Legacy Roofing Services LLC v. Fusco

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

:

LEGACY ROOFING SERVICES : CASE NO. 1:23-cv-01341

LLC, :

: OPINION & ORDER

Plaintiff, : [Resolving Doc. 6]

:

v. :

:

MICHAEL FUSCO, et al., :

:

Defendants. :

:

JAMES S. GWIN, UNITED STATES DISTRICT COURT JUDGE:

With this order, the Court decides whether there is sufficient evidence to preliminarily

enjoin Defendant Michael Fusco, a long-time roofing construction salesman, from working

for Defendant Facility Products & Services LLC, a competitor of his earlier employer, Plaintiff

Legacy Roofing Services LLC. The Court considers two issues. First, the Court considers

whether sufficient evidence shows that Fusco should be restrained from sales work because

Fusco arguably had trade secrets from Legacy Roofing. Second, the Court considers whether

Fusco has an enforceable non-solicitation agreement with Legacy Roofing.

* * *

When Defendant Fusco left his job at Plaintiff Legacy Roofing, Fusco took over 2,000

Legacy documents with him. Then, after Fusco began his new job at Defendant Facility

Products, Fusco allegedly used those documents to solicit Legacy clients.

Plaintiff Legacy Roofing sued Defendants Fusco and Facility Products, arguing that

Defendants’ actions violated trade secret law. Legacy Roofing also claimed that Fusco

breached a non-solicitation clause in Fusco’s Legacy employment contract, and that Facility

Products tortiously interfered with that non-solicitation clause.

Legacy Roofing moves for a preliminary injunction requiring Defendants to return the

documents that Fusco took. Legacy Roofing also seeks to prohibit Fusco from soliciting

Legacy customers.

After carefully considering the parties’ briefing, the record in this matter, and the

arguments made at hearing, the Court DENIES the preliminary injunction motion.

I. BACKGROUND

A. Factual Background

Plaintiff Legacy Roofing and Defendant Facility Products compete in the commercial

roofing business.1 Defendant Fusco earlier worked as a Legacy employee. After resigning

from Legacy Roofing, Fusco now works for Facility Products.2

In January 2020, Fusco joined Legacy Roofing as a senior regional account manager.3

In that role, Fusco handled sales calls, helped prepare bids for roofing projects, and managed

customer relationships for Legacy.4 Upon joining Plaintiff Legacy Roofing, Fusco signed an

employment contract with a non-solicitation clause.5 This non-solicitation clause barred

Defendant Fusco from soliciting business from all actual Legacy clients and some potential

Legacy clients for two years after Fusco resigned.6

For a time, both Legacy Roofing and Fusco were seemingly satisfied with their

arrangement. But by early 2023, Fusco had lost faith in Legacy Roofing’s business direction.

1 Doc. 1 at ¶¶ 10, 12. Because Legacy verified its complaint, the Court treats the complaint as an affidavit for purposes of

Legacy’s preliminary injunction motion. , 530 F.3d 407, 414 (6th Cir. 2008).

2 Doc. 1 at ¶¶ 29, 56.

3 at ¶ 29.

4

5 Doc. 1-1 at 3 (Page ID #: 41).

By then, Legacy Roofing owed Fusco outstanding commissions, was not paying some

company credit cards, and was having difficulty purchasing materials for roofing projects.7

As a result, Fusco began searching for a new job.

In February 2023, Fusco reached out to Facility Products to ask about job openings.8

Discussions between the two progressed quickly, and by early March 2023, Facility Products

offered Fusco a job.9 On March 15, 2023, Fusco resigned from his Legacy position.10 Five

days later, Fusco joined Facility Products in a similar role.11

Fusco did not, however, make a clean break from Legacy. Shortly before Fusco left

Legacy, he downloaded 2,331 Legacy files onto a personal hard drive.12 And once Fusco

began working at Facility Products, Fusco continued to seek business from some of the same

clients he dealt with at Legacy Roofing.13 These actions prompted Legacy Roofing to sue.

B. Procedural History

On April 17, 2023, Plaintiff Legacy Roofing filed suit against Defendant Fusco in the

Cuyahoga County Court of Common Pleas.14 On May 23, 2023, Legacy Roofing amended

its complaint to add Facility Products as a defendant.15 As relevant here, the amended

complaint contained claims for breach of Fusco’s non-solicitation clause, tortious

interference with contract, and violations of Ohio trade secret law.16

7 Doc. 30-2 at 36:23–37:8; Doc. 31 at 40:2–41:8.

8 Doc. 30-2 at 35:3–11.

9 at 37:21–38:7.

