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Down-Lite International, Inc. v. Altbaier

United States District Court, S.D. Ohio, Western Division

August 8, 2019

Down-Lite International, Inc., Plaintiff,
v.
Chad Altbaier, et al., Defendants.

          SUSAN J. DLOTT JUDGE

          OPINION & ORDER

          STEPHANIE K. BOWMAN U.S. MAGISTRATE JUDGE

         This matter is before the court on Defendants' Motion to Dissolve Temporary Restraining Order and Motion to Vacate Expedited Discovery Order and Hearing Date. (Doc. 3). Plaintiff has filed a Response in Opposition. (Doc. 9). For the reasons stated below, Defendants' Motion to Dissolve Temporary Restraining Order is DENIED.

         I. Procedural Background

         Plaintiff Down-Lite International, Inc. ("Down-Lite") filed a complaint in the Hamilton County Court of Common Pleas on July 19, 2019 seeking injunctive and compensatory damages "in excess of $25, 000" plus attorney's fees incurred, all of which "in total state a claim for less than $75, 000". (Doc. 4, PagelD #152-153). Plaintiff brings three claims against Defendants Chad Altbaier and his company Paice Partners Global, LLC ("Paice")[1], alleging misappropriation of trade secrets, breach of an employment agreement, and breach of a shareholder agreement. Plaintiff claims on the same day they filed the complaint they sent stamped copies of the Complaint, a Motion for Temporary Restraining Order, and other filings to Defendants via overnight mail. (Doc. 9, PagelD #196). Plaintiff states they received confirmation from FedEx of delivery to Defendants' home and business addresses on Saturday, July 20, 2019.

         The state court held a hearing on July 22, 2019 regarding Down-Lite's Motion for Temporary Restraining Order (TRO), which it granted the same day. The state court issued a fourteen-day TRO to extend until August 5, 2019 and scheduled a preliminary injunction hearing for that date. On July 29, 2019, Defendants filed a notice of removal to federal court as well as Motions to Dissolve the TRO and Vacate the Expedited Discovery Order and hearing date previously ordered by the state court. Plaintiff responded in opposition to Defendants' Motions to Dissolve and Vacate on August 3, 2019. On August 1, 2019, Defendants separately filed a Motion to Change Venue and Consolidate with a related action Defendants filed in the United States District Court for the Northern District of California.

         When the case was initially removed to federal court, this Court scheduled a preliminary injunction hearing to be held, if necessary, on August 7, 2019. On August 5, 2019, counsel for both parties attended a telephone conference where they mutually agreed to extend the TRO until August 7, 2019, the day of the preliminary injunction. On August 6, 2019, Plaintiff responded in opposition to Defendants' Motion to Change Venue and Consolidate. The same day, this Court granted Defendants' unopposed motion for extension of time until August 12, 2019 to answer, move or otherwise respond to Plaintiff's complaint. This Court also published an Opinion and Order denying Defendants' Motion to Transfer Venue and Consolidate. On August 7, 2019, both parties agreed to delay the preliminary injunction hearing and attempted mediation. The parties did not reach a settlement agreement, so this Court rescheduled a preliminary injunction hearing to begin on August 26 or 27, 2019.[2] This Court, by separate order filed this day, also extended the TRO until the hearing is concluded.

         This Opinion and Order addresses the Defendants' Motion to Dissolve Temporary Restraining Order and Motion to Vacate Expedited Discovery Order and Hearing Date.

         II. Factual Background

         Plaintiff is an Ohio family owned corporation founded by Bob Altbaier, Marvin Werthaiser and Larry Werthaiser, with its principal place of business located in Ohio. (Verified Complaint, Doc. 1-4, ¶¶6, 12). Down-Lite's business is concentrated in the United States, Canada and Europe, but operates globally. (Doc. 1-4, ¶2). Defendant Chad Altbaier, one of three children of Bob Altbaier, was an employee at Down-Lite. Chad Altbaier began working for Down-Lite as a Management Trainee in 2001. (Declaration of Chad Altbaier, Doc. 3-2, ¶ 1). Starting in 2003, Chad Altbaier alleges to have worked out of his home in California. (Id. at ¶ 2). Most recently, Chad Altbaier was "the founder and head of Down[-L]ite's Outdoor division ...". (Doc. 1-4, ¶ 18). Chad Altbaier is a signatory to an Employee Agreement that contains noncompete and nonsolicitation provisions and a Shareholder Agreement which also contains restrictive covenants and a forum selection clause indicating that claims be exclusively brought in Hamilton County, Ohio, courts. (Doc. 1-4, ¶ 9, see also Doc. 13-2). Chad Altbaier formed his own business, Paice Partners Global, LLC, a California limited liability company, on April 30, 2019. (Doc. 1-4, ¶ 8). Paice is a single-member LLC, 100% owned, controlled and managed by Chad Altbaier. (Id. ¶ 20). Chad Altbaier resigned from Down-Lite, effective August 1, 2019. Down-Lite alleges that Chad Altbaier is violating both agreements by competing with Down-Lite and misappropriating its trade secrets. (Id. at ¶ 3)

         III. Legal Analysis

         A. Standard

         In relevant part, Ohio Civ. R. 65(A) provides state courts the following standard for granting temporary restraining orders without notice to the adverse party:

[a] temporary restraining order may be granted without written or oral notice to the adverse party or his attorney only if (1) it clearly appears from specific facts shown by affidavit or by the verified complaint that immediate and irreparable injury, loss or damage will result to the applicant before the adverse party or his attorney can be heard in opposition, and (2) the applicant's attorney certifies to the court in writing the efforts, if ...

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