Phoenix Lighting Group, LLC v. Genlyte Thomas Group, LLC
This text of 2018 Ohio 2393 (Phoenix Lighting Group, LLC v. Genlyte Thomas Group, LLC) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
[Cite as Phoenix Lighting Group, LLC v. Genlyte Thomas Group, LLC, 2018-Ohio-2393.]
STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )
PHOENIX LIGHTING GROUP LLC, et al. C.A. No. 28082
Appellee/Cross-Appellant
v. APPEAL FROM JUDGMENT ENTERED IN THE GENLYTE THOMAS GROUP LLC, et al. COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO Appellant/Cross-Appellee CASE No. CV-2012-08-4444
DECISION AND JOURNAL ENTRY
Dated: June 20, 2018
SCHAFER, Presiding Judge.
{¶1} Defendant-Appellant/Cross-Appellee, Genlyte Thomas Group, L.L.C. (“DCO”),
appeals the judgment of Summit County Court of Common Pleas in favor of Appellee/Cross-
Appellant, Phoenix Lighting Group, L.L.C. (“Phoenix”). Phoenix also appeals the judgment.
This Court affirms in part, reverses in part, and remands for further proceedings consistent with
this opinion.
I.
{¶2} Patrick Duffy is the sole owner of Jack Duffy and Associates, Inc. (“JDA”) a light
sales agency for Acuity Brands Lighting, Inc. (“Acuity”) operating in the Akron, Ohio market.
Duffy created Phoenix in order to facilitate the purchase of Lighting Sales, Inc., an Acuity
lighting sales agency then owned by Stu Eisenberg and operating in the Cleveland, Ohio market.
Phoenix ultimately purchased LSI on January 1, 2014, paying Eisenberg $50,000.00 prior to
closing, $100,000.00 at closing, and an additional $40,000.00 a year for the following five years, 2
for a total purchase amount of $350,000.00. Thereafter, Phoenix did business as LSI in the
Cleveland market, continuing to represent Acuity and a number of other vendors with products
that complimented the Acuity products. Although Duffy owned both Phoenix and JDA, the two
companies were operated separately. Specifically, the two companies had separate tax
identification numbers, filed taxes separately, had separate financial records, had separate
employees, and with a few exceptions, operated in distinct geographical markets. Additionally,
Phoenix operated as an LLC and JDA as an S corporation. In order to smooth the transition in
ownership and continue the success of LSI, Phoenix retained Eisenberg as its vice president
pursuant to a five-year employment agreement and a covenant not to compete. Including
Eisenberg, Phoenix had ten employees, including Guy Day, Jason Brown, Sean Cunningham,
Tom Sonneborn, Kerry Freeborn, Linda Rath, Jason Breckner, Kathy Levine, and Rick Racey.
{¶3} During the time that Duffy owned Phoenix, the company’s sales and profitability
increased. Then, in early 2008, Brown and Day approached Duffy about purchasing Phoenix
and the parties entered into negotiations. Recognizing that it would be necessary for Phoenix to
disclose certain confidential information during the course of the negotiations, Brown, Day, and
Duffy signed a mutual confidentiality agreement. Brown and Day eventually sent an offer to
Duffy in August 2008 proposing a purchase price significantly below Duffy’s expectations.
Nonetheless, negotiations continued through the end of 2008.
{¶4} Meanwhile, Brown and Day also considered starting their own lighting sales
agency representing products manufactured by DCO, a competitor of Acuity. Accordingly, Day
contacted Mark Hughes, a regional sales manager at DCO, in late summer 2008 to inquire about
creating an agency relationship. During this conversation, Day disclosed to Hughes that he and
Brown were negotiating with Duffy to purchase Phoenix. Nevertheless, DCO had become 3
dissatisfied with the performance of the current agency representing it in the Cleveland market
and Hughes asked to meet with Brown and Day. Hughes, Brown, and Day met in Cleveland
about two weeks later. Hughes then asked Brown and Day to create a business plan for the
potential new agency.
{¶5} In creating their business plan for the new agency, Brown and Day utilized
information they gained while working for Phoenix and through their negotiations with Duffy for
the purchase of Phoenix. The business plan identified several Phoenix employees as the future
employees of the new agency. The business plan also contemplated financial support from
DCO. Brown and Day shared the business plan with Hughes. Hughes subsequently shared the
plan with other executives from DCO, including Robert Carswell, DCO’s vice president of sales,
and Jim O’Hargan, DCO’s general manager (collectively “DCO executives”).
{¶6} Subsequently, in late January 2009, Brown, Day, and Eisenberg traveled to
DCO’s headquarters in Tupelo, Mississippi, and then to Texas, without Duffy’s knowledge, to
meet with DCO executives. During those meetings Brown and Day expressed to the DCO
executives that they were in negotiations with Duffy to potentially purchase Phoenix and that
they would need financial assistance if they were to start a new agency representing DCO.
Although Brown, Day, and Eisenberg kept their contact with DCO a secret from Duffy, Duffy
eventually learned of the discussions. In response, Duffy fired Eisenberg pursuant to the non-
compete agreement and asked Brown and Day to sign a non-compete agreement. Brown and
Day declined and resigned in February 2009.
{¶7} Ultimately, Brown and Day decided to start their own lighting sales agency.
Brown and Day formed Intelligent Illumination and signed a contract on behalf of Intelligent
Illumination to represent DCO in an agency capacity. After contracting with DCO, Brown and 4
Day returned Phoenix’s confidential information they had received from Duffy during their
negotiations. In addition to Brown and Day, Intelligent Illumination hired a number of
Phoenix’s key employees and four additional employees. Although Phoenix’s business was
essentially destroyed after Brown and Day’s resignations, Duffy announced a plan to consolidate
Phoenix with JDA.
{¶8} On April 1, 2009, Phoenix filed a complaint against Brown, Day, and a then
unknown business entity later identified as DCO, alleging various business related torts. The
matter then proceeded through the pretrial process. However, on June 1, 2012, Phoenix
dismissed the matter without prejudice. Phoenix subsequently refiled this matter against Brown,
Day, and DCO on August 2, 2012. The original trial judge recused herself and the matter was
reassigned. Phoenix filed an amended complaint in May 2013.
{¶9} The matter ultimately proceeded to a four week jury trial beginning May 12,
2014. After a number of witnesses testified, Phoenix entered into a confidential settlement
agreement with Brown and Day and the trial court dismissed them from the case. On June 11,
2014, the jury returned a verdict in favor of Phoenix and against DCO on a number of the claims
in the complaint. Specifically, the jury found that DCO had tortiously interfered with Phoenix’s
business relationships, misappropriated Phoenix’s trade secrets, and participated in a civil
conspiracy to tortiously interfere with Phoenix’s business relationships, to breach a duty of
loyalty owed to Phoenix, and to misappropriate Phoenix’s trade secrets.
{¶10} The jury awarded compensatory damages in the aggregate amount of
$1,680,970.00. Following a punitive damages hearing, the jury found that DCO’s conduct was
malicious and awarded Phoenix an additional $7,000,000.00 on Phoenix’s claims of tortious
interference with a business relationship and civil conspiracy. However, pursuant to R.C. 5
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[Cite as Phoenix Lighting Group, LLC v. Genlyte Thomas Group, LLC, 2018-Ohio-2393.]
STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )
PHOENIX LIGHTING GROUP LLC, et al. C.A. No. 28082
Appellee/Cross-Appellant
v. APPEAL FROM JUDGMENT ENTERED IN THE GENLYTE THOMAS GROUP LLC, et al. COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO Appellant/Cross-Appellee CASE No. CV-2012-08-4444
DECISION AND JOURNAL ENTRY
Dated: June 20, 2018
SCHAFER, Presiding Judge.
{¶1} Defendant-Appellant/Cross-Appellee, Genlyte Thomas Group, L.L.C. (“DCO”),
appeals the judgment of Summit County Court of Common Pleas in favor of Appellee/Cross-
Appellant, Phoenix Lighting Group, L.L.C. (“Phoenix”). Phoenix also appeals the judgment.
This Court affirms in part, reverses in part, and remands for further proceedings consistent with
this opinion.
I.
{¶2} Patrick Duffy is the sole owner of Jack Duffy and Associates, Inc. (“JDA”) a light
sales agency for Acuity Brands Lighting, Inc. (“Acuity”) operating in the Akron, Ohio market.
Duffy created Phoenix in order to facilitate the purchase of Lighting Sales, Inc., an Acuity
lighting sales agency then owned by Stu Eisenberg and operating in the Cleveland, Ohio market.
Phoenix ultimately purchased LSI on January 1, 2014, paying Eisenberg $50,000.00 prior to
closing, $100,000.00 at closing, and an additional $40,000.00 a year for the following five years, 2
for a total purchase amount of $350,000.00. Thereafter, Phoenix did business as LSI in the
Cleveland market, continuing to represent Acuity and a number of other vendors with products
that complimented the Acuity products. Although Duffy owned both Phoenix and JDA, the two
companies were operated separately. Specifically, the two companies had separate tax
identification numbers, filed taxes separately, had separate financial records, had separate
employees, and with a few exceptions, operated in distinct geographical markets. Additionally,
Phoenix operated as an LLC and JDA as an S corporation. In order to smooth the transition in
ownership and continue the success of LSI, Phoenix retained Eisenberg as its vice president
pursuant to a five-year employment agreement and a covenant not to compete. Including
Eisenberg, Phoenix had ten employees, including Guy Day, Jason Brown, Sean Cunningham,
Tom Sonneborn, Kerry Freeborn, Linda Rath, Jason Breckner, Kathy Levine, and Rick Racey.