10 Doc. 1 at ¶ 11.

11 Doc. 30-2 at 38:2–4.

12 Doc. 28-2 at ¶ 11; , Ex. B.

13 , Doc. 1 at ¶¶ 59–63, 68–72.

14 Compl., , No. CV-23-978150 (Cuyahoga Cnty. Ct. Com. Pl. Apr. 17, 2023). The Court

may take judicial notice of “developments in related proceedings in other courts of record.”

, No. 20-3557, 2021 WL 3702211, at *5 (6th Cir. Aug. 20, 2021) (citation omitted).

15 Am. Compl., , No. CV-23-978150 (Cuyahoga Cnty. Ct. Com. Pl. May 23, 2023).

On June 7, 2023, the Court of Common Pleas denied Legacy’s motion for a

preliminary injunction without receiving any evidence.17

On July 3, 2023, Plaintiff Legacy Roofing voluntarily dismissed its state suit without

prejudice.18 Just over a week after dismissing its state court case, on July 11, 2023, Legacy

Roofing filed this suit in federal court.19

In its federal complaint, Legacy Roofing raised substantially the same claims regarding

the same conduct that Legacy had raised in state court.20 However, to ensure federal

jurisdiction, Legacy Roofing added a federal trade secret claim.21

Legacy then filed the instant motion for preliminary injunction and a request for

expedited discovery.22 Defendants opposed the preliminary injunction motion.23 Legacy

filed a reply in support.24

The Court permitted the parties to conduct limited discovery related to the

preliminary injunction motion and ordered the parties to file supplemental briefs after

completing that discovery.25 The parties did so.26

On December 19, 2023, the Court heard oral argument from the parties.

17 Doc. 1 at ¶ 80 n.1; Journal Entry, , No. CV-23-978150 (Cuyahoga Cnty. Ct.

Com. Pl. June 8, 2023).

18 Notice of Voluntary Dismissal, , No. CV-23-978150 (Cuyahoga Cnty. Ct. Com. Pl.

July 3, 2023).

19 Doc. 1.

20

21 at ¶¶ 98–109.

22 Docs. 6, 7.

23 Doc. 9.

24 Doc. 10.

25 Docs. 13, 15.

II. LEGAL STANDARD

Preliminary injunctions are “designed to preserve the relative positions of the parties

until a trial on the merits can be held.”27 As such, a party “is not required to prove [its] case

in full” to secure a preliminary injunction.28 But neither is a party entitled to a preliminary

injunction as a matter of course, and courts do not issue preliminary injunctions lightly.29

As the Supreme Court has explained, “[a] preliminary injunction is an extraordinary

and drastic remedy.”30 Only when a party makes a “clear showing” that it is entitled to such

relief can a court grant a preliminary injunction.31

Courts consider four factors when deciding whether to grant a preliminary injunction:

(1) likelihood of success on the merits; (2) irreparable injury; (3) how an injunction might

cause substantial harm to others; and (4) the public interest.32

These four factors are part of a balancing test where a stronger showing on one factor

can make up for a weaker showing on another.33 But two factors are mandatory: likelihood

of success on the merits34 and irreparable injury.35 Not even the strongest showing of another

factor permits a preliminary injunction if there is no likelihood of success or no irreparable

injury.

27 , 556 F.3d 442, 447 (6th Cir. 2009).

28 , 511 F.3d 535, 542 (6th Cir. 2007) (quoting

, 451 U.S. 390, 395 (1981)).

29 , 860 F.3d 844, 849 (6th Cir. 2017).

30 , 553 U.S. 674, 689 (2008) (internal quotations and citation omitted).

31 , 555 U.S. 7, 22 (2008).

32 , 731 F.3d 608, 627 (6th Cir. 2013) (citation omitted).

33 , 942 F.3d 324, 326 (6th Cir. 2019).

34 , 928 F.3d 514, 517 (6th Cir. 2019) (“[A] court must not issue a preliminary

injunction where the movant presents no likelihood of merits success.”).

