Court File and Parties
COURT FILE NO.: CV-19-00622980 DATE: 20200402 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Edward Jones Plaintiff/Respondent – and – Chris Schoonderwoerd and National Bank Financial Defendants/Moving Party
COUNSEL: Mark Shapiro and Dylan Augruso, for the Plaintiff Bradley Berg and Adam Nickerson, for the Defendants
HEARD: February 7, 2020
Davies J.
Reasons for Decision
A. Overview
1Chris Schoonderwoerd is an investment advisor who worked for the financial services firm, Edward Jones, in St. Albert, Alberta from December 2013 until May 2019. He started working as an investment advisor at National Bank Financial immediately after he resigned from Edward Jones. Mr. Schoonderwoerd’s employment contract with Edward Jones prohibited him from soliciting clients he acquired from or during his time at Edward Jones for a period of time after he left. His contract also required him to return confidential or proprietary information to Edward Jones when his employment with them ended.
2Edward Jones commenced an action in Ontario claiming that Mr. Schoonderwoerd, with the assistance or encouragement of National Bank Financial, breached the non-solicitation and non-disclosure terms of his contract.
3Mr. Schoonderwoerd and National Bank Financial have brought this motion to stay the action in Ontario on the basis of forum non conveniens. Mr. Schoonderwoerd and National Bank Financial acknowledge that this Court has jurisdiction but argue that it should decline to exercise its jurisdiction in this case. For the reasons that follow, I find that Alberta is the clearly more appropriate forum and the motion is granted.
B. Legal Framework
4As a general rule, a court should exercise its jurisdiction once it is established. However, jurisdiction can be established on a low threshold and sometimes the rules governing the assumption of jurisdiction result in unfairness or create inefficiencies in the resolution of a case. [1] The power of the court to decline to exercise its jurisdiction, or stay proceedings on the basis of forum non conveniens, recognizes that favouring the exercise of jurisdiction in the forum where it is properly assumed must not “come at the cost of one party facing unfair or clearly inefficient proceedings.” [2]
5It is not enough for Mr. Schoonderwoerd and National Bank Financial to show that Alberta is an appropriate forum. The burden is on the defendants to show that Alberta is clearly the more appropriate forum, meaning that Alberta is in a better position to dispose of this matter fairly and efficiently. [3] If Alberta and Ontario are comparable forums, Edward Jones is entitled to have the matter decided in the forum of its choosing. On the other hand, if the forum chosen by the plaintiff, in this case Ontario, will not provide the defendants with a fair opportunity to present their case, a stay will be justified. [4]
6The factors relevant to the issue of which forum is more appropriate such that the court should decline to exercise its jurisdiction will vary from case to case. In Van Breda, the Supreme Court held that the following may be relevant factors: “the locations of parties and witnesses, the cost of transferring the case to another jurisdiction or of declining the stay, the impact of a transfer on the conduct of the litigation or on related or parallel proceedings, the possibility of conflicting judgments, problems related to the recognition and enforcement of judgments, and the relative strengths of the connections of the two parties”. [5] In a contract dispute like this, where the contract was signed, whether the contract specifies the applicable law, where the breach occurred and where the damages were incurred might also be relevant. [6]
7The strength and nature of the connection between the subject matter and the forum selected must be considered when deciding whether another forum is clearly more appropriate. Jurisdiction based on a weak connection may be more easily displaced in favour of another more appropriate forum. [7]
C. Analysis
8Mr. Schoonderwoerd and National Bank Financial argue that this Court should decline to exercise its jurisdiction because there is a much stronger connection to Alberta in this case. To support their position, the defendants point to the facts that the employment contract was carried out in Alberta, the alleged breaches occurred in Alberta, the alleged damages were sustained in Alberta, most of the relevant witnesses are in Alberta and any physical evidence is in Alberta.