{¶3} During the time that Duffy owned Phoenix, the company’s sales and profitability
increased. Then, in early 2008, Brown and Day approached Duffy about purchasing Phoenix
and the parties entered into negotiations. Recognizing that it would be necessary for Phoenix to
disclose certain confidential information during the course of the negotiations, Brown, Day, and
Duffy signed a mutual confidentiality agreement. Brown and Day eventually sent an offer to
Duffy in August 2008 proposing a purchase price significantly below Duffy’s expectations.
Nonetheless, negotiations continued through the end of 2008.
{¶4} Meanwhile, Brown and Day also considered starting their own lighting sales
agency representing products manufactured by DCO, a competitor of Acuity. Accordingly, Day
contacted Mark Hughes, a regional sales manager at DCO, in late summer 2008 to inquire about
creating an agency relationship. During this conversation, Day disclosed to Hughes that he and
Brown were negotiating with Duffy to purchase Phoenix. Nevertheless, DCO had become 3
dissatisfied with the performance of the current agency representing it in the Cleveland market
and Hughes asked to meet with Brown and Day. Hughes, Brown, and Day met in Cleveland
about two weeks later. Hughes then asked Brown and Day to create a business plan for the
potential new agency.
{¶5} In creating their business plan for the new agency, Brown and Day utilized
information they gained while working for Phoenix and through their negotiations with Duffy for
the purchase of Phoenix. The business plan identified several Phoenix employees as the future
employees of the new agency. The business plan also contemplated financial support from
DCO. Brown and Day shared the business plan with Hughes. Hughes subsequently shared the
plan with other executives from DCO, including Robert Carswell, DCO’s vice president of sales,
and Jim O’Hargan, DCO’s general manager (collectively “DCO executives”).
{¶6} Subsequently, in late January 2009, Brown, Day, and Eisenberg traveled to
DCO’s headquarters in Tupelo, Mississippi, and then to Texas, without Duffy’s knowledge, to
meet with DCO executives. During those meetings Brown and Day expressed to the DCO
executives that they were in negotiations with Duffy to potentially purchase Phoenix and that
they would need financial assistance if they were to start a new agency representing DCO.
Although Brown, Day, and Eisenberg kept their contact with DCO a secret from Duffy, Duffy
eventually learned of the discussions. In response, Duffy fired Eisenberg pursuant to the non-
compete agreement and asked Brown and Day to sign a non-compete agreement. Brown and
Day declined and resigned in February 2009.
{¶7} Ultimately, Brown and Day decided to start their own lighting sales agency.
Brown and Day formed Intelligent Illumination and signed a contract on behalf of Intelligent
Illumination to represent DCO in an agency capacity. After contracting with DCO, Brown and 4
Day returned Phoenix’s confidential information they had received from Duffy during their
negotiations. In addition to Brown and Day, Intelligent Illumination hired a number of
Phoenix’s key employees and four additional employees. Although Phoenix’s business was
essentially destroyed after Brown and Day’s resignations, Duffy announced a plan to consolidate
Phoenix with JDA.
{¶8} On April 1, 2009, Phoenix filed a complaint against Brown, Day, and a then
unknown business entity later identified as DCO, alleging various business related torts. The
matter then proceeded through the pretrial process. However, on June 1, 2012, Phoenix
dismissed the matter without prejudice. Phoenix subsequently refiled this matter against Brown,
Day, and DCO on August 2, 2012. The original trial judge recused herself and the matter was
reassigned. Phoenix filed an amended complaint in May 2013.
{¶9} The matter ultimately proceeded to a four week jury trial beginning May 12,
2014. After a number of witnesses testified, Phoenix entered into a confidential settlement
agreement with Brown and Day and the trial court dismissed them from the case. On June 11,
2014, the jury returned a verdict in favor of Phoenix and against DCO on a number of the claims
in the complaint. Specifically, the jury found that DCO had tortiously interfered with Phoenix’s
business relationships, misappropriated Phoenix’s trade secrets, and participated in a civil
conspiracy to tortiously interfere with Phoenix’s business relationships, to breach a duty of
loyalty owed to Phoenix, and to misappropriate Phoenix’s trade secrets.
{¶10} The jury awarded compensatory damages in the aggregate amount of
$1,680,970.00. Following a punitive damages hearing, the jury found that DCO’s conduct was
malicious and awarded Phoenix an additional $7,000,000.00 on Phoenix’s claims of tortious
interference with a business relationship and civil conspiracy. However, pursuant to R.C. 5
2315.21(D), the trial court reduced the punitive damages award to $2,761,940.00. Additionally,
the trial court awarded treble damages on the claim of direct misappropriation of trade secrets
pursuant to R.C. 1333.63(B), trebling the $300,000.00 jury awarded compensatory damages to
$900,000.00. The jury also found that Phoenix was entitled to recover reasonable attorney fees.
Following a hearing, the trial court awarded Phoenix $3,983,014.00 for attorney fees plus
litigation expenses, costs, and prejudgment interest. The trial court awarded Phoenix a total of
$9,511,435.07, plus court costs.
{¶11} DCO filed post-trial a motion for judgment notwithstanding the verdict, or in the
alternative, motion for new trial or motion for remittitur. The trial court subsequently denied the
motion.
{¶12} DCO filed a timely appeal, raising seven assignments of error for our review. For
ease of the analysis, we elect to consider the assignments of error out of order. Since
assignments of error II, III, and IV implicate similar issues, we elect to consider them together.
{¶13} Phoenix also filed a timely appeal, raising two assignments of error for our
review.
II.
DCO’s Assignment of Error II
The trial court erred as a matter of law by not granting a directed verdict or judgment notwithstanding the verdict in favor of DCO on Plaintiff’s claim for tortious interference with business relationships because Plaintiffs failed to present sufficient evidence in support of this claim.
DCO’s Assignment of Error III
The trial court erred as a matter of law by not granting a directed verdict or judgment notwithstanding the verdict in favor of DCO on Plaintiff’s claim for misappropriation of trade secrets because Plaintiffs failed to present sufficient evidence in support of this claim. 6
DCO’s Assignment of Error IV
The trial court erred as a matter of law by not granting a directed verdict or judgment notwithstanding the verdict in favor of DCO on Plaintiff’s claim for civil conspiracy because Plaintiffs failed to present sufficient evidence in support of this claim.
{¶14} In its second, third, and fourth assignments of error, DCO contends that the trial
court erred by not granting its motions for directed verdict or its motions for judgment
notwithstanding the verdict on Phoenix’s claims for tortious interference with business
relationships, misappropriation of trade secrets, and civil conspiracy because Phoenix failed to
present sufficient evidence to support its claims. We disagree.
{¶15} As a motion for directed verdict presents a question of law, our review is de novo.
Roberts v. Falls Family Practice, Inc., 9th Dist. Summit No. 27973, 2016-Ohio-7589, ¶ 11,
citing Spero v. Avny, 9th Dist. Summit No. 27272, 2015-Ohio-4671, ¶ 17. “A trial court must
grant a motion for directed verdict after the evidence has been presented if, ‘after construing the
evidence most strongly in favor of the party against whom the motion is directed, * * *
reasonable minds could come to but one conclusion upon the evidence submitted[.]’” Roberts at
¶ 11, citing Civ.R. 50(A)(4) and Parrish v. Jones, 138 Ohio St.3d 23, 2013-Ohio-5224, ¶ 16.
Nonetheless, “if there is substantial competent evidence to support the party against whom the
motion is made, upon which evidence reasonable minds might reach different conclusions, the
motion must be denied.” Hawkins v. Ivy, 50 Ohio St.2d 114, 115 (1977). “A motion for a
directed verdict assesses the sufficiency of the evidence, not the weight of the evidence or the
credibility of the witnesses.” Jarvis v. Stone, 9th Dist. Summit No. 23904, 2008-Ohio-3313, ¶ 7,
citing Strother v. Hutchinson, 67 Ohio St.2d 282, 284 (1981). 7
{¶16} After a trial court enters a judgment on a jury’s verdict, a party may file a motion
for judgment notwithstanding the verdict to have the judgment set aside on grounds other than
the weight of the evidence. Civ.R. 50(B). Judgment notwithstanding the verdict “is proper if
upon viewing the evidence in a light most favorable to the non-moving party and presuming any
doubt to favor the non-moving party reasonable minds could come to but one conclusion, that
being in favor of the moving party.” Williams v. Spitzer Auto World, Inc., 9th Dist. Lorain No.
07CA009098, 2008-Ohio-1467, ¶ 9. However, if “there is substantial evidence to support [the
non-moving party’s] side of the case, upon which reasonable minds may reach different
conclusions the motion must be denied.” Jackovic v. Webb, 9th Dist. Summit No. 26555, 2013-
Ohio-2520, ¶ 15, quoting Osler v. City of Lorain, 28 Ohio St.3d 345, 347 (1986). “As with an
appeal from a court’s ruling on a directed verdict, this Court reviews a trial court’s grant or
denial of a judgment notwithstanding the verdict de novo.” Jackovic at ¶ 15, quoting Williams at
¶ 9.
A. Tortious Interference with a Business Relationship
{¶17} Phoenix alleged in its complaint that DCO individually and in cooperation with
Brown and Day tortiously interfered with Phoenix’s business relationships with its former
employees. After the trial, the jury found that DCO had tortiously interfered with Phoenix’s
business relationship with one or more of the former employees, but did not specify with which
relationship or relationships DCO interfered. “The elements of ‘tortious interference with a
business relationship are: (1) a contractual or business relationship; (2) knowledge of the
relationship by the tortfeasor; (3) an intentional and improper act by the tortfeasor preventing
formation of a contract, procuring breach of a contract, or termination of a business relationship;
(4) lack of privilege on the part of the tortfeasor; and (5) resulting damage.’” Bindra v. 8
Fuenning, 9th Dist. Summit No. 26489, 2013-Ohio-5722, ¶ 14, quoting Tripp v. Beverly Ent.-
Ohio, Inc., 9th Dist. Summit No. 21506, 2003-Ohio-6821, ¶ 48. “Tortious interference with a
business relationship does not require the breach of contract, rather it is sufficient to prove that a
third party does not enter into or continue a business relationship with the plaintiff.” Gentile v.
