A CPA who took confidential documents from his former employer with the intention to use them in a wrongful dismissal action against the company has been ordered to return the documents by an Ontario court.
JR served as the Canada controller for Ecolab from Jan. 5, 2009, until his employment was terminated without cause on Feb. 28, 2020. He launched his wrongful dismissal action against Ecolab in 2021.
Highly sensitive financial information
Central to the controversy are documents taken by JR from Ecolab, which he admitted to obtaining without the company’s knowledge, with the intention of using them in his litigation against it.
Ecolab argued that these documents, many of which contain highly sensitive financial information, were unlawfully taken and constituted a significant breach of JR’s fiduciary duty and confidence.
Ecolab, the Canadian arm of the U.S.-headquartered Ecolab Inc., operates in a fiercely competitive market, and its financial information is confidential, it said. JR, during his tenure, held significant responsibilities including overseeing Ecolab’s accounting, financial control standards, and the administrative functions of the Finance and Administrative team.
Notably, he was also privy to confidential financial data from both the Canadian entity and its U.S. parent company.
Duty of confidentiality in employment agreement
JR’s employment agreement, a supplementary contract for management-level employees, and the company’s Code of Conduct clearly outlined his duty of confidentiality. The Code of Conduct expressly prohibited the personal use of the company’s proprietary information, both during and post-employment.
JR’s legal action includes claims for damages in lieu of 24 months’ notice for wrongful dismissal, punitive or aggravated damages, and special damages for job search expenses.
He argued that the documents in question are pertinent to his case, stating there is no breach of confidentiality since he hasn’t misused the information. He also alleged that the documents should not be deemed confidential due to Ecolab’s failure to adhere to its own Code of Conduct.
But the Ontario Superior Court of Justice disagreed.
“I find that many, if not all, of the documents taken by (JR) are confidential,” it said. “The Documents include financial information, which is not subject to public disclosure, including information relating to national sales revenues broken down on a division-by-division basis, cash flows, debts, costs (including confidential and competitive payroll information), and profits and losses.”
The court noted it was not making a determination on whether or not the documents are relevant to JR’s claim for bad faith.
“That is an issue for trial,” it said. “At the trial, unlike on the summary judgment motion, there will be an opportunity for submissions from the parties on relevance, admissibility, confidentiality, and the appropriateness of any non-publication order such as redacting or sealing documents. There will be judicial screening and consideration of same in the context of the evidence led at trial.”
It granted Ecolab’s motion for an order requiring JR to return the documents. He is required to return the documents and all copies.
“They are Ecolab’s property,” the court said. “If he made paper or electronic copies, the copies should be returned or destroyed.”
It encouraged the parties to agree on costs, but left the door open to written submissions to settle the issue.
For more information, see Rae v. Ecolab Co., 2023 ONSC 5995 (CanLII).