Keller N. Am. v. Earl
| Decision Date | 24 August 2021 |
| Docket Number | 1:20CV2401 |
| Parties | KELLER NORTH AMERICA, INC., Plaintiff, v. JEREMY EARL, et al., Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
OPINION AND ORDER
Before the Court is Defendants Josh Senk and Michels Corporation's Motion to Dismiss (Doc. 22) Plaintiff Keller North America, Inc.'s Amended Complaint. Keller opposes dismissal at this stage of the proceeding. (Doc. 26). For the following reasons, the Court Grants, in part, and Denies, in part, Defendants' Motion to Dismiss and Dismisses Defendant Senk from the lawsuit.
Keller and Michels compete in the geotechnical engineering market, a highly competitive and technical market. In developing its competitive position, Keller has invested a significant amount of time and resources into developing certain procedures and tools, what Keller calls “trade secrets.”
Defendant Jeremy Earl worked for Keller for seven years. When he resigned in August of 2020, he served as the Cleveland, Ohio area manager. In this position, Earl managed 72 individuals and had full profit and loss responsibility for Cleveland operations. He also had access to Keller's trade secrets.
During the Summer of 2020, Earl and Keller's relationship soured. For example, Keller alleges that Earl failed to pursue a business opportunity worth $10 million to Keller. Disagreement ensued and Earl resigned. The next day, on July 18, 2020, Earl emailed his Keller-work account a reminder “to copy email addresses of customers and mobile numbers.” (Doc. 17-2, PageID: 313). He also copied various information from his work computer to personal devices. After taking these actions however, Earl apparently changed his mind. He rescinded his resignation and continued in his role at Keller.
From July 23, 2020 until his resignation on August 28, 2020, Earl remained Keller's employee. But, with this lawsuit, Keller alleges something more nefarious occurred during this month. Instead of dedicating his time and energies towards Keller's success, Keller believes Earl's continued employment was just a ruse between Earl and Michels to advance Michels' position in the Cleveland-area market.
Following the recission of his resignation, Earl and Michels allegedly entered discussions concerning Earl's new employment at Michels. And during these negotiations, Earl continued to access Keller's trade secrets and copy those same secrets to his own personal devices. He also neglected to further Keller's position respecting certain business opportunities. According to Keller, Michels received at least one of those business opportunities.
Earl also targeted his coworkers at Keller, offering them the opportunity to join him at Michels. He, along with Defendant Donald Williams, conducted meetings on Keller property with other workers, outlining their plains to leave Keller to work for Michels. During one of these meetings, Earl called Defendant Josh Senk, a manager at Michels. Senk apparently told all in attendance to leave Keller and follow Earl and Williams to Michels.
Michels ultimately offered Earl employment. In this new role at Michels, Earl would be serving in a substantially similar role as he did for Keller. Earl accepted Michels' offer on August 24, 2020. But he did not immediately resign from Keller. Instead, Earl continued to meet with Keller employees and accessed confidential information, including emails pertaining to two business opportunities.
On August 28, 2020 - four days after he accepted employment with Michels - Earl resigned from Keller. Before his resignation, Keller was unaware of Earl's subterfuge. Not until Earl and three others resigned in a coordinated manner did Keller become suspicious.
After investigation, Keller filed its original Complaint against Earl, Williams, Senk and Michels on October 22, 2020. Once he received service of this Complaint, Earl allegedly destroyed the personal electronic devices on which he maintained Keller information. According to Keller, this information would have been helpful to its case against Defendants.
Defendants Senk and Michels moved to dismiss the original Complaint. After further briefing, Keller requested leave to amend its Complaint, which the Court granted. This Amended Complaint therefore mooted Defendants' original Motion to Dismiss.
On January 13, 2021, Keller filed its Amended Complaint, bringing one count against Senk and eight counts against Michels. Both Defendants again moved to dismiss all counts against them. (Doc. 22). Keller opposed the motion (Doc. 26) and Michels and Senk filed a Reply shortly thereafter (Doc. 28).