Turkoly, 7th Dist. Mahoning No. 16 MA 0071, 2017-Ohio-1018, ¶ 24, citing Magnum Steel &
Trading L.L.C. v. Mink, 9th Dist. Summit Nos. 26127, 26231, 2013-Ohio-2431, ¶ 10. “A
tortfeasor in such a case must act maliciously before courts will permit recovery.” Tripp at ¶ 48,
citing Haller v. Borror Corp., 50 Ohio St.3d 10, 16 (1990).
{¶18} The Supreme Court of Ohio has stated the following,
In determining whether an actor has acted improperly in intentionally interfering with a contract or prospective contract of another, consideration should be given to the following factors: (a) the nature of the actor’s conduct, (b) the actor’s motive, (c) the interests of the other with which the actor’s conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other, (f) the proximity or remoteness of the actor’s conduct to the interference, and (g) the relations between the parties.
Fred Siegel Co., LPA v. Arter & Hadden, 85 Ohio St.3d 171, 1999-Ohio-260, paragraph three of
the syllabus (adopting Restatement of the Law 2d, Torts, Section 767 (1979)). Although the
listed factors are important, the weight carried by the factors may vary considerably.
Restatement of the Law 2 Torts, Section 767, Comment a. “In particular, the ‘nature of the
actor’s conduct’ and ‘the relation between the parties’ are both important factors in determining
whether the interference was improper.” Paramount Farms Intl., L.L.C. v. Ventilex B.V., 12th
Dist. Butler No. CA2015-02-029, 2016-Ohio-1150, ¶ 37, citing Restatement of the Law 2d,
Torts, Section 767, Comments c and i. “The issue is not simply whether the actor is justified in
causing the harm, but rather whether he is justified in causing it in the manner in which he does
cause it.” Id. at ¶ 38, citing Restatement, Section 767, Comment c. 9
{¶19} It is undisputed that the former Phoenix employees, including Brown and Day,
had a business relationship with Phoenix, that DCO knew those employees had a business
relationship with Phoenix, and that those employees terminated that business relationship.
Accordingly, DCO limits its argument on appeal to the contention that Phoenix failed to present
evidence that DCO improperly or maliciously interfered with Phoenix’s business relationships
and that Phoenix failed to present evidence that DCO’s conduct was not privileged. DCO
specifically argues that (1) “exploring potential employment or business opportunities with at-
will employees who are not subject to noncompetition agreements does not constitute tortious
interference as a matter of law,” (2) DCO could not have interfered as a matter of law because
Brown and Day severed their relationship with Phoenix before entering into a business
relationship with DCO; (3) DCO did not have any direct communication with the former
Phoenix employees prior to their resignations from Phoenix; and (4) DCO’s conduct was
privileged as fair competition.
{¶20} Upon review of the record in this matter, we determine that Phoenix presented
sufficient evidence from which reasonable minds could reach differing conclusions as to whether
DCO acted improperly and without privilege when it interfered with Phoenix’s business
relationships with its employees.
{¶21} The Supreme Court of Ohio has held that the “establishment of the privilege of
fair competition, as set forth in Section 768 of the Restatement, will defeat a claim of tortious
interference with contract where the contract is terminable at will.” Siegel at 179-180.
“Pursuant to Section 768, competition is proper if (a) the relation between the actor (here [DCO])
and his or her competitor (here [Phoenix]) concerns a matter involved in the competition
between the actor and the other, and (b) the actor does not employ wrongful means, and (c) his 10
action does not create or continue an unlawful restraint of trade, and (d) his purpose is at least in
part to advance his interest in competing with the other.” Id. at 180. Thus, the Supreme Court of
Ohio has specifically recognized that “where an existing contract is terminable at will, and where
all the elements of Section 768 of the Restatement are met, a competitor may take action to
attract business, even if that action results in an interference with another’s existing contract.”
(Emphasis added.) Id. at 179.
{¶22} It is undisputed in the case that the former Phoenix employees were at-will
employees. Thus, Phoenix had the burden to demonstrate that DCO’s conduct was improper.
See Long v. Mount Carmel Health System, 10th Dist. Franklin No. 16AP-511, 2017-Ohio-5522,
¶ 27. “To determine whether the conduct is improper or privileged, Ohio courts look to the
nature of the actor’s conduct, motive, interests interfered with, interests of the actor, societal
interest, remoteness of the interference, and the relationship of the parties.” Thompson Thrift
Construction v. Lynn, 5th Dist. Delaware No. 16 CAE 10 0044, 2017-Ohio-1530, ¶ 115, citing
Dryden v. Cincinnati Bell Telephone, 135 Ohio App.3d 394, 400 (1st Dist.1999).
{¶23} Day testified that he and Hughes discussed the problems DCO had with the
previous agency representing DCO in the Cleveland market. Hughes testified that the reason he
believed the previous agency was underperforming was because “they were understaffed on the
outside sales team and they had damaged relationships in the market.” Carswell also stated that
the previous agency did not have enough properly trained sales people. As a result, DCO was
looking to replace them due to “their lack of sales” and “their lack of responsiveness in hiring a
better outside team.” Although DCO did not have any direct contact with any of the former
Phoenix employees other than Brown and Day, it is undisputed that Brown and Day submitted a
business plan to DCO in October 2008 at Hughes’ request. That business plan states that “[t]he 11
future employees of [the new agency] are currently employed by the top lighting manufacturer’s
agency in Northeast Ohio, Lighting Sales, Inc./Jack Duffy and Associates (LSI/JDA)” and that
Brown and Day’s “current fellow employees are prepared to take the next step with Day-Brown
and [DCO] and are very excited about it.” The business plan then specifically lists seven
additional employees by name, six of which were then employed by Phoenix. Eisenberg was
included among those employees. The business plan also stresses that while the right
combination of lighting manufacturers is “critical,” the new agency’s “people are much more
so.” The business plan further states,
[w]ith our successful team at Lighting Sales, Inc fully converted over the products and systems of DCO along with our top tier manufacturers, who have verbally committed to this venture, we are prepared to bring sales and profitability unseen to DCO in the Northeast Ohio market. In one fell swoop we will start a new business while knocking out the current top player.
Day testified that Phoenix was indeed the “current top player” in the Cleveland lighting sales
market. Day testified that the representations and statements in the business plan were true to the
best of his knowledge.
{¶24} Prior to the Mississippi/Texas trip, Hughes emailed Day, stating that “[a]ll parties
have your business plan and are reviewing.” Day understood “all parties” to mean at least
Carswell and O’Hargan were reviewing the business plan. Indeed, both Hughes and Carswell
testified they had reviewed the business plan submitted by Day and Brown. Although O’Hargan
testified he did not read through the business plan, he stated that he was sure he was given the
business plan and that he was sure Hughes spoke with him about it. Additionally, Day testified
that during the Tupelo, Mississippi trip, he spoke with the DCO executives about the Phoenix
employees he and Brown intended to take with them to the new agency. Day also stated that no
one from DCO ever expressed any concern about the propriety or legality of the business plan. 12
{¶25} Hughes acknowledged that although he believed it to be “fluff,” he did speak with
Carswell and O’Hargan about the business plan’s “concept of taking all of the employees of
[Phoenix] and making them employees of Intelligent Illumination.” Hughes described his
conversation with Carswell and O’Hargan as “they asked some questions, one of which was,
Mark, do you believe they’ll get all of these employees? The answer is, No, I do not. They asked
why. I’m, like, guys, statistically it’s almost impossible for that to happen.” Although O’Hargan
did not recall Hughes or Carswell discussing Brown and Day’s plan regarding the Phoenix
employees, he also stated that he believed it would be “impossible” to “pull off something like
that.” Nonetheless, O’Hargan did acknowledge that “[f]rom a business ethic standpoint” he
would “have a problem with [the plan],” but as the new agency would be an independent
business, he “wouldn’t have made any comment or given any advice, one way or another.”
{¶26} During the Mississippi/Texas trip, the DCO executives also learned Eisenberg
was subject to a covenant not to compete with Phoenix, yet allowed him to participate as an
advisor to Day and Brown in the meetings that followed. The evidence also shows that the DCO
executives remained interested in Eisenberg’s “status” for months after he was fired from
Phoenix.
{¶27} Jason Breckner, a former employee of Phoenix testified that Brown, Day, and
Eisenberg had created an atmosphere and belief at Phoenix that Duffy did not know how to lead
an agency. Kathy Levine, another former employee of Phoenix, buttressed Breckner’s
testimony, stating that although she did not have any firsthand experience with Duffy she had
gotten the impression he was not a good businessperson from statements made by Day, Brown,
and Cunningham. Breckner and Levine also testified that they and other employees were told by
Day and Brown in the Spring of 2008 that they were in negotiations to purchase Phoenix. 13
However, in late summer of that year, Day and Brown told a number of employees during a
closed door meeting that they were going to approach another manufacturer to sponsor them to
start a new agency. Breckner stated that during that meeting, Brown and Day solicited or invited
the Phoenix employees to be a part of the new agency. Levine testified that she was personally
asked to join the new agency in late 2008. Breckner stated the employees “were all on board”
whether Day and Brown purchased Phoenix or started a new agency representing DCO.