35 , 942 F.3d at 327 (“Thus, although the of an injury may be balanced against other factors, the of an

III. DISCUSSION

Plaintiff Legacy Roofing justifies its request for a preliminary injunction under two

theories. First, Legacy argues that the Court should enjoin Defendants Fusco and Facility

Products because Defendants violated federal and state trade secret laws.36 Second, Legacy

argues that Fusco breached, and that Facility Products tortiously interfered with, Fusco’s non-

solicitation clause.37

The Court finds that Legacy Roofing has failed to meet the high bar for a preliminary

injunction under either of its theories.

A. Effect of Legacy Roofing’s State Suit

Before turning to the merits of Legacy Roofing’s trade secret and contract claims, the

Court first addresses what impact Legacy’s earlier state lawsuit should have on these federal

proceedings. Defendants argue that, under ,38 this Court

must follow the state court’s earlier decision to deny a preliminary injunction.

In , the Sixth Circuit faced a procedural scenario like the one here. The

plaintiff had initially sued in Ohio state court.39 The Ohio trial court ruled against the

plaintiff on his breach of contract claim.40 The plaintiff took an appeal. On appeal,

the Ohio appellate court agreed that the contract claim failed, but the Ohio appellate court

reversed and remanded to allow the plaintiff to plead any non-contract claim he might

have.41 The plaintiff then voluntarily dismissed his state case and filed a case in federal

court raising an identical contract claim.42

36 Doc. 6-1 at 7–12.

37 at 12–14.

38 125 F.3d 948 (6th Cir. 1997).

39 at 949.

40

41 at 949, 952.

The federal district court held that the plaintiff’s contract claim again failed. In

so holding, the federal district court reasoned that the earlier state court rulings controlled as

law of the case.43 The Sixth Circuit affirmed but did not explicitly find that the district court’s

law of the case reasoning controlled. The Sixth Circuit explained that “the state appellate

court . . . arrived at a conclusive decision as to plaintiff’s breach of contract claim.”44

The Sixth Circuit did not specify how it reached that result. Instead, the Sixth Circuit

identified three possible sources for its decision: the law of the case doctrine, the

doctrine, and the preclusion doctrine.45

The Court finds that none of these three doctrines apply in this case, so the Court is

not bound by the decisions in Legacy Roofing’s earlier state lawsuit.

1. Law of the Case

Law of the case does not apply in the circumstances of this case. Under the law of

the case doctrine, courts should usually not “reconsider a matter once resolved in a

continuing proceeding.”46 The law of the case doctrine seeks “to ensure that the issue

presented a second time in the in the should lead to the .”47

However, the law of the case doctrine is not an absolute mandate, it is a discretionary

doctrine. “[L]aw of the case does not bar a court from reassessing an issue if it believes good

reasons exist to do so (such as a change in the law or an obvious mistake).”48 Federal Rule

of Civil Procedure 54 lends further support: “[A]ny order or other decision, however

43 ,125 F.3dat 950.

44 at 952.

45 at 951; at 952 (Contie, J., concurring) (noting that the panel majority did not specify the legal basis for the

majority opinion).

46 , 801 F.3d 718, 739 (6th Cir. 2015) (citation omitted).

47 (internal quotation marks omitted) (emphasis in original) (quoting , 689 F.3d 776, 780 (D.C. Cir.

2012)).

designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer

than all the parties does not end the action as to any of the claims or parties and may be

revised at any time before the entry of a judgment adjudicating all the claims and all the

parties’ rights and liabilities.”

Law of the case does not apply because Legacy’s dismissed state court suit is not

Legacy’s current federal suit. Defendants disagree, implying that says that the law of

the case doctrine makes earlier state case decisions binding in this new federal case.49

Subsequent decisions defeat that interpretation of . The Sixth Circuit has

emphasized that “[t]he defining feature of the law-of-the-case doctrine is that it applies only

within the .”50 When a plaintiff dismisses its state case and files a new federal case,

those two cases are not the same. As such, the state court’s preliminary injunction denial

does not act as the law of the case to decide Legacy Roofing’s application for a preliminary

injunction.