9On the other hand, Edward Jones argues that because the subject matter of the litigation is closely connected to Ontario, and the defendants have a real and substantial connection to Ontario, this Court should exercise its jurisdiction and dismiss the motion. The plaintiff relies on the fact that National Bank Financial and Edward Jones both carry on business in Ontario, the employment contract was formed in Ontario and the contract is governed by Ontario law. Edward Jones also takes the position that most of the relevant witnesses and documents are in Ontario, or at least not in Alberta.
10There are factors in this case that favour Ontario as the appropriate forum. For example, the employment contract was formed in Ontario. The general rule is that a contract is formed where the offeror, in this case Edward Jones, receives notice that the offeree, Mr. Schoonderwoerd, has accepted their offer. Mr. Schoonderwoerd signed an Employment Agreement and a Supplemental Agreement on December 6, 2013 in Alberta. He sent the documents to Toronto, where an Edward Jones representative signed them. Because Mr. Schoonderwoerd sent the signed documents to Ontario by fax, Edward Jones received notice that he accepted their offer in Ontario and that is where the contract was formed. [8] Each agreement also contains a clause that says that any dispute arising out of the agreement will be governed by Ontario law.
11There are other factors that are neutral or not relevant in this case. For example, there is no related litigation pending in any other jurisdiction so there is no risk of conflicting judgments. There is also no evidence that Edward Jones would lose a juridical advantage if this case proceeds in Alberta.
12However, there are three factors that, taken together, tip the balance in favour of Alberta being clearly the more convenient forum in this case: the location and convenience of the parties, where the contract was performed and allegedly breached, and the location and convenience of the witnesses.
i. Location of and convenience to the parties
13Edward Jones and National Bank Financial are both national companies who carry on business in Alberta and Ontario. Edward Jones’ head office is in Ontario. National Bank Financial’s head office is in Montreal but it has offices in Ontario as well. The corporate parties each have a similar connection to Ontario and Alberta. Neither jurisdiction would be clearly more convenient than the other for the corporate parties in this case.
14The same is not true for Mr. Schoonderwoerd. He lives in Alberta. He has been working in and around Edmonton since 1998. Proceeding in Alberta would be much more convenient for Mr. Schoonderwoerd.
ii. Performance and Breach of the Contract
15Throughout his tenure with Edward Jones, Mr. Schoonderwoerd worked in Alberta. He ran Edward Jones’ retail investment office in St. Albert, Alberta. He was permitted to take on clients in other parts of Canada and had a handful of clients outside of Alberta. However, his office was in Alberta and more than 90 percent of his clients were in Alberta. Mr. Schoonderwoerd’s supervisor was in Edmonton. In other words, Mr. Schoonderwoerd carried out his obligations under his employment contract almost exclusively in Alberta. And when he resigned from Edward Jones, he gave his letter of resignation to his supervisor in Edmonton.
16To the extent that Mr. Schoonderwoerd solicited Edward Jones' clients to move their investments to National Bank Financial or retained client or proprietary information belonging to Edward Jones when he left in violation of his employment agreements, he did all of that in Alberta. Therefore any breach of the employment contract took place in Alberta.
iii. Location of and convenience to the witnesses
17The location and convenience to the anticipated witnesses is a matter of significant dispute between the parties and a crucial issue on this motion. Edward Jones takes the position that none of its principal witnesses are in Alberta. On the other hand, the defendants take the position that most of the relevant witnesses are in Alberta, and they question the relevance of the witnesses identified by the plaintiff.
18There will be some witnesses in this case from Ontario. However, for the reasons that follow, I find that the majority of the relevant witnesses are in Alberta. It would create significant inconvenience and cost for those witnesses to travel to Ontario for discovery or trial, which would undermine both the fairness and efficiency of a trial in Ontario.
19To analyze the positions of the parties about who will likely be called as a witness and where the witnesses are located, it is necessary to set out in some detail the chronology of events, the terms of Mr. Schoonderwoerd’s employment contract with Edward Jones and the particulars of the plaintiff’s claims against Mr. Schoonderwoerd and National Bank Financial.
