The refusal to grant a provisional interlocutory injunction to enforce a non-competition agreement

By Me Antoun Alsaoub, with the collaboration of Émilie Faubert

The petitioner, PMC Sales Canada inc. (“PMC”), is a supplier and re-seller of technology products and solutions and focuses its sales solely in the United States. Its provisional interlocutory injunction seeking to enforce a non-competitition agreement was dismissed by the Superior Court. The respondant was a senior account executive working from their call center in Montreal. He was bound by a non-competition agreement which provided for a 12-month period in which he could not work in any business activity which is competitive to PMC’s business activities within the states of New Jersey, Maryland and Delaware.

The respondant left PMC and was hired by a competitor, Infogestion OSN Inc.  (“OSN”), which carried out their business in the USA. PMC therefore filed proceedings to enforce the non-competition agreement through injuctive relief.

In its application for leave, PMC submitted that:

“a.       First, the judge ignored the teachings of this Court’s in UBI Soft Divertissements inc. v. Champagne-Pelland […] providing that, save egregious circumstances, a non-competition agreement should be deemed prima facie valid at the provisional interlocutory injunction stage or at the safeguard stage of the proceedings

1.          Second, the criteria used by the judge to assess the balance of convenience – the employee’s right to work to earn a living – is contrary to article 2089 of the Civil Code of Quebec and would negate in all circumstances any injunctive relief to enforce a non-competition agreement.

1.          Finally, the judge erred by not finding that potential harm through loss of clients is sufficient to establish irremediable harm at the provisional injuncton stage where the enforcement of a non-competition agreement is at issue.”

Evidence was brought forth in the Superior Court that the new company employing the respondant did carry out business in the USA, but PMC did not provide evidence as to activities in the states covered by the non-competition agreement. Consequently, it could not be concluded that the respondent was in violation of the agreement. Therefore, the Court of Appeal confirmed the ruling of the Superior Court and dismissed the leave for appeal.