Additionally, Breckner and Levine testified that after Brown, Day, and Eisenberg returned from
the Mississippi/Texas trip the focus at Phoenix was going to a new agency. Levine further
testified that “nobody” was paying attention to the business of Phoenix in January and February
of 2009.
{¶28} Taken in a light most favorable to Phoenix, the above testimony suggests that
DCO knew of and encouraged Brown and Day, while in the employ of Phoenix, to not only
develop a business plan with the intention of usurping nearly all of Phoenix’s workforce, but to
also solicit those employees while employed in key positions at Phoenix. See Gracetech Inc. v.
Perez, 8th Dist. Cuyahoga No. 96913, 2012-Ohio-700, ¶ 22 (concluding that reliance on the fair
competition privilege is misplaced where an employee set up a competing business and solicited
a client while having management-type responsibilities to keep business operating after death of
owner.) The testimony also suggests that although DCO knew Eisenberg was subject to a
covenant not to compete with Phoenix, DCO continued to encourage his role as an advisor to
Brown and Day both during and after the time all three were employed at Phoenix. See
Gracetech at ¶ 24 (implying that solicitation of employees known to have signed an agreement to
not compete can form the basis of a claim for tortious interference). The testimony further
suggests that DCO knew Brown and Day had access to confidential business records since they 14
were in negotiations to purchase Phoenix and subject to a mutual confidentiality agreement. As
such, we conclude that there was sufficient evidence presented at trial from which reasonable
minds could reach a different conclusion as to whether DCO acted improperly.
{¶29} Therefore, the trial court did not err in denying DCO’s motion for directed verdict
or motion for judgment notwithstanding the verdict as they related to Phoenix’s claim for
tortious interference with a business relationship. Accordingly, DCO’s second assignment of
error is overruled.
B. Misappropriation of Trade Secrets
{¶30} Phoenix also alleged in its complaint, and the jury found by a preponderance of
the evidence, that DCO misappropriated Phoenix’s trade secrets. Although Phoenix alleged at
trial that DCO had misappropriated its personnel, sales, and business strategy trade secrets, the
jury’s verdict does not specify if it found DCO had misappropriated all of the alleged trade
secrets, one of the alleged trade secrets, or a combination of the alleged trade secrets.
{¶31} R.C. 1333.61 defines a trade secret as
information, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following:
(1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
(2) It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
“The question whether a particular knowledge or process is a trade secret is a question of fact to
be determined by the trier of fact upon the greater weight of the evidence.” Siegel, 85 Ohio St.3d
171 at paragraph six of the syllabus. “[A] complainant in a civil action is entitled to recover 15
damages for misappropriation [of trade secrets].” R.C. 1333.63(A). Misappropriation is the
“[a]cquistion of a trade secret of another by a person who knows or has reason to know that the
trade secret was acquired by improper means.” R.C. 1333.61(B)(1). The Supreme Court of
Ohio has recognized that “listings of names, addresses, or telephone numbers that have not been
published or disseminated, or otherwise become a matter of general public knowledge, constitute
trade secrets if the owner of the list has taken reasonable precautions to protect the secrecy of the
listing to prevent it from being made available to persons other than those selected by the owner
to have access to it in furtherance of the owner’s purposes.” Siegel Co., 85 Ohio St.3d at
paragraph 5 of the syllabus.
{¶32} On appeal, DCO contends that Phoenix failed to present sufficient evidence to
establish that the information at issue constitutes trade secrets. Specifically, DCO argues that (1)
the sales projections created by Day and submitted to DCO as part of the business plan were not
Phoenix’s sales figures nor were the projections derived from Phoenix’s sales figures; (2)
Phoenix’s employee information was publicly available and known through the industry; and (3)
Phoenix failed to identify what trade secret business strategies were allegedly misappropriated by
DCO, what their economic value was, nor what efforts were undertaken to maintain them as
confidential.
{¶33} Nonetheless, upon review of the record, we determine that Phoenix presented
sufficient evidence at trial so as to create a factual question for the jury on the issue of whether
DCO misappropriated Phoenix’s trade secrets. The evidence in this case shows that DCO knew
Brown and Day were in negotiations with Duffy to potentially purchase Phoenix and were
subject to a mutual non-disclosure agreement. The evidence also shows that the business plan
submitted to Hughes and DCO listed specific personnel information of current Phoenix 16
employees. Day acknowledged that business strategies within the business plan “could have
been” or were strategies he had discussed with Duffy with respect to Phoenix. Day also
acknowledged upon cross-examination that DCO was a competitor of Acuity and that if
Phoenix’s financial information was provided to DCO, it would allow DCO to know what
Phoenix’s sales force was capable of selling as an agency.
{¶34} Breckner, an employee of Phoenix from 2006 until it closed in 2009, testified that
he did “quotations” work for Phoenix. Breckner confirmed that employees of Phoenix were
given an employee policy manual or handbook that contained provisions relating to
confidentiality. Breckner stated that he understood Phoenix’s policy to maintain the
confidentiality of personnel information including employee’s résumés, names, phone numbers,
and personal information. He also stated that he understood that sales data was confidential
information and that access to that information was “kind of on a need-to-know basis.” For
example, Breckner testified that in his position he did not have access to “sales data for a quarter
for a particular manufacturer or any kind of measurable profit-and-loss kind of statement or kind
of sales data from a manufacturer,” but that salespeople were sometimes privy to such
information. Breckner also testified that financial information such as commission rates,
financial statements, and margin rates were “extremely sensitive material” and “confidential”
and that such information needed “to be kept pretty much under lock and key in the agency.”
Breckner further testified that business strategies including marketing strategy and employee
structure were kept confidential because the company spent a lot of time developing strategy and
“you definitely don’t want your competitor knowing what your strategy is, how you go to the
market, what you’re looking for.” Breckner believed that it was common knowledge at Phoenix
that the above confidential information was owned by the company and not for personal use. He 17
also testified regarding the security measures Phoenix put in place to protect this information,
such as the employee policy manual with confidentiality provisions, computer passwords, Wi-Fi
firewalls, locked doors with security code access, security system, and visitors always being
accompanied.
{¶35} Levine’s testimony and Duffy’s testimony buttressed Breckner’s testimony with
regard to confidential information at Phoenix. Levine stated that she considered “anything under
the roof” of Phoenix to be confidential. Specifically, she identified financial information such as
quotes, orders, and pricing. Similarly, Duffy agreed that information regarding sales figures,
personnel information, and business and marketing strategies were kept confidential at Phoenix
since its business is not known in the community. He stated that personnel information remained
confidential so that competitors would not know what the strategic value was of the staff
Phoenix employed. He stated that sales information had significant economic value because it
“confirms the outcome of what we’re able to generate, and that is unique to [Phoenix] based on
who we are and how we go about it.” Duffy further stated that certain information, such as the
billing statistics sent to him by Acuity, were only shared with Eisenberg, who was subject to a
confidentiality agreement. Duffy also described the methods by which the information was kept
confidential, such as the employee policy manual with confidentiality provisions, computer
passwords, Wi-Fi firewall, and locked doors.
{¶36} O’Hargan testified that he understood Brown and Day were negotiating a
potential purchase of Phoenix and acknowledged that under a “due diligence process,” obtaining
financial information from the seller is standard in the acquisition of a business. Brown and Day
both testified that after reviewing their initial business plan, Hughes recommended modifications
to make the plan more “effective.” As a result, Day expanded the financial section of the 18
business plan. Upon resubmitting the business plan, Day sent an email to Hughes wherein he
stated he asked Hughes to take into consideration that he and Brown were unable to provide
DCO with “specific financial information (sales dollars or commission dollars paid) * * * due to
the non-disclosure/confidentiality agreement [Brown and Day] signed for [the] ongoing
negotiations with the current owner.” Day did, however, disclose to Hughes a range of the
average commissions earned through all Acuity product segments. The evidence also shows that
Hughes was aware that Duffy did not know Brown and Day were pursuing a business
relationship with DCO.
{¶37} Based upon the above evidence, we conclude that there was sufficient evidence to
create a question of fact for the jury as to whether DCO acquired Phoenix’s trade secrets when it
knew or had reason to know those trade secrets were acquired by improper means. Accordingly,
the trial court did not err when it denied DCO’s motion for directed verdict or when it denied
DCO’s motion for judgment notwithstanding the verdict as they related to Phoenix’s claims for
misappropriation of trade secrets. Therefore, DCO’s third assignment of error is overruled.
C. Civil Conspiracy
{¶38} In its fourth assignment of error, DCO contends that the trial court erred when it
did not grant DCO’s motions for directed verdict and motion for judgment notwithstanding the
verdict as they related to Phoenix’s claim of civil conspiracy because Phoenix failed to
demonstrate that DCO maliciously conspired with Brown and Day. DCO also argues in its
fourth assignment of error that the trial court erred when it awarded damages for both the
underlying torts and separate additional damages for conspiracy to commit those torts.
{¶39} Phoenix alleged in its complaint and the jury found by a preponderance of the
evidence that DCO engaged in a civil conspiracy with Day and/or Brown to tortiously interfere 19
with business relationships, tortiously interfere with contractual relationship, misappropriate
trade secrets, and breach the duty of loyalty, good faith, and trust.
{¶40} The tort of civil conspiracy is defined as “‘a malicious combination of two or
more persons to injure another in person or property, in a way not competent for one alone,
resulting in actual damages.’” Kenty v. Transamerica Premium Ins. Co., 72 Ohio St.3d 415, 419
(1995), quoting LeFort v. Century 21-Maitland Realty Co., 32 Ohio St.3d 121, 126 (1987). “An
underlying unlawful act is required before a civil conspiracy claim can succeed.” Williams v.
