Capital Senior Living, Inc. v. Barnhiser
3:22-cv-00606
N.D. OhioOct 7, 2022Background
- Capital Senior Living (plaintiff) employed Heather Barnhiser as Executive Director under a Texas-governed employment agreement that contained nondisclosure, one-year non-solicitation, remedies, and choice-of-law provisions.
- Capital Senior alleges it provided Barnhiser confidential information (employee/resident lists, pricing, operational/financial/personnel information) and took measures to protect it (NDAs, password protections).
- After resigning, Barnhiser became Executive Director at Maumee Pointe (managed by Meridian) and allegedly recruited/hired at least seven former Capital Senior employees and convinced multiple residents to transfer, aided by employee Selders.
- Capital Senior sent cease-and-desist letters; Meridian acknowledged receipt and indicated it expected compliance, but Maumee/ Meridian nonetheless employed Barnhiser and hired former Capital Senior staff.
- Capital Senior sued for breach of contract, OUTSA misappropriation and threatened misappropriation, tortious interference (contractual and business relations), and breach of duty of loyalty; defendants moved to dismiss under Rule 12(b)(6) and the court denied the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of nondisclosure/non-solicitation (Texas law) | Capital Senior: Barnhiser’s role required receipt of confidential information, so employer impliedly promised to provide such information, supplying consideration | Defendants: at-will employment lacks consideration so covenants unenforceable | Court: Covenants enforceable; implied promise and actual disclosure suffice; denial of dismissal |
| Breach of contract — use/solicitation | Capital Senior: Barnhiser used confidential lists to solicit/hire employees and residents (names identified in cease-and-desist) | Defendants: allegations are conclusory and insufficiently pleaded | Court: Pleading plausible; specific hiring/solicitation allegations survive dismissal |
| Misappropriation under OUTSA (trade secrets) | Capital Senior: employee/resident lists, pricing, operational and personnel info constitute trade secrets; plaintiff used NDAs and password protection | Defendants: categories not pleaded with requisite particularity; no adequate allegation of acquisition/use | Court: General categories and protective measures suffice at pleading stage; claim for misappropriation and threatened misappropriation survives |
| Tortious interference with contractual relations | Capital Senior: Meridian/Maumee knew of Barnhiser’s contract and intentionally employed her with hiring authority after notice, procuring breaches | Defendants: conduct justified or insufficient | Court: Allegations that defendants continued employment/authorized hires after notice plausibly allege intentional procurement without justification; claim survives |
| Tortious interference with business relations (residents) | Capital Senior: Barnhiser arranged videoconference solicitations and induced residents to transfer; specific residents named | Defendants: insufficient specificity to show intentional interference | Court: Allegations of direct solicitations and named transfers are sufficient; claim survives |
| Breach of duty of loyalty (Selders) | Capital Senior: Selders leaked confidential info, solicited residents, and made disparaging remarks | Defendants: conduct protected by NLRA or insufficiently pleaded | Court: Disparaging remark plausibly states claim; leak and solicitation allegations are conclusory/insufficient at pleading stage |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: factual allegations must state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must raise claim above speculative level)
- Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011) (restrictive covenants enforceable if ancillary and reasonable)
- Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (employer’s implied promise to provide confidential information can supply consideration)
- Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006) (discussion of confidentiality and reasonableness inquiry)
- Avery Dennison Corp. v. Kitsonas, 118 F. Supp. 2d 848 (S.D. Ohio 2000) (customer lists and pricing can be trade secrets where protected)
- Fred Siegel Co., L.P.A. v. Arter & Hadden, 707 N.E.2d 853 (Ohio 1999) (factors for improper interference in tortious interference claims)
- Procter & Gamble Co. v. Stoneham, 747 N.E.2d 268 (Ohio App. 2000) (threatened trade secret misappropriation where employee moves to competing position)