20Mr. Schoonderwoerd had been an investment advisor in Alberta for approximately 15 years when he joined Edward Jones in late 2013. He had many existing long-standing clients at that time. Approximately 170 of his clients at that time transferred their investment accounts to Edward Jones when Mr. Schoonderwoerd started working at their office in St. Albert, Alberta.
21As part of his employment agreement with Edward Jones, Mr. Schoonderwoerd was also required to take on 18 existing Edward Jones clients.
22Mr. Schoonderwoerd resigned from Edward Jones on May 14, 2019 and started working at National Bank Financial the next day. When Mr. Schoonderwoerd left Edward Jones, he had approximately 250 active clients. Of those, 170 were the long-time clients he brought with him to Edward Jones, 18 were Edward Jones clients he took on when he joined and 62 were new clients he developed during his time at Edward Jones.
23Mr. Schoonderwoerd’s Employment Agreement prohibited him from soliciting any Edward Jones customers for one year after his employment there ended. Solicitation is defined in the Employment Agreement as initiating any “contact or communication, of any kind whatsoever, for the purpose of inviting, encouraging or requesting Edward Jones customers, to transfer from Edward Jones” to him or his new employer. Clients that Mr. Schoonderwoerd worked with before joining Edward Jones were exempt from the non-solicitation clause.
24The Supplemental Employment Agreement dealt with the 18 Edward Jones clients Mr. Schoonderwoerd inherited when he started working there. Those clients are referred to in the Supplemental Agreement as “Gifted Accounts”. The Supplemental Agreement says that for a period of five years after Mr. Schoonderwoerd leaves Edward Jones, he “shall not contact any Gifted Account for any purpose, or solicit or attempt to solicit, directly or indirectly, Gifted Accounts in an attempt to divert, transfer or take away Gifted Accounts from Edward Jones”. The Supplemental Agreement defines solicitation as any communication, regardless of who initiates it, for the purpose of inviting, encouraging or requesting a client to transfer their investments from Edward Jones.
25Some of Mr. Schoonderwoerd’s clients transferred their accounts from Edward Jones to National Bank Financial shortly after he started working there on May 15, 2019. Edward Jones alleges that Mr. Schoonderwoerd transferred in excess of $41 million in investments from Edward Jones to National Bank Financial after he resigned.
26In its Statement of Claim, Edward Jones alleges that Mr. Schoonderwoerd contacted clients to advise them that he had moved to National Bank Financial. It also alleges that Mr. Schoonderwoerd solicited clients to transfer their accounts to National Bank Financial. Edward Jones also alleges that Mr. Schoonderwoerd retained copies of confidential client lists when he left. Finally, Edward Jones alleges that all of Mr. Schoonderwoerd’s activities were done at the direction of, or with the encouragement and assistance of National Bank Financial.
27Mr. Schoonderwoerd swore an affidavit in support of this motion. In cross-examination, Mr. Schoonderwoerd acknowledged that he did contact approximately 30 clients by phone on May 15, 2019 to let them know that he was no longer working for Edward Jones. He testified that if a client asked, he would tell the client he moved to National Bank Financial. He said he did not send any correspondence to any clients about his move. Mr. Schoonderwoerd also testified that some of his clients told him that they were advised of his move to National Bank Financial by the Edward Jones advisors who took over Mr. Schoonderwoerd’s portfolio when he resigned.
28On May 29, 2019, Edward Jones sent a letter to all of Mr. Schoonderwoerd’s clients and told them that he was no longer with Edward Jones. The letter says that another financial advisor, Mark Claffey, had been asked to assist Mr. Schoonderwoerd’s clients. The letter also says, “As a courtesy, I also want to let you know Chris Schoonderwoerd is now employed by Angus Watt Group at National Bank”.
29Based on the language of the Employment Agreement and Supplementary Agreement, there are 80 clients who could be the subject of the non-solicitation claim: the 18 Edward Jones clients that Mr. Schoonderwoerd inherited when he joined their firm and the 62 new clients he established while working for Edward Jones. The other 170 clients he had when he joined Edward Jones are exempt from the non-solicitation clause.
