Employer Law Report : Employment and Labor Relations Lawyer & Attorney : Porter Wright's Employer Law Report : Employment Litigation, Non-Compete, Trade Secrets

It's hard to believe that fewer than 10 years ago, there was widespread concern that our computers were all going to blow up and there would be anarchy in the streets. Since the clock struck midnight on January 1, 2000, we have seen an unprecedented technology boom that has had a widespread impact on the workplace. Remember the anxiety caused by cameras on our cell phones due to their impact on protecting trade secrets and our privacy in the locker rooms? Since then, we have grown comfortable with workers using laptops offsite though we still need to concentrate better on keeping track of them and what is on them!

Now, the social media craze -- Facebook, Linked-In, Twitter, etc. -- seems to be causing employers the most recent concern. As editor of employerlawreport.com, I have come to achieve a certain comfort level with social media, but I think that what primarily is keeping many employers up at night is fear of the unknown. That is why I'm going to summer camp! Starting this past Tuesday and running through the second Tuesday in August, I will be attending Social Media Summer Camp, a Columbus Business First initiative. The first session, "Social Media 101," provided a nice overview of everything that is out there and how businesses have been and could be using social media to market their services and products. The attractiveness of social media from a marketing perspective is often easy to see and hopefully we will be able to use some of what we learn at camp to improve our blog and to otherwise better communicate with our clients and friends.

In addition, I'm keeping my employment lawyer hat on to identify potential issues for employers that are encouraging their employees to "friend" others or to "tweet" or are attempting to regulate how and when they do it. This past Tuesday's session left me with one particular impression: Whether or not companies choose to use social media to foster their business, they would be wise to monitor the various social media outlets to make sure that others, including disgruntled and former employees, are not messing with their messages or creating unwanted ones.

So that's why I'm going to summer camp. I'm taking my laptop with me, but fortunately for all involved, I'm leaving my bathing suit at home.

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If you missed our recent Employment Relations Seminar:  The Changing Landscape of Labor and Employment Law, that was held on Monday, May 4, 2009 in Columbus, we invite you to download a copy of our materials from the program here.

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With the economy down, many well-known employers in virtually every industry across the country have increased their efforts to protect their customer relationships, market share, and confidential business information by bringing no-compete and/or trade secret misappropriation litigation against former employees and competitors. These lawsuits have included:

• Bear Stearns suing a former executive director who joined a competitor in Massachusetts;
• Motorola suing a former executive in Illinois who joined Apple;
• Clear Channel suing a former vice president who joined The Tribune Co. in Illinois;
• Wachovia suing Banc of America and three former Wachovia employees in Virginia;
• Countrywide suing an ex-manager in Oklahoma;
• Merrill Lynch suing a former financial advisor in Florida;
• American Express Bank suing Credit Suisse in Florida (over alleged trade secret misappropriation);
• National Oilwell Varco, L.P. (NOV) suing a rival oil field supply company and four former employees in Texas; and
• IBM suing a former director of sales and current Hewlett Packard employee in California (claiming trade secret theft).

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In Ohio, courts have the discretion to redraw an overly broad non-competition agreement so that its restrictions are no greater than are needed to protect the employer's legitimate business interests. As a result, Ohio employers often cavalierly draft the terms of their employee non-competition agreements as broadly as possible, believing the worst case scenario is that a court will rein in and “re-draft” the terms if necessary to make them reasonable and enforceable. Unfortunately, a federal district court in Illinois and the Seventh Circuit court of appeals clearly were unwilling to endorse this somewhat common Ohio employment practice despite analyzing a non-competition agreement’s enforceability under Ohio law pursuant to the agreement’s choice of law provision.   

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In Al Minor & Assoc., Inc. v. Martin, 2008-Ohio-292, Martin, a pension analyst, signed neither a non-competition nor a non-solicitation agreement during his employment with Al Minor. When he resigned to establish a competing business, Martin contacted and successfully solicited 15 clients using information that he memorized while working for Al Minor. Al Minor sued Martin for misappropriating its trade secret client information. Following trial, Martin was ordered to pay nearly $26,000 in damages to Al Minor, representing lost earnings from former clients successfully solicited by Martin. Although Martin appealed, the Franklin County Court of Appeals upheld the trial court’s decision. Martin then appealed to the Ohio Supreme Court where his arguments in support of his actions were once more rejected.

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If a Franklin County Court of Appeals decision is upheld, Ohio employers may reap the benefits of even greater protection against former employees who engage in competing business endeavors. For this reason, the Ohio Supreme Court’s ruling will be closely watched by employers and employees alike.

“In the absence of a no-compete agreement between an employer and its former employee, does the employee's compilation from memory and competitive use of a list of his former employer's customers constitute a violation of Ohio's Uniform Trade Secrets Act?” That is how the Ohio Supreme Court framed the issue pending before it in Al Minor & Associates, Inc. v. Robert E. Martin, a case in which the Court held oral argument on November 6, 2007. The case has been briefed and argued – all that awaits now is the Court’s decision.

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