Workplace Investigation Cannot Be Both Sword and Shield

Last week, the Portage County Court of Appeals issued an opinion addressing the confidentiality of workplace investigation notes, reports, recommendations and recordings of witness interviews when the employer’s attorney conducted the investigation and interviews.  Smith v. Technology House, Ltd., 2019-Ohio-2670.   The defendant employer had broadly asserted its Faragher/Ellerth affirmative defense of taking prompt remedial action, but had not specifically cited to its attorney’s investigation as the basis for that defense.  Nonetheless, the trial court found that the interview recordings, report and recommendations should be produced in discovery.  The Court of Appeals reversed in part on the grounds that the employer had not specifically waived attorney-client privilege or yet asserted that the investigation was the basis for its defense, but held that the recording of the plaintiff’s interview must be produced because she was clearly adverse to the employer at the time and had her own attorney.  It also ordered an in camera inspection of the investigation materials to determine what else may be outside privilege and work product protection because it predated the investigation, etc.  Finally, it noted that privilege may not be used as both a sword (i.e., defense) and shield (confidential). 


According to the Court’s opinion, the plaintiff alleged that she complained about sexual harassment.  The employer, fearing litigation, immediately retained counsel to conduct an investigation, which began the following day.  When the plaintiff was brought into a room with the company’s attorney, she left the room to contact her attorney and then informed the employer’s attorney that she was represented.  He still interviewed her, a few managers and a few hourly employees.  All of the interviews were apparently recorded.  When litigation commenced, the plaintiff sought during discovery a copy of the interview recordings of her and her non-supervisory co-workers as well as any notes and documents related to those interviews.  The employer responded that the information was protected by attorney-client privilege and the work product privilege.   The trial court granted the plaintiff’s motion, but the discovery order was broader than the request in that it ordered the production of all recordings and documents related to the investigation.  The defendant was also ordered to correct its discovery responses to identify the attorney who conducted the investigation.   The employer appealed the discovery order.


The employer pointed out that the Ohio Supreme Court has found workplace investigations by attorneys to be covered by the attorney-client privilege.   Therefore, the trial court’s broad order compelled the production of materials that were protected by privilege.   Nonetheless, the Court found that not everything related to the investigation was privileged.  “Documents and records whose existence preceded a factual investigation or were created independent of such investigation, i.e., independent of any communication between attorney and client, would not be protected by the attorney client privilege.”


“Also, the identity of persons who participated in the investigation is not covered by the privilege.”  Therefore, the attorney’s participation in the investigation is not confidential.

Further, the recording of the interview with the plaintiff was not protected by privilege because she was, by then, an adverse party with her own attorney.

Finally, the attorney-client privilege does not protect the recording of the interview with Smith as this interview may not properly be said to have occurred within the context of the attorney-client relationship.  In the case of a corporate client, Ohio cases have generally held that the privilege extends to communications between counsel and employees of the corporate client.  . . . In light of the foregoing, Technology House could not reasonably expect that the substance of the interview would have the character of a confidential communication between an attorney and client which underlies the reason for the privilege.  At the time of Smith’s interview, a de facto adversarial relationship existed between the parties and, therefore, the substance of that interview falls outside the scope of the privilege.

The Court also found that the attorney’s assessment and materials about the plaintiff’s interview would be protected as work product.   However, the application of privilege or work product to a particular document requires an analysis of the particular document and that was not possible on the current record because the employer failed to provide or produce a privilege log describing the documents being withheld as privileged and work product.

Upon remand, the trial court of necessity must either conduct an in camera review of the compelled discovery to determine whether the attorney-client privilege and work-product doctrine exempts them from discovery or require the production of description of the documents sufficient to make such a determination, noting that the following types of materials are not privileged: documents and records whose existence preceded Attorney Thompson’s factual investigation or were created independent of that investigation (supra at ¶ 24); the identity of persons who participated in the investigation (supra at ¶ 25); and any recordings or transcripts of the substance of the interview with [the plaintiff].

The Court also rejected the plaintiff’s assertion of waiver as premature on the current record.  The plaintiff argued that the employer’s assertion of its Faragher/Ellerth defense waived privilege and work product protection for the investigation. 