30On this motion, Edward Jones takes the position that evidence from the clients who transferred their accounts from Edward Jones to National Bank Financial is of limited value. Edward Jones argues that they only have to prove that Mr. Schoonderwoerd contacted some or all of the 80 clients and that some or all of the 80 clients moved their investments from Edward Jones to National Bank Financial to prove liability. I do not agree.
31The clients who moved from Edward Jones to National Bank Financial will have very relevant evidence to give on the nature of any communication they had with Mr. Schoonderwoerd before they transferred their investments, and in particular before the May 29, 2019 correspondence from Edward Jones to all of Mr. Schoonderwoerd’s clients.
32For the purpose of this motion, I will assume the restrictive covenants in the Employment Agreement and Supplemental Agreement are reasonable and enforceable. [9] Nonetheless, there will likely be issues at trial about how the agreements are to be interpreted and whether Mr. Schoonderwoerd solicited clients in breach of either agreement.
33In relation to the 62 new clients Mr. Schoonderwoerd acquired while working at Edward Jones, the plaintiff will have to prove that he initiated contact with them for the purpose of inviting, encouraging or requesting them to transfer their investments from Edward Jones to National Bank Financial. It is not enough for Edward Jones to simply prove that Mr. Schoonderwoerd contacted some of these clients to establish liability. The key issues with these clients will be whether Mr. Schoonderwoerd contacted them (or if they heard about his move from another Edward Jones advisor) and, even if he initiated the contact, whether he said anything to them that amounts to solicitation as defined in the contract. Mr. Schoonderwoerd testified on this motion that he did not send any written communication to any of these clients, so the evidence about who initiated contact and the nature of any conversations he had with them will have to come from Mr. Schoonderwoerd or the clients.
34As set out above, the Supplemental Agreement that deals with the 18 "Gifted Accounts" clients Mr. Schoonderwoerd inherited when he joined Edward Jones may be open to interpretation at trial. That agreement says that for five years after Mr. Schoonderwoerd leaves Edward Jones, he is prohibited from contacting any of those clients for any purpose, or contacting them to solicit or attempt to solicit them directly or indirectly for the purpose of diverting their investments away from Edward Jones. It will be for the trial judge to determine whether this agreement prohibits Mr. Schoonderwoerd from communicating with these clients for any reason at all for five years or only prohibits him from communicating with them for the purpose of encouraging them to transfer their investments. If the trial judge finds that the Supplemental Agreement only prohibits communications for the purpose of encouraging those clients to move their investments, those clients would also have relevant evidence to give about the nature of any communication they had with Mr. Schoonderwoerd about his move to National Bank Financial.
35Given that many of the clients will have relevant evidence to give, the focus of the analysis for the purpose of this motion is on where the clients are located. None of the clients who could be the subject of the solicitation claim live in Ontario. [10] Almost all of them live in Alberta. Those who do not live in Alberta live in British Columbia.
36Edward Jones takes the position that because Mr. Schoonderwoerd has not “clearly identified” which clients he intends to call at trial, the location of the clients should be given little weight on this motion. I disagree.
37Edward Jones has identified 200 clients who transferred their accounts from Edward Jones to National Bank Financial after Mr. Schoonderwoerd left. Edward Jones has not specified how many of those 200 clients are covered by the non-solicitation clause in the Employment Agreement or Supplemental Agreement.
38Edward Jones is not required in their pleadings to name the clients who were allegedly improperly solicited. But the fact that the solicited clients have not been identified makes it impossible for Mr. Schoonderwoerd or National Bank Financial to identify the clients they will need to call to respond to the claim. In any event, any client that is required to testify is either in Alberta or British Columbia.
39Even if all 170 of Mr. Schoonderwoerd’s pre-existing clients transferred their accounts after he left Edward Jones, there would still be 30 clients among the 200 who transferred their investments from Edward Jones who are covered by a non-solicitation condition. In other words, there are at least 30 witnesses with highly relevant evidence to give in this matter who all live in Alberta or British Columbia. There could be as many as 80 witnesses, or more, in Alberta or British Columbia. [11] Mr. Schoonderwoerd said in his affidavit that it is unlikely many of the clients he inherited from Edward Jones would be willing to travel to Ontario for discovery or trial. This factor strongly favours Alberta as the appropriate jurisdiction in this case for trial efficiency and convenience.
