Did the parties reach an agreement?

[31]      The short answer to this question is, in my view, yes.

[33]      Despite the failure to agree on a more formal document, the terms of the agreement can, in my view, be distilled from the email traffic between the parties which commenced on 25 December 2013 and culminated with Ms. Farnham’s ‘we have an agreement’ email of 9 January 2014?

Remedy Drug Store Co. Inc. v. Farnham, 2014 ONSC 4391 (Justice Mew)

As is always the case, we encourage you to read the full-text of the case for a broader understanding of what happened by clicking on the case-link above.

What happened?

Ms. Farnham was the General Manager and Executive Vice President, Pharmacy Services until October 28, 2013.  That morning, she deleted over 13,000 emails from her email inbox and more than 35,000 emails from her sent messages.  She also printed a large number of documents and took them with her when she left the office.  Between October 26 and October 28, she remotely accessed the employer’s server a number of times and forwarded more than 500 emails (a large number with attachments) to her home email account.

The employer brought an action for damages and declaratory relief saying Ms. Farnham:

  1. breached her employment agreement;
  2. breached fiduciary duties owed to the employer; and
  3. engaged in a breach of confidence.

The employer also sought an interim and interlocutory injunction to protect confidential information it alleged Ms. Farnham had acquired.

The parties attempted to settle the dispute by email.  On January 9, 2014, Ms. Farnham said in an email “we have an agreement”.  Subsequently, the parties’ lawyers became involved and attempted to reduce the email agreement to a settlement agreement.  This resulted in the parties disagreeing as to what was agreed upon in the email agreement and the court’s quote at the outset of this blog.

What happened when the court became involved?

The court found that the only contentious issue was the “extent of the work to be done by the IT professionals” in removing the data from Ms. Farnham’s laptop and iPad:

[34]      The only serious issue in contention is the extent of the work to be done by the IT professionals.  The parties had agreed that Ms. Farnham would not retain confidential information.  They had agreed that the confidential information that she had held should be destroyed.  They had agreed that this should be done by Remedy’s preferred consultant and that Ms. Farnham should pay for it.  The only disagreement appears to be whether the work to be done by the IT consultant extended to a review by the consultant of what Ms. Farnham had done with the confidential information which she had received.

On review of the email correspondence, Justice Mew concluded that there had been a compromise – Ms. Farnham had ultimately agreed to the employer’s preferred IT consultant overseeing the work to be done.  In his opinion, the disagreement over the terms of the email settlement did not result in a repudiation of that agreement.

What this means to employers

This was not a wrongful dismissal action, but it was resolution of a disagreement over the exit of a high level employee who left with what the employer believed was confidential information she was not entitled to have in her possession.  The decision acts as a reminder to employers to be mindful of confidential information in employment agreements and settlement agreements and, if necessary, to trace the departure of confidential information at the same time that a high level employee departs to minimize risk of dissemination of that information.

  1. Act quickly

The leak of confidential information can harm an organization for obvious reasons.  In this case, the parties were able to reach an agreement via email for an IT consultant to clean and purge information from the former employee’s personal equipment.  The detail that was unclear and led to the court room, was “who” the IT consultant would be.  Nonetheless, the agreement was very important to both parties understanding that the information would be wiped from the former employee’s equipment albeit that it took a good month or so for that understanding to form “agreement” status and then another six months for the court to sort out what the parties had agreed to.

  1. Have a policy

If you don’t already have a policy dealing with departing employees and information that they may store on personal devices, now is the time to revisit and re-write your confidentiality and privacy policies so that issue is covered.  Ideally, personal device storage should be prohibited, but if it’s something your organization can live with, spell out the responsibility of the employee during and post-employment.  As we’re always emphasizing, communicate and train on the policy and have an even hand when it comes to discipline.

This decision had a good outcome, but it could have been have very different and much worse for the employer.