Case Report – Court affirms Anton Piller in departing employee case

28 Jun

On May 5th, the Alberta Court of Queen’s Bench for affirmed an Anton Piller order that permitted a search of business premises and private residences and seizure of materials and information related to a departing employee claim.

There is a three-part test for the making of an Anton Piller order: (1) there must be an extremely strong prima facie case; (2) the potential or actual damage to the applicant must be very serious; and (3) clear evidence that the defendants have incriminating evidence in their possession and that there is a real possibility they may destroy such material.

The Court examined the mixed jurisprudence on the “serious harm” element and held that it requires proof of procedural rather than financial harm. That is, an applicant must demonstrate that its proposed order will preserve evidence without which it could not prove its case. The Court reasoned that the purpose of the extraordinary order is to preserve evidence and that irreparable financial harm can be addressed through an ordinary injunction:

As discussed, the adverse financial impact approach considers potential harm that may be visited upon the plaintiff as a result of the use of the proprietary or confidential information that the defendant has or may have in its possession. If this is the type of damage that the plaintiff seeks to enjoin, then an injunction may suffice without the need for the court to exercise the extraordinary power of granting an Anton Piller Order. As noted by Hoffmann J. in 1268 Lock International Plc. v. Beswick and Others, [1989] 1 W.L.R. 1268 at 1281, Anton Piller orders reside at the “absolute extremity of the court’s powers”. For that reason, they should only be granted in circumstances which demand their imposition. Those circumstances would have to include more than the desire to enjoin certain activities which could be accomplished through much less intrusive methods. They must include a need to preserve evidence without which the plaintiff’s claim could not be proven.

The Court held that the applicant met its burden of proving serious harm even though it had copies of the information taken and (presumably) evidence showing it was taken. The Court suggested that the applicant would also need forensic evidence about how its information was stored and maintained on the defendants’ computers to prove misuse of confidential information: “[Making out its case] would include showing where the information was taken and how it was used or altered.”

The Court also engaged in a detailed analysis of the evidence to determine whether the applicant had established a “real possibility” of destruction based on a “compelling inference.” There is a policy lesson in this part of the judgement for employers who are likely to be faced with claims by departing employees who take electronically-stored confidential information and claim they deleted it because they realized that taking it was wrong. In the face of such a defence, the Court drew an inference that destruction of evidence was a possibility based partly on the applicant’s good information management practices. It said:

I am satisfied that on all of the circumstances in relation to this point there is a basis upon which to draw a strong inference of dishonesty. Particularly compelling is the fact that Higham took the documents in the face of his supervisor’s warning and an employment agreement he executed prohibiting him from copying or transmitting “[a]ll notes, records, working papers, files, research material or literature accumulated or developed” while at CCS…

Secure argued that the e-mails Higham deleted and the CD-Rom he destroyed was not “evidence” when it was destroyed because there was no Statement of Claim yet issued or because the litigation had not yet commenced. Belzil J. in Netsmart considered the destruction of documents before litigation had commenced in relation to this arm of the test. In any event, Higham knew he was in possession of documents that he should not have had and he chose to destroy them. Even if the destruction was in good faith as he claims, a point upon which I make no finding, it does not mitigate the risk of his destroying further CCS documents in his possession. In other words, he was given to destroying documents that were improperly in his possession. Regardless of his motives the fact that he did this at least twice indicates that it may well happen again. As stated by Richard A.C.J. in Adobe, at para 89: “It cannot now be argued that the plaintiffs should be denied an Anton Piller type order preserving evidence when that evidence was in fact destroyed.”

While this passage highlights the applicant’s good information management practices, the applicant also suffered for agreeing to give another of its departing employees his work laptop in return for a promise to make a charitable donation and then failing to wipe the laptop when requested by the employee. The Court held that it could not draw any negative inference from the employee’s deletion of over 4,000 e-mails in these circumstances because the this action was consistent with the actions of an honest employee who wanted to rid himself of his employer’s e-mails. As a result, the Court revised the order to exclude the laptop.

The plaintiff brought a cross-motion to deal with the scope and form of production of information from a number of seized hard drives. The award discusses the protcol by which the parties will deal with production but is not very directive as it appears they were in substantial agreement on how to proceed.

CCS Corp. v. Secure Energey Services Inc., 2009 ABQB 275 (CanLII).

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