Even if permitted law of the case to apply from Legacy’s dismissed state case

to this federal case, it would still be inappropriate to apply law of the case here. That is

because law of the case does not apply “when the legal conclusions in a preliminary-

injunction decision were based on an underdeveloped record, issued under time pressures

related to the circumstances of the preliminary injunction at issue, or were otherwise not

conclusively decided.”51

49 Doc. 9 at 11.

50 , 922 F.3d 737, 739 (6th Cir. 2019) (emphasis added) (citations omitted);

, 651 F. App'x 332, 339 (6th Cir. 2016) (“[L]aw-of-the-case doctrine is not used to prevent relitigation of the

same issues across different cases.”) (collecting authorities).

When the state court denied Legacy’s preliminary injunction request, the parties had

not conducted discovery.52 But the parties have since had the opportunity to request

documents, conduct written discovery, and hold depositions.53 In its discretion, the Court

finds that this new discovery is good reason for not applying law of the case.

2. Doctrine

Defendants’ reliance on the doctrine fares no better than their argument regarding

the law of the case. Under , federal courts are required to follow the decisions of state

appellate and supreme courts when deciding issues of state law.54 So, the doctrine could

have applied in because the state appellate court had ruled on the contract claim at

issue in that case.55

However, in this case, a state appellate court never considered Legacy Roofing’s

preliminary injunction request. The only state court decision was from the Ohio trial court.

Unlike state appellate decisions, state trial court decisions do not bind federal courts.56

Therefore the Ohio trial court’s decision denying Legacy’s preliminary injunction is not

binding on this Court under .

3. Preclusion Doctrine

Finally, preclusion does not bind this Court either. Ohio preclusion law applies.57 In

Ohio, both res judicata and collateral estoppel require a final judgment.58 Plainly, Legacy’s

52 Doc. 1 at ¶ 80 n.1.

53 Docs. 13, 15, 28-1 to -7, 29-1 to -3.

54 , 125 F.3d at 951 (citing , 311 U.S. 464, 467–68 (1940)).

55 at 952.

56 , 439 F.2d 1023, 1025 (6th Cir. 1971). In particular, federal courts are not “bound by a decision

which would not be binding on any state court.” , 333 U.S. 153, 161 (1948).

Ohio trial court decisions are not binding precedent on other Ohio courts. , 386 F.2d 295, 297 (6th Cir.

1967). So, Ohio trial court decisions are not binding on federal courts either.

57 , 37 F.4th 1101, 1109 (6th Cir. 2022).

state case resulted in no final judgment because Legacy voluntarily dismissed its state case

without prejudice.

Further, preliminary injunction rulings generally have no preclusive effect.59 That is

because preliminary injunction rulings “are often made on an incomplete record and are

inherently tentative in nature.”60 A preliminary injunction decision can be preclusive only

when it is “‘clearly intended to firmly and finally resolve the issue,’ rather than ‘estimate the

likelihood of success’ of proving that issue.”61

In evaluating whether a preliminary injunction is intended to finally resolve the issue,

courts consider “whether the parties were fully heard, whether the court filed a reasoned

opinion, and whether that decision could have been, or actually was appealed.”62

In this case, three factors weigh strongly against treating the state court’s preliminary

injunction denial as final. For one, although the Ohio court heard oral argument, it did not

receive any preliminary injunction briefing from the Defendants.63 Put another way, the

parties were not fully heard before the Ohio court made its decision.

Further, the Ohio court denied Legacy Roofing’s preliminary injunction without any

written decision and proceeded to set a discovery schedule and trial date.64 This indicates

that the Ohio court did not intend to finally decide issues in the state case.

59 , 951 F.3d 393, 397 (6th Cir. 2020) (“[A] preliminary injunction has no preclusive

effect—no formal effect at all—on the judge's decision whether to issue a permanent injunction.”) (quoting

, 751 F.2d 199, 202 (7th Cir. 1984)); , 473 F.3d 1196,

1205 (Fed. Cir. 2007) (quoting , 859 F.2d 36, 38 (7th Cir. 1988)).

60 , 473 F.3d at 1205 (quoting , 859 F.2d at 38).

61 at 1206 (quoting , 859 F.2d at 38).

62 , 126 F.3d 461, 474 n.11 (3d Cir. 1997) (citation omitted).

63 Doc. 1 at ¶ 80 n.1.

Perhaps most significantly, the Ohio court made its decision before discovery.65 A

preliminary injunction decision made without evidentiary support does not justify finding a

final decision on the request for injunctive relief.66

Therefore, the Court finds that the state court’s previous denial of Legacy’s preliminary

injunction has no preclusive effect.

