Allied Erecting v. Genesis Equip. & Mfg., Case No. 4:06CV114.

• Decision Date: 12 August 2009
• Docket Number: Case No. 4:06CV114.
• Citation: 649 F.Supp.2d 702
• Parties: ALLIED ERECTING AND DISMANTLING CO., INC. and Allied-Gator, Inc., Plaintiffs, v. GENESIS EQUIPMENT & MANUFACTURING, INC., Paladin Brands, LLC, and Mark Ramun, Defendants.
• Court: U.S. District Court — Northern District of Ohio

649 F.Supp.2d 702

ALLIED ERECTING AND DISMANTLING CO., INC. and Allied-Gator, Inc., Plaintiffs, v. GENESIS EQUIPMENT & MANUFACTURING, INC., Paladin Brands, LLC, and Mark Ramun, Defendants.

Case No. 4:06CV114.

United States District Court, N.D. Ohio, Eastern Division.

August 12, 2009.

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F. Timothy Grieco, Wendy West Feinstein, Audrey K. Kwark, Christopher R. Opalinski, Eckert, Seamans, Cherin & Mellott, Pittsburgh, PA, Jay M. Skolnick, Sr., Robert S. Hartford, Jr., Nadler, Nadler & Burdman, Youngstown, OH, for Plaintiffs.

Denise S. Rahne, Thomas C. Mahlum, Damien A. Riehl, Thomas B. Hatch, Robins, Kaplan, Miller & Ciresi, Minneapolis, MN, Richik Sarkar, Ulmer & Berne, John S. Kluznik, Sr., Warren M. Rosman, Weston Hurd, Cleveland, OH, Brian D. Hall, Porter, Wright, Morris & Arthur, Columbus, OH, for Defendants.

MEMORANDUM OPINION AND ORDER

PETER C. ECONOMUS, District Judge.

The instant matter is before the Court on Defendant Mark D. Ramun's Motion for Summary Judgment (Dkt. # 111), and Defendants Genesis Equipment & Manufacturing, Inc. ("Genesis") and Paladin Brands, LLC's ("Paladin") (collectively "Defendants") Motion for Summary Judgment (Dkt. # 112). For the following reasons, Defendants' Motions are GRANTED IN PART.

I. FACTUAL BACKGROUND

A. The Parties

Plaintiff Allied Erecting and Dismantling Co., Inc. ("Allied Erecting") is an industrial dismantling contractor and its sister company, Plaintiff Allied-Gator, Inc. ("Allied-Gator") (collectively "Allied") is a manufacturer of specialized equipment and attachments for the dismantling and scrap processing industries. (Dkt. # 129, at 1.) Both Allied Erecting and Allied-Gator are wholly-owned subsidiaries of Allied Consolidated Industries. (Dkt. # 129, at 1.) John Ramun, Allied's President, and his father founded the company over thirty years ago in Youngstown, Ohio; it has remained family-owned and family-operated. (Dkt. # 129, at 1.)

Founded in 1997, Defendant Genesis designs and manufactures attachments— including industrial shears and concrete pulverizers—for the demolition, scrap-processing, and reconstruction industries. (Dkt. # 112, at 3.) In June 2004, the assets of Genesis were sold. (Dkt. # 112, at 3.) Since selling off its assets, Genesis has not been an operating entity; Genesis Attachments, LLC has been operating the Genesis business. (Dkt. # 112, at 3-4.) However, Genesis Attachments, LLC is not a party to this lawsuit. (Dkt. # 112, at 3.)

Defendant Paladin was the parent company of Genesis Attachments, LLC until August 30, 2006, at which time the assets of Paladin (including Genesis Attachments, LLC) were sold to a new owner. (Dkt. # 112, at 3.)

Defendant Mark Ramun is the son of John Ramun. (Dkt. # 112, at 3.) From May 1992 to June 2001, Mark Ramun was a full-time employee of Allied. (Dkt. # 129, at 4.) During his tenure with Allied, Mark Ramun worked as the manager of information systems, manager of projects and administration for Allied Erecting, and manager of marketing for Allied-Gator. (Dkt. # 129, at 4.) In August 2003, Mark Ramun began working for Genesis. (Dkt. # 112, at 3.)

B. The Products

There are two primary products at issue in this dispute: (1) the Allied MT and (2) the Genesis LXP.

1. The Allied MT Series Multi-Tool

The Allied MT is a multi-purpose attachment designed to meet the special requirements of the demolition industry: speed, versatility, durability, and power. (Dkt. # 129, at 2.) The Allied MT "generates the power of a dedicated tool (a tool which does not permit multiple jaw sets), with the versatility of a multi-purpose tool, permitting an operator to field change from a shear jaw set (which cuts steel) to a concrete-crusher jaw set (or other MT jaw set) in a matter of minutes." (Dkt. # 129, at 2.)

John Ramun first conceived of the MT in 1995; the first MT was put into service in October 2000. (Dkt. # 129, at 3.) Allied claims to have spent several million dollars in designing, testing, and developing the Allied MT. (Dkt. # 129, at 2.) By 2004, Allied had sold only 4 MT's. (Dkt. # 129, at 3.) However, since then, sales of the Allied MT have increased. (Dkt. # 129, at 4.) To date, Allied has sold 77 MT's, and is currently manufacturing over 151 to supply future orders. (Dkt. # 129, at 4.)

