Unipco has won a permanent injunction, via summary judgement, preventing one of its former IT employees from sharing confidential information about the company. It’s a complicated tale involving a missing hard drive and a series of Facebook messages he argued were private.
SM, Unipco’s director of computer program development, resigned from his position in early 2021.
Unipco accused SM of violating non-compete and non-disclosure agreements by sharing trade secrets with Stake Hospitality Group — a competitor — and then joining that same rival.
SM denied these allegations and countersued Unipco, claiming constructive dismissal and breach of privacy. He asserted that Unipco viewed private Facebook Messenger exchanges he had with other employees, violating his expected privacy.
Unipco’s legal stance focused primarily on seeking injunctive relief to prevent SM from disclosing any confidential information, as stipulated in the non-disclosure agreement. They also sought legal costs against SM.
SM, in his legal defense, argued that there is no need for a trial regarding his counterclaims and therefore he also sought summary judgement.
Background
SM joined Unipco in 2014 after working as an outside IT consultant. As part of his employment, he signed non-disclosure and non-compete agreements. The non-disclosure agreement specifically included Unipco’s client lists and other sensitive information, with an agreement for injunctive relief in case of a breach.
The non-compete agreement, which is now moot due to its time frame, restricted SM from engaging in any materially competitive business in North America for two years post-employment.
SM’s tenure at Unipco was largely uneventful until the COVID-19 pandemic struck in 2020, leading to a temporary layoff and subsequent re-employment at reduced pay, which he contended was a constructive dismissal.
Missing hard drive
The current legal battle intensified following his resignation in January 2021. Shortly after, Unipco hired an IT consultant who discovered that SM had extensive access to Unipco’s confidential data and had removed a hard drive containing development tools from his workstation.
Unipco also found SM’s Facebook Messenger conversations with other employees, which hinted at his potential sharing of confidential information.
“They are control freaks. They are in for a world of hurt,” SM wrote in one message. “I’m preparing to point out the bodies right now. I know where they are buried and I will expose them.”
In another note, he mentioned that he had a phone call booked with Stake Hospitality. When the other person in the message asked if he was joining that company, SM replied: “Lol. Nope. I think my career in food service is over. It’s mostly just give some ammo to attack Unipco.”
But he later said he had indeed joined the competitor.
The Court of King’s Bench of New Brunswick found SM “acted with malice and in direct contravention of his legal obligations.” It did not believe SM’s denials about never divulging any confidential information to Stake Hospitality or to anyone else.
“He did not initially have discussions with Stake Hospitality about a job – it was clearly to share information (he) knew, or hoped, would harm Unipco,” the court said. “I am satisfied on the balance of probabilities that (SM) shared confidential information with Stake Hospitality.”
Both parties agreed that damages in this case were an “inadequate remedy” and Unipco would be entitled to an injunction in the event of any breach by the employee.
“The evidence satisfies me that damages would indeed be an inadequate remedy in this case, where the impact of any unlawful disclosure of confidential information would be difficult to assess,” the court said.
Constructive dismissal, privacy intrusion claims
Regarding SM’s claim of constructive dismissal and desire for a summary judgment, the court ruled that this matter required a trial.
SM argued that he was constructively dismissed due to a temporary reduction in salary during the COVID-19 pandemic, increased workload, and changes to the group insurance plan. However, the court noted inconsistencies in his claims, including the duration he continued working under the changed conditions and his own statements during his exit interview.
The court found these factors raised questions about the veracity of his claim, warranting a trial.
SM’s counterclaim for breach of privacy, based on the allegation that Unipco unlawfully accessed his Facebook Messenger communications, also required a trial, the court said.
It was not convinced that Unipco’s conduct was intentional or reckless. The evidence suggested that the messages were accessed during a security check and were not deliberately targeted. Moreover, the court questioned whether SM, an experienced IT professional, reasonably expected privacy on his work computer, particularly since he had been advised to log off his Facebook account to maintain privacy.
The court granted Unipco’s request for summary judgement for a permanent injunction restraining SM from disclosing any confidential, propriety information to Stake Hospitality or to anyone else.
Costs
Unipco was awarded costs of $7,500 inclusive of HST and disbursements for the motion on the injunction.
Additionally, Unipco was entitled to costs of $2,500 inclusive of HST and disbursements on SM’s motion for summary judgment regarding his claims for constructive dismissal and breach of privacy.
For more information, see Unipco Ltd., a body corporate, Unipco Purchasing Program, a partnership v. Scott Mullin, 2023 NBKB 200 (CanLII)
