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Poseidon Environmental Services, Inc. v. NU Way Industrial Waste Management, LLC

Court of Appeals of Ohio, Seventh District, Mahoning

December 28, 2017

POSEIDON ENVIRONMENTAL SERVICES, INC., PLAINTIFF-APPELLANT/ CROSS-APPELLEE,
v.
NU WAY INDUSTRIAL WASTE MANAGEMENT, LLC ET AL., DEFENDANTS-APPELLEES/ CROSS-APPELLANT.

         Civil Appeal from Court of Common Pleas of Mahoning County, Ohio Case No. 14 CV 1896

          For Plaintiff-Appellant Attorney Bruce M. Broyles

          For Defendants-Appellees Attorney Constant A. Prassinos

          JUDGES: Hon. Gene Donofrio Hon. Mary DeGenaro Hon. Carol Ann Robb

          OPINION

          DONOFRIO, J.

         {¶1} Plaintiff-appellant, Poseidon Environmental Services, Inc., appeals the Mahoning County Court of Common Pleas' decision to limit an adverse inference jury instruction to only two pieces of evidence and granting directed verdicts in favor of defendants-appellees-cross-appellants, Nu Way Industrial Waste Management, LLC ("Nu Way"), Pamela Johnston ("Johnston"), Georgienne Douropoulos ("Georgienne"), and Louie Douropoulos ("Louie"). Defendants-appellees-cross-appellants are collectively referred to herein as "appellees." Appellees appeal the Mahoning County Court of Common Pleas' order denying the remaining directed verdict motions and the court's order issuing an injunction against Johnston.

         {¶2} Appellant is in the business of brokering hazardous waste transportation services to the industrial coatings industry with an emphasis on structural steel painters and lead abatement contractors. In 2007, Johnston was hired to work for appellant. Johnston's job responsibilities are somewhat in dispute. According to appellant, Johnston's job responsibilities included contacting customers directly in order to provide them with price quotes for appellant's services. This exposed Johnston to: appellant's customer list, the name, phone number, and email address of the contact person for each customer, and price rates/profit margins of appellant. Appellant estimates that Johnston was privileged to approximately 100 different customer identities and their contact information throughout the duration of her employment. Johnston's job responsibilities also included preparing submittals to each customer which included price quotes for appellant's services. According to Johnston, her responsibilities were more akin to an office secretary. In order to carry out her job responsibilities, appellant provided Johnston with numerous computing devices including: a cell phone, a tablet device, and a laptop computer. These devices were considered appellant's property.

         {¶3} In January of 2013, Johnston terminated her employment with appellant and began working for Nu Way. Nu Way is owned in whole or in part by Georgienne and Louie. Nu Way is also in the business of brokering hazardous waste transportation services to various businesses. Georgienne is Johnston's mother and Louie is Johnston's stepfather. Upon terminating her employment with appellant, appellant instructed Johnston to return any and all phones and computer devices that appellant had provided her. Appellant argues that it instructed Johnston to keep any information on her devices related to appellant's business intact which potentially included: customer lists, customer contact information, pricing information, and communications between Johnston and various customers. Johnston returned her smart phone, tablet, and computer to appellant. However, the smart phone and tablet were reset to factory settings which erased any and all data on them. Similarly, some information from the computer had been deleted.

         {¶4} Appellant then contracted Global Digital Forensics to perform forensic analyses on the three devices. David Gitkos from Global Digital Forensics was the employee who was assisting appellant in this venture. Mr. Gitkos' analyses of the phone and tablet revealed no information. However, Mr. Gitkos's analysis of the computer revealed numerous references to Nu Way, Georgienne, and Louie.

         {¶5} On May 29, 2014, appellant contacted Johnston and Nu Way via a letter and demanded that they cease and desist from contacting any of appellant's customers. Additionally, appellant requested that Johnston and Nu Way preserve numerous items in anticipation of litigation. On August 1, 2014, appellant then filed this action alleging multiple counts against appellees including: a common law breach of duty claim, a misappropriation of trade secrets claim, a breach of contract claim, and a claim for injunctive relief against appellees.

         {¶6} The case then proceeded to discovery. During the discovery phase, appellant received evidence that appellees had provided services to approximately ten of appellant's clients during the 2014 year. Additionally, Mr. Gitkos performed a more thorough examination of the laptop Johnston returned to appellant and discovered that approximately 22, 734 of appellant's company files had been accessed and most likely copied onto two USB mass storage devices.