Although no Ohio court has adopted this position, it has been held in other jurisdictions that the assertion of the Faragher/Ellerth defense effects a waiver of any privilege attaching to a party’s investigation of the alleged harassment.  “When an employer puts the reasonableness of an internal investigation at issue by asserting the Faragher/Ellerth defense, the employer waives any privilege that might otherwise apply to documents concerning that investigation,” including “‘not only the [investigative] report itself, but [ ] all documents, witness interviews, notes and memoranda created as part of and in furtherance of the investigation.” . . . .

The issue of whether Technology House and Gear waived the privilege attaching to Attorney Thompson’s investigation by asserting a Faragher/Ellerth defense may be resolved by recourse to “[o]rdinary waiver principles” and the “animating maxim that the privilege cannot ‘be used as both sword and shield.’”  In re Itron, Inc., 883 F.3d 553, 558 (5th Cir.2018).  That is: “when a party entitled to claim the attorney-client privilege uses confidential information against his adversary (the sword), he implicitly waives its use protectively (the shield) under that privilege.”  (Citation omitted.)  Id.  

Accordingly, courts do not find a waiver of privilege unless a party indicates its reliance  on a particular investigation in its assertion of the Faragher/Ellerth defense.  The “clear majority view” is that the defense must be “premised, in whole * * * or [in] part, on the results of an * * * investigation.”  . .  . . “This holding aligns with the numerous cases across jurisdictions finding waiver ‘when a client asserts reliance on an attorney’s advice as an element of a claim or defense,’ * * * and the many dozens of cases finding no waiver when no such reliance has occurred.”

In the present case, Technology House and Gear’s assertion of the Faragher/Ellerth defense does not acknowledge the existence of much less indicate reliance upon Attorney Thompson’s investigation.  The mere assertion that they exercised “reasonable care to prevent and promptly correct any alleged sexually harassing behavior” does not constitute a waiver of any privilege applicable to the investigation.

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 be changed or 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.

Flurry of Restrictive Covenant and Trade Secret Activity This Spring

There has been a number of developments affecting employment agreements, non-compete agreements and trade secrets this Spring.  First, a new federal statute was enacted last month, the Defend Trade Secrets Act of 2016 which, as discussed below, creates federal court jurisdiction over civil trade secret theft lawsuits, authorizes courts to issue ex parte seizure orders in “extraordinary circumstances” and authorizes treble damages and attorneys’ fees  only when the employer amended its confidentiality agreements and/or policies to permit confidential disclosure to government agencies, under seal in litigation, and to attorneys in whistleblower situations, but does not permit court to enjoin individuals from obtaining employment with a competitor.   In one lawsuit, the Ohio Court of Appeals affirmed judgment for an employer who revoked a former employee’s severance pay when he began working for a company and the severance agreement permitted the employer in its “sole discretion” to deem it a “competitor.”  In the second, the employer lost in its attempt to keep temporary employees from continuing to work for a client through a competitor supplier because the court interpreted the contract to only apply if the defendant employees had voluntarily resigned, which they had not.  Finally, in the last decision from earlier this month, the court reversed a shortening of the restrictive period from one year to six months because the hardship on the employee was not undue in light of his considerable financial resources.

 Congressed passed the DTSA in April and it was signed by the President in May.  Federal court may be invoked when a trade secret involving a product or service used in interstate or federal commerce has misappropriated within the prior three years.   In extraordinary circumstances, a court may – without prior notice to the defendant – issue an order for the seizure of property necessary to prevent the dissemination or propagation of the misappropriated trade secret.    The Court may also grant other civil remedies, but may not enjoin an employment relationship or enjoin information that the person simply knows (as opposed to misappropriated trade secrets).  In other words, Congress did not adopt the inevitable disclosure doctrine and only provides a remedy when the misappropriation was through “improper means” or was acquired by someone who knew that the information was “derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret.”  “Improper means” was defined to “include[] theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means” but “does not include reverse engineering, independent derivation, or any other lawful means of acquisition.”  The DTSA does not preempt state law or change the burden of providing that particular information is, in fact, a trade secret.

In order to obtain an ex parte seizure order, the plaintiff needs to show that a TRO (i.e., temporary restraining order) would be inadequate because the defendant ‘would evade, avoid, or otherwise not comply with such an order and the plaintiff would suffer immediate and irreparable injury if the property were not seized.  The plaintiff need also show that the harm to the defendant and third parties is outweighed by the plaintiff’s harm, that the defendant has possession of the trade secret and property to be seized, and that it is likely that information is in fact a trade secret which was misappropriated through improper means (or through such a conspiracy).  Finally, the plaintiff needs to show that the application for a seizure order has not been publicized and, if it were, that the defendant (and/or his/her co-conspirators) would move or destroy or make inaccessible the property to be seized.  The property seized is then placed in the custody of the court.  The defendant could have an action for wrongful seizure against the plaintiff.

