Collar Jobs, LLC v. Stocum

• Decision Date: 30 November 2022
• Docket Number: 1:22-CV-1892
• Parties: COLLAR JOBS, LLC, et al., Plaintiffs, v. BENJAMIN STOCUM, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

COLLAR JOBS, LLC, et al., Plaintiffs, v. BENJAMIN STOCUM, et al., Defendants.

No. 1:22-CV-1892

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

November 30, 2022

MEMORANDUM OF OPINION

DONALD C. NUGENT, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This matter is now before the Court on Plaintiffs' motion for a preliminary injunction in connection with their Verified Complaint and Derivative Complaint for Preliminary and Permanent Injunction, and Money Damages, filed on October 20,2022. (ECF #1)?

The named Plaintiffs in this action are Collar Jobs, LLC, a Delaware limited liability company with its principal place of business in Austin, Texas, and Collar Diversified, LLC, an Ohio limited liability company with its principal place of business in Solon, Ohio. (EOF #1, PageID #5, ¶¶ 8-9).

Collar Jobs is 100% owned by an entity named Park Resilience Holdings, and Park Resilience Holdings is 100% owned by Collar Jobs' (and Park Resilience Holdings') principal Geoffrey Loree (“Loree”). (ECF #16 [Hearing Tr. 11/01/22], PageID #379-380 (Loree)).

Collar Diversified, LLC (“Collar Diversified”) is a joint venture between Plaintiff Collar Jobs, LLC (“Collar Jobs”) and Defendant Delta Diversified Inc. (“Delta Diversified”), with each joint venture partner owning a 50% share of Collar Diversified. (ECF #16 [Hearing Tr. 11/01/22], PageID #379-380 (Loree)-, ECF #17 [Hearing Tr. 11/02/22], PageID #598 (Stocum)). Collar Jobs asserts in its Complaint that it brings this action both on behalf of itself and derivatively on behalf of Collar Diversified under the provisions of Ohio Revised Code §§ 1706.61-1706.617. (ECF #^[1] [Complaint], PageID #3, ¶ 11).

The facts involved this case relate to the formation and the activities of Collar Diversified, the Operating Agreement under which Collar Diversified is managed and governed, the duties and obligations of the Operating Agreement, and the duties and obligations of Employee Agreements and Nondisclosure Agreements entered into by the Employees.

The named Defendants are Delta Diversified, Benjamin Stocum (“Stocum”), who owns the controlling interest of Delta Diversified, and nine employee individuals, identified as Cheryl Pearson, Christina Rakich, Regina Ziccardi, Abigail Burke, Cullen Berelka, Emily Slak, Cassidy Czikray, Madison Lewis, and Sean Hyde, all of whom are Ohio residents, and each of whom performed services for Collar Diversified (the individual employee Defendants will be collectively referred to as “Employee Defendants” unless individual identification is needed).

(ECF #1 [Complaint], PageID #5-6, ¶¶ 13-23).^[2]

Plaintiffs' complaint asserts fifteen claims: misappropriation of trade secrets on behalf of Collar Jobs against all Defendants under the Defend Trade Secrets Act, 18 U.S.C. § 1836, et seq. (Count I); misappropriation of trade secrets on behalf of Collar Jobs against all Defendants under the Ohio Uniform trade Secrets Act, Ohio Rev. Code § 1333.61, et seq. (Count II); misappropriation of trade secrets on behalf of Collar Diversified against all Defendants under the Defend Trade Secrets Act (Count III); misappropriation of trade secrets on behalf of Collar Diversified against all Defendants under the Ohio Uniform trade Secrets Act (Count IV); breach of the Operating Agreement on behalf of Collar Jobs against Delta (Count V); breach of the Operating Agreement on behalf of Collar Diversified against Delta (Count VI); breach of fiduciary duty on behalf of Collar Jobs against Delta (Count VII); breach of fiduciary duty on behalf of Collar Diversified against Delta (Count VIII); breach of noncompete obligations on behalf of Collar Diversified against Employees (Count IX); breach of nondisclosure obligation on behalf of Collar Jobs against Employees (Count X); tortious interference with contractual relationship on behalf of Collar Diversified against Defendants Stocum and Delta (Count XI); tortious interference with contractual relationship on behalf of Collar Jobs against Defendants Stocum and Delta (Count XII); conversion on behalf of Collar Jobs against all Defendants (Count XIII); conversion on behalf of Collar Diversified against all Defendants (Count XIV); and a prayer for preliminary and permanent injunction (Count XV). (ECF #1, PageID #24-39, ¶¶ 129-227).

Jurisdiction is asserted under the federal question statute, 28 U.S.C. § 1331, based on the Defend Trade Secrets Act. Supplemental federal jurisdiction over the non-federal claims is asserted on the ground that such claims arise out of the same facts and circumstances as the federal claims. (ECF #1, PageID #6, ¶ 24).

