Individuals employed in high-level positions commonly have a clause in their employment contracts governing the use of confidential information. Typically, such a clause defines what constitutes confidential information and dictates the uses that may be made of such information by the employee both during and after employment with the employer.
Litigation concerning confidential information generally arises in the context of a dismissed employee (whether terminated or voluntarily resigned) who continues to work in the same field as their former employer operates. In such circumstances, employers may learn of a former employee’s activities and deduce that the employee could not have undertaken their actions unless they had used confidential information gained through their employment with the former employer. As such, many employers commence litigation to recover damages commensurate with the harm caused to the former employer by the former employee’s abuse of their confidential information.
Employee Quits Job to Work for Former Employer’s Customer
The case of Boaden Catering Limited v Earl Haig Community Day Care involved a claim of misuse of confidential information by a former employee. The employee in question had voluntarily resigned as executive chef of the plaintiff catering company to work for one of the catering company’s customers, the defendant community daycare. The community daycare hired the former employee as a daycare chef in September 2015, and in December 2015, it ceased ordering any catered meals from the plaintiff. The plaintiff had historically earned $175,000 per year in the neighbourhood through its contract with the defendant’s daycare. As such, the loss of this contract represented a significant income loss for the plaintiff.
Former Employer Sues New Employer for Misuse of Confidential Information
When the plaintiff discovered that its former employee was working for the defendant, it commenced a claim alleging misuse of its confidential information for the defendant’s own benefit. In particular, the plaintiff alleged that the former employee had used the plaintiff’s menu as a template by which to formulate the defendant daycare’s menus, that the menus of the defendant daycare were very similar to the plaintiff’s own menus, and that the former employee had created a draft menu for the daycare within days of commencing his employment therewith, which the plaintiff alleged would only be possible if the former employee was abusing confidential information of the plaintiff, his former employer.
What Constitutes ‘Confidential Information’ in the Employment Context?
Generally speaking, confidential information in the employment context includes any information treated by the owner of such information as secret. Confidential information does not typically include “the general skills and knowledge an employee has acquired while working for the employer.”
Moreover, in defining confidential information regarding a particular circumstance, the court will also consider how the term is defined in any applicable employment contract or agreement.
Use of Confidential Information by Former Employees
A person who possesses confidential information about a former employer cannot use it for their benefit. In particular, the ‘springboard doctrine’ dictates that it causes harm to a former employer when a former employee exploits confidential information gained through his employment with the former employer to advance a competitor of the former employer.
Did the Information Asserted as Secret in this Claim Constitute Confidential Information?
In this case, the plaintiff’s former employer asserted that its menus, processes, and recipes were all comprised of confidential, secret information that was integral to their business. The court disagreed, finding instead that the menus were not confidential because they had never been designated as such, in addition to which they were regularly disclosed to daycare customers on a weekly or monthly basis. Customers who received these menus occasionally posted them in public areas such as bulletin boards and regularly shared them with parents of their daycare students. Furthermore, the plaintiff posted sample menus online on their own website, and they did not ask their former employee to return the laptop that contained all of their menus when he resigned, even though the laptop contained many years of the plaintiff’s menus.
The court was similarly satisfied that the plaintiff’s recipes and internal processes also failed to satisfy the standard necessary to find confidentiality, as the dates on which certain food items would be served did not constitute ‘secret’ knowledge. Moreover, the former employee of the plaintiff, who had worked as their executive chef for seven years, would necessarily have acquired some general knowledge of the plaintiff’s recipes and policies over the course of the years.
The plaintiff’s delivery method, which involves the use of warming containers and steam tables and confirming food temperatures upon arrival at a given venue, was also found by the court to fall short of being worthy of categorization as confidential information, given that the plaintiff had never bound its customers or its employees to a non-disclosure policy concerning its process. Moreover, the plaintiff’s former employee would have acquired this knowledge over time through his experience as the company’s head chef.
In the result, the court found none of the information claimed by the plaintiff as confidential to actually constitute confidential information.
Did the Former Employee Misappropriate Confidential Information?
The court began its assessment of this claim by noting that the plaintiff catering company and defendant daycare company are not competitors. As such, in respect of the plaintiff’s claim that the defendant daycare achieved a ‘head start’ on its menus by hiring its former head chef, the court was satisfied that not only was there no evidence to substantiate a claim that the daycare hired the former employee to access the plaintiff’s menus, the parties were not in competition with one another in any event.
Moreover, the former employee was an experienced chef, and as such, he had gained significant expertise, knowledge, and experience in cooking and preparing meals for daycares. In these circumstances, it was not unusual that he would be capable of planning a daycare menu for a new client in a relatively short time frame.
The court concluded that the former employee had engaged in one instance of abuse of confidential information in that he had used at least one of his former employer’s menus as a template for the menus he created for the defendant. However, the court was satisfied that the former employee had only undertaken this shortcut to save himself several hours of labour, and the former employer had suffered no loss or damage due to this breach. In particular, the court found no evidence of a link between the plaintiff’s loss of the defendant’s daycare as a client and the former employee’s use of the plaintiff’s menu as a template for new menus. As a result, the claim for breach of confidence was dismissed.
Contact Haynes Law Firm Today to Discuss Your Employment Contract Needs
Whether you are an employee who seeks to understand the terms of your employment contract or an employer who seeks advice with respect to crafting of an employment contract, you are in need of adept legal counsel to ensure that your rights are protected and asserted at each step of the way. Fortunately, Haynes Law Firm is here to help. From our offices in downtown Toronto, Ontario, Haynes Law Firm is proud to provide clients from all over Southern Ontario with the knowledgeable, capable legal advice they need.
Contact Haynes Law Firm today, either online or via telephone at (416) 593-2731, and one of our friendly staff will be pleased to schedule a confidential consultation.