Total Quality Logistics, L.L.C. v. BBI Logistics, L.LC.

2024 Ohio 2597
Ohio Court of Appeals·Decided July 8, 2024·No. CA2023-11-076·Published·Cited by 1 cases

Opinion

IN THE COURT OF APPEALS

TWELFTH APPELLATE DISTRICT OF OHIO CLERMONT COUNTY

TOTAL QUALITY LOGISTICS, LLC, :

Appellee and Cross-Appellant, : CASE NO. CA2023-11-076

: OPINION - vs - 7/8/2024 :

BBI LOGISTICS LLC, et al., :

Appellants and Cross-Appellees. :

CIVIL APPEAL FROM CLERMONT COUNTY COURT OF COMMON PLEAS Case No. 2019-CVH-00699

Dinsmore & Shohl LLP, and Eric K. Combs, for appellee and cross-appellant.

Brennan, Manna & Diamond LLC, and David M. Scott and Krista D. Warren, for appellants and cross-appellees.

S. POWELL, P.J.

{¶ 1} Defendants, BBI Logistics, LLC ("BBI") and Benjamin Humphries, appeal the decision of the Clermont County Court of Common Pleas denying them attorneys' fees. In turn, plaintiff, Total Quality Logistics, LLC ("TQL"), cross-appeals the trial court's judgment in favor of BBI and Humphries. For the reasons stated below, we affirm in part and reverse in part the judgment of the trial court.

{¶ 2} TQL is a freight broker and third-party logistics company headquartered in Clermont County, Ohio. As a third-party logistics company, TQL does not own its own trucks or trailers, but facilitates shipments through those means for other carriers. To that end, TQL offers several transportation services in the freight industry, including highway drive end solutions, refrigerated services, and flatbed services.

{¶ 3} Benjamin Humphries was hired by TQL in 2009 as a Logistics Account Executive Trainee ("LAET"). At that time, Humphries signed an Employee Non-Compete, Confidentiality and Non-Solicitation Agreement (the "2009 NCA"). Under the 2009 NCA, Humphries agreed, that for one year after the termination of his employment with TQL, he would neither hold employment with a business competing with TQL nor solicit business from any TQL customer. These are commonly referred to as noncompetition and nonsolicitation provisions.

{¶ 4} Over the years he was employed by TQL, Humphries advanced through the ranks, becoming a Logistics Account Executive ("LAE") and later a Sales Team Leader ("STL") before being promoted to a Branch Team Leader ("BTL") in March 2016. As a BTL, Humphries was privy to some confidential information that was not available to him as a LAET, LAE, and STL. During his time at TQL, Humphries also assisted in the creation of a Columbus office for TQL and was described as one of its "founding members." Humpries' main client while working at TQL was Pilot Freight Services ("Pilot"), and he served as the primary contact between Pilot and TQL for arranging business between the companies.

{¶ 5} On May 4, 2017, approximately 14 months after Humphries assumed his position as a BTL, he signed a new Employee Non-Compete, Confidentiality and Non- Solicitation Agreement (the "2017 NCA"). The 2017 NCA was similar to the 2009 NCA, except its noncompetition and nonsolicitation provisions applied for period of two years

after Humphries terminated employment with TQL. The 2017 NCA also contained a trade secrets clause pursuant to which Humphries agreed not to disclose or use for the benefit of any third party TQL's trade secrets, including customer lists, carrier lists, load management system, and private processes. The trade secrets clause contained no time limit or term.

{¶ 6} Typically, TQL's new BTLs sign the two-year noncompete immediately.

While the delay in Humphries signing of the 2017 NCA was initially attributed to being an administrative oversight, it was testified to at trial that the delay was attributed to the fact that Humphries was not able to enroll in TQL's Long-Term Incentive ("LTI") program upon being promoted to a BTL. The LTI program operated as "phantom stock" that entitled select TQL employees who held it to extra money depending on the company's performance. Despite this delay, there is no dispute among the parties that the 2017 NCA was signed and supported by adequate consideration. The issue, discussed further below, is whether the restrictions in that agreement were reasonable and enforceable under Ohio law.

{¶ 7} In early April 2018, Humphries voluntarily took a demotion to a Senior Logistics Accounts Executive ("SLAE"). At that point, Humphries believed he was only subject to a one-year noncompete, as other SLAEs were. Later that month on April 27, 2018, Humphries resigned from TQL entirely. In the year following his resignation, Humphries did some work in excavation and for his in-laws' company, assisted family with their children, traveled, and "[took] a year and disconnect[ed] and kind of reprioritized[d] what was important in life" after working for TQL for nearly ten years.

{¶ 8} On April 23, 2019, Humphries texted Brent Bosse. Bosse is a high school friend and former coworker of Humphries at TQL who left the company to form BBI, now a competitor of TQL in the freight logistics industry in Columbus. In these texts,

Humphries noted that it had nearly been one year since Humphries left TQL and that he was "chomping at the bit" to begin working for BBI. The two discussed his onboarding with BBI and the likelihood that TQL would file suit to enforce the 2017 NCA. Various communications in the record demonstrate that BBI and Humphries were aware of the stated restrictions under the 2017 NCA prior to the time Humphries commenced employment with BBI. In fact, counsel for BBI and TQL exchanged letters in April of 2019. BBI asserted that Humphries was not subject to 2017 NCA while TQL insisted he was.

{¶ 9} Nonetheless, in May 2019, Humphries began employment with BBI. He signed a two-year noncompete with them, as all BBI employees do. The language of the agreement BBI uses is nearly verbatim to the 2017 NCA. In his first month at BBI, Humphries entered into thirteen transactions with Pilot and made $40,000 from those transactions.

{¶ 10} TQL filed a complaint on May 30, 2019, and alleged four causes of action:

(1) breach of the 2017 NCA's noncompete, nonsolicitation, and confidentiality provisions (against Humphries); (2) misappropriation of trade secrets pursuant to R.C. 1333.61 (against Humphries); (3) tortious interference with contract (against BBI); and (4) tortious interference with business relations (against BBI). TQL's complaint sought to enjoin Humphries from violating the 2017 NCA, including working for or consulting with BBI and enjoining BBI from further tortious interference with TQL's contractual or business relations by hiring or continuing to employ former TQL employees.

{¶ 11} TQL also sought a preliminary injunction against BBI and Humphries. A preliminary injunction hearing was held on September 26, 2019. With its Decision and Entry of January 9, 2020, the trial court denied TQL's motion for a preliminary injunction.

{¶ 12} The matter continued for years until a two-day bench trial commenced on July 17, 2023. The trial evidence revealed that Humphries had access to substantial

confidential information prior to his promotion to a BTL and while subject to one-year noncompetition and nonsolicitation provisions. Once promoted to the BTL position, Humphries received more corporate training and became privy to additional confidential information. It is unclear from the record what exactly the scope of that information was beyond customer contact information. Representatives from TQL also conceded that TQL's confidential information changes and loses value over time due to various factors such as market conditions. They also acknowledged that TQL conducts no evaluations of exactly how long its information retains its value and must remain protected.

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Total Quality Logistics, L.L.C. v. BBI Logistics, L.LC., 2024 Ohio 2597 (Ohio Ct. App. 2024).

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