Lack of Full Disclosure: Special Costs in Failed Anton Piller Order

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In recent years, employers have increasingly sought and obtained Anton Piller Orders (“APO”) where a departing employee leaves with confidential information. The strategy is often extremely effective: the employer recovers the confidential information and obtains significant leverage in the litigation, usually prompting settlement. While effective, APOs are not for the uninitiated – the Courts have referred to this remedy as one of the “nuclear weapons” of litigation. Employers and their counsel must exercise extreme caution when using APOs.

The British Columbia Supreme Court’s recent decision in Pierce v Jivraj, 2014 BCSC 926 represents a warning for employers and their counsel in seeking an APO. In that case, the Court ordered special costs personally against the plaintiff’s counsel for failure to meet the high burden of full disclosure in the APO application.

The action originated as a defamation suit by Mr. Pierce against Mr. Jivraj. Mr. Pierce alleged that Mr. Jivraj improperly published statements that various securities exchange commissions had imposed regulatory sanctions against Mr. Pierce for ‘ill-gotten gains’ from stock manipulation. Mr. Pierce brought an ex parte application for an APO to preserve evidence on Mr. Jivraj’s personal computer relating to the defamation suit. At the ex parte hearing, the Court made inquiries of Mr. Pierce’s counsel concerning regulatory sanctions and fines against Mr. Pierce. Counsel was “evasive at best” concerning these inquiries. The Court granted the APO, directing a search of Mr. Jivraj’s personal residence and seizure of his computer.

In fact, Mr. Pierce had been subject to three regulatory sanctions, and was ordered to disgorge “ill-gotten” profits of over $9 million. On a motion by Mr. Jivraj, the Court set aside the APO on the basis that the merits for granting an APO were not met, in light of the new evidence regarding Mr. Pierce’s reputation: Pierce v Jivraj, 2013 BCSC 1850. Further, the Court found that it would have set aside the APO for Mr. Pierce’s complete failure to provide full and frank disclosure of the prior regulatory sanctions.

Mr. Jivraj brought a motion for special costs against Mr. Pierce and his counsel for the material non-disclosure: Pierce v Jivraj, 2014 BCSC 926. In finding counsel personally liable for special costs, the Court concluded that an APO “requires ‘fastidious’ disclosure and to be ‘profoundly fair’ in presenting facts. Neither occurred here.” The Court was particularly concerned that the APO involved entry into a personal residence.

APOs are serious and significant remedies. This decision represents an important reminder of the high standards of complete disclosure of all objectively material facts in applying for an APO.  Employers and their counsel must include all possible material facts as part of the evidence, particularly where the Order will direct a search of a personal residence. The APO is no doubt a nuclear weapon, and employers and their counsel must take care in its use.

Case Information

Pierce v Jivraj, 2014 BCSC 926: http://www.canlii.org/en/bc/bcsc/doc/2014/2014bcsc926/2014bcsc926.pdf

 

Topics:  Anton Pillar Orders, Canada, Disclosure Requirements

Published In: Civil Procedure Updates, Civil Remedies Updates, Intellectual Property Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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