C.R.H Industrial Water, LLC v. Eiermann

CourtDistrict Court, N.D. Ohio
DecidedNovember 21, 2024
Docket1:23-cv-01805
StatusUnknown

This text of C.R.H Industrial Water, LLC v. Eiermann (C.R.H Industrial Water, LLC v. Eiermann) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
C.R.H Industrial Water, LLC v. Eiermann, (N.D. Ohio 2024).

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

C.R.H. INDUSTRIAL WATER, LLC, ) CASE NO. 1:23-cv-01805 et al., ) ) JUDGE BRIDGET MEEHAN BRENNAN Plaintiffs, ) ) v. ) ) MEMORANDUM OPINION MICHAEL EIERMANN, et al., ) AND ORDER ) Defendants. )

Before the Court is Defendants’ motion to dismiss. (Doc. 23.) Plaintiffs opposed the motion (Doc. 28), and Defendants replied (Doc. 32.) For the reasons explained below, the motion to dismiss is GRANTED in part and DENIED in part. I. Background A. Factual Allegations In this trade secrets case, C.R.H. Industrial Water, LLC (d/b/a Western Reserve) and C.R.H. Ohio, LTD claims Michael Eiermann, Andrew Bokovitz, and Perry Celaschi through Engineered H2O Solutions, LLC and M&M Water Processing Inc., misappropriated—and continue to misappropriate—proprietary and confidential information to unfairly compete.1 (Doc. 1 at ¶ 3.) Eiermann founded Western Reserve in 2003. (Id. at ¶ 18.) Western Reserve specialized in delivering high-quality water treatment products and technologies to customers in

1 C.R.H. Industrial Water, LLC and C.R.H. Ohio, LTD. will be referred to as “Western Reserve” or “Plaintiffs.” Michael Eiermann, Andrew Bokovitz, and Perry Celaschi will be referred to individually as “Eiermann,” “Bokovitz,” or “Celaschi,” and collectively as the “Individual Defendants.” Engineered H2O Solutions, LLC and M&M Water Processing Inc. will be referred to individually as “Engineered H20 Solutions” or “M&M Water.” References to “Defendants” will mean all individual and business defendants together. the medical, food, and pharmaceutical industries, among others. (Id. at ¶ 20.) After nearly 16 years in business, Western Reserve filed for bankruptcy in April 2019. (Id. at ¶ 18.) C.R.H. Industrial Water, an affiliate of the largest water treatment company in the United States, purchased the assets of Western Reserve in bankruptcy in December 2020. (Id. at ¶¶ 9, 19.) Western Reserve then continued to operate. (Id. at ¶ 19.)

As part of the transition to new ownership, Western Reserve rehired certain employees from the previous iteration of the company. (Id.) Eiermann, Bokovitz, and Celaschi were among those rehired. (Id.) Western Reserve hired Eiermann to assist with sales. (Id. at ¶ 25.) Eiermann completed some of Western Reserve’s pre-hire paperwork but did not sign an employment agreement with a non-disclosure, noncompete, or non-solicitation provision. (Id. at ¶ 24.) In January 2021, Western Reserve hired Bokovitz as a service technician. (Id. at ¶¶ 27– 31.) At the same time, Western Reserve hired Celaschi as a field service engineer. (Id. at ¶¶ 32– 35.) Unlike Eiermann, Bokovitz, and Celaschi signed an employment agreement which included restrictions on disclosure of information, competition, and solicitation. (Id. at ¶¶ 27, 38.)