In order to obtain treble damages or attorney’s fees following the successful prosecution of a trade secret theft action, the employer must have first provided notice of the DTSA’s statutory immunity to defendant through “any contract or agreement with an employee that governs the use of a trade secret or other confidential information”  which is signed or modified after May 11, 2016 or through “a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.”   “Employees” includes contractors and consultants.  This statutory immunity protects individuals from being held criminally or civilly liable under any federal or state trade secret law if the individual’s otherwise unlawful disclosure was made in confidence to a federal, state or local government official or any attorney solely for the purpose of reporting or investigating a suspected legal violation, or was disclosed in a complaint or other document filed under seal in a lawsuit or, if the individual  files a whistleblower retaliation lawsuit for retaliation against his or her employer, was disclosed to the individual’s own attorney  or used in the court proceeding if the information is filed under seal and only disclosed pursuant to a court order.

As for non-competition agreement cases, the first case involves a non-competition provision inserted in a severance agreement.  Saunier v. Stark Truss Co., Inc., 2016-Ohio-3162.  The non-competition clause was not very strict.  The employee agreed to not work for any competitor for a year, but even if he did, he would only lose his severance pay.  In addition, the Agreement permitted him to work for a competitor in certain non-sensitive positions (i.e., maintenance), but again, if he did so, his severance pay would cease.  The determination of what entity was a “competitor” was left to the “sole discretion” of the employer without any reasonableness standard.   The employee obtained a job shortly thereafter and, wouldn’t you know it, the employer deemed that entity to be a competitor and cut off his severance pay.  The employee sued and lost because the Court found that the Agreement gave the employer the “sole discretion” to deem the entity a competitor.

In the second case, the employer lost in attempting to keep its temporary employees from continuing to work for its client through a competitor.  Drone Consultants, L.L.C. v. Armstrong, 2016-Ohio-3222.  The plaintiff employer provided temporary employees to a client.  Those employees were required by contract to provide two weeks advance notice of resignation so that their replacements could be recruited and trained and then precluded from returning to their temporary assignment with that client through a competitor.   After the client terminated its contract with the plaintiff employer, the employer notified the six defendant employees that their employment was being terminated and they could collect unemployment.  Instead, they were hired by a competitor who placed them right back in their previous assignments with that client and the plaintiff employer sued.  The Court interpreted the contract to only require the employees to provide notice if they voluntarily resigned, which they had not.  Similarly, the restriction against returning to their previous assignments through a competitor also only applied in the event of their voluntarily resignation and, therefore, did not apply in the event of their involuntary termination.    Although the court ultimately did not discuss or apply it, the plaintiff employer’s contract to provide contingent workers to that client provided that it was required to waive any restrictive covenants that would preclude those workers from continuing to work for the client in the event the plaintiff employer’s contract was terminated by the other party without cause (which it had been).

The final case from earlier this month reversed the trial court’s shortening of the non-compete period from one year to six months.   AK Steel Corp. v. Arcelormittal USA, L.L.C., 2016-Ohio-3285.  In that case, a senior executive with knowledge of the plaintiff employer’s strategic plans for the future was subject to a one-year world-wide non-competition agreement and was recruited to the be the COO of a larger competitor.   The trial court reduced the restrictive period to six months on the grounds that it constituted an undue hardship to the defendant employee without a corresponding benefit to the plaintiff employer.  The appeals court found the restrictive period to be reasonable in light of his confidential knowledge of strategy, business plans, manufacturing processes for current and next generation products, future plant locations, pricing and awarding of contracts, etc.

To be sure, there is no allegation that Howell has in any way attempted to steal confidential or trademarked information for the benefit of ArcelorMittal. Furthermore, it is acknowledged among the parties that certain information available to Howell, such as highly complex and detailed manufacturing processes and patented technology, are simply not capable of reproduction from memory. Rather, the pertinent concerns related to confidential information involving company strategy and information that is relied upon at such a fundamental level that makes non-disclosure nearly impossible. Although there is no evidence to suggest any malicious intent on the part of ArcelorMittal, as competing multibillion dollar companies operating worldwide, there is a certain amount of information, in particular strategic decisions, that the companies have a legitimate interest in remaining confidential. The record establishes that AK Steel has a legitimate interest in restricting Howell, the fourth-highest executive within the company, from accepting employment from a competitor for a one-year period.