2. Genesis LXP

Genesis manufactures a variety of heavy attachments for the demolition and scrap industries. (Dkt. # 112, at 4.) The LXP is designed to be attached to an excavator and used to shear steel. (Dkt. # 112, at 4.) It is similar to Allied's MT in that it can accommodate interchangeable jaw sets. (Dkt. # 112, at 4.) The LXP can be used with either a shear jaw set, concrete-pulverizer jaw set, or cracker jaw set. (Dkt. # 112, at 4.)

Defendants claim that, although multi-processors with interchangeable jaw sets have been around for a number of years, Genesis's LXP product is unique in that it relies on a hydraulically expandable lock pin and a quick coupler pin to lock the jaw set to the body of the attachment. (Dkt. # 112, at 4.) Defendants also claim that the Allied MT differs from the LXP because, rather than employing a hydraulically expandable lock pin, the MT requires manual insertion of several keeper pins to attach the jaw set to the body of the tool. (Dkt. # 112, at 5.)

C. Mark Ramun's Access to Allied's Confidential Information

Mark Ramun served as a full-time employee of Allied from May 1992 to June 2001. (Dkt. # 129, at 4.) During that time, Mark Ramun worked for both Allied Erecting (as manager of projects and administration), and Allied-Gator (as manager of marketing). (Dkt. # 129, at 4.) In these capacities, Mark Ramun had network access to documents and confidential information relating to Allied's contracts, accounting, payroll, and financial data. (Dkt. # 129, at 4.)

Moreover, Mark Ramun had the highest security clearance at Allied and, therefore, had access to all computer files relating to design, engineering, sales, and marketing. (Dkt. # 129, at 4.) Mark Ramun's access included access to the confidential engineering information used in the development of the Allied MT. (Dkt. # 129, at 4.) Mark Ramun signed an employment agreement, which prohibited him from, inter alia, disclosing Allied Erecting's confidential or trade-secret information to third parties or competitors.¹ (Dkt. # 129, at 5.)

D. Mark Ramun's Alleged Misappropriation of Trade Secrets

After resigning from his employment with Allied, Mark Ramun retained nearly 15,000 documents. (Dkt. # 129, at 7.) Allied alleges that these documents contained "a substantial array of highly confidential and proprietary information. . . . [including] the master presentations that mark Ramun used to make numerous tailored presentations to each of the prospective joint venture partners [who were] desiring not only to learn more about Allied's products and ideas, but also [to] potentially manufacture Allied's line of attachments." (Dkt. # 129, at 7.) Responding to Allied's Complaint, Mark Ramun initially denied that he had retained any of Allied's confidential information. (Dkt. # 129, at 7.) Subsequently however, Mark Ramun admitted that he had retained Allied's confidential files and documents, and provided Allied with 5 CDs and 2 DVDs containing the nearly 15,000 documents that he retained from Allied. (Dkt. # 129, at 7.)

Moreover, a forensic computer analysis of Mark Ramun's laptop revealed that he had installed commercial software on his computer that allowed him to permanently delete information from his laptop. (Dkt. # 129, at 8.) Mark Ramun installed this software on February 19, 2006, shortly after Allied filed its Complaint. (Dkt. # 129, at 8.) The last run date for this deletion software was on June 27, 2006, immediately prior to the date in early July 2006 when Mark Ramun surrendered his laptop to his own counsel, Brian Hall, to be quarantined and forensically analyzed. (Dkt. # 129, at 8-9.)

E. A-Ward Attachments

Following his employment with Allied, Mark Ramun worked for A-Ward Attachments ("A-Ward") from September 2002 to August 2003. (Dkt. # 129, at 8.) A-Ward manufactures mechanical tools and attachments for the demolition, recycling, and material-handling industries. (Dkt. # 129, at 8.) The President of A-Ward, Simon Ward ("Ward"), testified during his deposition that Mark Ramun attempted to show Ward confidential information regarding the Allied MT, which was taken from a presentation that Mark Ramun had done for Allied-Gator in Europe. (Dkt. # 129, at 8; Ward Dep. 59:16-84:22.) Ward refused Mark Ramun's offer. (Dkt. # 29, at 8; Ward Dep. 62:7-15.) Mark Ramun eventually resigned from A-Ward. (Dkt. # 129, at 8.) Subsequently, A-Ward filed suit against Mark Ramun for disclosing confidential information to his next employer, Genesis. (Dkt. # 129, at 8; Grieco Decl. Ex. H, A-Ward Complaint against Mark Ramun.)

F. Genesis

After making a presentation to Genesis about A-Ward products, Mark Ramun joined Genesis as an employee in August 2003. (Dkt. # 129, at 9.) Bruce Bacon ("Bacon"), the Vice President and General Manager of Genesis, personally hired Mark Ramun. (Dkt. # 129, at 11.) In an employment-proposal letter from Bacon to Mark Ramun, Bacon made it clear that Mark Ramun was being "groom[ed] . . . for the top slot" at Genesis. (Dkt. # 129, at 11; Grieco Decl. Ex. V.)

The letter outlined three phases to Mark Ramun's employment with Genesis. (Grieco Decl. Ex. V.) In phase one, Mark Ramun's initial title would be "Special Projects Director," and his responsibilities would include: (1) input into the launch of and design of a new product line, and (2) direct sales to customers and distributors. (Grieco Decl. Ex. V.) In phase two, Mark Ramun would become a regional manager; he would continue to have direct input into new product development. (Grieco Decl. Ex. V.) Bacon characterized phase three as Mark Ramun's "managerial `rise-to-the-top'"...