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Hinsch v. Root Learning, Inc.

Court of Appeals of Ohio, Sixth District

August 2, 2013

William Hinsch Appellant
v.
Root Learning, Inc. Appellee

Trial Court No. CI0201006568

John D. Franklin, for appellant.

Thomas P. Dillon and Nicholas T. Stack, for appellee.

DECISION AND JUDGMENT

OSOWIK, J.

{¶ 1} This is an appeal from a judgment of the Lucas County Court of Common Pleas, in which the trial court granted summary judgment to appellee, Root Learning, Inc. ("Root"), and dismissed a complaint filed by appellant, William Hinsch. For the reasons that follow, we affirm the judgment of the trial court.

{¶ 2} Hinsch is an artist who worked for Root from 1992 until mid-2007. Before working for Root, Hinsch was an illustrator for the Toledo Blade newspaper. Root is a company that offers strategic consulting services to businesses. Part of appellee's services are comprised of visual learning materials known by the company as "Learning Maps, " "Learnegy Maps, " and "RootMaps" which, according to Root, employ visual graphics, metaphors, and other learning materials to simplify complex organizational matters. During his employment at Root, Hinsch helped to create many of the illustrations that were used in Root's products.

The Confidentiality Agreement

{¶ 3} On August 30, 2000, during Hinsch's term of employment, appellant and Root executed a "Confidentiality/Invention Agreement for Root Employees" ("Confidentiality Agreement"). Section 3 of the Confidentiality Agreement defined "confidential information" as:

a)All information, in whatever form recorded or transmitted;
b)Related to or coming within the past, present or future business affairs of Root or other parties whose information Root has in its possession under obligations of confidentiality, including, without limitation, all business plans, customer lists or information, data, designs, developments, discoveries, employee compensation and benefits, expressions (in any medium), financial information, ideas, improvements, innovations, inventions, marketing materials, methods, operations, personnel records and information, processes, product development processes, programs, promotional materials and methods, research, systems, techniques, trademarks, or trade secrets;
c) Having commercial or proprietary value; and
e) Any and all visual graphics and metaphors, strategic dialogue questions, peripheral cards, guide booklets and other learning materials, whether delivered in a physical, tangible format and/or an electronic format, that are collectively referred to as Root Learning Map Products, Root Learnegy Map Products, and/or RootMap Products.

{¶ 4} Exempted from the definition of "confidential information" was any information that:

a. Is or becomes publicly known through no wrongful act of Employee;
b. Is received from a third party free to disclose it to Employee and not under conditions of confidentiality;
c. Is independently developed by Employee outside of his or her Root employment; is unrelated to Root's business, products, research and development, or services; and is not developed using Root's trade secrets or other proprietary information * * *.

{¶ 5} Section 5 of the Confidentiality Agreement, which governs nondisclosure and noncompetition, states in relevant part that:

a. During and after Employee's employment with Root or its affiliates, Employee shall not use for Employee's own benefit or the benefit of others * * *, or disclose in any manner, any Confidential Information it receives from Root or a third party to any person or entity except authorized recipients of Root known to Employee who have a need to know and who have entered into a confidentiality agreement with Root. Employee shall use a high degree of care to avoid disclosure of Confidential Information * * *.
c. During Employee's employment and for a period of two (2) years after Employee ceases to be employed by Root Employee agrees not to engage in any activity, either as an individual, employee or independent contractor with any person or entity who or that offers like-kind or similar products or services competitive with Root's products or services. * * *.

{¶ 6} Section 7 of the Confidentiality Agreement stated that:

Employee agrees that all tangible property in whole or part used, complied, or created by Employee, or made available to Employee, during Employee's employment by Root and relating to his or her employment by Root, including, but not limited to, disks, documents of all kinds, equipment, software, and supplies, shall be returned promptly to Root if Employee ceases to be employed by Root for any reason, or at any other time at the request of Root.

{¶ 7} Pursuant to Section 8, in the event of any breach, or threatened breach, of the terms of the Confidentiality Agreement, Root was entitled to seek all possible legal and equitable remedies including, but not limited to, damages, lost profits, compensatory and punitive damages, restraining orders and injunctions.

The Stock Plan

{¶ 8} Effective September 1, 2000, Root established a "Stock Incentive Plan, " ("the Stock Plan"), under which certain employees, including Hinsch, were awarded stock options as a reward for excellent individual performance. Hinsch received two option awards under the Stock Plan. The first option price was $1.33 per share, and the second was $2.79 per share. The terms of the Stock Plan were negotiated on behalf of appellant and the other employees by an attorney who was compensated by Root.

{¶ 9} Article Seven of the Stock Plan governed purchase and sale rights, as well as Stock Plan participants' distribution rights. The amount to be paid from a participant's Termination Distribution Account ("TDA"), set forth in Article 7.4 of the Stock Plan, was to be calculated using a formula that took into account the fair market value of the shares at the time of distribution.

{¶ 10} In addition to governing the terms under which stock option awards were to be paid and limitations on their transfer, Article 8 of the Stock Plan document, titled "Breach of Restrictive Covenants, " stated that:

[N]otwithstanding any other provision of this Plan to the contrary, if the participant breaches the competition, non-solicitation or nondisclosure provisions of the Award Agreement, whether during or after termination of Service, the participant will forfeit:
(c) any and all rights to receive any remaining installment payments due to the Participant from his or her Distribution Account or Termination Distribution Account, pursuant to Section 7.4 [which governs form and amount of distributions to participants].

{¶ 11} A "TDA" is defined in Article Two of the Stock Plan as:

[A] bookkeeping account maintained by the Company that holds and distributes the Redemption Value of a Participant's vested Options or Owned Shares that are converted to such account following the ...

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