Finally, the Court rejected the trial court’s concern with hardship on the defendant employee because every employee suffers some hardship from these covenants, but they can only be modified or eliminated when the hardship is undue:

 . . the trial court failed to consider that "sole means of support," as noted by the Raimonde decision is not limited to employment income. The record here supported a finding that Howell was a highly sought after senior executive of a major steel company, and was recruited by an even larger competitor. Although there was testimony that Howell had a family that depended on his income, there was also testimony that Howell had a large, vested retirement plan from AK Steel, and his new employment with ArcelorMittal would include a $900,000 signing bonus. In resolving the issue of "undue hardship," we find the trial court erred by failing to consider the additional resources in determining whether the noncompete provision deprived Howell of his sole means of support.

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 be changed or 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.

EEOC Revises Its “Equal Employment Opportunity Is the Law” Poster To Reflect November 21 Effective Date of Genetic Information Nondiscrimination Act

The EEOC has posted on its website the new EEO Is the Law poster which reflects the November 21 effective date of GINA. Every employer with more than 15 employees and most federal contractors are required to post a notice about the rights of applicants and employees under Title VII, the ADA, the ADEA, the GINA, the Equal Pay Act, Executive Order 11246, the Rehabilitation Act and the Vietnam Era Veterans Readjustment Assistance Act, etc. Employers may post a supplemental poster next to their existing poster of employees news rights under GINA and the ADAA or may post an all new poster which incorporates the new rights under GINA. Employers may print out these posters in English and Spanish directly from the EEOC website or may order larger (and more readable) version to be mailed.

GINA was enacted in 2008 and has broader application to employers and healthcare providers than its name implies. Title I applies to group health plans sponsored by private employers, unions, and state and local government employers, issuers in the group and individuals health insurance markets, etc.

Sixth Circuit Dismisses ADEA Claims by Employees Who Claimed They Were Terminated For Budget Reasons Rather than For Violating Confidentiality Policy.

Today, the Sixth Circuit affirmed the dismissal of claims by two employees who alleged that they had been terminated on account of their age because the new CEO had sought to increase turnover among (more expensive) employees with more seniority so that he could hire less expensive, newer employees. Allen v. Highlands Hospital Corp., No. 07-6414 (10/21/08). The plaintiffs admitted to the conduct which the hospital explained motivated it to terminate their employment, but the plaintiffs denied their conduct was the actual reason for their termination. Indeed, the court was sympathetic that the plaintiffs had not actually violated patient confidentiality as alleged, but still gave more weight to the hospital’s argument that it held an honest belief that the plaintiffs had violated its HIPAA policy based on a thorough investigation by the human resources department. In any event, the court found that there was no evidence that the hospital’s business strategy to reduce its budget for employee compensation had a disparate impact on older employees and did not constitute direct evidence of age discrimination.

The plaintiffs were terminated for violating the hospital’s HIPAA policy when one of the plaintiffs obtained the x-rays of her own granddaughter (at the parent’s request) from the other plaintiff without having a signed authorization from the parent of the granddaughter. The grandmother plaintiff had been told by another employee that the parent’s signature was mandatory, but there was no written policy governing the situation. Moreover, the plaintiff grandparent then forged the parent’s signature on the authorization form, back-dated the form and placed it in the medical record (which may have shown knowledge of her own guilt in violating an unwritten policy). Both employees were terminated for violation of the HIPAA policy, which the hospital considered to be a major offense.

