O'Donnell Medical Industries, Inc. v. Animal Reference Pathology, LLC

CourtDistrict Court, S.D. Ohio
DecidedJanuary 8, 2021
Docket1:19-cv-00214
StatusUnknown

This text of O'Donnell Medical Industries, Inc. v. Animal Reference Pathology, LLC (O'Donnell Medical Industries, Inc. v. Animal Reference Pathology, LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
O'Donnell Medical Industries, Inc. v. Animal Reference Pathology, LLC, (S.D. Ohio 2021).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION

O'Donnell Medical Industries, Inc., : : Case No. 1:19-cv-00214 Plaintiff, : : v. : Judge Michael R. Barrett : Animal Reference Pathology, LLC, et : al., : : Defendants. : :

OPINION AND ORDER This matter is before the Court on the Motion for Summary Judgment filed by Defendants Animal Reference Pathology, LLC ("ARP") and ZNLabs, LLC ("ZNLabs") (collectively, "Defendants"). (Doc. 10). I. BACKGROUND1 O’Donnell was an Ohio company that existed, during the relevant time, to receive sales commission payments that Steven DeMaio and Sean Flynn hoped to earn when they worked as ARP sales representatives. (Doc. 11, Steven DeMaio Depo. 8:15-11:8); (Doc. 12, Sean Flynn Depo. 131:4-134:22). Mr. DeMaio and Mr. Flynn are the principals of O'Donnell. (Doc. 11-8). Mr. DeMaio and Mr. Flynn each worked briefly for a veterinary supply company, Henry Schein Inc. ("Henry Schein"), in approximately 2016, but had no other experience with the veterinary market when they reached out to ARP in hopes of working together. (Doc. 11, DeMaio Depo. 11:9-19, 12:16-19, 13:3-14). More specifically,

1 The Court took parts of Defendants' Motion for Summary Judgment's facts section to create this background section, as the Court finds Defendants' account to be accurate. neither Mr. DeMaio nor Mr. Flynn had any experience with veterinary reference laboratory services. (Id., 16:22-17:7; 19:24-20:6); (Doc. 12, Flynn Depo. 15:16-18). ARP was a veterinary reference laboratory company based in Salt Lake City, Utah. (Doc. 4 ¶ 2). Veterinary reference laboratories provide laboratory testing services to

veterinary clinics. For example, if a veterinary clinic needed blood, tissue, or fecal samples analyzed for their patients, the clinic could ship the samples to ARP, ARP would conduct the analysis, and ARP would return the results to clinic. (Doc. 1-1 ¶ 2); (Doc. 4 ¶ 2); (Doc. 11, DeMaio Depo. 20:7-14). Dr. David Gardiner, a well-known veterinarian, led ARP and is experienced in the veterinary reference laboratory industry. (Doc. 12, Flynn Depo. 144:7-20). O'Donnell acknowledges that, in the industry, “there was nobody that was on par with David Gardiner.” Id. ZNLabs is a veterinary reference laboratory in Louisville, Kentucky that provides diagnostic services in veterinary medicine. (Doc. 1-1 ¶4); (Doc. 4 ¶ 4). Dr. Gardiner and Frank Everett Smith co-founded ZNLabs on July 18, 2017. (Doc. 1-1 ¶4); (Doc. 4 ¶ 4).

While working for Henry Schein, Mr. DeMaio and Mr. Flynn realized what many in the veterinary market had previously realized: two major competitors dominated the veterinary reference laboratory industry and veterinarians nationwide wanted the option of using a third competitor. (Doc. 11, DeMaio Depo. 201:13-202:12); (Doc. 12, Flynn Depo. 18:6-19; 30:6-22; 35:2-37:7); cf. (Doc. 12, Flynn Depo. 50:13-25) ("Everybody had tried to crack into the top three."). Mr. DeMaio and Mr. Flynn approached ARP to inquire about working as sales representatives for ARP to help grow ARP into a viable third competitor. (Doc. 11, DeMaio Depo. 48:22-49:9). ARP was receptive, and, in May 2016, O’Donnell asked ARP to execute a Non-Disclosure Agreement (“NDA”). (Id., 51:8-22); (Doc. 11-5). The NDA defined “confidential information” as “proprietary” information that “has been developed and obtained through great efforts” by O’Donnell, and expressly excluded information that was already known to ARP or that could be publicly known or developed. (Doc. 11-5 PageID 398).

