In Garbage King Inc. v Voth, 2025 ABKB 661 (Justice Jones) the Alberta Court of King’s Bench rejected an injunction application by a waste management company to prevent a former employee and his new employer from soliciting clients and using knowledge of client needs and how they conduct business.
This case is important because it provides guidance surrounding the often complicated issue of fiduciary non-solicitation obligations.
Facts
The following were some of the pertinent facts summarized by the Alberta Court of King’s Bench:
- Mr. Voth was an employee of Garbage King. He gave resignation notice and was kept on for 2 weeks to train a successor. He joined a competitor in the waste disposal business operating under the name VP Disposal
- The plaintiff and applicant Garbage King brought an application for an injunction against Voth and VP Disposal
- Garbage King alleged that Voth was a key employee and fiduciary of Garbage King with a duty not to solicit its customers for competitive business
- The evidence was that Voth started Garbage King with another party and had been a director, although the parties had not given much consideration to the significance of that title
- Garbage King alleged that Voth had become a senior executive at VP Disposal, where he solicited their customers
- Garbage King claimed to have lost 90% of its business as a result of Voth and VP Disposal’s actions
- Voth had an established client base in the industry before joining Garbage King. When Voth left Garbage King, many of those clients ended up with him again
- There was no direct evidence of solicitation of clients. Voth claimed some clients approached him a few months after he left, and that Garbage King had told some of its customers there had been a change in “office manager”
- Garbage King was seeking an injunction to stop them from using its confidential and proprietary information, which it argued included client lists and pricing lists, as well as knowledge of clients’ needs, how such clients conduct their business and other unspecified information unique to each client that allowed Garbage King to service their needs
- Voth had not signed any non-competition or non-solicitation agreements while at Garbage King
Analysis / Conclusion
The Court of King’s Bench considered if an injunction should be granted prohibiting Voth and VP Disposal from soliciting Garbage King’s customers or using customer information. The Court noted that for an injunction, Garbage King would need a strong prima facie case that Voth was a fiduciary employee and breached a fiduciary duty of non-solicitation or misuse of confidential information.
The Court found there was a strong prima facie case Voth was a fiduciary employee of Garbage King because: (1) he brought clients and expertise into Garbage King’s venture, and, (2) as operations manager, he was the “face” of Garbage King, being in a position to significantly influence client goodwill – and the migration of clients to VP Disposal was evidence of vulnerability.
The Court considered Garbage King to be vulnerable to Voth despite that Garbage King only sought to keep him on for two weeks to train his successor, noting that most of his responsibilities would have been assumed by its remaining leader in that time.
This injunction application was heard over 2 years after Voth’s departure from Garbage King. Garbage King argued the period of fiduciary non-solicitation should be imposed from the date of the Court order. The Court rejected this, noting as follows:
[86] […] The policy behind a cooling off period is to protect the former employer from unfair and harmful competition. Imposing a cooling off period years after a former employee has left and started competing does not afford the former employer an opportunity to protect its interests.
The Court provided the following general rule about fiduciary rights and obligations post-employment:
[24] […] Absent a non-competition agreement or other similar restriction, the fiduciary may use his or her skills and experience to compete with the corporation post-departure, providing this is not done unfairly […]
The Court considered the rules around fiduciary solicitation of former customers.
The Court found that simply “providing new contact information is not solicitation. There must be encouragement or a request that the client follow the departed employee…”. The Court went on to note as follows:
[89] […] Voth had a duty to decline to do work for its clients for a period of time, even if he did not overtly solicit them. That period is defined with reference to how long it would reasonably have taken Garbage King to contact its clients and attempt to retain their business.
Ultimately, the Court found that Garbage King began contacting its customers almost immediately, and it “should have taken very little time”. This led the Court to conclude that Garbage King was unlikely to establish that Voth’s interactions with former customers breached his fiduciary duty.
The Court noted the following about the significance of customers departing a fiduciary’s former employer:
[102] Where a customer rejects the services of a corporation because it has lost access to the fiduciary’s expertise or because the customer has a direct relationship with the fiduciary, there is no breach of fiduciary duty […]
The Court found that while the identity of customers can be confidential information in some instances, in this case it was not. As evidence of this, the Court cited that Garbage King would put its name on porta potties on client job sites, which suggested to the court that “who Garbage King is doing work for is not perceived by it to be confidential information.” The Court went on as follows:
[104] There seems little doubt that Voth knew what Garbage King was charging its clients. He appears to acknowledge that he created the pricing structure. But even if he did not, clients could readily have given him that information. I am not satisfied that Voth used Garbage King’s pricing information to entice customers to VP Disposal. It seems to me equally likely that the customers followed Voth, not for pricing reasons, but because they had a relationship with him that they valued.
The Court decided against granting an injunction against Voth and VP Disposal in this case.
My Take
This case appears employee friendly, but there are wins for both employers and employees here.
The caselaw is consistent that fiduciaries are not to solicit competitive business of former clients for a reasonable period of time. However, the statement by the Court that fiduciaries should decline work (i.e. that wasn’t solicited) from customers for a period after departure is not seen very often in the case law. It’s clear from this decision that the period for declining work is fairly short, but it is nevertheless significant and a point for employers.
Perhaps the biggest win for employees in this case is the statement that “where a customer rejects the services of a corporation because it has lost access to the fiduciary’s expertise or because the customer has a direct relationship with the fiduciary, there is no breach of fiduciary duty”.
