Risk to employer 'because she was an important employee, not because she was a fiduciary'
“A fiduciary has the authority to do things on behalf of a company and they have an implied obligation to always act in the best interest of
that company, whereas a valuable employee without that authority doesn't really carry that implied obligation in the same sense - they probably act in their own interest first, while a fiduciary arguably has an obligation to act in the company’s interest before their own.”
So says labour and employment lawyer Allie Laurent of McLennan Ross in Calgary, after the Alberta Court of King’s Bench dismissed an employer’s application for an interlocutory injunction against a former employee and her new employer over the worker’s alleged breaches of fiduciary duty.
The worker started working for Imperial Printing, an offset printing company in Edmonton, in 1999. Over time, her position expanded to include scheduling, planning, estimating, stock purchasing, and providing quotes to clients. She was considered a valuable employee with extensive knowledge and expertise in the printing industry, as she had worked in her family’s printing business before joining Imperial.
The worker had no written restrictive covenants with Imperial.
On March 31, 2020, the original owners of Imperial sold the company’s assets to a numbered company that was part of the Rayacom Group of Companies, a group of printing businesses in BC, Alberta, and Saskatchewan. In the sale agreement, Rayacom assumed no obligations of Imperial or any employment contracts.
The new owners gave the worker the option to work at the new company, which she accepted. She continued in a similar role with the new Imperial Printing with no additional employment contract or restrictive covenants.
Dissatisfaction led to resignation
In 2023, Imperial moved from its original location to another location in Edmonton that it shared with another company that was part of the Rayacom group. The worker gradually became dissatisfied with management decisions that she felt hurt the business. She raised concerns with the new owner, but she felt that he ignored her input, making her feel marginalized.
In late 2023, the worker inquired about a possible job at Westkey Graphics, another printing company based in Vancouver. She met with management but there were no positions available.
The worker resigned from her position at Imperial on Feb. 28, 2024, with two weeks’ notice. She was asked to train a replacement during those two weeks, although they never met in person and all the training was done over email and telephone during a four-day period.
On March 9, the worker contacted Westkey and this time they had a job available. She started employment with Westkey on March 18 as an account manager for the company’s existing clients.
After the worker joined Westkey, she sent emails to certain former clients from Imperial to let them know of her new contact information. She wanted to make sure they knew she wasn’t retiring, as Imperial had given them the impression that she had left the industry. She said some positive things about Westkey, but also mentioned the staff were inexperienced. Some of the clients responded with suggestions of future dealings with Westkey, but the worker didn’t follow up with them as she wasn’t responsible for developing new accounts.
Accusation of soliciting clients
Imperial’s owner learned of email communications between the worker and an Imperial client, which he believed was an attempt to lure the client and its business to Westkey. He asked the worker about it and subsequently had his lawyer send a cease-and-desist letter to the worker and Westkey. Westkey’s counsel replied that they hadn’t done anything unlawful and refused to comply.
Imperial did a financial analysis and concluded that its revenues had decreased because of the worker luring clients away. It applied for an interlocutory injunction against the worker and Westkey banning them from soliciting its clients for a period of one year. It argued that Westkey was a bigger company with many clients and the harm Imperial would suffer without the injunction was more significant than what Westkey might suffer if the injunction was granted.
Imperial argued that the worker was a key employee – holding the title of plant manager in the organizational chart – who was the primary interface between Imperial and its existing clients, participated in important meetings, and had extensive expertise, so she was therefore a fiduciary. She improperly enticed clients to move their business to Westkey, causing financial and reputational harm, the company said.
The worker and Westkey asserted that she wasn’t a fiduciary and had not breached any obligations. They contended that Imperial’s losses, if any, were either self-inflicted or compensable in damages. The worker also argued that she had never held a general manager or plant manager title, and her business card didn’t include either title.
The court applied a modified version of the RJR-MacDonald test, requiring Imperial to demonstrate a "strong prima facie case" for its claims and show that it would likely succeed at trial.
No decision-making authority
While the worker had held administrative and client-servicing roles with Imperial, the court found no evidence that she had exercised unilateral power or discretion over the company’s legal or operational interests. The court noted the lack of a job description, performance reviews, or evidence of independent decision-making authority. Her duties were largely administrative, carried out under the direction of Imperial’s management, said the court, noting that “simply knowing who the customers are or having relationships with them” didn’t make an employee a fiduciary.
The court also pointed out that, when Imperial was sold, the choice to stay with the new ownership was hers on a “take it or leave it” stipulation. And when she resigned, Imperial replaced her in a cavalier fashion with just four days of remote training of her replacement. These weren’t indicative of a key, mission-critical employee, said the court.
The court determined that worker was a valuable and experienced employee who had “a variety of administrative tasks” but she wasn’t a "key employee" in the fiduciary sense, stating that the value of an employee doesn’t prove vulnerability of the employer to the employee’s actions.
“It didn't look like [Imperial] had evidence that the worker had the authority to sign significant contracts or make significant decisions that would bind the company,” says Laurent. “One of the reasons she left is that there was a disagreement about the way things were done and [Imperial] disregarded her opinion on those things, and ultimately let her leave.”
“[Imperial] just failed to really demonstrate that [the worker] was in a fiduciary role and it was vulnerable to her in a way more than an employer is normally vulnerable just because somebody is an important person to the organization,” she adds.
No client solicitation, breach of confidentiality
The court also found that, while some of the worker’s emails extolled the virtues of her new employer, there was insufficient evidence to establish solicitation reaching the threshold of a "strong prima facie case."
On the issue of confidentiality, the worker testified that she didn’t take customer lists or other proprietary information from Imperial. The court accepted that she reconstructed some client contact details from memory or public sources, which wasn’t a breach of confidentiality under Alberta law, the court said.
The court also found no evidence of irreparable harm to Imperial, as financial information the company presented included the three months before the worker left. In addition, any potential losses were quantifiable and compensable in damages, said the court, noting that granting the injunction would interfere with consumer choice and the public interest, particularly given the competitive nature of the printing industry.
The court dismissed Imperial’s application for an interlocutory injunction, stating that Imperial “has a very difficult road” to establish at trial any breach of fiduciary duty by the worker.
Document fiduciary duty
If a company truly believes that an employee is a fiduciary, that needs to be in some sort of documentation during their active employment, according to Laurent.
“When you can demonstrate that the employee knows they're in a fiduciary position, then their breach is more egregious because they understood that they had that type of authority that comes from their role within the company,” she says.
“I think [Imperial’s] point was that the worker was important to the organization and she'd been there a long time, so it was certainly exposed to some risk if she left,” adds Laurent. “But the court essentially found that [Imperial] was exposed to risk because she was an important employee, not because she was a fiduciary.”