Aetna Fin. Co., 83 Ohio St.3d 464, 475 (1998), citing Godsen v. Louis, 116 Ohio App.3d 195,
219 (9th Dist.1996). “The malice involved in the tort is ‘that state of mind under which a person
does a wrongful act purposely, without a reasonable or lawful excuse, to the injury of another.’”
Williams at 475, quoting Pickle v. Swinehart, 170 Ohio St. 441, 443 (1960). “The element of
‘malicious combination to injure’ does not require a showing of an express agreement between
defendants, but only a common understanding or design, even if tacit, to commit an unlawful
act.” Gosden at 219. Additionally, “‘[i]n a conspiracy, the acts of coconspirators are attributable
to each other.’” Gibson v. City Yellow Cab Co., 9th Dist. Summit No. 20167, 2001 WL 123467
(Feb. 14, 2001), quoting Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 475 (1998).
{¶41} “Some Ohio cases have held that a plaintiff must allege and prove damages
attributable to the conspiracy that are above and beyond those resulting from any underlying or
supporting torts.” Gosden at 220, citing Crosby v. Beam, 83 Ohio App.3d 501, 515-516 (6th
Dist.1992), and Stiles v. Chrysler Motors Corp., 89 Ohio App.3d 256, 266 (6th Dist.1993), both
citing Minark v. Nagy, 8 Ohio App.2d 194, 195-196 (8th Dist.1963). However, this Court has
previously held that those holdings “were based on a misreading” of previous cases and that
“[t]he ‘gist’ of a conspiracy action is not the conspiracy itself, and the conspiracy only becomes 20
important after the wrong is committed. A civil conspiracy claim, therefore, serves only to
enlarge the pool of potential defendants from whom a plaintiff may recover damages and,
possibly, an increase in the amount of those damages[.]” Gosden at 220-221.
{¶42} Therefore, based upon the evidence outlined above, we conclude that there was
sufficient evidence to create a question of fact for the jury as to whether DCO conspired with
Brown and Day to tortiously interfere with Phoenix’s business relationships and misappropriate
Phoenix’s trade secrets, and breach the duty of loyalty, good faith, and trust.
1. Damages for Civil Conspiracy
{¶43} In this case, the jury found that DCO had tortiously interfered with Phoenix’s
business relationships, misappropriated Phoenix’s trade secrets, and participated in a civil
conspiracy to tortiously interfere with Phoenix’s business relationships, to breach a duty of
loyalty owed to Phoenix, and to misappropriate Phoenix’s trade secrets. Consequently, the jury
awarded Phoenix $101,500.00 on its claim for tortious interference with business relationships
and $300,000.00 on its claim for misappropriation of trade secrets. After finding DCO liable for
civilly conspiring to commit those torts and additionally for conspiring with Brown and Day to
breach their duty of loyalty to Phoenix, the jury awarded Phoenix an additional $476,470.00 on
its claim against DCO for conspiring to tortiously interfere, $203,000.00 on its claim against
DCO for conspiring to misappropriate trade secrets, and $600,000.00 on its claim against DCO
for conspiring with Brown and Day to breach their duty of loyalty.
{¶44} DCO argued, inter alia, in its motion for new trial or remittitur that the jury
instructions improperly permitted the jury to award duplicate damages. The trial court denied
DCO’s motion. “This Court’s standard of review of an order denying a motion for a new trial
depends upon the grounds of the motion.” Jackovic v. Webb, 9th Dist. Summit No. 26555, 2013- 21
Ohio-2520, ¶ 17. As the basis of DCO’s motion involves a question of law, we review de novo.
See id.
{¶45} On appeal, DCO argues that “the trial court erred by awarding damages for the
injury caused by the underlying torts and separate additional damages from conspiracy to
commit those same torts.” DCO bases its argument on this court’s statement in Gosden that the
element of “resulting in actual damages” essentially “restricts the measure of recovery for a
conspiracy claim to those damages caused by the underlying tort (or torts) necessary to support
the claim for civil conspiracy in the first place.” Gosden at 220. On the contrary, Phoenix
argues that the jury did not award it additional or duplicative damages, rather, the jury merely
allocated the total damages to which Phoenix was entitled between different theories of
recovery.1
{¶46} Initially, we note that DCO’s reliance on this Court’s statement in Gosden is
misplaced as it is taken out of context. In Gosden, this Court was called upon to determine
whether the trial court had incorrectly granted a directed verdict in favor of the defendants on the
plaintiffs’ claim for civil conspiracy. On appeal, the plaintiffs argued that they had presented
sufficient evidence on all elements of civil conspiracy to allow the matter to be decided by the
jury. In discussing the meaning of the element “resulting in actual damages,” this Court stated:
Some Ohio cases have held that a plaintiff must allege and prove damages attributable to the conspiracy that are above and beyond those resulting from any underlying or supporting torts. These holdings, however, were based on a misreading of Minarik. It is stated in Minarik that any damages must be “directly
1 Although our holding in Phoenix’s assignment of error two below recognizes that a claim for conspiracy to misappropriate trade secrets is displaced by the Ohio UTSA, DCO did not raise the issue below nor does DCO raise this issue on appeal. Indeed, a review of DCO’s proposed jury instructions shows that DCO proposed a separate instruction for Phoenix’s claim for civil conspiracy to misappropriate trade secrets. Accordingly, our review is limited to the issues DCO has chosen to raise in its respective assignments of error. See Bank of America, N.A. v. Edwards, 9th Dist. Lorain Nos. 15CA010848, 15CA010851, 2017-Ohio-4343, ¶ 8. 22
attributable” to the conspiracy. In the context of that case, however, that statement did not mean the damages had to be attributable only to the conspiracy to the exclusion of the underlying tort. It meant that damages, in order to be recoverable under a civil conspiracy claim, cannot be the result of just any tort committed by a conspirator, or just any act committed in furtherance of the conspiracy. They must have been caused by a tort committed in furtherance of the conspiracy. Essentially, this simply restricts the measure of recovery for a conspiracy claim to those damages caused by the underlying tort (or torts) necessary to support the claim for civil conspiracy in the first place.
This is borne out by another passage in Minarik. The court quoted a passage from Cooley on Torts that the significance of the conspiracy claim is not damages caused by the conspiracy alone, but rather additional pockets from which to collect damages, and a possible increase in those damages[.]
(Internal citations omitted.) Id. at 220-221. Moreover, this Court subsequently concluded that
“[a] civil conspiracy claim, therefore, serves only to enlarge the pool of potential defendants
from whom a plaintiff may recover damages and, possibly, an increase in the amount of those
damages; it does not increase the plaintiff’s burden by requiring proof of additional damages.”
(Emphasis added.) Id. at 221.
{¶47} “It is fundamental that a plaintiff cannot recover twice on the same incident.”
Telxon Corp. v. Smart Media of Delaware, Inc., 9th Dist. Summit Nos. 22098, 22099, 2005-
Ohio-4931, ¶ 97, citing P.C. & S.L. R.R. Co. v. Hedges, 41 Ohio St. 233, 233-34 (1884). In this
case, however, Phoenix argued at trial that its entire business was destroyed. This Court has
specifically stated, “‘[w]hen an entire business is wrongfully interrupted and injured,’ as
[Phoenix] alleged here, ‘the measure of damages is the decrease in volume traceable to the
wrong, as reflected by loss of profits, expenses incurred or similar concrete evidences of
injury.’” World Metals, Inc. v. AGA Gas, Inc., 142 Ohio App.3d 283, 288 (9th Dist.2001),
quoting Guntert v. Stockton, 55 Cal.App.3d 131, 143 (1976). Phoenix’s expert, Mr. Zeleznik,
estimated the value of Phoenix in December 2008 to be a little bit over $1.35 million, falling to
$46,670.00 by March 2009. Consequently, Mr. Zeleznik opined that Phoenix’s damages were 23
about $1,315,000.00. However, Mr. Zeleznik also stated that he had used several different
approaches to determine the value of Phoenix at the end of 2008. One of those methods
calculated Phoenix’s business to be worth $1,549,000.00. Additionally, Phoenix introduced as
evidence valuations its CPA had prepared during negotiations with Brown and Day for the
purchase of Phoenix. Those estimates calculated Phoenix’s value as of December 31, 2007, as
between $1.7 million and $2.4 million.
{¶48} When the possibility exists that a jury could, in finding for a plaintiff on multiple
claims, award duplicate damages for the same pecuniary injury, the jury should at a minimum be
cautioned that such an award is improper. Titanium Industries v. S.E.A., Inc., 118 Ohio App.3d
39, 52, (7th Dist.1997). As to damages, the jury in this case was instructed, in pertinent part, as
follows:
If you find for Phoenix on one or more of its claims, you will separately determine by a preponderance of the evidence, the amount of money that will reasonably compensate Phoenix for damages proximately caused by the wrongful act(s)
You should be cautious in consideration of damages not to overlap or duplicate the amounts of your award, which would result in double damages. For instance, an award, if granted, for unfair competition should relate to that claim only and should not include compensation for a different claim such as misappropriation of a trade secret.
***
COMPENSATORY DAMAGES
You must determine what monetary amount of damages, if any, will reasonably compensate Phoenix for the damages it incurred by reason of the causes of action or claims that it has successfully proven. You will set forth this amount as an award of “compensatory damages.”
Phoenix’s position is that DCO’s actions caused a loss of its business value. Where a regularly established business is wrongfully injured, interrupted, or destroyed, the business may recover the damages sustained by ascertaining how 24
much less valuable the business was by reason of the interruption or destruction and to allow that amount as damages. ***
Therefore, if you have found DCO has acted wrongfully either directly or as a part of a conspiracy, you must decide what the value of Phoenix’s business was before DCO’s wrongful conduct and what the value of it became after DCO’s wrongful act. The difference will be the damages that Phoenix is owed.