B. Likelihood of Success on the Merits

1. Trade Secrets

Plaintiff Legacy Roofing has not shown that it is likely to succeed on any of its trade

secret claims because Legacy has not shown that any files taken by Defendant Fusco are

trade secrets.

Legacy Roofing’s state and federal trade secret claims both require that Legacy prove

the existence of a trade secret.67 And both Ohio and federal law define trade secrets

similarly. Under both Ohio and federal law, a plaintiff must show that the alleged trade

secret (1) derives value from not being generally known or from not being readily

ascertainable from proper means, and that (2) the owner took reasonable efforts to maintain

secrecy.68

There is no dispute that Legacy Roofing took reasonable efforts to maintain the secrecy

of its information, so the decisive issue is whether the files taken by Fusco derived value from

not being generally known or readily ascertainable.

65 Doc. 1 at ¶ 80 n.1.

66 , 999 F.3d at 308 (a legal issue decided in a preliminary injunction decision is “not conclusively decided” in

the law of the case context when the preliminary injunction decision is “based on an underdeveloped record”).

67 , No. 1:19-cv-2381, 2020 WL 2814440, at *16–17 (N.D. Ohio Mar. 4, 2020),

, 2020 WL 2812871 (N.D. Ohio May 29, 2020). Both claims also require proof of

misappropriation, and Ohio trade secret claims require proof that a defendant used the trade secret.

In this regard, Legacy’s imprecision when describing its alleged trade secrets

complicates the Court’s analysis. Legacy Roofing describes its trade secrets differently from

complaint to motion, and even between different paragraphs in the same document. Legacy

Roofing’s failure to specifically identify what it claims to be trade secrets makes it difficult

for the Court to determine exactly what information Legacy argues is protected.

As best as the Court can tell, Legacy’s alleged trade secrets fall into four general

categories: (a) proprietary bidding methodologies; (b) project bids and proposals; (c) the

underlying inputs for bids; and (d) customer lists and other customer information.69 The

Court addresses each category in turn.

a. Proprietary Bidding Methodology

According to Legacy’s 30(b)(6) representative, Legacy Roofing’s proprietary bidding

methodology is a customized version of generally available bidding software known as “The

EDGE.”70 Specifically, Legacy Roofing customized its EDGE software to automatically enter

some underlying inputs and to reduce the number of steps needed to generate a bid.71

Legacy Roofing has not shown that Defendant Fusco took a copy of Legacy’s

customized EDGE software. None of the files taken were software files. Rather, the files

were primarily PDF, Microsoft Word, and Microsoft Excel files.72 So, regardless of whether

Legacy Roofing’s customized EDGE software would qualify as a trade secret, Legacy is not

likely to succeed because Legacy has not shown that Defendants took that software.

69 Doc. 1 at ¶¶ 2, 4, 18, 22–23, 99.

70 Doc. 31 at 61:1–8.

71 at 61:11–63:23.

b. Project Bids and Proposals

Plaintiff Legacy Roofing also argues that its project bids and proposals are trade

secrets. But “stale or ‘obsolete information cannot form the basis for a trade secret claim

because the information has no economic value.’”73

Legacy Roofing sells roofing construction services. It competes for roofing work,

mostly commercial roofing work.74 Because each roofing job involves significantly different

scopes of work, different raw material costs, different general roofing market demand, and

different geographic issues, roofing proposals for one project are inherently not transferable

to other roofing projects.75

At hearing, the parties described that most commercial roofing jobs involve property

owners conducting meetings with multiple prospective roofing companies at the work sites.

After meeting with interested roofing contractors, the property owners solicit proposals.

In this case, Legacy Roofing usually holds bid pricing for six months.76 Shortly before

leaving Legacy Roofing, Defendant Fusco downloaded many of the bids Fusco had worked

on while employed at Legacy.77

However, based on file names, many of the bids Fusco took are from 2019 to 2022.78

And even if some of the bids were more recent, the latest bids that Fusco could have taken

73 , Nos. 2:21-cv-05779, 2:22-cv-03838, --- F. Supp. 3d ----, 2023 WL 5178345,

at *17 (S.D. Ohio Aug. 11, 2023) (quoting , 319 F.3d 329, 336 (8th Cir.

