CP executive linked to CN espionage allegations

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Transcripts of text messages filed in court as part of a corporate espionage lawsuit between Canadian National Railway Co. and Canadian Pacific Railway Ltd. allege CP's second-highest ranking executive encouraged a CP employee to use information he obtained while employed at rival CN.

In one text message CP's chief operating officer Keith Creel tells an employee there are "no restrictions" on using client lists obtained by a former employee of the company's Montreal-based competitor.

"It's a competitive world," Mr. Creel replied. "Free market. Just don't give out any old CN documents or [anything] with CN on them. Just relative facts about the customer."

Mr. Creel was replying to a text from CP sales director, Derek Ackford, a former CN employee who told him he had a list of "potential customers" he allegedly obtained from CN while he worked there.

"I'm unsure what my restrictions are or just go?" Mr. Ackford asked.

CN alleges the list Mr. Ackford referred to was one he downloaded shortly before he resigned from CN in September, 2014.

In court documents filed this week, CN is asking the court to appoint an independent monitor to block CP and its former employees from soliciting any of its clients identified in the documents.

In an emailed statement, CP spokesman Martin Cej said the company will not be held "ransom" by CN.

"While the company is dealing with this situation CN's efforts to smear the reputations of CP, its senior management including Mr. Creel and its other employees, are beyond reprehensible and will be vigorously defended," Mr. Cej said.

CN has repeatedly refused to comment.

The allegations, which have not been proven in court, form part of CN's lawsuit against CP, in which CN alleges the Calgary-based railroad encouraged a CN salesman, Greg Shnerer, to share secret client lists with CP, and then hired him. CN alleges Mr. Shnerer, who joined CP in July, violated his fiduciary duties to CN, and that CP is improperly soliciting clients and profiting as a result.

The lawsuit, which names Mr. Shnerer and CP, seeks the return of profits that resulted from the alleged action and $2-million in damages. Mr. Ackford is not being sued by CN. In the documents, it becomes apparent CN was unaware Mr. Ackford also allegedly downloaded confidential CN information before he left the company.

The lawsuit offers a rare glimpse at the intense rivalry between the two companies, which command almost all of Canada's rail freight business. Mr. Shnerer and Mr. Ackford are both salesman in the domestic intermodal container business in the Greater Toronto Area, one of the few rail divisions that has grown in the past year as consumer demand for goods has remained strong even as the industrial shipments of coal, metals and oil have slowed steeply.

In August, the court ordered CP to preserve all electronic information related to the case, and to allow a third party to examine the laptops, smartphones and other electronic devices used by Mr. Shnerer and his new boss at CP, Mr. Ackford.

CN alleges Mr. Ackford, who worked in the same Toronto-area office at Mr. Shnerer until 2014, directed and encouraged Mr. Shnerer to divulge company secrets, and then used that information against CN by soliciting clients. Mr. Shnerer "has taken and made unfair use of confidential and proprietary information belonging to the plaintiff to assist CP in competing with CN and soliciting CN clients," CN alleges in its statement of claim.

The documents allege that Mr. Ackford and Mr. Shnerer drafted a "a target list" of CN accounts that CP should go after. The list allegedly contained confidential CN customer data, and was circulated in CP's intermodal group.

The documents allege that after Mr. Shnerer started his new job at CP in July, 2015, he sent an e-mail to his new boss, Mr. Ackford, listing the top CN customers that CP should target: "In his e-mail, he sets out revenues, contract expiry dates and CN's marketing strategies for what Mr. Shnerer identifies as the top 7 CN accounts to target, as well as 'honourable mentions' for Labatt, Molson and Walmart."

An examination of Mr. Shnerer's phone and computer use in the month before he quit shows he was in text or phone contact with Mr. Ackford 52 times, according to documents CN has filed in court. Mr. Shnerer also viewed and saved information on clients outside his area of responsibility, and sent proprietary CN files to his personal e-mail account, CN alleges.