After entering into the NDA, O'Donnell discussed the payment structure for Mr. DeMaio and Mr. Flynn to earn sales commissions, on new business that they brought in, with ARP. The parties agreed that commissions would begin to accrue effective April 1, 2017. See (Doc. 1-1 PageID 24-29); (Doc. 4 ¶ 23); (Doc. 11, DeMaio Depo. 35:14-36:4, 37:19-39:16). Although the parties did not sign a formal sales agreement establishing compensation rates for Mr. DeMaio and Mr. Flynn, the emails attached to the Complaint set forth the parties’ understanding. (Doc. 1-1 PageID 24-29). In particular, the parties understood that: · ARP's pre-existing customers were excluded from the commission arrangement (Doc. 11, DeMaio Depo. 24:18-20);

· O'Donnell “would be paid commissions on business that [it] brought in, and there would be the potential for ownership once [it] hit certain numbers” (Id., 23:20-24:1); · O’Donnell would receive no salary, advances, or reimbursement for expenses— its only compensation was to be commission-based (Id., 24:7-25, 25:18-26:3); and · If O’Donnell failed to bring in new business, O'Donnell's commissions would be zero. (Id., 24:12-14). Mr. DeMaio and Mr. Flynn subsequently agreed to forego any commissions stemming from one of the relationships that ARP asked O'Donnell to develop, i.e., the Veterinary Cooperative ("TVC"), until that relationship became profitable.2 (Id., 48:9-21; 165:13-24). The TVC was the major lead that ARP explicitly asked Mr. DeMaio and Mr. Flynn to pursue. (Id., 171:13-20). The relationship between O’Donnell and ARP did not become profitable during the

eighteen months they worked together, and, on November 1, 2017, ARP terminated the relationship. (Id., 166:10-19); (Doc. 11-23). ARP detailed its reasons for the termination in an email—the lack of revenue growth for the TVC, lack of new business for ARP, and overall poor performance by O'Donnell—and offered to meet to discuss the termination decision. (Doc. 11, DeMaio Depo. 170:19-171:2); (Doc. 11-23). O’Donnell declined ARP's offer to meet and discuss. (Doc. 11, DeMaio Depo. 170:19-171:2). Instead, O’Donnell threatened litigation in a November 7, 2017 email. (Id., 171:24-173:14) (“Q. So your immediate reaction to the 11-1 email was to threaten litigation. Is that fair? A. Yes.”); (Doc. 11-24). O'Donnell subsequently filed its Complaint in this matter in the Clermont County

Court of Common Pleas. (Doc. 1-1). O'Donnell brings four counts: a violation of Ohio Revised Code § 1335.11 ("Payment of commission due sales representative"), breach of contract, unjust enrichment, and misappropriation of trade secrets. Id. Defendants timely removed the matter. Id. Defendants later timely filed their Motion for Summary Judgment. (Doc. 10). O'Donnell did not respond.3

2 ARP's sales reports, which Mr. DeMaio and Mr. Flynn testified that they have no reason to doubt, show that, at most, O'Donnell might have accrued $365.95 in commissions for the TVC by October 2017. (Doc. 12, Flynn Depo. 124:19-130:2, 151:18-153:1); (Doc. 13-4); (Doc. 13-5); (Doc. 16-1). ARP terminated O'Donnell the next month.

3 At a March 2020 status conference with the Court, two months after Defendants filed their Motion for Summary Judgment, O'Donnell's counsel reported that he could no longer reach his client. II. ANALYSIS a. Standard of Review Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

FED. R. CIV. P. 56(a). A dispute is “genuine” when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” only if its resolution affects the outcome of the suit. Id. On summary judgment, a court must view the evidence and draw all reasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

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O'Donnell Medical Industries, Inc. v. Animal Reference Pathology, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/odonnell-medical-industries-inc-v-animal-reference-pathology-llc-ohsd-2021.