The Court acknowledged that the hospital’s actions in this case were unduly harsh: “the facts of this case are not a “textbook example” of a privacy violation for which a hospital would usually take such serious action against its long-time employees. The record shows that [plaintiff] was not only the biological grandmother of the patient, but also was involved in her care and guardianship (although [plaintiff] was admittedly not [the granddaughter’s] legal guardian). Moreover, [the hospital] does not dispute that [the mother], as [the granddaughter’s] mother and legal guardian, in fact gave [plaintiff] verbal authorization to retrieve the x-rays. The plaintiffs have thus undoubtedly pointed to a weakness in the Hospital’s policy, if for no other reason than that this case highlights the potential ambiguity caused by the lack of detail in the employee manual’s prohibition against an unauthorized release. But the fact that the Hospital would benefit from developing a more detailed policy on this issue does not mean that [the plaintiffs] have succeeded in creating a genuine issue of material fact about whether HHC’s stated reason for terminating them was a pretext designed to hide age-based discrimination. We thus agree with the Hospital that, in determining if the plaintiffs have raised a genuine issue of material fact as to pretext, we should consider not whether [the plaintiffs] actually breached patient confidentiality, but rather whether the Hospital had an honestly held belief that they had committed a Group I offense.”

To support their age discrimination claims, the plaintiffs produced evidence that the hospital’s new CEO sought to increase employee turnover among more senior (and presumably more expensive) employees. According to the court, the hospital’s budget manager testified “one of [the CEO’s] strategies was to terminate employees based on seniority to facilitate the hiring of new, less costly employees. In fact, [the CEO] increased the annual turnover rate from 2% to 28%. [The budget manager] did not know whether the cost-cutting measures had a disproportionate effect on older employees, but she said that [the CEO’s] focus was at all times on improving HHC’s financial situation.” In any event, the Court of Appeals found that this testimony did not constitute direct evidence of age discrimination.

“Indeed, the Supreme Court in Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), has specifically held that the strategies discussed by [the budget manager] are permissible methods for employers to cut costs: When the employer’s decision is wholly motivated by factors other than age, the problem of inaccurate and stigmatizing stereotypes disappears. This is true even if the motivating factor is correlated with age . . . . On average, an older employee has had more years in the work force than a younger employee, and thus may well have accumulated more years of service with a particular employer. Yet an employee’s age is analytically distinct from his years of service. An employee who is younger than 40, and therefore outside the class of older workers as defined by the ADEA, see 29 U.S.C. § 631(a), may have worked for a particular employer his entire career, while an older worker may have been newly hired. Because age and years of service are analytically distinct, an employer can take account of one while ignoring the other, and thus it is incorrect to say that a decision based on years of service is necessarily ‘age based.’”

Moreover, the court found insufficient evidence that the CEO’s budget practice had a disparate impact on older workers either. The hospital’s expert produced evidence that the hospital’s increased turnover did not result in a disproportionate reduction in the number of employees over the age of 40. “ Nor is the plaintiffs’ disparate-impact claim salvaged by the allegation that the number of terminations of those over 40 years of age increased from 14.3% to 62.5% of all terminations between 2002 and 2003. As the district court noted, this data is not statistically significant because the pools from which those percentages were drawn were very small—i.e., there were only 21 terminations in 2002 and 16 terminations in 2003.”

Finally, “[t]he plaintiffs, however, have failed to satisfy their burden of isolating and identifying a specific employment practice that disproportionately impacts employees who are at least 40 years old. As we have already explained, the plaintiffs have at best alleged that HHC desired to reduce costs associated with its highly paid workforce, including those costs associated with employees with greater seniority. But the plaintiffs have not established that this corporate desire evolved into an identifiable practice that disproportionately harms workers who are at least 40 years old. Because Allen and Slone have simply “point[ed] to a generalized policy,” as opposed to specific practice, they have therefore failed to raise a genuine question of material fact with respect to their disparate impact claim.”

The plaintiffs also produced evidence that a the supervisor of a hospital contractor told one of its employees that the employee should start looking for another job because it looked as though all of the older employees would be let go. The court also rejected this as direct evidence that the plaintiffs were terminated on account of their age because the solitary statement was not made by their supervisors and was, instead, made in connection with another employer.

Insomniacs can read the full decision at http://www.ca6.uscourts.gov/opinions.pdf/08a0381p-06.pdf.


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.

Ohio Appeals Court: Employee Handbook is Not a Binding Non-compete Agreement.

Last month, the Lake County Court of Appeals affirmed the dismissal of a fraud lawsuit brought by an employer against an employee after the plaintiff-employer incurred substantial litigation expenses in an earlier case brought by the employee’s former employer. Freedom Steel, Inc. v. Rorabaugh, 2008-Ohio-1330 (3/21/08). The employee salesperson left his long-time employer and was hired by the plaintiff-employer after assuring it that he had never signed a non-competition agreement with his long-time employer. However, he did not inform the plaintiff-employer that he had signed an employee handbook acknowledgment because it was not a non-compete agreement and he did not think that handbook’s non-competition provision was enforceable. The court ultimately ruled that the employee was correct.

