Manager must pay $1.5 million for organizing resignations

Departed employees free to compete but manager had a higher contractual duty: Supreme Court of Canada
By Jeffrey R. Smith
|Canadian Employment Law Today

The Supreme Court of Canada has affirmed $1.5 million in damages for a British Columbia financial management firm’s lost profits after a branch manager helped a competitor induce most of the firm’s staff to jump over to it.

RBC Dominion Securities and Merrill Lynch Canada both had offices in Cranbrook, B.C., that competed directly with each other. In November 2000, Merrill Lynch’s regional manager, who had spent 20 years at RBC, asked the RBC branch manager to join Merrill Lynch and help persuade the advisors to follow. Despite RBC’s attempts to retain the advisors’ clients, most of them moved with the advisors to Merrill Lynch. The RBC branch essentially collapsed after losing all its investment advisors. RBC sued its former employees for breach of fiduciary duty and implied contractual terms for leaving without notice, competing directly with it and taking confidential client records. It also sued Merrill Lynch for inducing the employees to breach their contractual obligations.

Employees failed to give reasonable notice