Saturday, 19 April 2014

Ontario court forces BlackBerry executive to work out notice period... or did it?

"Ontario court forces BlackBerry executive to work out notice period." That was the headline of an article posted earlier this week by the Financial Post (article here,) following the decision of the Ontario Superior Court in the case of BlackBerry Limited v. Marineau-Mes, 2014 ONSC 1790 (CanLII). While the case is likely subject to appeal in any event, it is important to note exactly what it is that the court ordered Mr. Marineau-Mes to do and how the case came to be.

Facts

The case concerned an application brought by Blackberry for the court’s declaration that:

The employment contract entered into between BlackBerry and the respondent Sebastien Marineau-Mes (“Marineau-Mes”), dated effective September 27, 2013 and signed on October 16, 2013 (the “Contract”), is binding on the parties thereto, and that Marineau-Mes is obligated, as set out in the Contract, to provide six months’ prior written notice of his resignation from employment with BlackBerry

As set out by the application’s judge, Marineau-Mes had been a long-time employee of QNX Software Systems (“QNX”), which was acquired in 2010 by BlackBerry. Thereafter, he began working for BlackBerry and over time received a number of promotions that resulted in increased responsibility and enhanced compensation. In early 2013, Marineau-Mes held the position of Senior Vice-President, Software (“SVP”). He was responsible for a group of approximately 600 employees, including 3 Vice-Presidents. In the early fall of 2013, Marineau-Mes was offered the promotion to EVP. In this role, he would be responsible for approximately 3,000 employees, including 11 Vice-Presidents and 70 Directors. On September 24, 2013, he was provided with a letter from the Chief Operating Officer, Kristen Tear (“Tear”), confirming the promotion to EVP and providing him with the Contract to sign. In a September 2013 email to BlackBerry, Marineau-Mes indicated that he would have an employment lawyer review the Contract. Marineau-Mes signed the Contract on October 16, 2013.

As Justice McEwen noted, the contract contained a number of terms and conditions, the most pertinent of which, for the purposes of this post, being those concerning termination. Article 4.1 of the employment contract read as follows:

Termination by You – You may resign from employment with BlackBerry at any time upon providing six (6) months prior written notice. You will continue to provide active service during the notice period, unless the requirement for active employment is expressly waived in whole or in part by BlackBerry. Upon resignation, you will have no entitlement to compensation or damages of any kind except for unpaid base salary for the six month notice period, vacation earned to the Date of Termination (as defined in paragraph 4.5(b) below) and reasonable unpaid expenses in accordance with prevailing BlackBerry policies. All of your benefits will cease upon the Date of Termination. For greater certainty, termination by you for Good Reason (as defined in paragraph 4.5(b) below) will not constitute a voluntary resignation for the purpose of this subsection 4.1.

During the fall of 2013, BlackBerry underwent some difficult times. In November 2013, John Chen (“Chen”) became BlackBerry’s new Chief Executive Officer.

Marineau-Mes continued to play a central role at BlackBerry during these times, and had discussions with Chen about his future that were not all that satisfactory to Marineau-Mes. It was discussed, amongst other things, that Marineau-Mes’ role might ultimately be narrower in scope than originally contemplated.

Marineau-Mes also began discussions with Apple Inc. (“Apple”) in September 2013. In December 2013, Apple offered Marineau-Mes the position of Vice-President Core OS. In this position, he will be involved with the development of software important to the operating system.

On December 23, 2013, Marineau-Mes gave BlackBerry notice of his resignation in writing. The next day he advised BlackBerry that he would likely be joining Apple in California in approximately two months’ time.

This led to the dispute between the parties as to whether Marineau-Mes was required to provide BlackBerry with six months’ written notice pursuant to s. 4.1 of the Contract.

BlackBerry took the position that article 4.1 of the employment agreement was binding upon Marineau-Mes, and he was therefore obligated to provide six months’ prior notice.

For his part, Marineau-Mes took the position that BlackBerry was not entitled to the relief sought and that BlackBerry could not legally prevent Marineau-Mes from commencing employment with Apple. He argued that BlackBerry’s claim was confined to one of damages (i.e. money) if Marineau-Mes were to commence employment with Apple prior to the expiration of the notice period.

