces in the home, with Caroline working directly next to their home printer. As such, when MacDonald needed something printed from his account, he would email it to Caroline from another floor of the house and she would print it for him. MacDonald explained that this was done as a matter of convenience, to save running up and down stairs all day.

Di Nardo also offered an innocent explanation for the four emails sent to his personal email from his professional Morgan email account: He copied messages sent to coworkers before he went on vacation, to enable him to provide assistance to them while he was away. Further, Reefer provided unchallenged evidence that nobody in the company had ever received any kind of confidential information from Morgan, nor had Reefer ever competed unfairly with Morgan.

The Test for an Injunction

When seeking an injunction for any reason, the moving party must satisfy the RJR-MacDonald test by demonstrating all three of the prongs of the following test:

“a. the action raises a serious question to be tried, in the sense that the claim is neither frivolous nor vexatious;

b. the moving party would suffer irreparable harm if the court does not grant the

injunction until the completion of the trial; and

c.  that the balance of convenience favoured granting the injunction because the moving party would suffer greater harm than the responding party if the injunction is not granted.”

Since the granting of the injunction in this case would effectively remove MacDonald and Di Nardo from gainful employment, the Court noted that Morgan must meet a higher standard for the first branch of the test, that of a strong prima facie case, noting that:

“Here, however, the parties agree that Morgan Canada must meet a higher standard on the first branch of the test to obtain an injunction that prohibits Mr. MacDonald and Mr. Di Nardo from working with Reefer Sales and any other competitor of Morgan Canada. The parties agree that Morgan Canada must meet the more onerous test of a strong prima facie case on the first branch of the test. To meet the strong prima facie case standard, Morgan Canada must satisfy me that there is a strong likelihood on the law and the evidence to be presented at trial that it will prove the allegations set out in the statement of claim.”

The Company Fails the Test to Justify Granting an Injunction

After reviewing the evidence, the Court stated that Morgan had failed to satisfy even one branch of the RJR-MacDonald test, in that no evidence had been provided to substantiate:

• that either MacDonald or Di Nardo were a fiduciary of Morgan;
• that either defendant had misused any confidential information; or
• that Morgan would suffer irreparable harm if the injunction were not granted.

Morgan Canada has not demonstrated a strong prima facie case with respect to any of its pleaded causes of action. Morgan Canada has not demonstrated a strong likelihood that it will establish at trial that Mr. MacDonald or Mr. Di Nardo:

a.      owed it fiduciary duties or that they breached any such duties

b.      misused any of its confidential information to compete unfairly with the company; or

c.      committed the tort of spoliation, if such a tort exists under Ontario law.

The Court went on to note that:

“Morgan Canada has also not demonstrated that it will suffer irreparable harm if the injunction is not granted. Although it has been well over a year since Mr. MacDonald and Mr. Di Nardo left the company, Morgan Canada’s evidence of irreparable harm is speculative, and it is unable to point to any harm attributable to the alleged misuse of confidential information.”

In particular, the Court noted that “the balance of convenience strongly favours the defendants”, as “[t]he inconvenience to the defendants of losing their jobs until trial far outweighs the inconvenience to Morgan Canada. This is particularly so given the weakness of Morgan Canada’s case on the first two branches.” As such, an injunction was not granted.

Contact Guelph Employment Lawyer Peter A. McSherry for Advice on Addressing Disputes With Your Former Employer

If you have been contacted by a former employer threatening an injunction, or if an injunction has been pursued against you, trusted employment lawyer Peter A. McSherry can help. Our employment law team has extensive experience dealing with letters and legal action from former employers, and are well equipped to assist you in protecting your rights and ensuring you are positioned for the best possible outcome. Contact us today online, or by telephone at 519-821-5465 to arrange a confidential consultation.