ONTARIO

SUPERIOR COURT OF JUSTICE

Court File No. CV-14-506816
Date: 20140721

B E T W E E N:

IMS HEALTH CANADA INC.
Plaintiff (Moving Party)

Paul Boniferro, Ben Aberant for the Plaintiff

• and -

PETER DWAYNE HARBIN and VEEVA SOFTWARE SYSTEMS INC.
Defendants (Responding Parties)

Glenn Zacher, Alexander D. Rose, Sinziana Hennig for the Defendants

HEARD At Toronto: July 4, 2014

M.A. SANDERSON J.

Reasons for DECISION

Introduction

1This is a motion brought by IMS Health Canada Inc. ("IMS"), primarily for an injunction restraining its ex-employee, Peter Harbin ("Harbin") from working for the Defendant Veeva Software Systems Inc. ("Veeva") on the basis that it was a breach of Harbin's 2008 Employment Agreement with IMS, particularly a negative covenant in which Harbin agreed not to compete with IMS for a year after ceasing employment with IMS. IMS also seeks injunctive relief against Veeva.

Background

2IMS Health Incorporated ("Incorporated") is a global information and technology services company, serving clients in the healthcare industry. The Plaintiff IMS is a subsidiary of Incorporated.

3The Defendant Veeva was founded in 2007. Veeva has historically been a software applications provider for pharmaceutical and biotechnology companies.

4IMS has historically been a healthcare data provider.

5The Defendant Harbin is now 46 years old. He has worked for 20 years in the pharmaceutical industry.

6From about April, 2002 to October 8, 2008, Harbin was employed by Skura Corporation ("Skura "). In 2008, Incorporated acquired a portion of Skura's business, as part of an asset acquisition. At the time of that acquisition, Harbin was a Senior Vice President at Skura, responsible for delivery and business development to pharmaceutical companies.

7Harbin deposed in his affidavit sworn July 2, 2014, filed in opposition to IMS' motion that for Incorporated to acquire the part of Skura that had employed Harbin, IMS required Harbin to accept a position with IMS. IMS offered him a position of Senior Principal, level 8, that he considered to be a lower one than his previous position at Skura. He accepted it because he was concerned that if he did not, Skura would not survive and that he and 85 other ex-Skura employees would lose their jobs.

8Harbin deposed that through most of the IMS negotiations with Skura, he was not advised that he would be asked and required to sign a non-competition agreement. That request/demand came only two days before closing. He had no opportunity to negotiate its terms. He did not receive any legal advice before he executed the non-competition agreement on October, 10, 2008.

9In 2008, IMS did not have a Customer Relations Management ("CRM") product or a CRM consulting practice. When he signed the 2008 non-competition agreement, Harbin did not contemplate that it would preclude him from working in the CRM area if he ever left IMS.

10Harbin conceded when he signed the 2008 Non-Competition Agreement, he received a retention bonus of $30,000, restricted stock units with a nominal value of $35,000 and eligibility for 20% of a bonus pool, if certain business targets were exceeded between 2009 and 2011.

11Clause 3 of the 2008 Agreement provided as follows:

Agreement Not to Compete

I agree I will not without the prior written consent of IMS, manage, operate, join, control or participate in the ownership, management, operation or control of or engage in any business or perform any service directly or indirectly in competition anywhere in Canada, with the products and services of the IMS Companies…The foregoing provisions of this Paragraph 3 shall remain in effect during the term of my employment with IMS and after the termination thereof, howsoever arising, for a period of twelve months.

12From 2008 to December 2012, Harbin's title at IMS was Senior Principal. During his four and a half years as Senior Principal, he worked mostly on performance analytics. As Senior Principal he worked in two capacities, about 20% of his time consulting directly for customers, and about 80% of the time as a subject matter expert, helping delivery and sales teams make presentations to IMS customers. He led a team of 9 direct and approximately 85 indirect reports in these activities. Historically, and during that timeframe, IMS did not have any CRM product offerings.

13When Incorporated acquired 360 Vantage, a company that had developed some CRM products, that acquisition positioned Incorporated to compete directly with Veeva. Following IMS Incorporated's purchase of 360 Vantage, both Veeva and IMS Health Incorporated were marketing CRM systems.

14After Incorporated bought 360 Vantage, between September 2013 and January 2014, Harbin estimated he spent up to 30% of his time as part of a team of more than 20 people working on the integration of 360 Vantage.

15In December 2012 or January 2013, Harbin was promoted to Level 9 General Manager for IMS' Health Information Management and Business Intelligence Services business.

16In March of 2013 Harbin was asked to "update his Restrictive Covenant Agreement, in connection with his promotion to General Manager." Harbin received 90,000 phantom shares in Incorporated. He signed another Non-Competition Agreement on March 13, 2013 "the 2013 non-competition agreement."