Western Reserves’ new relationship with Eiermann was tumultuous and short-lived. Eiermann quit in June 2021 after Western Reserve confronted him about his intention to start a new water treatment business that would compete with Western Reserve. (Id. at ¶ 50.) Throughout his employment, Western Reserve asked Eiermann to sign an employment agreement (with noncompete provisions), but Eiermann refused. (Id. at ¶ 45.) Western Reserve learned that Eiermann registered at least two companies with the Ohio Secretary of State while still employed by Western Reserve. (Id. at ¶¶ 44, 47.) Eiermann also tried to solicit Western Reserve employees to leave and start working for him at a new company. (Id. at ¶¶ 46, 48.) After leaving Western Reserve, Eiermann founded Engineered H2O Solutions and began competing with Western Reserve. (Id. at ¶ 52.) After Eiermann quit, he sued Western Reserve alleging nonpayment of wages. (Id. at ¶ 36.) In December 2022, the parties settled and entered a Release and Settlement Agreement (“Release”). (Id. at ¶ 37.) As part of the Release, Western Reserve paid Eiermann a sum of

money to resolve the claims. (Id.) The release requires Eiermann to refrain from disparaging Western Reserve, requires Eiermann return all Western Reserve property, and prohibits Eiermann from divulging trade secrets. (Id.) Both parties released all claims that arose on or before the Release date, December 8, 2022. (Id.) In April 2023, Bokovitz and Celaschi resigned from Western Reserve and began working at Engineered H2O Solutions with Eiermann. (Id. at ¶ 58.) Engineered H2O Solutions, through the Individual Defendants, began soliciting clients of Western Reserve. (Id. at ¶ 60.) Western Reserve alleges the Individual Defendants took, disclosed, and are now using its trade secrets at Engineered H2O Solutions. (Id. at ¶ 76.)

B. Procedural History From the above facts, Western Reserve filed a nine-count complaint. The claims are: violations of the Defend Trade Secrets Act (“DTSA”) (Count One as to all Defendants); violations of the Ohio Uniform Trade Secrets Act (“OUTSA”) (Count Two as to all Defendants); unfair competition (Count Three as to all Defendants); tortious interference with prospective business expectancies (Count Four as to all Defendants); tortious interference with a business relationship (Count Five as to all Defendants); civil conspiracy (Count Six as to all Defendants); breach of contract (Count Seven as to Bokovitz and Celaschi only); breach of contract (Count Eight as to Eiermann only); and breach of faithless servant doctrine (Count Nine as to Bokovitz and Celaschi only). (Id. at ¶¶ 78–151.) Defendants moved to dismiss the complaint. (Doc. 23.) Mainly, Defendants argue the DTSA and OUTSA claims should be dismissed for failure to state a claim under Rule 12(b)(6). (Id. at 138.)2 Defendants move to dismiss the remaining claims for lack of jurisdiction. (Id. at

145.) Finally, Defendants alternatively argue the state-law claims should be dismissed as preempted by OUTSA. (Id. at 146.) II. Analysis A. Legal Standard A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A Rule 12(b)(6) motion tests whether the complaint meets this standard. To survive a Rule 12(b)(6) motion for failure to state a claim, the complaint must make out a plausible legal claim, meaning the complaint’s factual allegations must be sufficient for a court “to draw the reasonable inference that the defendant is liable.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). Plausibility does not require any specific probability of success, but it does demand “more than a sheer possibility that a defendant has acted unlawfully.” Id. When courts evaluate whether a complaint makes out a plausible claim, they must accept all factual allegations as true. Cates v. Crystal Clear Techs., LLC, 874 F.3d 530, 534 (6th Cir. 2017) (citing Bickerstaff v. Lucarelli, 830 F.3d 388, 396 (6th Cir. 2016)). Courts must also draw all reasonable inferences in favor of the plaintiff, and they must generally construe the complaint

2 For ease and consistency, record citations are to the electronically stamped CM/ECF document and PageID# rather than any internal pagination. in the light most favorable to the plaintiff. Id. But courts do not accept legal conclusions or other conclusory allegations as true. D’Ambrosio v. Marino, 747 F.3d 378, 383 (6th Cir. 2014) (quoting Terry v.

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C.R.H Industrial Water, LLC v. Eiermann, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crh-industrial-water-llc-v-eiermann-ohnd-2024.