Thursday, July 17, 2014

Dismissed Employee Jailed for Contempt

Another very unusual fact pattern has arisen involving Ceridian, a major human resource service provider, in the case of Ceridian Canada Ltd. v. Azeezodeen.

Ceridian entered into a business relationship with Pendylum Inc., which involved Pendylum and its subcontractors assisting in providing services to Ceridian customers.  Because of the sensitive nature of much of Ceridian's information (consider that Ceridian processes payroll directly into the bank accounts of its customers' employees), Ceridian required Pendylum employees and subcontractors to undergo background checks and enter into strict confidentiality agreements.

In July 2013, Pendylum hired Ms. Azeezodeen - the court describes her occasionally as an employee, though other language would suggest that the relationship may have been characterized as an independent contractor relationship - to assist with Ceridian contracts.  She entered into the requisite confidentiality agreements, but it appears that she among others were not required by Pendylum to submit for a background least, not until Ceridian found out about it in October.  When Pendylum sought to correct the oversight, she refused, and her contract was terminated.

That circumstance could raise a number of interesting questions from an employment law perspective, and the right thing for her to do would have been to consult with an employment lawyer to assess whether or not she might have any recourse for her dismissal.

Unfortunately, what she actually did was basically the opposite of the 'right thing':
In November 2013, the defendant sent a letter to Ceridian in which she made numerous defamatory statements about the plaintiffs’ business practices and operations, which she threatened to make public. The defendant advised Ceridian that unless she was paid the sum of $23.2 million, she would make public confidential information relating to Ceridian, Pendylum and their customers. On January 6, 2014, the defendant again wrote to Ceridian threatening to “go public” with numerous allegations about Ceridian and Pendylum.  The defendant now offered not to publicize the allegations in exchange for a “settlement” of $500,000.
On April 24, 2014, she wrote again and threatened that, on May 12, 2014, she would circulate a press release - which would include, according to the court, "confidential information regarding Ceridian and Pendylum's business methods".  On May 8, 2014, she reiterated that threat.

So, on May 9, 2014, Ceridian and Pendylum brought an ex parte motion (i.e. without notice to the defendant) seeking an injunction.  Justice Belobaba granted the injunction, prohibiting her from carrying out her threat for a five-day period, so that the matter could be brought on for a full hearing on the merits.  A process server tried to serve her personally with the order, but she didn't answer the door; a copy was left at the door.  On May 10, 2014, the plaintiffs' counsel, David Lederman, sent her a copy of the order by email.  She responded very quickly that it was "too late" and that the press release was "already submitted and paid for".

Lederman's response, sent about 20 minutes later, was pretty much exactly what he should have said under the circumstances:
Pursuant to the terms of the attached Order, you and anyone acting on your behalf have been prohibited from publishing or disclosing any of the statements in the press release.  You will be held in contempt of Court if you do not abide by the terms of this Order.  I suggest you speak with a lawyer who can explain the ramifications to you should you choose to ignore the attached Order of the Court.
There was a lengthy exchange after that.  She claimed "free speech", and said that from her perspective the judge's order had "no effect", but she would try to stop the press release if Ceridian 'settled'.  Once again, that's exactly the wrong answer.  If she said, "I would if I could, but I can't", then that may well have provided her with a defence to a finding of contempt.  However, claiming that the judge's order had "no effect", and refusing to even try to comply, is pretty much the definition of contempt of court.

The press release was circulated online, and the plaintiffs brought a motion to find her in contempt.  On June 24, 2014, Justice Belobaba found that she was in contempt of court; on July 8, 2014, she was sentenced to 20 days in jail.


While the original publication of the press release has been taken down, the reality is that, once something is on the internet, it's probably there forever.  I was able to view a copy of it without much difficulty, despite a relative lack of technical expertise for such things.

I'm not going to reproduce the text, for reasons which should be fairly obvious, but I will make a few observations about it:  It's not that bad.  She didn't publish sensitive customer information, bank accounts, etc.  She did publish business practice information which would likely be caught by a standard confidentiality agreement, but no sensitive business strategies, and nothing likely to be prejudicial - at least, not from a confidentiality standpoint.

In fact, a large majority of the press release's contents, in terms of facts, are either expressly contained in the judicial decisions I've linked above, or else can be gleaned from them.

The two central thrusts of the press release appear to be allegations that (a) Ceridian is failing to protect sensitive customer information - including by having subcontractors upon whom background checks have not been carried out (pretty thick, isn't it?) - and that (b) Ceridian and Pendylum mistreat their subcontractors by illegally trying to work around employment standards legislation.

For clarity, I should highlight that I am not saying that these allegations are necessarily true - only that these appear to have been the allegations that Ms. Azeezodeen will go to jail for having made.  At the end of the day, it's likely that Ceridian would be more concerned about the unflattering allegations than about the disclosure of confidential information.

So it's important to emphasize that Ms. Azeezodeen was not sent to jail for breaching confidentiality.  Nor for defamation.  Indeed, there is a distinct possibility that, had she retained counsel and fought the injunction properly, she might have succeeded.  The reason she was sent to jail was because she published the press release despite a judge having ordered her not to.

There's no question that Ms. Azeezodeen did everything wrong.  Nor do I question the appropriateness of the sentence.  Still, I find myself a little concerned about one passage in the sentencing decision:
[T]he defendant’s breach is known to many Ceridian employees, who are actively following this dispute. These employees, who have their own strict obligations of confidentiality, are aware of the defendant’s breach, her confidentiality agreement and of her violations of this Court’s Order.  Given the nature of Ceridian’s business, it is important that confidentiality obligations be complied with and enforced in order to deter future violations.
In other words, Ceridian's goal here was to send a message to its other employees:  Don't go public about our business practices.  Which, respectfully, is not what contempt is about.  Contempt is the court's way of sending a message to the parties and to the general public to comply with its orders, and to punish parties for failing to do so.  And, as far as I know, no other Ceridian employee is subject to an injunction prohibiting such disclosure.  Merely contractual obligations - which are presumably civilly actionable if breached, but not the kind of thing you go to jail for.

If the fact of disclosure is what they're concerned about, the mechanism to remedy that is through a civil action, seeking compensatory and punitive damages from Ms. Azeezodeen for the disclosure.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

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