2003)); , No. 5:21-cv-1070, 2023 WL 3847289, at *15 (N.D. Ohio

June 5, 2023) (same).

74 Doc. 1 at ¶ 10.

75 Doc. 31 at 61:4–63:15 (describing numerous variables that go into generating a proposal).

76 at 205:22–206:3.

77 Doc. 28-2, Ex. B.

would be from March 2023, when Fusco left Legacy Roofing.79 It has now been over nine

months since that date, so most if not all the bids taken by Fusco are likely stale.

Legacy Roofing has not identified any bid that remains open, and nothing

demonstrates that stale bids still have any business value. As such, Legacy has not shown

that it is likely to succeed in proving that the bids taken by Fusco are trade secrets.

c. Underlying Inputs

Legacy Roofing further argues that the underlying inputs for its bids—supply costs,

labor costs, and profit margin—are trade secrets.80 This inputs theory suffers from the same

defects as Legacy’s bids theory: The record shows that inputs are time-sensitive and therefore

become stale.

For one, Facility Products’ 30(b)(6) representative testified that the costs of materials

have changed greatly over the past two to four years.81 In fact, Facility Products’ bids

explicitly account for this change in material costs by including an escalation clause that

allow the parties to modify or terminate their agreement if there is a significant change in

costs.82

While there is no comparable evidence about Legacy Roofing’s costs, there is no

reason to believe that Legacy deals with raw material costs that avoid this fluctuation. If

anything, Legacy’s practice of holding its bids open for six months83 affirmatively suggests

that Legacy Roofing is affected by changing costs. Unless the underlying inputs change,

there would be no need for the six-month bid expiration.

79 Doc. 1 at ¶ 11.

80 Doc. 6-1 at 1–2.

81 Doc. 30-1 at 13:5–8.

82 Doc. 28-7 at PageID #: 617.

Similarly, Legacy Roofing’s 30(b)(6) representative testified that profit margin can

change based on economic conditions.84 So, Legacy’s profit margin from a two-year-earlier

project says little about Legacy’s profit margin today.

Therefore, Legacy Roofing has not shown that the underlying bid inputs are likely

trade secrets.

d. Customer Lists and Information

Finally, Legacy Roofing argues that Fusco took trade secret customer lists and other

customer information.

The Court begins with the customer lists. While courts have found that customer lists

can be trade secrets, that only applies to large compilations of customer contacts.85 Small or

scattered amounts of customer contact information are not a trade secret since such

information is readily ascertainable through public research.86

None of the files taken by Fusco appear to be compilations of customer contacts.

Rather, they are mostly individual project files.87 Such files contain only scattered customer

contact information, so they are not trade secrets.

To the extent that Legacy Roofing argues the compilation of approximately 2,300 files

downloaded by Fusco is itself a trade secret customer list, that argument fails because Legacy

has not demonstrated that these customer contacts are not otherwise readily ascertainable.

Roofing customers solicit bids from multiple roofing companies, whether through

open bids or by seeking multiple private proposals.88 Although some customers may at times

84 Doc. 31 at 101:1–9.

85 , No. 1:21-cv-164, --- F. Supp. 3d ----, 2023 WL 5057333, at *9 (S.D.

Ohio July 31, 2023).

86 at *9.

87 Doc. 28-2, Ex. B.

seek purely private proposals from only a single company,89 the case evidence does not

suggest a significant number of customers do so. Since customers freely contact multiple

roofing companies for project proposals, the current record shows that customer contacts are

readily ascertainable.

Legacy Roofing has also failed to show that the other customer information taken by

Fusco is likely to be a trade secret. For one, Legacy has been vague in describing the

customer information that Fusco allegedly took. It is unclear whether Legacy Roofing

believes that all information about Legacy customers is trade secret, or if there are only

certain categories of customer information that are trade secrets. To determine the types of

information in Fusco’s files, the Court can only rely on file names.

For most of the files, the file name provides little information about what the file

contains. Where the file names do give an indication of what the files contain, the

information in those files is not trade secret. For example, Legacy points to two files named

“7120 KRICK RD building floor plan - REV 1.23.23” and “Krick New Dock Positions 12-07-

22 (1).” These two files appear to contain floor plan or layout information for a project at

Krick Road. But a potential customer’s building floor plan is not proprietary to Legacy

Roofing. And any roofing company invited to bid by that customer could readily obtain the

floor plan.

