CN accuses CP executive of aiding espionage, boosts damages claim

Share

Canadian National Railway Co. has intensified its legal battle against Canadian Pacific Railway Ltd., accusing CP's second-in-command, Keith Creel, of aiding and encouraging subordinates to use confidential client information taken "unlawfully" from CN.

CN first filed its corporate espionage lawsuit in August against CP and a former salesman, Greg Shnerer, who made off with company secrets before taking a job at the rival railway as CP's director of new business. CN has amended the statement of claim to include Mr. Creel and two other former CN employees, Derek Ackford and Stanley Jablonski, a consultant to CP.

Montreal-based CN has also boosted its damages claim to $100-million, from $2-million.

The lawsuit accuses CP and the former CN employees, including Mr. Creel, of improperly winning clients from CN's intermodal container business, using data on contracts and pricing.

CN says the information was taken by two former salesmen, Mr. Ackford and Mr. Shnerer, before they quit and took jobs at CP. CN also says their actions were aided and encouraged by Mr. Creel and Mr. Jablonski, who was CN's vice-president of sales until 2010.

Mr. Creel was CN's chief operating officer until 2013, when he left for CP to become heir apparent to chief executive officer Hunter Harrison, himself a former CN employee.

The claims have not been proven in court. CP and a lawyer for Mr. Shnerer have admitted in court that Mr. Shnerer took the information. But they said it is no longer in use, and that it was a mistake that is inconsistent with CP's business culture.

"Adding Mr. Creel and Mr. Jablonski and increasing the alleged damages to $100-million does not change the facts or deter CP and Mr. Creel from defending themselves in court," a CP spokesman said on Monday.

Mr. Ackford and Mr. Shnerer, who have been suspended by CP, could not be reached.

CN says it discovered, in the weeks leading up to Mr. Shnerer's departure, that he swapped dozens of texts and calls with Mr. Ackford, and downloaded, printed and saved several documents that contained information on CN clients, including contract expiration dates and prices.

A cross-examination of Mr. Ackford related to the lawsuit revealed he, too, had taken CN client information before working at CP.

CN's lawsuit alleges Mr. Ackford and Mr. Shnerer, with the knowledge of Mr. Creel and Mr. Jablonski, developed a list of CN clients to "attack," that they assigned account managers to each client and that they made progress reports to the executives.

"CP used the CN confidential information disclosed by Ackford, with the knowledge and participation of Creel and Jablonski, to create a list of CN customers and to begin aggressively soliciting them. CP obtained business from CN customers by doing so," CN said in its statement of claim.

It points to text messages between Mr. Ackford and Mr. Creel in April, 2015: "I was going to ask you, Keith, what can I provide and can't provide to my team? To be specific, I have a list of potential customers with renewals expiring in 2015 with competition. I'm unsure what my restrictions are or just go?"

Mr. Creel responds: "No restrictions. It's a competitive world. Free market."

CN notes Mr. Creel owes a fiduciary duty to his former employer.

"It was incumbent on Creel to take steps to ensure that Ackford not retain, disclose or misuse any CN confidential information," CN said in court documents. "Not only did Creel not do so, he instead authorized and directed the disclosure and misuse of confidential information for purposes of competing with CN."

On Monday, CN lost its bid to have an Ontario judge appoint a monitor to oversee CP's dealing with clients in the intermodal division. Justice Glenn Hainey of Ontario's Superior Court said a monitor would be "too intrusive" and would "unduly" interfere with CP's normal business affairs.