Adverse Inference based upon the Failure to Produce Evidence

         In a recent jury trial, my client and I were faced with the inability to obtain a piece of evidence that we believed would demonstrate that a former employee misappropriated trade secrets.  When the former employee returned the company computer devices many of the devices were wiped clean, or restored to factory defaults.  The data on one company computer was not completely destroyed.  My client enlisted the assistance of David Gitkos and Global Digital Forensic.  Through a forensic analysis of the company computer David Gitkos was able to testify that in excess of 22,000 company files were rapidly accessed in successive order.  David Gitkos explained to the jury that this was indicative of mass copying of the company files.  David Gitkos also testified that a USB mass storage device was inserted into the company computer at the same time the company files were being rapidly accessed.
            The missing piece of the puzzle was the USB mass storage device.  David Gitkos based upon his training and experience could reasonably presume that the 22,000 company files were copied onto the USB mass storage device, but the jury may disagree.  We attempted to obtain the USB mass storage device through discovery, but it was not produced.  The former employee testified at trial that the USB mas storage device contained personal information and had nothing to do with her employment.  The former employee also testified that shortly after she left her employment the USB mass storage device was destroyed when her young child was playing with it. 
            Keen v. Hardin Mem. Hosp.(Ohio App. 3rd Dist.), 2003-Ohio-6707, at ¶10 provides that the trial court can instruct the jury that they are permitted to make an negative inference; permitting the jury to infer that such evidence would have been unfavorable to the party who failed to produce the evidence, quoting, Banks v. Canton Hardware Co. (1952), 156 Ohio St 453. 
            See, also RFC Capital Corp. v. EarthLink, Inc.(Ohio App. 10th Dist.), 2004-Ohio-7046, at ¶¶88-89.

           Here, the trial court instructed the jury that an adverse inference that the missing evidence would be unfavorable to the  party  who  failed  to  produce  it  arises  where  there  is  relevant  evidence  under   the   control   of   a   party   who   fails  to   produce   it   without   satisfactory   explanation.  

           I believe that the jury instruction on adverse inference was key to the jury determination that the former employee misappropriated trade secrets in Mahoning County Court of Common Pleas case No. 2014 CV 1896 known as Poseidon Environmental Services, Inc. vs. Nu Way Industrial Waste Management, LLC.  

Misappropriation of Trade Secrets

           What do you do when you believe that a former has taken confidential information and has now gone to work for a competitor?  Many employees have employment agreements that contain covenants not to compete.  However they are seen as a restraint on trade and are disfavored by the Courts.  Ohio has adopted the Uniform Trade Secrets Act.  This allows the Court to restrain unfair competition resulting from the theft of trade secrets.

The Uniform Trade Secrets Act defines trade secrets at R.C. 133.61(D).  Trade secret is defined 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.

             Many commentators and judicial opinions discuss the difficult task of demonstrating that the New Employer either knew that the trade secrets were misappropriated, or that the New Employer used the trade secrets.  An equally difficult task is demonstrating damages caused by the misappropriated trade secrets.

            After a four day jury trial the decision was handed down that the employee was exposed to trade secrets, that the employee misappropriated trade secrets, but that the New Employer was not liable under the Uniform Trade Secrets Act.  It is believed that the Former Employer was unable to persuade the jury that the New Employer knew that the information was misappropriated, that the New Employer used the misappropriated trade secrets, or that there was an economic benefit to the New Employer.  The Former Employer apparently was left without a recourse for the misappropriation of its trade secrets.

            The jury did find the Former Employee had violated the Uniform Trade Secrets Act by misappropriating trade secrets of the Former Employer.  The Court thereafter conducted a hearing on the appropriate remedy.  The argument made by the Former Employer was that damages are awarded to remedy past harms, but injunctive relief is granted in order to prevent future harms.  This actual or threatened harm caused by misappropriation of trade secrets may be enjoined pursuant to R.C. 1333.62.  Case law supporting this proposition states that when a trade secret is misappropriated, a threat of actual harm is presumed.  Proctor & Gamble Co. v. Stoneham (2000), 140 Ohio App.3d 260. 

             Ohio appellate decisions also supported the issuance of injunctive relief against the employee even though the New Employer was not found liable.  In Avery Dennison Corporation vs. Transact Technologies, Inc. (Ohio App. 11th Dist.), 2013-Ohio-4551, the trial court granted injunctive relief against the former employee, but found that the Plaintiff did not establish use of the trade secrets by Defendant new current employer.  In Columbus Steel Castings Co. v. Alliance Castings Co., L.L.C. (Ohio App. 10th Dist.), 2011-Ohio-6826, the trial court granted injunctive relief after the jury found a misappropriation of trade secrets, but awarded zero damages to the former employer. 

              In this case, the Former Employer was awarded injunctive relief against the employee.  The employee is restrained from engaging in the industrial waste brokerage business with Mahoning County, Ohio for a period of 18 months.  In addition, the employee may not communicate in any fashion with the Former Employer's customers regarding the waste brokering business for a period of 6 months.  The Mahoning County Court of Common Pleas rendered the injunctive relief in Case No. 2014 CV 1896 Poseidon Environmental Services, Inc. vs. Nu Way Industrial Waste Management, LLC.

The Law Office of Bruce M. Broyles - Civil Litigation: Civil Litigation - The Law Office of Bruce M. Broy...

The Law Office of Bruce M. Broyles - Civil Litigation: Civil Litigation - The Law Office of Bruce M. Broy...: Civil Litigation: I have practiced law for almost 25 years and it has all been involved in Civil Litigation.  Approximately five years ago I...

Civil Litigation - The Law Office of Bruce M. Broyles - More than Foreclosures

Civil Litigation: I have practiced law for almost 25 years and it has all been involved in Civil Litigation.  Approximately five years ago I began writing a blog to help spread the word about the many issues in defending foreclosures.  I continue to help homeowners facing foreclosure, and I still maintain a blog regarding those issues.  I wanted to start writing a blog about some of the other issues I handle without changing the message or content of my first blog.

I handle many different areas of the law when conflicts arise, as well as, advising business clients how to avoid issues.  I have handled cases involving minority shareholder rights, covenants not to compete, franchise agreements, unfair competition and trade secrets.  I represent both landlords and tenants; I represent buyers and sellers in real property transactions and land installment contracts; I represent both homeowners and contractors; I have been involved in cases involving breach of fiduciary duty, concealment and estate assets, conversion of personal property, and boundary disputes. 

I also have an extensive back ground in appellate practice, and have argued cases in most of the appellate districts in Ohio and The Ohio Supreme Court.  I have also argued cases before the Sixth Circuit Court of Appeals and the Bankruptcy Appellate Panel. 

There are areas of the law that I believe are better handled by those who practice in those areas on a regular basis: Domestic Relations, Probate, and Worker's Compensation,   I also do not handle any criminal cases.  However, I have been involved with other attorneys and have assisted in the motion practice and appellate practice of these areas.  So I am at least familiar enough with those areas to assist you in finding an attorney.

I am located in Youngstown, Ohio.  My practice is primarily located in Mahoning, Trumbull and Columbiana counties, but I have handled cases in many of the counties in the Eastern part of the State from Lake County to Scioto County.