In reviewing a motion to dismiss, courts construe the complaint in the light most favorable to the plaintiff, accepts its allegations as true, and draw all reasonable inferences in favor of the plaintiff. Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). Factual allegations contained in a complaint must “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Twombly does not “require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.” Id. at 570. A court should dismiss if the complaint lacks an allegation as to a necessary element of the claim raised. Craighead v. E.F. Hutton & Co., 899 F.2d 485, 491 (6th Cir. 1990).
The United States Supreme Court, in Ashcroft v. Iqbal, discussed Twombly and provided additional analysis of the motion to dismiss standard:
In keeping with these principles, a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pled factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.
According to the Sixth Circuit, the standard described in Twombly and Iqbal “obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible.” Weisbarth v. Geauga Park Dist., 499 F.3d 538, 541 (6th Cir. 2007) (quoting Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)).
The Court should disregard conclusory allegations, including legal conclusions couched as factual allegations. Twombly, 550 U.S. at 555; J & J Sports Prods. v. Kennedy, 2011 U.S. Dist. LEXIS 154644, *4 (N.D. Ohio Nov. 3, 2011). A written instrument attached to a pleading is part of the pleadings for all purposes. Fed. R. Civ. Pro. 10(c).
Finally, “Rule 12(b)(6) does not countenance…dismissals based on a judge's disbelief of a complaint's factual allegations…a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable…” Twombly, 550 U.S. at 556.
Michels and Senk's Motion to Dismiss can be broken down into three general attacks on the Amended Complaint. First, they attack Keller's claim that Earl acted as an agent for Michels. Second, Keller's common law claims against Michels must fail because Ohio statutory law preempts the claims. And finally, Michels and Senk attack the merits of whatever claims remain after their first two arguments. Understanding these general arguments, the Court addresses each below.
Undergirding Defendants' Motion to Dismiss is the attack on Keller's agency theory. According to Defendants, Keller insufficiently pled facts to establish either an agency relationship existed or that Earl acted within the relationship's confines. Keller disagrees. In rebuttal, Keller points to specific allegations to support its theory. Defendants acknowledge these allegations but argue that they go to Earl's actions as opposed to Michels. Therefore, it is not plausible that Earl acted as Michels' agent.
“In Ohio, the doctrine of respondeat superior can hold an employer or principal vicariously liable for the tort of its employee or agent in certain circumstances.” Sitton v. Massage Odyssey, LLC, 158 N.E.3d 156, 159 (Ohio Ct. App. 2020) (citing Auer v. Paliath, 17 N.E. 561, 564 (Ohio 2014)). For liability to attach to the principal-employer, a plaintiff must demonstrate “[1] that a principal-agent relationship exists (e.g., employer and employee) and [2] that the perpetrator committed a tortious act within the scope of employment.” Id. When the tort is intentional, “the behavior giving rise to the tort must be calculated to facilitate or promote the business for which the servant was employed.” Byrd v. Faber, 565 N.E.2d 584, 587 (Ohio 1991) (citations omitted). “A party who claims that a principal is responsible for the acts of an employee is obligated to prove the agency and scope of the employee's authority.” Aetna Cas. v. Leahey, 219 F.3d 519, 542 (6th Cir. 2000).
However, the existence and extent of the agency relationship is typically a question of fact. McWilliams v. S.E. Inc., 581 F.Supp.2d 885, 893 (N.D. Ohio 2008). At the pleading stage then, the plaintiff must allege the agency relationship with sufficient specificity to make the relationship apparent from the face of the pleading. Toms v. Delta, 124 N.E.2d 123, 126-27 (Ohio 1955). Mere legal conclusions of agency are insufficient. Bird v. Delacruz, 2005 WL 1625303, at *4 (S.D. Ohio July 6, 2005).
With the above in mind, it helps to review caselaw that found agency was insufficiently pled. Take, for example Defendants' cite of McWilliams. There, plaintiff...
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