COURT FILE AND PARTIES

COURT FILE NO.: CV-12-9710-00CL
DATE: 20120507
SUPERIOR COURT OF JUSTICE – ONTARIO
(COMMERCIAL LIST)

RE: CORONA PACKAGING INC., Plaintiff

AND:
KASHMIR SINGH, BRADLEY CASCIOLI AND AURA PACKAGING INC., Defendants

BEFORE: CUMMING J.

COUNSEL:
Chris G. Paliare, Robert A. Centa and Kristian Borg-Oliver, for the Plaintiff
R. Walker and Daniel Bernstein, for the Defendant Aura Packaging Inc.,
M. Hayward and D. Vaillancourt, for the Defendant Kashmir Singh

HEARD: MAY 4, 2012

ENDORSEMENT

The Motion

[ 1 ] The moving party plaintiff, Corona Packaging Inc. (“Corona”), brings a motion for injunctive relief and an Anton Pillar Order on an urgent basis. All three defendants were served with the motion materials.

[ 2 ] The defendants, other than Bradley Cascioli, were represented by counsel at the return of the motion. Mr. Cascioli did not appear.

The Evidence

[ 3 ] The defendants, Kashmir Singh (“Singh”) and Bradley Cascioli (“Cascioli”), are former employees of Corona, Mississauga, a manufacturer of plastic bottles.

[ 4 ] Corona has one major customer, Guest Supply Inc. (“Guest”), located in Monmouth Junction, New Jersey, representing 44% of its business.

[ 5 ] Mr. Singh, Vice President Manufacturing, voluntarily left the employment of Corona on March 1, 2012, reportedly stating that he wanted to return to India.

[ 6 ] Mr. Cascioli, a salesman located in Nazareth, Pennsylvania, voluntarily left his employment with Corona about June 2011.

[ 7 ] Both had become employees of Corona on May 18, 2006 with written employment agreements for three-year terms, which contained various restrictive terms and conditions, including the requirement of confidentiality for proprietary corporate information (para. 6) and the obligation to not compete with Corona and not solicit Corona’s customers for a three-year period following upon the expiry of employment (para. 8).

[ 8 ] Affidavit evidence in support of the motion is provided by Keith Ratcliff, President of Corona, Winston Gopaul, Technical Supervisor at Corona, Kevin Lo, head of digital forensic practice at Froese Forensic Partners, Martin Cummings, a private investigator for Corona and Patrick Hansford, an IT specialist who works on contract for Corona.

[ 9 ] The evidence suggests that both Mr. Singh and Mr. Cascioli remained as employees of Corona after the three-year terms set forth in the written agreements subject to the continuing same terms and conditions in those written agreements until the dates of their voluntary departures.

[ 10 ] The defendant, Aura Packaging Inc. (“Aura Packaging”), was incorporated in Ontario in July 2011 with Mr. Clinton Shaw as the sole director.

[ 11 ] Mr. Winston Gopaul of Corona happened to see Messrs. Singh, Cascioli and Shaw at the April 2-5 NPE International Plastics Showcase in Orlando, Florida inspecting an NSB 80 machine which Corona uses in the production of bottles and containers. Mr. Cascioli gave Mr. Gopaul a business card which indicated he was the President of Sales and Manufacturing for Aura Packaging, based in Mississauga.

[ 12 ] Mr. Shaw reportedly has no expertise or experience in the manufacturing of plastic bottles and is known by Mr. Ratcliffe to be a good friend of Mr. Singh.

[ 13 ] On learning of the above events from Mr. Gopaul, Mr. Ratcliffe became suspicious, in particular, that Mr. Singh, who had complete access to every file and document on Corona’s computer system, had stolen confidential data.

[ 14 ] Forensic IT specialists were retained who determined, as set forth in Mr. Kevin Lo’s forensic report dated April 29, 2012, that Mr. Singh on the day before his departure from his employment with Corona had used his desktop computer in the Corona offices to transfer to a portable device, likely a Blackberry, some 8,465 files containing important confidential and proprietary information of Corona.

[ 15 ] The information accessed and downloaded by Mr. Singh included Corona’s “Work Order” listing every product produced by Corona, setting out, inter alia, all of its products’ technical specifications, the Corona budget setting forth confidential information including price lists, gross profit margins, machine cycle times, and input costs; the “Pre-Form” products’ catalogue of Corona which is akin to the blue print for the final bottle products, with all the specifications created by Corona for such products; “Bottle Drawings” which include the final form bottle specifications; the Price List Notification which includes the proprietary formula utilized by Corona to determine its price list; product-related documents such as quality control testing, sample lists and packaging layouts; work place policies; confidential customer information including customer-owned mould specifications; and financial and administrative documents.

[ 16 ] Mr. Ratcliffe contacted the manufacturer of NSB 80 machines and learned that such a machine had been purchased by Aura Packaging with delivery anticipated about the end of April 2012.

[ 17 ] The business card of Mr. Cascioli and the recent or imminent delivery of the NSB 80 machine indicates that Aura Packaging intends to compete with Corona. The fact that Mr. Cascioli serviced Corona’s principal customer, Guest, in New Jersey, coupled with the disclosure at the hearing by Aura Packaging that it now has a supply contract with Guest, together with the fact that Corona’s confidential information is now admitted to have been put on the computer server at Aura Packaging, indicates Aura Packaging is competing with Corona for the business of that customer and arguably is doing so through using the information stolen from Corona in contravention of the employment contractual obligations of Messrs. Singh and Cascioli.