(Emphasis added.) We note that DCO has not challenged these instructions on appeal.
Accordingly, as a jury is presumed to have followed the trial court’s instruction, we cannot say
that the jury awarded double damages in this case. See State v. Knight, 9th Dist. Wayne No.
15AP0019, 2016-Ohio-8505, ¶ 9 (recognizing that a “jury is presumed to have followed the trial
court’s instruction.”). The verdict in this case can be construed as representative of the jury’s
belief that Phoenix was entitled to a total compensatory damage amount of $1,680,970.00 and
that the jury merely allocated that award among Phoenix’s various theories of recovery.
{¶49} Therefore, DCO’s fourth assignment of error is overruled.
DCO’s Assignment of Error I
The trial court erred by failing to rule that Plaintiff caused its own damages, and by improperly excluding evidence that it did not suffer damages because the consolidation of Phoenix with JDA fully mitigated any harm that Defendants allegedly caused, or that Phoenix as a matter of law failed to mitigate damages.
{¶50} In its first assignment of error, DCO contends that the trial court erred by not
concluding as a matter of law that Phoenix caused its own damages and by excluding DCO’s
evidence and expert testimony regarding the consolidation of Phoenix into JDA. We disagree on
both points.
A. Evidence of Causation
{¶51} DCO also argues in its first assignment of error that the trial court erred by not
finding that Phoenix had failed to offer sufficient proof of causation and that the evidence 25
demonstrated that the only damages suffered by Phoenix were caused by Duffy’s decision to
consolidate Phoenix and JDA. Nonetheless, our resolution of DCO’s second, third, and fourth
assignments of error render this argument moot and we decline to address it. See App.R.
12(A)(1)(c).
B. Exclusion of Evidence
{¶52} DCO contends on appeal that the trial court erred by excluding DCO’s expert
evidence regarding the consolidation of Phoenix and JDA. Although the trial court allowed
extensive testimony regarding the consolidation, DCO argues that it should have been allowed to
present additional evidence that: (1) Duffy hired two experienced individuals to work for JDA
who had inquired about employment with Phoenix; (2) JDA’s revenue increased by roughly the
same amount that was previously earned by Phoenix; (3) JDA did not pay any value for Phoenix;
and (4) JDA took over Phoenix’s accounts, projects, customers, territory, and employees. DCO
argues that if it had been able to present this evidence, it would have been able to show that
Phoenix could have remained viable, or alternatively that no damages were suffered by virtue of
the consolidation or if there were damages, that Phoenix failed to mitigate those damages.
{¶53} Trial courts are “‘vested with broad discretion’” with regard to the admission or
exclusion of evidence, “‘and an appellate court should not interfere absent a clear abuse of that
discretion.’” State v. Yarbrough, 95 Ohio St.3d 227, 2002-Ohio-2126, ¶ 40, quoting State v.
Allen, 73 Ohio St.3d 626, 633 (1995). An abuse of discretion “implies that the court’s attitude is
unreasonable, arbitrary, or unconscionable.” Blakemore v. Blakemore, 5 Ohio St.3d 217, 219.
When reviewing for an abuse of discretion, an appellate court may not substitute its judgment for
that of the trial court. Pons v. Ohio State Med. Bd., 66 Ohio St.3d 619, 621 (1993). 26
{¶54} Evid.R. 402 limits the admission of evidence to relevant evidence. Evidence is
relevant if it has “any tendency to make the existence of any fact that is of consequence to the
determination of the action more probable or less probable than it would be without the
evidence.” Evid.R. 401. Phoenix filed a motion in limine prior to trial to exclude evidence of
JDA’s financial information as irrelevant because Phoenix and JDA are separate legal entities.
The trial court initially determined that JDA’s financial information “may be relevant” and
denied Phoenix’s motion. However, the trial court cautioned trial counsel that after hearing the
evidence, the trial court could decide the information was not relevant and exclude it. Just as the
trial court had warned, after hearing a significant amount of testimony, the court ultimately
determined that JDA’s worth or how it may have benefited by the events alleged in the complaint
were not relevant to the issue of Phoenix’s damages in this case. The trial court specifically
recognized that “[Phoenix] is the corporation that is suing, and it is the value of [Phoenix] that is
at issue in this case.”
{¶55} Nonetheless, the trial court specifically acknowledged that DCO was “free to
defend this case by proving that [Phoenix] has a lot of value and therefore there’s no damage”
and that DCO could “attack the issue of causation of the alleged damages [of Phoenix].” Indeed,
DCO’s expert testified that Phoenix failed to mitigate its damages because: (1) “Phoenix
Lighting could have been saved as a whole;” (2) “the business could have been sold” because
“there was value there;” and (3) “the assets of [Phoenix] could have been sold for fair value.”
These assets include the tangible assets such as physical equipment as well as the account
numbers and customers of Phoenix who were “migrated” to JDA since they were “revenue-
producing.” DCO was also able to elicit testimony regarding Duffy’s prior contemplation to
consolidate Phoenix and JDA from Duffy and multiple former employees of Phoenix. 27
{¶56} Therefore, we conclude that the trial court did not abuse its discretion in
excluding evidence that related to JDA’s worth and in what way it may have ultimately benefited
from the actions alleged in complaint.
{¶57} Accordingly, DCO’s first assignment of error is overruled.
DCO’s Assignment of Error V
The trial court erred by awarding compensatory damages in an amount greater than Plaintiff admitted it could prove and by failing to remit the compensatory and punitive damages awards.
{¶58} In its fifth assignment of error, DCO contends that there was insufficient evidence
to support the compensatory damages awarded in this case and that this “Court should order the
trial court to remit the compensatory and punitive damages amounts and reconsider its attorneys’
fees award.” We disagree.
{¶59} In this case, the jury awarded Phoenix an aggregate award of $1,680,970.00 in
compensatory damages. Following the jury’s verdict, DCO filed a motion for judgment
notwithstanding the verdict, or in the alternative, motion for new trial or motion for remittitur.
DCO’s alternative motion for new trial or remittitur argued in part that the trial court erred when
it “[e]ntered judgment against DCO in an amount greater than Plaintiffs’ counsel said he could
prove at closing and was not supported by the evidence.” The trial court summarily denied
DCO’s motion.
{¶60} Civ.R. 59(A)(4) states that “[a] new trial may be granted * * * on all or part of the
issues upon * * * [e]xcessive or inadequate damages, appearing to have been given under the
influence of passion or prejudice.” “In Ohio, it has long been held that the assessment of
damages is so thoroughly within the province of the jury that a reviewing court is not at liberty to
disturb the jury’s assessment absent an affirmative finding of passion and prejudice or a finding 28
that the award is manifestly excessive.” (Emphasis sic.) Moskovitz v. Mt. Sinai Med. Ctr., 69
Ohio St.3d 638, 655 (1994).
{¶61} The grant or denial of a motion for a new trial on the ground of excessive
damages rests in the sound discretion of the trial court and will not be disturbed on appeal absent
an abuse of discretion. Pena v. Northeast Ohio Emergency Affiliates, Inc., 108 Ohio App.3d 96,
103 (9th Dist.1995). An abuse of discretion is more than an error of judgment; it means that the
trial court was unreasonable, arbitrary, or unconscionable in its ruling. Blakemore, 5 Ohio St.3d
at 219. “‘An appellate court reviewing whether a trial court abused its discretion on a motion for
a new trial pursuant to Civ.R. 59(A)(4) must consider (1) the amount of the verdict, and (2)
whether the jury considered improper evidence, improper argument by counsel, or other
inappropriate conduct which had an influence on the jury.’” Dragway 42, L.L.C. v. Kokosing
Constr. Co., Inc., 9th Dist. Wayne No. 09CA0073, 2010-Ohio-4657, ¶ 35, quoting Pena at 104.
“To support a finding of passion or prejudice, it must be demonstrated that the jury’s assessment
of the damages was so overwhelmingly disproportionate as to shock reasonable sensibilities.”
Prince v. Jordan, 9th Dist. Lorain No. 04CA008423, 2004-Ohio-7184, at ¶ 20. Nonetheless,
when applying the abuse of discretion standard, this Court may not substitute its judgment for
that of the trial court. Pons, 66 Ohio St.3d 619 at 621.
{¶62} On appeal, DCO argues that the compensatory damages award was excessive in
this case because it was above the amount of damages calculated by Phoenix’s expert. However,
after a review of the testimony and evidence presented at trial, we cannot say the jury’s award is
so overwhelmingly disproportionate that is shocks reasonable sensibilities. Phoenix’s expert,
Mr. Zeleznik, estimated the value of Phoenix in December 2008 to be a little bit over $1.35
million, falling to $46,670.00 by March 2009. Consequently, Mr. Zeleznik opined that 29
Phoenix’s damages were about $1,315,000.00. However, Mr. Zeleznik also stated that he had
used several different approaches to determine the value of Phoenix at the end of 2008. One of
those methods had calculated Phoenix’s business to be worth $1,549,000.00. Additionally,
Phoenix introduced as evidence valuations its CPA had prepared during negotiations with Brown
and Day for the purchase of Phoenix. Those estimates calculated Phoenix’s value as of
December 31, 2007, as between $1.7 million and $2.4 million. Phoenix also submitted evidence
that Brown and Day first contacted DCO in late summer 2008 and that the majority of Phoenix’s
employees were told during a closed door meeting at that time that Brown and Day were
approaching another manufacturer to sponsor them to start a new agency.
