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Lack of Evidence Fatal to Employer’s Claim of Breached Non-Competition Clauses

Whitten and Lublin | Jul 22, 2013

A recent motion for summary judgment provides a valuable reminder for employers and employees when it comes to enforcing non-competition agreements: it is not enough for the employer to simply claim that the employee breached a non-competition clause. To succeed at trial, the employer needs to show convincing evidence that the employee did truly breach their employment contract.

 

Eagle Professional Resources’ Recent Claim

Three former employees left Eagle Professional Resources Inc. to work for a competitor. The employment relationships were governed by written employment contracts, which included non-competition and non-solicitation clauses that prohibited soliciting Eagle’s clients or using its confidential information.  After the employees left, Eagle claimed that all three breached these provisions. The employees denied the allegations, stating that they did not improperly use any information they learned while employed at Eagle, nor did they have access to any of Eagle’s confidential information.

The former employees brought a motion for summary judgment before the Ontario Superior Court of Justice, seeking to dismiss Eagle’s claim as having no real issue requiring a trial. The Court found that Eagle’s pleadings failed to provide any specific evidence in support of its allegations, and that thus there was no evidence before the Court of any breach of the non-competition clauses. Given this, the Court found that Eagle had no reasonable prospect of succeeding at a trial, and dismissed the claim, with legal costs awarded to the former employees.

 

Lessons Learned from Eagle’s Non-competition Clauses

While this case is not precedent-setting, it does provide a useful reminder for employers and employees: a bare assertion that an employee violated non-competition clauses is not sufficient to enforce the breach in court. The party alleging the breach must always show evidence of the breach in order to succeed at trial. A lack of evidence can result in the claim being dismissed before it gets to trial, even if the employee’s conduct really was in breach of the contract. Even where there is a legally binding non-competition or non-solicitation clause in place, the employer will have to show evidence that the employee actually did breach the clause, or else risk their claim being dismissed, as occurred in Eagle Professional Resources Inc. v. MacMullin.

 

This post was guest authored by Nathan Rayan.