Last week, the Montgomery County Court of Appeals affirmed a declaratory judgment in favor of an employee that the non-compete agreement which he had signed just six months earlier was unenforceable because it sought to prevent regular competition instead of unfair competition. Geloff v. R.C. Hemm's Glass Shops, Inc., 2021-Ohio-394. The Court found that the employer failed to show that the employee had memorized or was familiar with its entire customer list or that this list was in fact confidential. The employee was familiar with the identities of the customers he had serviced, but the employer had also publicized the names of some customers on its website. Moreover, the fact that the employee learned the skills of a common trade during his employment did not make those skills a protectable interest or trade secret. Because the non-compete clause was unenforceable, the trial court did not need to narrow it in order to make it enforceable.
According to the Court’s opinion, the plaintiff employee had
been hired in 2015 as a glazier and was promoted to foreman in January
2019. He signed a non-compete upon
being hired and upon his promotion. He
resigned his employment six months later, joined the union and was assigned to
a new employer, which hired him as a glazier.
His employer then threatened to file suit for breach of his non-compete
(and presumably for tortious interference against his new employer), prompting
the plaintiff to seek a declaratory judgment.
His new employer terminated his employment. A year later, the trial court entered summary
judgment in the employee’s favor. The
Court of Appeals affirmed.
The trial court concluded that the employer failed to show
that the employee possessed confidential information because the identities of
its customers were public knowledge. The
plaintiff only had knowledge of the customers which he served. While he may have been aware of a customer
list, there was no allegation that he memorized it or possessed a copy. The employee’s “awareness of the identities of
some customers, moreover, is not the equivalent of possession of a complete
customer list.“ The plaintiff disputed
that he had information about marketing, pricing, or customer acquisition
techniques, etc. Because
the employer “itself voluntarily discloses the identities of certain customers
on its website, presumably for promotional purposes, it cannot establish that
the identities of individual customers are entitled to protection as trade
secrets or otherwise confidential information.”
The court also rejected the employer’s argument that the
employee’s training and experience as a field glazier constituted a trade
secret.. “[S]uch experience and skills
“cannot qualify as trade secrets if they are of common knowledge * * * in the
trade.”
The Court also refused to enforce a six-state restrictive
territory. The plaintiff had only been assigned outside Ohio twice during his
four-year employment and the employer itself had only ever performed 30
projects outside Ohio.
The trial court found that [the employer] did not produce evidence suggesting that the Agreement’s restrictions were necessary to restrain [the employee], “a field installer of the products [that the employer distributes,” from engaging in unfair competition. . . . [The employer] did not explain how [the employee’s] subsequent employment as an installer “in Ohio or within the other five * * * states” listed in the Agreement “[would] subjectively harm” [its] business, inasmuch as [it] did not establish that its out-of-state work was a significant component of its business overall, or more importantly, that the nature of [his] subsequent employment as an installer, as opposed to employment involving sales and marketing, constituted anything other than ordinary competition.
The employer did not understand why the trial court was
influenced by the fact that the employee was not involved in sales. The
employer
fails to distinguish between unfair competition and ordinary competition. The distinction depends on whether the “form of competition [a] covenant [not to compete] restricts is in its nature and character unfair” to the employer; if the form of competition is not unfair, then the restriction is unenforceable. . . .The trial court reasoned that in the absence of any evidence that [the employee] worked subsequently in sales and marketing for a competitor of [the employer], and in the absence of any evidence that [he] “established his own business in direct competition” with [it], the enforcement of the Agreement would serve only to prevent [him] from working as an installer.
We concur with the trial court. [The employer] has not demonstrated that [the employee] engaged in unfair competition merely by installing glass products for a competing business, nor did [it] produce evidence showing that [he] possessed trade secrets or other confidential information that he could have used to give his subsequent employer or employers an unfair advantage over [it].
Further, “The trial court found, in effect, that the Agreement
would not provide any benefit to [the employer], because the evidence on record
did not show that [the employee] possessed any confidential information or
trade secrets, or that [he] had engaged in unfair competition.
Agreeing, the Court stated that “Absent
evidence that [the employee] misappropriated confidential information or trade
secrets, or otherwise engaged in unfair competition, enforcement of the
Agreement would not discernibly benefit [the employer], whereas it would
needlessly prevent [him] from working as an installer.”
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
