Weatherford Canada Partnership v. Addie, 2012 ABQB 533

Court of Queen ’ s Bench of Alberta Citation: Weatherford Canada Partnership v. Addie, 2012 ABQB 533 Date: 20120824 Docket: 0603 04628 Registry: Edmonton Between: Weatherford Canada Partnership Plaintiff - and - Dave Addie, David Anderson, Glen Kinnee, Ted Harland, Dan Endersby, Midfield Supply ULC, Midfield Supply International Ltd., Dale Denney, Douglas Golledge, John Letwinetz, Rick Endersby, Jakob Ambrosius, Artemis Kautschuk Und Kunstoff-Technik GmbH, Wilhelm Kaechele GmbH, West Met Tools & Machinery Ltd., John Doe 1 to 10, and Europump Systems Inc.

Defendants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice D.L. Shelley _______________________________________________________ Background and Facts [ 1 ] This Memorandum of Decision arises from the latest of a series of applications made by various parties to this litigation in relation to document production. Various aspects of the litigation and these document production issues have been detailed in a series of earlier judgements, most recently Weatherford Canada Partnership v Addie , 2012 ABQB 215 . Therefore, I will not reiterate these

details in this Memorandum, other than as may be necessary to address the specific issues raised in this application, which was brought by the Defendants Addie, Anderson, Kinnee, Harland and Europump Systems Inc. (collectively referred to as the “Europump Defendants”). [ 2 ] The Europump Defendants now seek an Order directing Weatherford to review its records and produce any further records that are relevant and material to this action. They have specifically requested: (

a) all records relating to Weatherford’s proposed or paid bonuses and incentive compensation plans involving the Europump Defendants and Weatherford employees who reported to the Europump Defendants while they were employed by Weatherford, as well as similar plans involving Weatherford employees after the Europump Defendants left Weatherford’s employ (collectively the “Compensation Plan Records”); and (

b) all records relating to Weatherford’s relationship and dealings with Oil Lift Technology Inc. (the “Oil Lift Records”). The Issues [ 3 ] The parties have never disagreed about the law to be applied in applications of this nature. They agree that all parties have an obligation to produce relevant and material records pursuant to Rule 5.2 of the Alberta Rules of Court , Alta Reg 124/2010 (collectively the “ Rules ” and individually a “ Rule ”). [ 4 ] They also agree that the issues of relevancy and materiality are tied to the pleadings, since it is the pleadings which define the issues.

Authorities for this proposition have been cited and discussed in previous judgments in this Action, including the one referred to in Paragraph 1 above. Therefore I will not set them out again here. [ 5 ] Consequently, to determine the proper response to this application, I must decide whether the specific records requested are relevant and material. To do that, I must determine whether these records relate to issues that are raised by the pleadings. If so, I must determine whether the records may help determine one or more of those issues. Analysis and Reasons

a) Compensation Plan Records [ 6 ] The Europump Defendants submit that the Compensation Plan Records relate to a live issue raised by the pleadings. They point out that Weatherford has alleged that: (

a) Addie’s departure from Weatherford was part of a conspiracy aimed at harming Weatherford’s economic interests; (

b) neither Addie or Anderson gave proper notice; (

c) as a result of the wrongful acts of the Europump Defendants, Weatherford lost employees; and

(

d) Weatherford had to increase compensation above market levels to retain employees. [ 7 ] The Europump Defendants also point out that their pleadings alleged that: (

a) Weatherford unilaterally and significantly changed Addie’s responsibilities and compensation, thereby constructively dismissing him; (

b) Addie had developed, proposed and overseen bonus programs for Weatherford employees under his supervision and Weatherford’s unilateral rejection or variation of those proposals undermined Addie’s authority and adversely affected the morale of Weatherford’s employees and the performance of that division; (

c) Addie tendered his resignation as a result of his frustration with Weatherford and his loss of confidence in it and its business practices; and (

d) Weatherford has not suffered the alleged damages. [ 8 ] The Europump Defendants submit that the Compensation Plan Records are relevant to the foregoing issues raised in the pleadings in that they will help determine: whether Addie’s departure from Weatherford was part of a conspiracy or whether he left because he was frustrated with Weatherford’s actions in relation to the programs proposed by him; and whether Addie was constructively dismissed (which is relevant to Weatherford’s allegation that he did not give sufficient notice). [ 9 ] Furthermore, the Europump Defendants argue that the Compensation Plan Records will help determine whether they caused employees to leave Weatherford or whether it was Weatherford’s handling of these programs that caused or contributed to employees leaving.

They argue that these records will also address Weatherford’s allegation that it had to increase its costs and adjust compensation to retain employees. [ 10 ] The Europump Defendants maintain that no records relating to both bonus plans were included in either the original or the supplemental affidavits of records. They point to various portions of the questioning of representatives of Weatherford which suggest that such records do exist. [ 11 ] Weatherford’s response is three pronged. It submits that the Compensation Plan Records:

a) have already been produced; or

b) do not exist; or

c) would not significantly help determine the issues in this Action. [ 12 ] Weatherford acknowledges that Addie was frustrated when it did not implement the bonus plan suggested by him.

