2019 Ohio 4589
Ohio Ct. App.2019Background
- Henning was RCA’s relationship manager (2010–2017) under an employment agreement that barred post‑employment disclosure/use of confidential information and soliciting RCA customers for 18 months; “Confidential Information” included customer lists and account data.
- Fifth Third acquired RCA in April 2017. On April 3, 2017 Henning and RCA executed a termination agreement stating the employment agreement was terminated and that each party released the other from all obligations under it.
- Henning resigned April 21, 2017, immediately began working for Formidable, and allegedly exported password‑protected customer/account spreadsheets from RCA to his personal email and to two external drives, then deleted related emails.
- Plaintiffs (RCA and Fifth Third) sued Henning and later Formidable for breach of contract, breach of fiduciary duty (duty of loyalty), misappropriation of trade secrets (OUTSA), tortious interference, and spoliation; Formidable allegedly burned the external drives after being warned.
- The trial court granted judgment on the pleadings dismissing all claims (holding the termination agreement released contractual confidentiality and nonsolicitation obligations) and dismissed the spoliation claim as moot; plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract | Termination agreement ineffective because Henning promised to continue employment and to sign a new restrictive agreement; that promise was a condition precedent | Termination agreement is a clear, unambiguous written release canceling all rights and obligations under the employment agreement | Affirmed: termination agreement controlled; no breach of the employment agreement |
| OUTSA (trade secrets/misappropriation) | Customer lists/account data are trade secrets and were taken and used without authorization | Termination release eliminated confidentiality obligations, so no trade secret claim | Reversed: plaintiffs adequately pleaded trade‑secret status (economic value and reasonable efforts) and misappropriation; OUTSA claim survives |
| Breach of fiduciary duty (duty of loyalty) | Henning breached common‑law duty by removing confidential customer info and soliciting while still employed | Release of contractual duties eliminated obligations | Reversed: common‑law duty of loyalty exists independent of contractual release and was plausibly breached |
| Tortious interference | Henning/Formidable knowingly and wrongfully solicited RCA customers using misappropriated information, interfering with contracts/relationships | Conduct was justified by release in termination agreement | Reversed: allegations that interference used wrongful means (OUTSA breach) sufficiently plead unjustified interference |
| Spoliation of evidence | Formidable willfully destroyed key evidence (external drives) after notice of probable litigation, disrupting plaintiffs’ case | Spoliation claim fails because no viable underlying claims remain after release | Reversed: disruption element may be satisfied; plaintiffs adequately alleged willful destruction and damages; spoliation claim survives |
Key Cases Cited
- Galmish v. Cicchini, 90 Ohio St.3d 22 (2000) (final written integration cannot be varied by prior or contemporaneous oral agreements)
- Al Minor & Assoc., Inc. v. Martin, 117 Ohio St.3d 58 (2008) (customer lists can constitute trade secrets)
- Vanguard Transp. Sys., Inc. v. Edwards Transfer & Storage Co., 109 Ohio App.3d 786 (1996) (trade‑secret status is not dependent on existence of a written confidentiality agreement)
- 84 Lumber Co., L.P. v. Houser, 188 Ohio App.3d 581 (2010) (legal obligations to maintain trade‑secret confidentiality exist regardless of written contract)
- Elliott‑Thomas v. Smith, 154 Ohio St.3d 11 (2018) (elements of intentional spoliation of evidence)
- Smith v. Howard Johnson Co., Inc., 67 Ohio St.3d 28 (1993) (spoliation doctrine and required elements)