2018 Ohio 3364
Ohio Ct. App.2018Background
- Northern Chemical subcontracted filling/blending work to Strib Industries for ~25 years; payments to Strib were a percentage of revenue and Strib would be paid after Northern Chemical was paid by customers.
- Northern Chemical had an NDA with Strib (Strib NDA); ChemMasters also contracted with Northern Chemical under its own NDA.
- ChemMasters later began contracting directly with Strib; Northern Chemical sued Strib and ChemMasters alleging breach of contract, tortious interference, misappropriation of trade secrets, and related claims.
- Strib counterclaimed for unpaid invoices (~$8,992.50); the trial court deemed Northern Chemical’s failure to respond to requests for admissions as admissions.
- At summary judgment the trial court struck Northern Chemical’s untimely, unauthenticated emails and a late affidavit, then granted Strib summary judgment on Northern Chemical’s claims and on Strib’s counterclaim for unpaid invoices.
- The appellate court affirmed, finding (a) the trial court did not abuse discretion in striking the late affidavit/emails, and (b) no genuine issues of material fact existed on tortious interference, breach of the NDA, or trade-secret claims; Strib was entitled to judgment on its unpaid-invoices counterclaim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Tortious interference with business relations | Strib improperly induced ChemMasters to stop using Northern by withholding product/payment and using confidential knowledge to "steal" the account | Strib stopped performing because Northern failed to pay; Strib informed ChemMasters and ChemMasters chose to contract directly; no exclusivity existed | Affirmed for Strib — no evidence of improper means or lack of privilege; Strib had a good-faith basis to cease performance |
| Tortious interference with contract | Northern: there was an existing contractual relationship with ChemMasters that Strib knowingly procured breach of | Strib: no evidence of an actual contract between Northern and ChemMasters; only at-will/purchase-order dealings | Affirmed for Strib — plaintiff failed to show existence/knowledge of a binding contract |
| Breach of Strib NDA (use/disclosure of confidential info) | Northern: Strib used Northern’s pricing/formula/info to obtain ChemMasters | Strib: formulas and product information belonged to ChemMasters; no evidence Strib used/disclosed Northern’s confidential info | Affirmed for Strib — Zemaitis admitted formulas were ChemMasters’; no admissible evidence that Strib misused Northern’s confidential information |
| Misappropriation of trade secrets | Northern: Strib misappropriated business, pricing, process, and technical information to obtain ChemMasters | Strib: no improper acquisition or disclosure; alleged secrets belonged to ChemMasters or were already known to ChemMasters | Affirmed for Strib — no evidence of improper means or that trade secrets were Northern’s and were misused |
| Strib counterclaim for unpaid invoices | Northern: Strib materially breached payment arrangement (waiting until Northern was paid), excusing Northern’s payment | Strib: Northern admitted nonpayment (requests for admissions deemed admitted); invoices outstanding | Affirmed for Strib — invoices deemed admitted; no admissible evidence of Strib’s material breach; judgment for $8,992.50 plus interest |
Key Cases Cited
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (de novo standard for appellate review of summary judgment)
- Dresher v. Burt, 75 Ohio St.3d 280 (summary judgment burden-shifting framework)
- Fred Siegel Co., L.P.A. v. Arter & Hadden, 85 Ohio St.3d 171 (improper means required for tortious interference)
- Murphy v. Reynoldsburg, 65 Ohio St.3d 356 (doubts resolved for nonmoving party)
- Blakemore v. Blakemore, 5 Ohio St.3d 217 (abuse of discretion standard)
- Salemi v. Cleveland Metroparks, 145 Ohio St.3d 408 (factors for evaluating trade-secret status)