Plaintiffs seek a preliminary injunction against Defendants Delta Diversified and Stocum, requesting an order enjoining them from:

“(1) interfering with Collar Jobs' management and operation rights as a 50% member of [Collar Diversified],^[3] in violation of the Operating Agreement;

“(2) using, disclosing, copying, or transmitting [Collar Diversified's] confidential and proprietary information;

“(3) using, disclosing, copying, or transmitting Collar Jobs' confidential and proprietary information, and

“(4) employing the Employee Defendants under [Delta Diversified] or Collar Talent.”^[4]

(ECF #2 [Plaintiffs' Motion for Temporary Restraining Order], PageID #204).

Plaintiffs also seek injunctive relief against the Employee Defendants enjoining them from:

“(1) working for, with, or on behalf of [Delta Diversified] or Collar Talent in violation of their non-compete provision in their Employment Agreements;

“(2) using, disclosing, copying, or transmitting Collar Jobs' confidential and proprietary information for any purpose, in violation of the Nondisclosure Agreement with Collar Jobs; and

“(3) using, disclosing, copying, or transmitting [Collar Diversified's] confidential and proprietary information for any purpose, in violation of federal and Ohio law.”

(ECF #2, PageID #204-205).

The Court held a two-day hearing on Plaintiffs' motion for preliminary injunction. The parties thereafter submitted written closing arguments (ECF #19 [Plaintiffs] & ECF #29 [Defendants]), and proposed findings of fact and conclusions of law, (ECF #21 [Plaintiffs] & ECF #28 [Defendants]).

After considering the evidence presented at the hearing, and the written submissions of the parties, the Court finds that Plaintiffs have not met the standards necessary for the granting of a preliminary injunction. Accordingly, Plaintiffs' motion for preliminary injunction is DENIED.^[5]

II. FINDINGS OF FACT

The Court held a two-day hearing on the motion for preliminary injunction on November 1 and 2, 2022. (ECF #14 [Minutes of Proceedings 11/01/2022] & ECF #15 [Minutes of Proceedings 11/02/2022].

The Court heard testimony from the following witnesses: Geoffrey Loree, Abigail Burks, Christina Rakich, Sean Hyde, and Benjamin Stocum. At the hearing, the Court admitted Plaintiffs' Exhibits 1 through 25, and 27 through 34, and Defendants' Exhibits B through F. Afterward, the parties submitted written closing arguments and proposed findings of fact and conclusions of law. Based on the evidence presented, the Court makes the following findings of fact in its analysis of whether to grant a preliminary injunction at this stage of the case.^[6]

In May, 2020, Collar Jobs and Delta Diversified created a joint venture business arrangement, to be called “Collar Diversified, LLC.” (ECF #18-1, PageID #792 [Operating Agreement, Hearing Ex. 1]). Each of the joint venture partners, Collar Jobs and Delta Diversified, owns a 50% share (ECF #16 [Hearing Tr. 11/01/22], PageID #379-380 (Loree); ECF #17 [Hearing Tr. 11/02/22], PageID #598 (Stocum). The governing document by which Collar Diversified was created and thereafter operated was the “Operating Agreement of Collar Diversified, LLC.” (ECF #18-1 [Operating Agreement, Hearing Ex. 1], PageID #792-806). While not explicitly stated in the Operating Agreement, nor stated directly by any of the witnesses at the hearing, the basic purpose of Collar Diversified was to match persons in the building technologies industry seeking new jobs with employers in the building technologies industry seeking new talent. (See, e.g, Hearing Ex. F [Page from “Collar” website describing various “Collar” entities]^[7] (“Collar Diversified: The #1 on-demand hiring platform for the Building Technologies industry” (emphasis in original)). Essentially, Collar Diversified was a recruiting firm identifying persons in the building technology industry seeking new positions in the marketplace and working with them to find new positions with employers looking to fill positions.

The basic process by which this would work is that Collar Jobs would identify names of prospective candidates looking for new employment in the building technology industry and email those names to hiring specialists working at Collar Diversified, then the hiring specialists, over the course of many months, would communicate with the candidates to obtain an array of information regarding the candidate's experience, and then enter the information and various notes onto a third-party database purchased by Collar Jobs called “Bullhorn,” and then that information would be used throughout the representation to assist the Collar Diversified hiring specialists in placing the candidates with employers drawn from Delta Diversified's longtime client list of employers seeking new talent. (See, e.g, ECF #16 [Hearing Tr. 11/02/22], PageID #561-562 (Rakich) (describing general process); Id., PageID #587 (Hyde) (same)).

The Operating Agreement contains no specific description or delineation of the specific roles of Collar Jobs and Delta Diversified, (see ECF #18-1 [Operating Agreement]) within the business plan of Collar Diversified. The overall evidence...