40There are other relevant witnesses who are in Alberta as well. For example, to the extent that the Edward Jones advisors who took over Mr. Schoonderwoerd’s clients and spoke to them after his departure become relevant, these advisors are all in Alberta. Mr. Schoonderwoerd’s supervisor during his tenure at Edward Jones is also in Alberta. To the extent that the recruiters and supervisors at National Bank Financial who dealt with Mr. Schoonderwoerd’s hiring and client transfers are needed to respond to the conspiracy allegation, they are also in Alberta.
[41] Edward Jones has identified five “key” witnesses who are located in Ontario:
- the recruiter who negotiated the Employment Agreement and Supplemental Agreement with Mr. Schoonderwoerd on behalf of Edward Jones;
- the two people who signed the Employment Agreement and Supplemental Agreement on behalf of Edward Jones;
- an administrative assistant who has complied information about which Edward Jones clients transferred accounts to National Bank Financial after Mr. Schoonderwoerd left and what confidential information Mr. Schoonderwoerd accessed before he resigned; and
- the regional development manager who wrote to each client to let them know Mr. Schoonderwoerd was no longer at Edward Jones.
The defendants question the relevance of these witnesses and suggest that Edward Jones is padding the witness list to enhance the connection to Ontario.
42I accept that the recruiter is likely a necessary witness. He and Mr. Schoonderwoerd exchanged a series of emails before Mr. Schoonderwoerd signed the Employment Agreement and Supplemental Agreement. Mr. Schoonderwoerd asked him about the non-solicitation conditions explicitly.
43I also accept that the administrative assistant is an important witness. She will testify about what confidential client information Mr. Schoonderwoerd accessed, when he accessed it, which clients transferred their funds and when the funds were transferred.
44The regional development manager is also likely necessary to testify about the communications, written or otherwise, that he had with Mr. Schoonderwoerd’s clients after he resigned from Edward Jones.
45I am less certain about the other two proposed witnesses. It is not clear why the people who signed the Employment Agreement and Supplemental Agreement on behalf of Edward Jones, but who did not discuss the terms of the contracts with Mr. Schoonderwoerd, would be required witnesses. There does not appear to be any dispute over the fact that Mr. Schoonderwoerd signed the contract and it was binding on him. As a result, any evidence these two proposed witnesses might have about the execution of the contract could almost certainly be put before the Court by way of an agreed statement of fact.
46In the end, I find that there are likely only three witnesses in Ontario that will be necessary for the plaintiff to call at trial. But even if I were to accept that Edward Jones has five witnesses from Ontario, that does not change my conclusion that the vast majority of witnesses with relevant evidence to give are in Alberta, including Mr. Schoonderwoerd, his supervisor while employed at Edward Jones, the clients he allegedly solicited, the investment advisors who contacted his clients after he left Edward Jones and the people at National Bank Financial who hired and supervised Mr. Schoonderwoerd.
47There are several other witnesses who are not in Ontario or Alberta. For example, Edward Jones will also likely call members of its Client Transfer Team, who were responsible for monitoring what confidential information Mr. Schoonderwoerd accessed before he left Edward Jones and which client accounts were transferred after he left. The Client Transfer Team is located mostly in Missouri. In addition, to the extent that a representative from the National Bank Financial head office is required, that person will be from Montreal. These witnesses will have to travel or testify by video-link regardless of where this trial takes place. I appreciate there may be minor differences in the cost and convenience associated with travelling to Ontario compared to travelling to Alberta. Those differences are, in my view, insignificant and do not affect my assessment of whether Alberta is clearly the more appropriate forum.
