Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs sought broad interlocutory injunctions to prevent former employees and related companies from using alleged confidential information, competing, or soliciting employees.

• The court found the plaintiffs’ definition of “confidential information” too vague and overbroad, failing to meet the legal standard for specificity.

• Much of the plaintiffs’ evidence relied on hearsay and double hearsay, which the court ruled inadmissible for granting injunctive relief.

• Plaintiffs failed to show irreparable harm or actual misuse of confidential information by defendants, which is required for an injunction.

• The enforceability of a non-competition agreement with Mr. Zimmerman was in question, and the court found a subsequent employment agreement likely extinguished any prior restrictive covenants.

• All applications for injunctive relief were dismissed, and the defendants were awarded ordinary costs.

Background and facts

Epiroc Rock Drills AB and Epiroc Canada Inc. (collectively, “Epiroc”) are manufacturers of mining and infrastructure equipment. In 2021, Epiroc acquired FVT Research Inc., a company specializing in vehicle electrification. Brad Zimmerman, then president and principal of FVT Research, became an employee of Epiroc after the acquisition. The transaction included an Asset Purchase Agreement and, allegedly, a Non-Competition Agreement that would prevent Mr. Zimmerman from competing with Epiroc or soliciting its employees for five years. Mr. Zimmerman denied signing this agreement and argued that a later 2023 Employment Agreement, which contained an “entire agreement” clause and no non-competition or non-solicitation provisions, replaced and extinguished any earlier restrictive covenants.

Mr. Zimmerman resigned from Epiroc in late 2023 and, through his consulting business, began working with Joy Global. Around the same time, Michael Barnhill and Alan Tweedie, also former Epiroc employees, resigned and joined Battery Powertrain Solutions Corp. (BPS Corp.), which contracted with Joy Global. Epiroc alleged that these individuals solicited other Epiroc employees and misused confidential information, including technical documents related to battery and thermal management systems, based on forensic IT evidence of document access and downloads prior to their departures.

Policy terms and contractual clauses at issue

The central contractual issues were the existence and enforceability of the Non-Competition Agreement and the confidentiality obligations in various employment agreements. The court examined whether the 2023 Employment Agreement, which had an “entire agreement” clause, superseded prior agreements.

Court’s analysis and outcome

The court found that the plaintiffs’ definition of “confidential information” was overly broad and not specific enough to support an injunction. The court emphasized that for an injunction to be granted, the information to be protected must be clearly identified, and the risk of irreparable harm must be substantiated with direct evidence, not speculation. Much of Epiroc’s evidence was based on hearsay and double hearsay, which the court found inadmissible for this purpose.

The court also found that even if Mr. Zimmerman had signed the Non-Competition Agreement, the subsequent 2023 Employment Agreement’s “entire agreement” clause likely extinguished any prior restrictive covenants. The plaintiffs failed to demonstrate that the defendants retained or misused any confidential information after their departures, especially in light of their compliance with cease-and-desist letters.

Ruling and costs

The court dismissed all of Epiroc’s applications for interlocutory injunctions. The court found no basis for restraining the defendants from using confidential information, competing with Epiroc, soliciting employees, or requiring the return of documents, as the plaintiffs had not met the legal or evidentiary thresholds. The court ordered that the defendants are entitled to their ordinary costs at Scale B. No specific monetary award was made, as the application for injunctive relief was entirely dismissed in favor of the defendants.