However, it argues that Addie’s motivation for leaving Weatherford is irrelevant to determining the issues in the Action and that his frustration and unhappiness are not defences to his alleged wrongful conduct. [ 13 ] Furthermore, Weatherford asserts that it has produced Compensation Plan Records for the period prior to Addie’s departure, as well as relevant and material bonus and payroll records for the period following his departure. Weatherford argues that, even if Addie was constructively dismissed, this is irrelevant to the unlawful conduct Weatherford alleges he engaged in following his departure.

[ 14 ] I concur that Addie’s motivation for leaving his employment would not justify unlawful conduct on his part. However, I conclude that Weatherford’s conduct in connection with compensation (historically paid, suggested, or changed) is relevant and may help determine the issues of:

a) whether Addie was constructively dismissed;

b) whether others may have left Weatherford as a result of compensation issues at Weatherford or as a result of solicitations made by the Europump Defendants, including their proposals for bonuses and other compensation; and

c) whether Weatherford’s costs and compensation levels increased as a result of unlawful acts of the Defendants, which is directly related to the issue of damages. [ 15 ] I further conclude that the requested records are therefore relevant and material and ought to have been produced. To the extent that Weatherford has not already produced them, it must now do so.

b) Oil Lift Records [ 16 ] The Europump Defendants submit that the Oil Lift Records are relevant to the following allegations made by Weatherford in its Statement of Claim, as amended:

a) that Addie, Anderson and Harland gained and used knowledge of key suppliers’ special needs, preferences, etc., by virtue of their extensive contact with them in the course of their employment with Weatherford;

b) that Weatherford was vulnerable to the solicitation of its suppliers by Addie and Anderson due to such influence;

c) that various Defendants planned to cripple Weatherford’s PC pump business by inducing suppliers to alter or terminate their relationship with Weatherford. [ 17 ] In addition, the Europump Defendants submit that the Oil Lift Records are relevant to their denials that they improperly solicited Weatherford’s suppliers or that Weatherford has suffered any damages. [ 18 ] The Europump Defendants argue that the Oil Lift records are relevant and material given that Oil Lift is or was a key supplier to Weatherford.

The Europump Defendants have produced their records relating to Oil Lift and Weatherford has produced some records relating to Oil Lift. In addition, Weatherford has confirmed that Oil Lift is one of the suppliers contemplated in its pleadings.

The Europump Defendants pointed to sections of records produced which suggest that there are additional Oil Lift Records that exist, they are relevant and material, and they ought to have been produced by Weatherford. [ 19 ] Weatherford maintains that it has produced all relevant records relating to Oil Lift. [ 20 ] Given Weatherford’s allegation that certain of the Defendants used knowledge and influence gained during their employment with Weatherford to solicit (or attempt to do so) key suppliers including Oil Lift, the records requested by the Europump Defendants are relevant and material to several issues raised in the pleadings. [ 21 ] As I stated in several previous decisions in this Action, a party need only produce relevant and material records that exist.

It is unclear whether Weatherford’s submission that it has produced all relevant records relating to Oil Lift is due to it taking the position that

the other records requested by the Europump Defendants do not exist or, alternatively, that it objects to producing them because it does not believe they are relevant and material. If it is the latter, then I have concluded otherwise and the types of records described in paragraph 41 of the Europump Defendants’ Brief ought to be produced. Conclusion [ 22 ] Weatherford is directed to produce to the Europump Defendants the following: (

a) the Compensation Plan Records; (

b) the Oil Lift Records of the types described in paragraph 41 of the Europump Defendants’ Brief; and (

c) any other documents or records which are relevant and material to issues raised in the pleadings filed in this Action. [ 23 ] The Europump Defendants are entitled to costs of the within application. If the parties are unable to agree on the costs so payable, they are to contact my assistant within 30 days of the issuance of this Memorandum of Decision for the purposes of arranging a time at which costs can be addressed. Heard on the 31 st day of May, 2012 Dated at the City of Edmonton, Alberta this 24 th day of August, 2012. D.L. Shelley J.C.Q.B.A.

Appearances: Fausto Franceschi, Joe Rosselli, Fraser Milner Casgrain LLP for the Plaintiff Dan Scott Seveny Scott for the Defendant West Met Kenneth W. Fitz McLennan Ross LLP

for the Defendant Artemis W. Paul Sharek, Q.C. Emery Jamieson LLP for the Defendant Kaechele Tim Mavko Reynolds, Mirth, Richards & Farmer LLP for the Defendants Addie, Anderson, Kinnee, Harland and Europump Systems Inc. Predrag Anic Fleming LLP for the Defendant Midfield