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The Perils of Contracting By Email

March 7, 2019

Alleged confidentiality agreement found not to have been completed because email attachment not opened

In Safety First Contracting (1995) Ltd v. Murphy, Justice Bill Goodridge of the Supreme Court of Newfoundland and Labrador presided over the trial of an action for breach of a confidentiality and non-competition agreement, breach of confidence, and wrongful conversion of trade secrets. The plaintiff company, Safety First, alleged that the defendant, its former operations manager, had breached a confidentiality and non-competition agreement that was part of his terms of employment. It was common ground that the defendant had left his job with Safety First and accepted a virtually identical management position with the main competitor company, Hi-Vis, three weeks later. The defendant denied that there was any confidentiality/non-competition agreement and that he had copied or shared any trade secrets.

The primary dispute was whether had, indeed, been a confidentiality/non-competition agreement entered into by Safety First and Murphy at the point at which Murphy’s employment was finalized. Justice Goodridge found that while Safety First had intended there to be such an agreement, it was not completed. One of Safety First’s witnesses testified that there had been a written agreement executed, but that it had been “lost or stolen.” Justice Goodridge was dubious about this claim, particularly given that the company had a policy of duplicating all documents in a DropBox folder for viewing by the head office in Halifax, despite the company’s testimony that the policy had changed because the St. John’s office had been given more administrative autonomy (of which, in any event, Murphy was not aware). Safety First’s account of what matters were discussed with Murphy during and after his job interview was affected by witness credibility problems and inconsistent evidence about administrative practices.

Accordingly, the central factual matter was whether Murphy had received and viewed the agreement by email, as it was attached to an email sent to him by a Safety First official on March 5, 2015. That email read, in part, “Please find attached your acceptance and confidentiality letter,” but had two attachments: a letter containing the basic terms of employment and the confidentiality/non-competition agreement. Murphy testified that he saw only the first attachment, which he opened, signed and sent to the employer. He denied seeing the agreement. An account of the evidence followed:

[27]    There was evidence from computer experts, addressing whether the second letter (the confidentiality and non-competition agreement) was received and opened at Mr. Murphy’s inbox.  None of the experts who testified could say with certainty whether both attachments on the March 5, 2015 email arrived at Mr. Murphy’s inbox. All experts agreed that anti-virus software does occasionally remove an attachment during transmission, and that the sender would have no way of knowing that this had occurred.  

[28]         John Murphy, a technical specialist in IT security, testified that attachments to emails, or even single attachments on an email with multiple attachments, can be intercepted and not arrive at the intended recipient’s email account. Servers and desktop computers are designed to screen malware and spam. The screening technologies are not perfect and items can be quarantined or deleted without the sender or recipient knowing.

[29]         Craig H. Bennett, who manages Safety First’s email server, testified that he reviewed Mr. Murphy’s company email account -- patrick@safetyfirst-sfc.com -- and was of the view that neither attachment had been quarantined or deleted. He could see that a document of the same size, suggesting two separate documents, was received by Mr. Murphy on the Safety First email account. That evidence is not helpful because Mr. Murphy was not able to open attachments on the Safety First email account at that time.  On the day the email was sent, Mr. Murphy was snowmobiling in a remote area of Newfoundland.  He was using a hand held smart phone.  He could reply to the email but he could not open the attachment.  He forwarded the email to his two personal email accounts -- paddymurphy1272@gmail.com and paddy@circusorange.com. Mr. Bennett had no way of determining if both attachments were received at Mr. Murphy’s personal email accounts.

Justice Goodridge found that Murphy was unaware of the second document, and that even if it did arrive in one of his personal email accounts, his failure to open it was “inadvertent but…not unreasonable. The matter referenced in the email from Safety First suggested that there was only a single letter attached, and there was no mention in the body of the email about non-competition. There was nothing that would signal to Mr. Murphy the need to search for a second attachment.” Accordingly, there was no agreement in place.

Justice Goodridge went on to find that, even in the absence of an agreement, certain common law duties did apply to prevent employees from taking away confidential information. Again, however, the employer’s claim was hamstrung by questionable evidence about administrative practices regarding electronic document access. Corporate documents (including trade secrets) were kept on three different DropBox folders, and the company witnesses were inconsistent about which folders Murphy had access to; Murphy, for his part, testified that he had only ever accessed sub-folders relevant to his actual tasks, and the judge found this account to be more credible.

The employer’s only direct evidence that Murphy had actually stolen trade secrets came from a witness, Little, who was retained by Murphy to do contract work at Hi-Vis after Murphy began working there. She alleged to have seen him bring up a Safety First safety manual from a thumb drive on his computer, and that she had managed to surreptitiously send herself a copy of that manual using Murphy’s computer via email (the email was produced in evidence). However, Justice Goodridge found Little to be “loose with the truth” and concluded that she had been engaged in some kind of self-appointed sting operation for Safety First, for whom she hoped to do contract work, and rejected her evidence. In the final result, the employer’s claims were dismissed.

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