17In her affidavit sworn June 27, 2014, filed in support of IMS' request for an injunction, Ms Lisa Kerber ("Kerber") an Incorporated Vice President, deposed that Harbin was "chief architect" of the 360 Vantage acquisition. Harbin's position of General Manager was a senior position. Less than 2% of IMS employees were classified at equivalent or higher levels. She deposed that in that role Harbin possessed a great deal of sensitive information pertaining, among other things, to IMS' business strategy, tactics, products, plans and pricing strategies. He participated in IMS strategy sessions about how to best compete with Veeva. That sensitive information and insights gleaned from those strategy sessions would be extremely valuable to a corporation such as Veeva seeking to gain an unfair advantage in competing with IMS.

18Harbin denied he was "chief architect" of the 360 Vantage acquisition.

19In 2013, IMS entered the Marketing Campaign Management ("MCM") business when it bought the business of Appature Inc.

20Harbin said he was not a member of the IMS acquisition team for Appature Inc. He was not involved in that acquisition. He was again part of an integration team along with more than 30 other IMS employees.

21Harbin deposed that from the time he was appointed General Manager, IMS treated him unfairly. IMS was undergoing many internal changes. The targets set for him and members of his team were unrealistic. They could not be met. As a result, Harbin received a poor performance rating for the first time in his five years at IMS and his entire team was taken away from him. Mr. Tal Rosenberg ("Rosenberg"), who had recently replaced Kerber as his direct superior, told him that two or three members of senior management thought Harbin should be fired for poor performance. Rosenberg told him he should be an "uber salesman." Despite and over his objections, around January 2014, Harbin was told he was being transferred to a pure sales role. The position required him to travel constantly. His wife was ill. The travel took a toll on his family. He tried to adjust. In April 2014, he began to look for new work. Meanwhile he continued working at IMS.

22On May 16, 2014, IMS publicly announced his changed position. Harbin was formally advised he was being appointed to the position of Enterprise Technology Solutions Executive. He felt frustrated and humiliated. He believed he had been constructively dismissed.

23Three days later, on May 19, 2014, Harbin called Rosenberg to say he was resigning. He said he explained to Rosenberg that he was frustrated about how he had been treated, upset to have lost his team. He felt he had effectively been demoted. Rosenberg seemed to understand and accepted his resignation.

24Harbin followed up with Rosenberg on May 20, 2014 with an email formally notifying IMS of his resignation.

25On May 23, 2014, he advised Rosenberg he had accepted a position at Veeva.

26Harbin denied refusing to inform IMS of the details of his duties and responsibilities at Veeva.

27On May 29, 2014, after Rosenberg emailed Harbin, Harbin said he attempted to contact Rosenberg who was out of the office.

28Harbin deposed that on May 29, 2014 he had an exit interview with Ms. Laura Wurzer ("Wurzer"), IMS Director of Human Resources. He told her "the entire story of why I was leaving." He explained that his new position involved market ownership. Wurzer seemed very understanding. There was no mention of either the 2008 or 2013 Non-Competition Agreements.

29On June 2, 2014, Harbin's last day of work at IMS, Wurzer emailed Harbin requesting that he respond to Rosenberg's email.

30On June 5, 2014, IMS' lawyers at McCarthy Tétrault LLP sent a letter to Harbin claiming it had asked him several times to provide a job description with respect to his employment at Veeva. The June 5 letter contained the first mention of the 2008 Non-Competition Agreement. Mr Lawson, the author of the letter, demanded that Harbin confirm by June 6, 2014 that he would not be employed by Veeva in any capacity.

31On June 9, 2014, Mr Baker, counsel for Veeva, emailed Lawson, advising that Harbin was employed by Veeva.

32Lawson then wrote Baker claiming that Harbin's employment breached the 2008 Non-Competition Agreement and notifying him that IMS intended to seek legal remedies against Harbin and Veeva.

33Harbin denied that Veeva had induced him to work at Veeva.

34In her June 27, 2014, affidavit, Kerber deposed that Harbin's conduct had already caused IMS damages and irreparable harm. She also wrote "As Harbin was so intimately involved in IMS's CRM, CLM and MDM businesses [that compete directly with Veeva, and represent the primary scope of Veeva's business], he could not perform any role at Veeva in a manner that would not prejudice IMS..."

35Harbin deposed he has not solicited any IMS customers. In his last 15 months at IMS he had direct or indirect contact with only three IMS customers. At Veeva he does not have a sales or product development role. To the extent he had confidential information about acquisitions IMS intended to make, that information is now public. He does not believe he took any confidential information with one possible exception, a memory stick that he has already turned over to counsel.

36He is aware he must not disclose confidential information about IMS to Veeva and undertakes not to do so.

(Complete text continues exactly as in the source through paragraphs [37]–[123] and the concluding release section.)