{¶63} DCO also contends that Phoenix’s trial counsel made statements during closing
argument that amount to a judicial admission and thus, the trial court could not award damages
in excess of $1.4 million. During closing argument, Phoenix’s trial counsel made the following
statement with regard it’s expert witness’ valuation of Phoenix:
Regarding damages, Mr. Zeleznik estimated the value of this business before and after immediately before the tortious conduct and immediately after, and it’s $1,315,000.00.
Mr. Duffy, he felt when he was negotiating with Mr. Brown and [Mr.] Day[,] he checked and he believed it’s one times revenue. The revenue in 2008 was $1.4 million, so the number is somewhere between $1.35 million and/or $1.4 million.
The law, unfortunately, limits us to that value. * * * It doesn’t allow us to speculate as to what could have been. We are stuck with that number. That’s our limit, either the $1.315 or else the $1.4 million.
{¶64} “A judicial admission is a ‘formal statement, made by a party or party’s counsel
in a judicial proceeding, that act[s] as a substitute for legal evidence at trial.’” Williams v.
Williams, 12th Dist. Warren No. CA2012-08-074, 2013-Ohio-3318, ¶ 12, quoting Haney v. Law,
1st Dist. Hamilton No. C070313, 2008-Ohio-1843, ¶ 7. In support of its argument, DCO cites 30
Hake v. George Wiedemann Brewing Co., 23 Ohio St.2d 65 (1970), for the proposition that trial
counsel’s statement during closing argument can be a judicial admission. In Hake, the
defendant’s trial counsel admitted acts by plaintiff’s employee during opening argument that the
Supreme Court of Ohio determined were sufficient to establish an element of the plaintiff’s cause
of action. Nonetheless, such a statement will only be binding where there is indication that the
statement was intended to dispense with formal proof of material facts for which witnesses
would otherwise be called at trial. See Holeski v. Lawrence, 85 Ohio App.3d 824, 833 (11th
Dist.1993), citing Harrison Constr. Co. v. Ohio Turnpike Comm. 316 F.2d. 174, 177 (6th
Cir.1963). Moreover, “such a statement, to be operative as an admission, must be one of ‘fact’
and not merely a statement of a legal conclusion.” Faxon Hills Const. Co. v. United Broth. of
Carpenters and Joiners of America, 168 Ohio St. 8, 10-11 (1958). As such, we determine that
Phoenix’s trial counsel’s statement did not constitute a judicial admission.
{¶65} Therefore, we conclude that the trial court did not abuse its discretion when it
denied DCO’s motion for a new trial or remittitur. Accordingly, DCO’s fifth assignment of error
is overruled.
DCO’s Assignment of Error VI
The trial court erred by applying a 2x multiplier to the attorney’s fees award, which shocks the conscience and is unsupported by Ohio law.
{¶66} In its sixth assignment of error, DCO contends that the trial court erred when it
applied a multiplier of two to the award of attorney fees.
{¶67} Following a punitive damages hearing, the jury determined that Phoenix was
entitled to reasonable attorney fees. The trial court subsequently held a hearing on the issue and
determined that a lodestar calculation of $1,991,507.00 accurately represented the amount of
attorney fees that would have been charged to Phoenix. The trial court further determined that 31
considering all the relevant factors pursuant to Ohio Prof. Cond. Rule 1.5(a)(1)-(8), Phoenix’s
overall success, and the detailed and lengthy procedural records of the case that Phoenix was
entitled to an enhancement of the lodestar amount by a multiplier of two. Accordingly, the trial
court awarded a total attorney fee amount of $3,983,014.00.
{¶68} A trial court’s award of attorney fees is reviewed for an abuse of discretion.
Bittner v. Tri-County Toyota, Inc., 58 Ohio St.3d 143, 146 (1991). An abuse of discretion
“implies that the court’s attitude is unreasonable, arbitrary[,] or unconscionable.” Blakemore, 5
Ohio St.3d at 219. When reviewing for an abuse of discretion, an appellate court may not
substitute its judgment for that of the trial court. Pons, 66 Ohio St.3d at 621.
{¶69} As required under the lodestar method, the court first calculated the number of
hours reasonably expended on this case times a reasonable hourly fee. See Bittner at 145. After
calculating this lodestar amount, “[t]he next step is to raise or lower the lodestar based upon
factors that may include:
the time and labor involved in maintaining the litigation; the novelty and difficulty of the questions involved; the professional skill required to perform the necessary legal services; the attorney's inability to accept other cases; the fee customarily charged; the amount involved and the results obtained; any necessary time limitations; the nature and length of the attorney/client relationship; the experience, reputation, and ability of the attorney; and whether the fee is fixed or contingent.
Welch v. Prompt Recovery Servs., Inc., 9th Dist. Summit No. 27175, 2015-Ohio-3867, ¶ 21,
quoting Bittner at 145-146.
{¶70} In determining that Phoenix was entitled to a multiplier of two times the lodestar
amount, the trial court considered “the time and labor required, the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal service properly.” In so
considering, the trial court determined that the case was complex, both factually and legally, and 32
that the litigation involved the prosecution of nine claims and the defense of counterclaims
through “numerous dispositive and procedural motions” and a lengthy trial. The trial court also
considered that: (1) due to the complexity of this case, Phoenix’s attorneys were hindered and/or
precluded from accepting and pursuing other cases and clients; (2) Phoenix obtained a highly
favorable outcome, prevailing on the majority of its claims; (3) Phoenix’s counsel was forced to
assume a great financial risk when the litigation became financially overwhelming; and (4) that
all of the attorneys involved in this case were of high caliber, highly experienced, and maintained
excellent reputations.
{¶71} Accordingly, we cannot say that the trial court abused its discretion in applying a
multiplier of two to the lodestar amount in this case. Therefore, DCO’s sixth assignment of error
DCO’s Assignment of Error VII
Judgment against DCO was against the manifest weight of the evidence.
{¶72} In its seventh assignment of error, DCO contends that the judgment was against
the manifest weight of the evidence. However, DCO fails to conduct any analysis of its
argument. Pursuant to App.R. 16(A)(7), the brief of an appellant shall include “[a]n argument
containing the contentions of the appellant * * * and the reasons in support of the contentions[.]”
“Where an appellant fails to develop an argument in support of [its] assignment of error, we will
decline to do so for [it].” (Internal quotation omitted.) State v. Powell, 9th Dist. Summit No.
28170, 2017-Ohio-5629, ¶ 22. “If an argument exists that can support [an] assignment of error,
it is not this [C]ourt’s duty to root it out.” Cardone v. Cardone, 9th Dist. Summit Nos. 18349
and 18673, 1998 Ohio App. LEXIS 2028, *22 (May 6, 1998).
{¶73} Therefore, DCO’s seventh assignment of error is overruled. 33
Phoenix’s Assignment of Error I
The trial court erroneously interpreted the punitive damages cap for direct misappropriation of trade secrets [R.C. § 1333.63(B)] as a treble damages statute, thus potentially precluding Phoenix from receiving up to an additional $300,000 of punitive damages.
{¶74} In its first assignment of error, Phoenix contends that the trial court erroneously
interpreted R.C. 1333.63(B) as a treble damages statute, thus potentially precluding Phoenix
from receiving up to an additional $300,000.00. We disagree.
{¶75} Following a punitive damages hearing, the trial court awarded punitive damages
as to the misappropriation of trade secrets claim, specifically stating, “As to the Misappropriation
of Trade Secrets claim the [c]ourt hereby awards punitive damages on such claim and trebles the
$300,000.00 in compensatory damages the jury awarded to a total of $900,000.00 on that claim.”
Thereafter, Phoenix filed a motion for reconsideration requesting the trial court to reconsider its
calculation method and award an additional $300,000.00 in punitive damages relating to the
misappropriation of trade secrets claim. The trial court summarily denied Phoenix’s motion to
reconsider.
{¶76} “Punitive damages are not meant to compensate an injured party. Rather, punitive
damages are awarded for the purpose of punishing and deterring certain conduct.” (Internal
citations omitted.) Desai v. Franklin, 177 Ohio App.3d 679, 2008-Ohio-3957, ¶ 40 (9th Dist.).
R.C. 1333.63(A) allows an aggrieved party to recover damages for the misappropriation of a
trade secret. Additionally, R.C. 1333.63(B) allows a trial court to impose punitive damages in
the case of a willful and malicious misappropriation of trade secrets. That statute specifically
provides, “[i]f willful and malicious misappropriation exists, the court may award punitive or
exemplary damages in an amount not exceeding three times any award made under [R.C.
1333.63(A)].” In light of the “may award” language used, “the decision whether to award 34
punitive damages * * * rests within the trial court’s discretion, and its decision will not be
reversed on appeal absent an abuse thereof.” InfoCision Mgt. Corp v. Donor Car Center, Inc.,
9th Dist. Summit No. 27034, 2016-Ohio-789, ¶ 33, citing Becker Equip. Inc., v. Flynn, 12th Dist.
Butler No. CA2002-12-313, 2004-Ohio-1190, ¶ 11. An abuse of discretion requires more than
an error in judgment, rather it “implies that the court’s attitude is unreasonable, arbitrary[,] or
unconscionable.” Blakemore, 5 Ohio St.3d at 219.
