Court of Appeals of Ohio, Second District, Montgomery
STRATACACHE, INC. Plaintiff-Appellee
ALBERT A. WENZEL Defendant-Appellant
Appeal from Common Pleas Court Trial Court Case No.
JONATHAN R. SECREST, Atty. Reg. and SARA H. JODKA, Atty.
Attorneys for Plaintiff-Appellee
M. GREEN, Atty. and JONATHAN F. HUNG, Atty. Attorneys for
1} Albert A. Wenzel appeals from the trial
court's final judgment entry granting judgment by default
in favor of Stratacache, Inc. and against Wenzel on counts
two and three of Stratacache's complaint; dismissing
with prejudice Wenzel's counterclaims against Stratacache
and third-party complaint against Christopher Riegel; and
awarding Stratacache damages totaling $200, 000. The judgment
of the trial court will be affirmed.
and Procedural Background
2} Stratacache, Inc. is a digital media company
headquartered in Dayton, Ohio. For nearly 10 years, Wenzel
worked as a salesman for Stratacache, where he was paid a
salary plus commissions and reported to Riegel,
Stratacache's chief executive officer. When Wenzel left
Stratacache's employ in September 2015, he held the position
of Senior Vice President.
3} On November 12, 2015, Stratacache filed a
five-count complaint against Wenzel in the Montgomery County
Court of Common Pleas, setting forth claims for: 1) breach of
contract, 2) disgorgement of wages, 3) misappropriation of
trade secrets, 4) tortious interference with contracts and
business relationships, and 5) preliminary and permanent
injunctive relief. According to Stratacache, while working
for the company, Wenzel sought reimbursement for travel
expenses that were not reasonably related to his employment.
After Wenzel's employment there ended, however,
Stratacache learned that Wenzel, while still employed by
Stratacache, had co-founded and performed services for a
competing business called "Strata Insights, Inc."
Stratacache's complaint alleged that Wenzel impermissibly
competed against his former employer by soliciting
Stratacache's customers and using and disclosing
Stratacache's trade secrets and confidential information,
and violated his duty of loyalty by engaging in outside
employment while still employed by Stratacache.
4} Wenzel responded with counterclaims against
Stratacache and a third-party complaint against Riegel.
Wenzel asserted claims for breach of contract and violation
of R.C. 4113.15 against Stratacache, and claims for unjust
enrichment, fraud, promissory estoppel, and punitive damages
against both Stratacache and Riegel. Wenzel later amended his
pleadings to add a claim of conversion against both other
parties. Wenzel alleged that Stratacache and Riegel failed to
pay Wenzel commissions and reimburse business expenses due
from his time at Stratacache. With leave of court, Wenzel
later filed second amended counterclaims as well as an
amended third-party complaint, adding no new claims, but
clarifying certain factual allegations.
5} After the exchange of some discovery, the trial
court granted partial summary judgment in Wenzel's favor
as to Stratacache's breach of contract claim (Count One),
based on Stratacache's failure to produce evidence that
Wenzel had signed a noncompete agreement. (Doc. #61). All
parties later submitted motions for summary judgment as to
the remaining claims. (Docs. # 68, 69, 75).
6} With the summary judgment motions pending,
however, discovery disputes persisted as to certain aspects
of the parties' claims. One particular point of
contention was Stratacache's assertion that it sent
Wenzel an email on May 11, 2012 that set his commission rate
at one percent (1%), and Wenzel's denial that he ever
received that email. Additionally, Stratacache sought
information as to any communications between Wenzel and
Stratacache customers about Wenzel's competing business
while Wenzel remained in Stratacache's employ. For those
reasons, on January 9, 2017, Stratacache served on Wenzel a
second set of interrogatories and first request for
production of documents, including a request that Wenzel
produce an IBM ThinkPad computer in his possession. Earlier
that day, Wenzel had submitted supplemental responses to
Stratacache's first set of discovery requests,
identifying an IBM ThinkPad laptop as the computer "he
used during his employment at Stratacache."
7} Wenzel failed to produce that computer or other
requested discovery by the February 6, 2017 deadline
specified in Stratacache's requests. As a result, on May
16, 2017, Stratacache moved to compel Wenzel to respond to
its outstanding discovery requests. (Doc. #65). On June 8,
2017, the trial court granted in part that motion to compel,
directing Wenzel "to submit * * * for a forensic
search" the IBM ThinkPad computer believed to possibly
contain emails relevant to the parties' claims. (Doc. #
79, p. 5).
8} Pursuant to Civ.R. 56(F), Stratacache thereafter
sought to delay its response to Wenzel's summary judgment
motion until Wenzel produced additional discovery, including
the computer; Wenzel opposed that motion. Following a
telephone conference with the parties on July 12, 2017, the
court issued an order clarifying the protocol for the
forensic examination and the subsequent handling of "any
documents extracted" from Wenzel's computer. (Doc.
#94). Thereafter, Wenzel submitted the computer for
examination by Stratacache's designated expert.
