20-Day Jail Sentence for Employee who Released Employer’s Confidential Information in Breach of Court Order
A former employee received a 20-day jail sentence after she flagrantly disregarded a court order by disclosing the plaintiffs’ confidential business methods and disparaging their business reputation.
In July 2013, Ceridian entered into an agreement with Pendylum Inc. (“Pendylum”) to assist in the delivery of services to Ceridian’s customers. Under the terms of its agreement with Pendylum, Ceridian required that all of Pendylum’s subcontractors, including the Defendant, submit to a background check. The Defendant refused. As a result, Pendylum terminated the Defendant’s contract.
Following her dismissal, the Defendant embarked on an email campaign with Pendylum and Ceridian that culminated in threats and conduct akin to extortion. In November 2013, the Defendant sent a letter to Ceridian advising that unless she received the sum of $23.2 million, she would disclose confidential information relating to the Plaintiffs’ business and their customers. The Defendant subsequently reduced her demand to $500,000.00. On April 24, 2014, the Defendant sent another letter to Ceridian, in which she threatened to circulate a “press release” on May 12, 2014 containing the Plaintiff’s confidential information to “every press agency and HR and payroll agency across Canada and the U.S.”. By letter dated May 8, 2014, the Defendant repeated her threat of disclosing her “press release” on May 12, 2014.
In response to the Defendant’s threats, the Plaintiffs brought an ex parte motion for, amongst other things, an interim injunction. The Court granted a five-day interim injunction prohibiting the Defendant from publishing the press release. Although the Defendant had knowledge of the court order, she disregarded the order and proceeded to issue the press release, which was widely disseminated on the internet by numerous news outlets.
The Finding of Contempt
The Court concluded that the Defendant knowingly and deliberately breached the court order by:
- releasing the enjoined document to press agencies;
- making absolutely no effort to stop the public release despite the pleas and offers of assistance from the Plaintiffs; and
- failing to provide the Plaintiffs with the list of persons to whom she had disclosed the confidential information.
The Court noted that if the Defendant disagreed with the court order, then the proper route would have been for her to challenge it by appeal or by another proceeding before the courts, not by ignoring its terms.
When considering the appropriate sentence for the Defendant’s non-compliance, the Judge commented that in his nine years as a judge he had “never encountered a more defiant or less remorseful Defendant”. The Court found that the Defendant was deserving of significant sanction for, inter alia, the following reasons:
- The Defendant knowingly and deliberately breached the court order, which can be evidenced by the emails that she exchanged with the Plaintiffs’ counsel in which she wrote “the court order has no effect” and “[the judge] cannot violate my right to free speech.”
- The Defendant took no steps to retract the press release even after she was aware of the court order.
- The Defendant continued to attempt to extort a settlement even after she had knowledge of the court order.
- The Defendant continued to refuse to provide a list of the persons to whom the press release/confidential information had been disclosed.
- There was uncontroverted evidence that the Plaintiffs may sustain significant harm as a result of the press release, which may have an impact on the Ceridian’s business and position in a competitive market.
Based on the foregoing, the Court found the Defendant’s breach of the order to be serious and continuing. Moreover, the Court found no mitigating factors – the Defendant did not show remorse; she did not apologize; she made no attempt to purge the contempt; she made no effort to stop the press release when she had days to do so; and she refused to provide the names of persons to whom the confidential information was disclosed. Furthermore, at the sentencing hearing she continued to argue that: this is nothing more than a defamation case; the order should never have been issued; the order was not breached; and that the Court and counsel have “colluded.”
The Court determined that a fine was an inappropriate sanction on the facts of this case. The Defendant was a single mother and the costs awards to date, totaling approximately $27,500, had not been paid and the Court accepted would probably never be paid.
Typically, incarceration for civil contempt is a sanction of last resort. However, the Court held that where the “the administration of justice has been flouted or ignored in public, imprisonment may be necessary for the court to send a clear a message that society as a whole disapproves of anyone who deliberately disobeys a court order”. The Defendant was sentenced 20 days in jail, to be served intermittently over five weekends so as not to jeopardize her employment income as the sole provider for her family.