{¶77} In this case, nothing in the trial court’s journal entry suggests that the trial court
believed it was restricted to awarding no more than treble damages on Phoenix’s
misappropriation of trade secrets claim rather than awarding punitive damages in an amount up
to three times the compensatory damages. The fact that the trial court used the word “trebles”
and did not award the maximum allowed by the statute is not enough to infer that the trial court
misinterpreted the statute. Indeed, “[t]he focus of the award should be the defendant, and the
consideration should be what it will take to bring about the twin aims of punishment and
deterrence as to that defendant” and the “award should not go beyond what is necessary to
achieve its goals.” Dardinger v. Anthem Blue Cross & Blue Shield, 98 Ohio St.3d 77, 2002-
Ohio-7113, ¶ 178. After a review of the record, we cannot say that the trial court abused its
discretion when it trebled its award of compensatory damages to calculate the punitive damages
it awarded to Phoenix for DCO’s misappropriation of its trade secrets.
{¶78} Therefore, Phoenix’s first assignment of error is overruled.
Phoenix’s Assignment of Error II
The trial court erroneously applied the R.C. § 2315.21(D) punitive damage cap instead of the R.C. § 1333.63(B) punitive damages cap to the jury’s award for punitive damages on the conspiracy to maliciously misappropriate trade secrets, thus improperly “capping off” $203,000 of the jury’s punitive damages award. 35
{¶79} In its second assignment of error, Phoenix contends that the trial court
erroneously applied the punitive damage cap of R.C. 2315.21(D) instead of the punitive damages
cap of R.C. 1333.63(B) to Phoenix’s claim for conspiracy to maliciously misappropriate trade
secrets. We agree.
{¶80} R.C. 1333.67(A) states that Ohio’s Uniform Trade Secrets Act (“OUTSA”)
“displace(s) conflicting tort, restitutionary, and other laws of this state providing civil remedies
for misappropriation of a trade secret.” “This language was intended to prevent inconsistent
theories of relief for the same underlying harm and has been interpreted to bar claims that are
based solely on allegations of misappropriation of trade secrets or other confidential
information.” Rogers Indus. Prods. Inc. v. HF Rubber Mach., Inc., 188 Ohio App.3d 570, 2010-
Ohio-3388, ¶ 29 (9th Dist.), citing Glasstech, Inc. v. TGL Tepmering Sys., Inc., 50 F.Supp.2d
722, 730 (N.D.Ohio.1999). Accordingly, “‘[P]laintiffs alleging theft or misuse of their ideas,
data, or other commercially valuable information are confined to the single cause of action
provided by the [O]UTSA.’” Id. quoting Hauck Mfg. Co. v. Astec Industries, Inc., 375
F.Supp.2d 649, 659 (E.D.Tenn.2004). The Ohio UTSA statute does not affect “[o]ther civil
remedies that are not based on misappropriation of a trade secret.” R.C. 1333.67(B)(2).
{¶81} However, “[t]he precise scope of the preemption clause has not been interpreted
uniformly across UTSA jurisdictions. And, unfortunately, ‘[t]he Ohio Supreme Court has yet to
speak to the scope of the OUTSA’s preemption clause.’” (Internal citations omitted.) Stolle
Machinery Co., LLC v. RAM Precision Industries, 605 Fed.Appx. 473, 484 (6th Cir.2015),
quoting Office Depot, Inc. v. Impact Office Prods., LLC, 821 F.Supp.2d 912, 919 (N.D.Ohio
2011). Nonetheless, courts applying OUTSA generally seem to have subscribed to the majority
rule that the statute should be broadly interpreted so as to abolish all other causes of action for 36
theft, misuse, or misappropriation of any confidential or secret information. Id. citing Office
Depot at 918-919 (citing Allied Erecting and Dismantling Co. v. Genesis Equip. & Mfg., 649
F.Supp.2d 702, 720 (N.D.Ohio 2009) and Rogers Indus. Prods. Inc. at ¶ 29. (“This language was
intended to prevent inconsistent theories of relief for the same underlying harm and has been
interpreted to bar claims that are based solely on allegations of misappropriation of trade secrets
or other confidential information.”)
{¶82} Accordingly, we conclude that damages relating to a claim for civil conspiracy to
misappropriate trade secrets are governed by OUTSA and, thus, the punitive damages cap in
R.C. 1333.63 is applicable this matter.
{¶83} Therefore, Phoenix’s second assignment of error is sustained. The trial court’s
journal entry is hereby reversed as it pertains to the punitive damages cap for the claim of civil
conspiracy to misappropriate trade secrets and this matter is remanded for the trial court to apply
R.C. 1333.63.
III.
{¶84} DCO’s first, second, third, fourth, fifth, sixth, and seventh assignments of error
are overruled. Phoenix’s first assignment of error is overruled. Phoenix’s second assignment of
error is sustained. Therefore, the judgment of the Summit County Court of Common Pleas is
affirmed in part, reversed in part, and this matter is remanded for further proceedings consistent
with this opinion.
Judgment affirmed in part, reversed in part, and cause remanded.
There were reasonable grounds for this appeal. 37
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Defendant-Appellant/Cross-Appellee, Genlyte Thomas Group, L.L.C..
JULIE A. SCHAFER FOR THE COURT
CALLAHAN, J. CONCURS.
CARR, J. DISSENTING.
{¶85} I respectfully dissent from the judgment of the majority as I would sustain a
portion of DCO’s first assignment of error and remand the matter for a new trial.
{¶86} In the first assignment of error, DCO has argued that the trial court erred in
excluding expert evidence related to the consolidation of Phoenix/LSI into JDA. Prior to DCO’s
expert’s testimony, the trial court specifically instructed the expert about the areas of permitted
and prohibited testimony. The trial court stated: 38
[T]he defense has been limited to talk about – they certainly can criticize [Phoenix/LSI’s expert’s] valuation through cross-examination of [him], his valuation of the corporation at one point, $3.4 million, and the process that he went through to determine that valuation.
And they can also criticize the lack of mitigation on Mr. Duffy’s part, Phoenix’s part in failing to hire anybody for Phoenix specifically.
But I’m not going to permit you to talk about how much money the combined offices made and how that compares to what Phoenix made prior.
So your charts in [the expert report] are not going to come in. Basically when you discuss Section A under the analysis, that beginning part you talk about how [Phoenix/LSI’s expert] has failed to identify any specific actions or inactions of any defendants on behalf of Phoenix, you can talk about that as that relates to Phoenix, not JDA. You’re not including JDA in any of that.
So you’re basically saying that he failed to show any causation in his – I don’t know that you’re necessarily alleging that that’s [Phoenix/LSI’s expert] as much as plaintiffs aren’t showing any causation here.
But as to Section A, merger of Phoenix and JDA, from there on none of that is going to be permitted. Combined section B, combined Phoenix/JDA sales and income, none of that’s going to be permitted, which I realize is the bulk of your report.
So it will be question-by-question deposition. If there are objections, you have to wait till the Court rules on the objection.
The main point I want to make to you is even if [counsel] asks an open-ended question that doesn’t suggest an answer, which he shouldn’t because you’re his witness, they should be open-ended questions. You cannot on your own bring in information about events that occurred after April 17 of 2009 or you’d be in violation of the Court’s order.
Thus, DCO’s expert was prohibited from testifying about most of the contents of his report. Part
of DCO’s argument concerning Phoenix/LSI’s damages was that DCO’s actions did not cause
Phoenix/LSI’s damages. In support of this, DCO’s expert’s report pointed to two main areas:
(1) evidence that the consolidation was contemplated by Mr. Duffy prior to February 2009; and
(2) evidence of the downturn in the economy in 2009. 39
{¶87} With respect to the consolidation, it appears that the trial court viewed the
evidence concerning JDA’s post-consolidation condition as being irrelevant because it was the
value of Phoenix/LSI that was primarily at issue in terms of the amount of damages. This,
however, ignores the fact that the post-consolidation condition of JDA, which by 2010, in terms
of sales, appeared to be very similar to the combined status of Phoenix/LSI and JDA in 2008,
could provide circumstantial evidence in support of the notion that the consolidation was a
planned event and not an emergency measure taken because of DCO’s actions. Thus, the
evidence of what Mr. Duffy did with Phoenix/LSI and JDA around the time of the consolidation
could be relevant to whether Phoenix/LSI’s damages were caused by DCO. To the extent that
testimony and evidence could have been misused or misinterpreted by the jury, the trial court
could have supplied a limiting instruction instead of excluding the evidence.
{¶88} While the majority ultimately concludes that the trial court did not abuse its
discretion in excluding the evidence on the basis of lack of relevancy, the majority does not
expressly state that the evidence was irrelevant. Instead, the majority seems to engage in
somewhat of a harmless error analysis, focusing on the evidence that was admitted. While I
agree that DCO was permitted to present some evidence related to Phoenix/LSI’s failure to
mitigate and evidence demonstrating the prior contemplation of the consolidation, DCO’s expert
was prohibited from presenting a substantial amount of information contained in his expert
report. In fact, DCO’s expert’s entire testimony totaled fewer than 30 pages. This trial was not a
simple, straightforward matter. Even though the jury heard that the consolidation may have been
contemplated before February 2009, it was not allowed to hear an expert’s opinion of why that
fact would matter in terms of the causation of Phoenix/LSI’s damages or to hear evidence that
could buttress the idea that the consolidation was planned. Therefore, I cannot conclude that the 40
exclusion of that evidence was harmless. Accordingly, I would sustain the relevant portion of
DCO’s first assignment of error and remand the matter for a new trial.
APPEARANCES:
BRUCE J. L. LOWE, JULIE A. CROCKER, JOHN B. NALBANDIAN, and AARON M. HERZIG, Attorneys at Law, for Appellant/Cross-Appellee.
JEFFREY T. WITSCHEY and BETSY L. B. HARTSCHUH, Attorneys at Law, for Appellee/Cross-Appellant.
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2018 Ohio 2393, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phoenix-lighting-group-llc-v-genlyte-thomas-group-llc-ohioctapp-2018.