When the employee resigned his long-time employment, he did not reveal the identity of his new employer. When the long-time employer asked him to not call on any of their customers, he responded that he did not have a non-compete and would do what he had to do to get and keep a job. In response, the long-time promised that it would sue him if he competed against it.

Not surprisingly, the employee generated sales by means of his prior customer relationships. In “March of 2005, [the employee] was served with a lawsuit filed by [his long-time employer] in Summit County. In the complaint, [the long-time employer] alleged violations of Ohio's Trade Secrets Act, interference with contractual business relations, conversion, and breach of contract. Shortly after being served, [the employee] notified [the plaintiff-employer] of the pending lawsuit [and was] questioned . . . again regarding whether he had signed anything "that would drag us into a lawsuit." [The employee] again denied signing such a document insisting "I will prove it to you, and you're going to apologize to me ***." Based on these assurances, the plaintiff-employer did not fire the employee at that time.

“Eventually, however, [the plaintiff-employer] was served with a subpoena from [the long-time employer] seeking disclosure of . . . . the names of ‘customers, where they are located, their addresses, who they are, what they buy, what you're selling them price wise, everything about the customers, it's an open book in other words.’ [The plaintiff-employer] fought the subpoena by filing a motion for protective order; however, the trial court overruled the motion. The trial court rendered the ruling a final appealable order and appellant subsequently filed an appeal with the . . . Court of Appeals. Before the appeal was heard,” the employee settled the lawsuit with his long-time employer.

On April 4, 2006, after the dismissal, [the plaintiff-employer] filed suit against [the employee] in the Lake County Court of Common Pleas alleging fraud. [The plaintiff-employer] asserted [the employee] defrauded [the plaintiff-employer] by concealing relevant information regarding his past employment which caused it to expend over $18,000.00 in attorney's fees to defend against the subpoena issued by [the long-time employer] in the Summit County case. . . . In February of 2007, the matter proceeded to jury trial. After deliberating, the jury returned a verdict” in favor of the employee.

During the trial, the trial court had instructed the jury that as a matter of law the employee handbook signed by the employee was not a binding non-compete or trade secrets agreement. Therefore, the employee had truthfully denied ever signing a non-compete agreement. On appeal, the Court of Appeals agreed that the employee handbook could NOT constitute a binding contract because the Acknowledgment page signed by the employee contained the following disclaimer:

"NOTHING CONTAINED IN THIS HANDBOOK IS INTENDED AS A CONTRACT AND THE POLICIES, RULES AND BENEFITS DESCRIBED IN IT ARE SUBJECT TO CHANGE AT THE SOLE DISCRETION OF FAMOUS ENTERPRISES WITHOUT NOTICE AT ANY TIME."

“Although the document indicates, by signing the receipt, [the employee] agreed to be bound by the statements contained within it, the document does not mention and thus does not bind [the employee] (or any acknowledging employee) to a non-compete clause. Moreover, although the document indicates that, by signing the document, [the employee] would not disseminate or use confidential information "CRITICAL TO THE SUCCESS OF FAMOUS ENTERPRISES" (emphasis sic), it does not use the term nor set forth any general trade secrets any current or past employee must not publish. The document merely states that confidential information, e.g., customer lists, pricing policies or other sensitive information, shall not be disseminated or used "OUTSIDE OF COMPANY PREMISES." As this statement appears in an employee handbook and, moreover, is vague as to what it specifically relates, it is reasonable to conclude that it simply reflects a policy requiring current and past employees not to disclose the information it stipulates as confidential.”

Not discussed by the Court is the fact that the plaintiff-employer likely would have been subpoenaed regardless of the arguable existence of a non-compete agreement because the trade secrets claim does not require the existence of an underlying breach of contract. However, the court of appeals incorrectly noted in a footnote that the use of the customer information from memory (as opposed to taking a list) was not actionable under Ohio's Trade Secret Act. (This issue was previously the subject of an earlier Ohio Supreme Court opinion on February 6, 2008 in Al Minor & Assoc., Inc. v. Martin, 2008-Ohio-292).

Insomniacs can read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/11/2008/2008-ohio-1330.pdf .

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.