In a recent decision of the Ontario Superior Court, popular personal injury law firm Sokoloff Lawyers won an injunction against six former employees who had been working out of the firm’s Brampton office. Notably, Savannah Chorney, the leading lawyer at the Brampton office, had plans to start her own firm and intended to work out of the very same office location.
The Takeover of the Brampton Office
According to the Court, “Ms. Chorney conducted a planned and deliberate operation to take over the Brampton office.” On October 8th, 2021, she closed the office early, changed the locks on the doors, had the Sokoloff Lawyers sign removed from the building, and instructed her employees to leave their computers on without password protection. Ms. Chorney and her team downloaded client files and precedents from the computers.
It was three days after this takeover, on October 11th, 2021, that Ms. Chorney advised her employer that she was resigning and would be starting her own practice out of the Brampton office.
On October 12th, Sokoloff Lawyers began receiving client file transfer authorizations. A number of Sokoloff Lawyers clients had decided to transfer to Ms. Chorney’s new practice. This occurred suspiciously quickly. According to Sokoloff Lawyers, this indicated that Ms. Chorney had started contacting clients before she had resigned from the firm. At the time of the Court’s decision, over 200 clients had provided authorizations to transfer. The Court ultimately agreed with Sokoloff Lawyers that Ms. Chorney had contacted clients about the transfer of filed before resigning from the firm.
Granting an Interlocutory Injunction
In deciding whether to grant an interlocutory injunction, such as the one requested in this case by Sokoloff Lawyers, a Court must apply the test laid out by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General). There are three parts:
- There is a serious issue to be tried;
- The moving party will suffer irreparable harm if the relief is not granted; and,
- The balance of convenience favours granting the injunction.
Here, the Court easily found that there were serious issues to be tried. Among them was the claim that Ms. Chorney had breached her good faith and fiduciary duties to Sokoloff Lawyers.
Secondly, on the issue of irreparable harm, the Court was of the view that this factor was less important given the strength of the plaintiff’s case. Nevertheless, the Court held it would be unfair and unreasonable for Ms. Chorney and the defendants to force Sokoloff Lawyers to carry the cost of disbursements on the files that had been transferred. Effectively, this would result in Sokoloff Lawyers financing their direct competitor. The unfair competition that would be result would indeed be difficult to calculate.
Finally, in considering the balance of convenience, the Court was tasked with deciding which of the two parties would suffer the greater harm from either granting or refusing the injunction pending a determination on the merits. The Court concluded that the balance of convenience favored granting the injunction. Requiring Ms. Chorney and the defendants to pay the cost of disbursements at the time of the file transfers would level the playing field and prevent Sokoloff Lawyers from having to carry the cost of both its files and the files handled by its direct competitor, Ms. Chorney.
Ultimately, all three aspects of the test for an interlocutory injunction were met. The Court ordered that, among other things:
- The Defendants refrain from initiating communication with or soliciting any current clients of Sokoloff Lawyers;
- The Plaintiffs refrain from initiating communication or soliciting clients who have delivered file transfer authorizations;
- The Defendants reimburse Sokoloff Lawyers all outstanding disbursements on transferred files within five months of Sokoloff Lawyers delivering a full accounting of claimed disbursements to the Defendants;
- The legal fees associated with each transferred file be divided 25% to Ms. Chorney, 25% to Sokoloff Lawyers, and 50% to trust, with the entitlement of either party to this amount being determined later by consent of the parties or by an order of the Court.