9} On August 14, 2017, Stratacache and Riegel
jointly moved for dismissal of Wenzel's claims as well as
default judgment on Stratacache's claims against Wenzel,
"as sanctions for Wenzel's intentional destruction
of evidence." (Doc. #104, p. 1). Specifically,
Stratacache and Riegel contended that on February 13, 2017 -
"after Stratacache requested [that Wenzel]
produce the computer - Wenzel "wiped [the] computer and
deleted all information contained on it." (Emphasis
sic.) (Id., pp. 1-2). According to a report prepared
by Stratacache's computer expert, his forensic
examination of the IBM ThinkPad revealed that Wenzel
reformatted the computer's hard drive and installed a
Windows 10 Professional operating system on February 13,
2017, leaving no emails from the relevant time frame
remaining on that computer. (Id., Exh. C). The
movants noted that Wenzel withheld that fact throughout
Stratacache's efforts to obtain the computer. Maintaining
that Wenzel's actions "destroyed relevant electronic
evidence crucial to Stratacache's case against Wenzel and
to Stratacache's defense of Wenzel's claims"
(id, p. 2), Stratacache and Riegel urged that
judgment in their favor as to all claims between the parties
10} In opposing the motion for discovery sanctions
against him,  Wenzel asserted for the first time that he
had created a backup of his laptop's hard drive, which he
claimed "means that Stratacache still has the ability to
review emails contained on the laptop" from the relevant
time period. (Doc. #111, p. 13). Wenzel also denied that the
laptop ever had contained any "relevant emails,"
offered a benign explanation for changes made to the laptop,
asserted that any discovery delays were due to
Stratacache's "unreasonable demand for unfettered
access" to the computer's contents. (Id.,
pp. 5-7). Additionally, Wenzel took issue with certain
conclusions of Stratacache's expert about changes made to
the ThinkPad's hard drive.
11} On September 26, 2017, the trial court held a
hearing on the parties' motions for sanctions and motion
in limine,  during which Wenzel and computer experts
for both parties testified. On October 3, 2017, the court
issued its decision. (Doc. #121). The trial court concluded
that Wenzel had violated the discovery rules by failing to
disclose the existence of the backup drives in his discovery
responses or in response to the court's orders that he
produce the IBM ThinkPad computer. Further, the court found
that "Wenzel intentionally destroyed the evidence
contained on the computer [o]n February 13, 2017."
(Id., p. 12). As to that finding, the trial court
The Court does not find * * * credible [Wenzel's claim]
that he was just one of the unlucky users whose data was lost
upgrading the system to Windows 10. * * * The reformatting of
the hard drive prior to the installation of the new operating
system opened all previous information to the risk of being
overwritten. The installation of the new operating system
overwrote all of the information, removing any chance of
recovering the information. The timing of the
installation of the new operating system is the most
concerning part for this Court. The computer was required to
be turned over only seven days prior to the installation of
the operating system[, ] despite [Windows 10 having] be[en]
available for about a year and a half.
Further, the entire incident is suspect. This is not a matter
of a person with little technological knowledge believing the
prompt to upgrade [to] Windows 10[, ] which stated that data
would not be los[t]. Wenzel is tech savvy and has a better
understanding of computers and their workings than the
average user. This is further not the case where information
was lost innocently and then immediately disclosed to
attorneys and the Court. No, this is a case where Wenzel was
aware that information was no longer contained on the
computer yet continued to fight its production in discovery.
The Court and counsel spent hours of their time negotiating
the production of the computer, not including the time spent
dealing with the many motions to compel on the matter. The
Court assumes such tactics to delay turning over the computer
were utilized in hopes that this Court would rule in
Wenzel's favor on the [then-]pending motions for summary
Finally, even if this information was not destroyed
intentionally (which is not what the court believes), Wenzel
undertook a major risk by choosing to install the new
operating system. As the experts at the hearing testified,
every time someone decides to upgrade the operating system[,
] they run the risk of destroying information. So, at the
very least, Wenzel affirmatively made a decision to risk
losing all of the information contained on the computer.
Information he was aware that he need to preserve[, ] * * *
as the litigation had been pending for more than a year.
Wenzel did not seek advice of counsel or a technology expert
before deciding to initiate an updated operating system.
(Emphasis added.) (Doc. #121, pp. 12-13).
12} The trial court further found "a reasonable
probability that access to [Wenzel's] emails prior to the
reformatting of the hard drive and installation of the new
operating system would have produced evidence favorable to
Stratacache that is not otherwise obtainable."
(Id., p.14). Based on its determination that
Wenzel's intentional actions would cause Stratacache
"a large amount of prejudice" due to its inability
to recover emails that might be relevant to the parties'
competing claims (id.), the trial court imposed the
"harsh sanction" of dismissing Wenzel's claims
against Stratacache and Riegel  and granting default judgment in
Stratacache's favor on its claims against Wenzel.
(Id., p. 17).
13} The trial court denied in most respects
Wenzel's subsequent motions to reconsider that sanctions
decision (see Docs. #127, 129, 135, 136), but did
agree to afford Wenzel a jury trial regarding the amount of
damages due Stratacache on its default judgment against
Wenzel. (Doc. #136). Ultimately, however, the parties reached
an agreement as to damages, pursuant to which the trial court
issued a final judgment entry granting judgment by default in
favor of Stratacache, Inc. and against Wenzel on counts two
and three of Stratacache's complaint;  dismissing with
prejudice Wenzel's counterclaims against Stratacache and
third-party complaint against Christopher Riegel; and
awarding Stratacache damages totaling $200, 000. (Doc. #158).
14} Wenzel appeals from that judgment, setting forth
this sole assignment of error:
The trial court erred by abusing its discretion and imposing
sanctions of default against * * * Wenzel for installing a
Windows 10 update to his laptop resulting in data loss, and
[for] late disclosure that he had Carbonite Premium and ...