Tomaydo-Tomahhdo L.L.C. v. Vozary

         Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-840927

          ATTORNEYS FOR APPELLANTS Daniel F. Lindner Rick L. Ferrara The Lindner Law Firm, L.L.C.

          ATTORNEYS FOR APPELLEES Julie L. Juergens Melanie R. Irvin Gallagher Sharp Bulkley Building.

          BEFORE: Stewart, J., McCormack, P.J., and Boyle, J.

          JOURNAL ENTRY AND OPINION

          MELODY J. STEWART, JUDGE.

         {¶1} Plaintiff-appellant Rosemarie Carroll and defendant-appellee Larry Moore were partners in a restaurant venture called Tomaydo-Tomahhdo. The partnership ended when the parties signed a share purchase agreement in which Carroll bought out Moore and Moore agreed not to compete against Carroll for one year. When Moore's noncompetition agreement with Carroll expired, he opened a catering business, Caterology, and eventually entered into a partnership with defendant-appellee George Vozary, a former Tomaydo-Tomahhdo employee. Carroll brought this action in her own name and in the name of Tomaydo-Tomahhdo and other businesses that she owned, against Moore, Vozary, and their business, Clean Plate, Inc. d.b.a. Caterology, alleging that Moore breached the share purchase agreement by recruiting Vozary and that Moore and Vozary stole trade secrets (recipes, menu builds, and a customer list) and engaged in unfair competition. The court granted summary judgment to all defendants, finding that most of the claims against them were preempted by the Ohio Unfair Trade Secrets Act and that there was no evidence that the items allegedly misappropriated by Moore were trade secrets or used without authorization. The sole assignment of error on appeal contests various aspects of the summary judgment.

         {¶2} Carroll and Moore formed their partnership in 2000. They began with a restaurant named Captain Tony's and expanded their holdings to include the restaurants Tomaydo-Tomahhdo and Tomaydo-Tomahhdo Express. They envisioned the Tomaydo-Tomahhdo restaurant to be "kid friendly, " "quick-service, " and inexpensive, yet "upscale." In addition to dining, the restaurant provided a food-catering service.

         {¶3} In 2004, Carroll and Moore hired Vozary. Vozary signed a confidentiality agreement in which he acknowledged that he would be exposed to "confidential information, including recipes, food preparation methods, marketing strategies, financial information and other trade secrets." Among other things Vozary agreed "not to discuss or disclose" were recipes, food preparation information, design models and schematics, and databases or documents containing customer information.

         {¶4} Carroll and Moore's partnership ended in February 2008 when Moore agreed to sell Carroll his entire interest in the business entities by a share purchase agreement. In Section 6.1 of the agreement, Moore promised, among other things, that he would not use, disclose, convey, or reproduce "menu files and development ideas, recipes (current and historical) and training tools (picture boards, build sheets, prep lists, master order guide), materials that describe the Tomaydo-Tomahhdo concept[.]" Moore also promised in Section 6.2 of the agreement that "on or before January 2, 2010, " he would not "induce or attempt to influence" any of Carroll's employees into entering into an employment contract with any other person or entity or "induce or attempt to influence" an individual or entity from terminating a relationship or contract that they, the individual or entity, had with Carroll. The parties specifically contemplated that Moore would be opening a restaurant in the 2008 fiscal year, so the agreement also required Moore to provide Carroll with the location of the restaurant he intended to open and that Moore not open a restaurant in certain northeast Ohio communities before July 31, 2008.

         {¶5} Moore opened a restaurant called Go Bistro in December 2008, but closed it in July 2010. Moore had several catering jobs pending when he closed Go Bistro, so he started another business, Caterology, that he operated from his house before moving to the back of a pizza shop.

         {¶6} During the time Moore began operating Caterology, Vozary began looking to branch out with his own restaurant through a business called Clean Plate, Inc. Clean Plate did not open a restaurant; however, Moore hired Vozary to work at Caterology starting in April 2011. In June 2011, Moore and Vozary combined Caterology and Clean Plate, Inc. in a handshake agreement in which they became equal partners.

         {¶7} In February 2015, Carroll and her business entities including Tomaydo-Tomahhdo, filed a complaint^[1] in the common pleas court alleging that Moore, Vozary, and Caterology misappropriated Tomaydo-Tomahddo recipes and customer lists, engaged in unfair competition, tortiously interfered with current and prospective business relationships, and otherwise breached contracts and fiduciary duties. Moore, Vozary, and Caterology sought summary judgment on the grounds that the recipes were not trade secrets; that the civil conspiracy, tortious interference, unfair competition, and breach of fiduciary duty claims were subsumed within the misappropriation of trade secrets claim; and that they did not access the Tomaydo-Tomahhdo customer list. The court granted summary judgment, finding that most of the items included in the trade secrets claim were not trade secrets; that Carroll and Tomaydo-Tomahhdo failed to establish that Moore, Vozary, and Caterology actually acquired and used customer lists; that there was no proof that Moore and Carroll breached non-competition agreements; and that the remaining claims were preempted by trade secrets law.

         {¶8} Our review of a case decided on summary judgment is de novo, conducting an independent review of the record and affording no deference to the trial court. Summary judgment is appropriate if the evidence properly before the court and viewed in a light most favorable to the nonmoving party shows that there are no genuine issues of material facts; the moving party is entitled to judgment as a matter of law; and reasonable minds can come to but one conclusion adverse to the nonmoving party. Civ.R. 56(C).

         I. Misappropriation of Trade Secrets

         {¶9} In order to prevail on a misappropriation-of-trade-secret claim, Carroll had to show by a preponderance of the evidence: (1) the existence of a trade secret; (2) the acquisition of a trade secret as a result of a confidential relationship; and (3) the unauthorized use of a trade secret. Heartland Home Fin., Inc. v. Allied Home Mtge. Capital Corp., 258 Fed.Appx. 860, 861 (6th Cir.2008). Carroll premised her misappropriation of trade secret claims on the alleged theft of customer lists, picture builds (pictorial representations of how to make a sandwich or salad), recipes, food preparation and training techniques, and marketing strategies and business models. The court found that, apart from customer lists, the remaining items did not meet the definition of a trade secret.

         {¶10} The Ohio Uniform Trade Secret Act, R.C. 1333.61(D), defines a "trade secret" as:

[Information, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following:

(1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

(2)It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

         {¶11} When analyzing a trade secret claim, the court must consider:

(1) The extent to which the information is known outside the business; (2) the extent to which it is known to those inside the business, i.e., by the employees; (3) the precautions taken by the holder of the trade secret to guard the secrecy of the information; (4) the savings effected and the value to the holder in having the information as against competitors; (5) the amount of effort or money expended in obtaining and developing the information; and (6) the amount of time and expense it would take for others to acquire and duplicate the information. (Citation omitted.)

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