         {¶7} Eventually, appellant filed a motion for the trier of fact to make an adverse inference against appellees. The basis of the motion was that when Johnston terminated her employment with appellant, she was immediately instructed to return any and all computerized devices appellant had provided her. Additionally, appellant instructed Johnston to maintain any and all company records and communications on those devices to not hinder appellant's business. Despite these requests, the devices were returned with deleted data. Furthermore, Mr. Gitkos performed a more thorough analysis of Johnston's laptop and concluded that Johnston accessed approximately 22, 734 company files belonging to appellant and copied them between January 28, 2014 and February 5, 2014. Additionally, appellant argued that it requested numerous text messages and emails from all appellees during the discovery process but appellees refused to comply, even after several motions to compel discovery were granted. However, the trial court overruled appellant's motion for the trier of fact to make an adverse inference. After the discovery phase, the case then proceeded to a jury trial.

         {¶8} At trial, on appellant's case-in-chief, appellant called its owner Pat Kapsulis, Mr. Gitkos from Global Digital Forensics, Louie, Georgienne, and Johnston. Appellant presented or attempted to present evidence that showed: Johnston violated a common law duty of loyalty she owed to appellant by copying appellant's files for Nu Way's use, the documents Johnston copied were trade secrets, Johnston's employment contract with appellant contained a no solicitation of clients clause that she violated, Georgienne, Louie, and Nu Way knew or should have known that documents Johnston provided to them were misappropriated trade secrets, and ten out of the 14 companies Nu Way did business with in 2014 were customers of appellant's.

         {¶9} At the conclusion of appellant's case-in-chief, appellees moved pursuant to Civ.R. 50 for a directed verdict on all claims. Appellees' argument for this motion, and throughout its case-in-chief, was that the files Johnston supposedly transferred from appellant to Nu Way were not trade secrets. Furthermore, appellees argued that Johnston was not responsible for soliciting clients at Nu Way. Appellant argued against this motion by arguing that sufficient evidence had been provided to the trial court to show that appellant could succeed on all of its claims.

         {¶10} The trial court granted appellee's Civ.R. 50 motion with regards to any and all of appellant's claims against Georgienne and Louie. The trial court also granted appellees' Civ.R. 50 motion on misappropriation of trade secrets claims regarding appellant's customer lists against Johnston and Nu Way. The trial court held that customer lists and contact information did not constitute a trade secret. The trial court denied the remaining Civ.R. 50 motions regarding all claims against Johnston and Nu Way and ruled that the pricing and bid quoting information belonging to appellant that appellees may have been in possession of were trade secrets.

         {¶11} Appellees then presented their case-in-chief. In addition to appellees calling Georgienne and Johnston, appellees also called Dr. Kriss Schuler and Gus Chirgott. Dr. Schuler testified that, to the best of his knowledge after reviewing Mr. Gitkos' report, Johnston merely copied appellant's data from a cloud storage device onto a computer that was owned by appellant. Mr. Chirgott testified that he co-owns a hazardous waste transportation brokerage company and that he does not consider his pricing and bid quote information a trade secret.

         {¶12} At the close of evidence and after closing arguments, the trial court read its instructions of law to the jury. Relevant to this appeal, the trial court instructed the jury that it could make an adverse inference against appellees concerning the contents of two mass storage USB devices that were connected to appellant's computer in Johnston's possession as appellant's files were being copied. Appellees contended that these devices were accidentally damaged and could not be provided during discovery or trial. Appellant objected to this particular jury instruction on the basis that it should not have been limited to just the USB devices and should have included: emails appellant requested during discovery that were not provided, cell phones appellant requested during discovery that were not provided, and Georgienne and Louie's personal laptop that appellant requested during discovery but was not provided. Appellant contended that the emails, cell phones, and laptop that were not produced potentially had incriminating evidence that was harmful to appellees' case which was why they were not provided. However, the trial court did not extend its adverse inference instruction.

         {¶13} On April 29, 2016, the jury returned the following verdicts: Johnston did not violate her common law duty of loyalty to appellant, Johnston was exposed to and misappropriated the trade secrets of appellant, and Nu Way did not misappropriate any trade secrets of appellant's to its benefit.

         {¶14} However, on May 27, 2016, the trial court issued its final judgment entry in this case. The trial court rendered judgment in favor of appellant on its common law breach of loyalty claim against Johnston. Additionally, the trial court rendered judgment in favor of appellant on its claim for injunctive relief and enjoined Johnston from working in the industrial waste brokerage business in Mahoning County, Ohio for a period of 18 months. Additionally, the trial court enjoined Johnston from soliciting any of appellant's clients for a period of six months. Appellant timely filed this appeal on June 20, 2016. Appellant now raises two assignments of error.

         {¶15} Appellant's first assignment of error states:

THE TRIAL COURT ERRED IN REFUSING TO INSTRUCT THE JURY ON THE ADVERSE INFERENCE REGARDING EMAILS NOT PROVIDED IN DISCOVERY, THE CELL PHONES THAT WERE NOT PRODUCED FOR DIGITAL IMAGING, AND ...

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