Decision

While issues of whether the notice of resignation clause offended the Ontario Employment Standards Act, 2000 are interesting reads for those in the industry, the central point in the case was whether Marineau-Mes could be required to be available to Blackberry for a full six months or whether such an obligation was an illegal restraint on trade. On that point Justice McEwen held that:

[30] I do not agree with this submission. [That the six-month notice period is the equivalent of a non-compete covenant] I agree with BlackBerry that having Marineau-Mes available is necessary. The notice period is one of the tools that allows BlackBerry to achieve that end. In this regard, I do not believe the case relied upon by Marineau-Mes, Sure-Grip Fasteners Ltd. v. Allgrade Bolt & Chain Inc., [1993] O.J. No. 193 at para. 19, is of assistance. In that case, there was no written employment agreement. Further, unlike with a non-compete agreement, Marineau-Mes continues to receive remuneration during the notice period.
[31] In any event, Marineau-Mes does not dispute that such clauses are usual in the industry so that companies can attempt to protect themselves. In fact, Marineau-Mes had a similar type of provision in his previous employment contract with QNX, albeit the notice period was for a shorter period of time. But this is understandable given the lesser role he had at QNX than he did at BlackBerry. In these circumstances, I cannot find that the notice period is the equivalent of a non-compete covenant, particularly when BlackBerry has made it known to Marineau-Mes that he must remain available to perform duties to BlackBerry, who anticipates those services will be necessary for his transition out of the company. Lastly, it cannot be ignored that even if the notice period constituted a non -competition clause, reasonable competition clauses are enforceable. While the notice period does have some non-competition aspects, it is not, in my view, offensive or overreaching. In my view, s. 4.1 is reasonable.

In the result, the court decided that:

For the reasons above, BlackBerry is entitled to a declaration that the Contract is binding on the parties and that Marineau-Mes is obligated as set out in the Contract to provide six months’ prior written notice of his resignation from employment with BlackBerry, which notice period expires on June 23, 2014.

Commentary

Notwithstanding the headlines, the Ontario Superior Court did not order Mr. Marineau-Mes to continue to work for Blackberry for six months. All it did was agree with Blackberry that he was obligated to provide six months’ prior notice of his resignation.

What is not dealt with by the decision cited by so many is, so what if Mr. Marineau-Mes does not provide that notice of resignation?

As I see it, if Mr. Marineau-Mes failed to provide such notice, as he demonstrably intended, then he is correct that Blackberry’s only real remedy is that of damages, i.e. money. I am not entirely sure what Blackberry actually obtained by receiving such a declaration. I certainly disagree with the characterization given to the decision by most headlines.

Indeed, when I read the headlines and when others questioned me about what I thought about such a decision, I was honestly taken aback by the idea that a judge would somehow order an employee to work for an employer. Courts have long been loath to enforce such contracts given the foreseeable unworkability of the situation. (How good a product is an employee going to produce if he is not at work voluntarily?)

And so, for all the headlines and attention I am honestly left with the question of “so what?” What if Mr. Marineau-Mes does not provide such notice? Does he go to jail for violating a court order? I doubt it. As I read the decision, the court did not order Mr. Marineau-Mes to work for Blackberry, the court agreed with Blackberry’s interpretation of its employment agreement with Mr. Marineau-Mes. Does Mr. Marineau-Mes have to pay Blackberry damages if he fails to provide such notice? Given that Apple recruited him, and given that Apple was likely aware of the risk of this situation, one has to imagine that Apple has budgeted for any such case.

So where does this decision get us? I am honestly not sure. Your thoughts would be welcomed in the comments section, below.

Takeaways for Employees with Labour Pains

As mentioned in previous posts, see for example I Quit! You Sue? the right to resign from employment is not absolute. There can be obligations imposed on employees to provide reasonable notice of resignation. While the Blackberry case discussed above provides an example of a notice of resignation period being enforced by contract, it is also possible for the law to impose such an obligation whether a written employment agreement exists or not.

If you are working in Ontario and are considering leaving your job for one reason or another, it may be prudent to seek professional legal advice before doing so. The professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

Takeaways for Employers with Labour Pains

If you are an employer and know that you will require your employee’s assistance after he or she elects to resign, then it may be appropriate to negotiate a reasonable resignation period in writing before hiring that person.

While I suspect that Mr. Marineau-Mes’ saga is far from over, and while it remains unclear exactly what Blackberry’s remedy to this situation is, employers would be prudent to use professionally prepared employment agreements (as Blackberry did) when retaining any employee.

If you are an employer in Ontario and are looking for employment agreements for your staff, the professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.

Sean Bawden, publisher of the law blog for the suddenly unemployed, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, and part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.



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