48The parties also made submissions about the location of evidence in this case. This is not a significant factor in this case. All Edward Jones offices are paperless. All records are kept electronically. Financial advisors are not permitted to keep paper files. Edward Jones stores client and account data electronically on servers in Ontario, Missouri and Florida. To the extent that data needs to be reproduced as documents for the Court, that can likely be done in any jurisdiction.
49Edward Jones argued that this case is factually similar to Edward Jones v. Raymond James Ltd. [12] in which Swinton J. of this Court refused to grant a stay. In that case, Michael Barker was an investment advisor in Manitoba who left Edward Jones to work at Raymond James. Like this case, Mr. Barker’s employment contract was formed in Ontario and stated that Ontario law would govern any disputes under the contract. Also similar to this case, Mr. Barker performed the contract in Manitoba and the alleged breach occurred in Manitoba. The defendants made a similar argument in that case, namely that Manitoba was clearly the more appropriate forum because the majority of the witnesses were in Manitoba and because Mr. Baker would be prejudiced financially if he had to pay the costs of litigating the matter in Ontario. Swinton J. was not satisfied that Manitoba was a clearly more appropriate forum in that case.
50There are, however, several important factual differences that distinguish this case from Edward Jones v. Raymond James. First, the executive team of Raymond James and the people who negotiated Mr. Barker’s employment contract on behalf of Raymond James were in Ontario. Here, the people who negotiated Mr. Schoonderwoerd’s move to National Bank Financial are in Alberta and the executive team is in Montreal. Second, in Edward Jones, there was a claim that Raymond James had devised a corporate strategy to hire investment advisors away from Edward Jones and through that process acquire clients from Edward Jones. Any such corporate strategy would have been conceived in Ontario. Although there is an allegation that National Bank Financial encouraged or assisted Mr. Schoonderwoerd to solicit the clients he had at Edward Jones, that conduct did not occur in Ontario. There is no allegation here of a corporate strategy to hire advisors from Edward Jones to acquire clients. Finally, Swinton J. made a finding that “many of the key witnesses are located outside Manitoba”. Here, I made a finding that although some witnesses are in Ontario, most of the key witnesses are in Alberta. The connection to Ontario is much more tenuous in this case than it was in Edward Jones v. Raymond James.
D. Conclusion
51Given the nature of the claims, the issues that are likely to arise at trial and the location of the witnesses, I am satisfied that Alberta is clearly a more appropriate forum. The contract in question was performed in Alberta and the alleged breaches of the contract occurred in Alberta. Mr. Schoonderwoerd lives and works in Alberta. The vast majority of the witnesses are in Alberta. On balance, Alberta is clearly in a better position to resolve this matter fairly and efficiently.
52I appreciate that the contract is governed by Ontario law, but the court in Alberta is fully capable of considering and applying the Ontario law of contracts in this case.
53There will, of course, be costs associated with commencing these proceedings in Alberta. However, those costs do not, in my view, outweigh the obvious costs and inconvenience of continuing the trial in Ontario with so many witnesses in Alberta. The motion is, therefore, granted and the proceedings in Ontario are stayed.
54I encourage the parties to try to reach an agreement on the issue of costs. If they are unable to do so, Mr. Schoonderwoerd and National Bank Financial may serve and file written submissions on costs of no more than three (3) pages together with their costs outline and any supporting authorities on or before April 17, 2020. Edward Jones may serve and file written responding submissions on costs of no more than three (3) pages with supporting authorities on or before May 1, 2020. These submissions must be filed electronically by delivering them to my assistant, Lorie Waltenbury (lorie.waltenbury@ontario.ca). In the event that I do not receive any written cost submissions by May 8, 2020, I will deem the issue of costs to have been settled.
Davies J. Released: April 2, 2020
Footnotes:
[10] The evidence on this motion is that Mr. Schoonderwoerd has one client in Ontario. That client is his aunt. She is a long-term client who is exempt the non-solicitation conditions. [11] Mr. Schoonderwoerd testified that each “client” was a household, not necessarily an individual. One “client” may actually represent more than one member of the same household.