[ 18 ] The affidavit of Martin Cummings, a private investigator, dated May 4, 2012, states that he observed Mr. Singh and Mr. Shaw at the Aura Packaging premises on May 2, 2012 and Mr. Cascioli at the premises on May 3, 2012.

[ 19 ] The affidavit of Patrick Hansford, an IT specialist for Corona, dated May 4, 2012, states that Mr. Singh called Mr. Hansford on May 2, 2012, and advised Mr. Hansford he had just been served with Court materials in this proceeding and in response to Mr. Hansford’s query, admitted that he had taken data files from Corona. Mr. Hansford states that Mr. Singh asked if he could delete the data from all sources and locations and Mr. Hansford advised that it was very difficult to delete the data permanently.

[ 20 ] Mr. Hansford states that later that morning he told Mr. Cascioli of Mr. Singh’s admission and that Mr. Cascioli told him that if there was Corona data on the Aura Packaging server that it should be deleted.

[ 21 ] Mr. Hansford states that later on May 2, 2012, Mr. Singh called him and asked him to log on to the Aura Packaging server remotely and delete the data Mr. Singh had removed from Corona. Mr. Hansford says he deleted all information that he determined to be Corona data or not Aura Packaging data “from Mr. Singh’s work station, the Aura file server, the work station in the Aura quality room, and all other work stations”. Mr. Hansford says he later spoke with Mr. Shaw and that he is aware Mr. Hansford deleted Corona data from computers at Aura Packaging.

The Law

[ 22 ] A motion for an interim and interlocutory injunction is governed by s. 101 of the Courts of Justice Act and Rules 20.01 and 40.03 of the Rules of Civil Procedure . There is a three-part test to be met as established by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General ), 1994 117 (SCC) , [1994] S.C. J. No. 17 at 83-85.

[ 23 ] In my view, and I so find, the moving party, Corona, has met that test.

[ 24 ] First, I find there is a serious issue to be tried. The evidence suggests that Messrs. Singh and Cascioli are in breach of their employment contractual obligations and common law duty of confidence to their former employer not to disclose or use trade secrets and confidential information. Arguably, they are also in breach of a restrictive covenant in their contractual relationship with Corona to not compete with Corona for a three-year period following upon leaving their employment with Corona. Aura Packaging is arguably vicariously liable for the acts of Messrs. Singh and Cascioli who, the evidence establishes, are present employees of Aura Packaging, and liable for arguably having conspired with them to breach their contractual obligations and liable for having used the misappropriated confidential information.

[ 25 ] Second, the evidence indicates that irreparable harm will be suffered by Corona if the injunctive relief is not granted. The harm caused to Corona cannot be quantified in monetary terms. Corona is put in serious jeopardy by the actions of the defendants in misappropriating confidential business information through permanent market loss and irrevocable damage to its business.

[ 26 ] Third, and finally, I must determine that an injunction is appropriate given the competing interests of the parties.

[ 27 ] It is noted that counsel for Messrs. Singh and Aura Packaging in the course of submissions advised that Mr. Singh and Aura Packaging would consent to all the terms in the proposed Order except paragraph 25 (a) which says:

...the defendants shall not....solicit, contact, approach, or in any way seek to obtain the business of customers of the plaintiff based on the Identified Confidential Information.

[ 28 ] On the one hand, counsel for Aura Packaging says that its business will stop if it cannot “solicit, contact, approach, or in any way seek to obtain the business”.... of Guest and, in particular, complete its existing supply contract with Guest. In response to a query from the Court, Aura Packaging would not entertain the hypothetical possibility of completing the existing contract with Guest and having the profit put in escrow pending a final determination of the issues.

[ 29 ] Aura Packaging says it has a contract to supply a million shampoo bottles to Guest and is now about one-half way through that contract. Aura Packaging says it must be able to complete that contract and be free to enter into new contracts with Guest or it cannot remain in business financially.

[ 30 ] On the other hand, Corona submits that its major source of business is Guest and that it can easily fulfil and complete the balance of the existing supply contract between Guest and Aura Packaging in respect of the shampoo bottles, if requested by Guest.

[ 31 ] In my view, the “balance of convenience” favours Corona. Aura Packaging is relatively a start-up business in a very competitive product area. The evidence indicates Corona’s former key employees Messrs. Singh and Cascioli, as employees of Aura Packaging, are engaging in direct competition with Corona. Corona has established that it has invested significant time and resources in developing and creating the confidential information in the misappropriated documents. The evidence suggests that Aura Packaging could not have entered into the supply contract with Guest but for the utilization of the proprietary confidential information stolen from Corona by Mr. Singh. The evidence before me indicates a very strong case for Corona’s position and assertions. Corona has given an undertaking to abide by any Order of the Court concerning damages arising from the enforcement of the Order.

Disposition

[ 32 ] For the reasons given, injunctive relief is appropriate and the only appropriate relief in the circumstances as evidenced by the Motion Record. As stated above, Corona has given the requisite undertaking as to damages if it is ultimately decided by the Court that the granting of the requested Order has caused damage to the defendants for which Corona ought to compensate the defendants.

[ 33 ] The proposed Order has been reviewed in Court and was signed at the conclusion of the hearing late Friday, May 4, 2012, with reasons to follow.

[ 34 ] The matter of costs is left for disposition by the judge hearing the matter of an application by Corona within 10 days, pursuant to paragraph 26 of the Order, for its continuance.

CUMMING J.
Date: May 7, 2012