Likewise, many of Fusco’s files appear to contain exterior photos.90 Based on

examples provided to the Court, these photos seem to be overhead shots of properties that

can easily be obtained from Google Earth or a similar program.91 And even if the photos

89 Doc. 31 at 84:6–85:13.

90 Doc. 28-2, Ex. B.

were ground level shots, they would still be as easily ascertainable as floor plans. A roofing

company submitting a bid could simply ask the customer for access to the project site to take

photos.

Legacy Roofing has not shown that the customer information taken by Fusco is likely

a trade secret.

2. Non-Solicitation Clause

Legacy Roofing is also unlikely to succeed on its contract-based claims because

Legacy has not demonstrated that Fusco’s non-solicitation clause is likely enforceable.

a. Enforceability of Restrictive Covenants

By their nature, non-solicitation clauses, non-compete clauses, and other restrictive

employment covenants are anticompetitive. By limiting or prohibiting employees from

moving freely from one job to the next, restrictive employment covenants reduce labor

market competition.

The negative effects that flow from restrictive employment covenants are stark. For

example, empirical research reveals that enforcing non-compete agreements noticeably

depresses wages.92 And not only do workers who signed restrictive covenants receive lower

wages, limiting worker mobility through restrictive covenants also reduces wages for even

those workers who did not sign restrictive covenants.93

92 Natarajan Balasubramanian et al.,

, 57 J. Hum. Res. S349, S351 (2022) (finding that new-hire wages for Hawaiian technology workers

increased by 4.2% after non-competes were banned for technology workers compared to a 0.7% increase across all

Hawaiian workers); Evan Starr, , 72

I.L.R. Rev. 783, 785 (2019) (finding that an increase in non-compete enforcement from no enforcement to mean levels of

enforcement would decrease wages by 4%); Matthew S. Johnson et al.,

48 fig.3 (Oct. 12, 2021) (illustrating the negative relationship between earnings and non-compete

enforceability), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3455381.

Apart from these general economic effects, restrictive employment covenants impose

burdens on the employees they bind. At best, restrictive covenants reduce a worker’s

leverage to negotiate better working conditions. If an employee raises complaints about a

bad boss, inconvenient hours, or other issues, an employer has less incentive to address

those complaints when that employee has signed a restrictive covenant—the employer

knows that job opportunities become limited for the employee.

At worst, restrictive employment covenants can threaten an employee’s very

livelihood. If an employee must quit for some reason, or the employer fires her, a restrictive

covenant could well prevent that employee from finding a new job to support herself.

For these reasons, courts have long been skeptical of restrictive covenants. Under

early English common law, restrictive covenants were often prohibited.94 And while limits

on restrictive covenants have somewhat relaxed in the years since, many states continue to

disfavor restrictive covenants.95

Ohio law disfavors restrictive covenants as well.96 Although restrictive covenants are

not unenforceable under Ohio law, a plaintiff seeking to enforce a restrictive covenant

must meet a high bar. “In Ohio, a [restrictive] covenant is enforceable [only] to the extent it

94 Michael J. Garrison & John T. Wendt,

, 45 Am. Bus. L.J. 107, 113–14 (2008).

95 , , 135 N.E.3d 150, 153 (Ind. 2019) (“Noncompetition agreements in employment

contracts are in restraint of trade and disfavored by the law.”) (internal quotations and citation omitted);

, 166 S.W.3d 674, 678 (Tenn. 2005) (“In general, covenants not to compete are disfavored in

Tennessee.”); , 808 So. 2d 294, 298 (La. 2001) (“Louisiana has long had a strong

public policy disfavoring noncompetition agreements between employers and employees.”); ,

741 N.W.2d 539, 545 (Mich. Ct. App. 2007) (“[N]oncompetition agreements are disfavored as restraints on commerce

. . . .”).

96 , 179 N.E.3d 241, 244 (Ohio Ct. App. 2021) (“Restrictive covenants are

disfavored in the law . . . .”) (citation omitted); , No. 1:18-cv-2114, 2020

WL 13454004, at *9 (N.D. Ohio Sept. 30, 2020) (“As courts in this district have explained, Ohio law disfavors restrictive

is reasonable.”97 And Ohio law requires the plaintiff to make a compelling showing of

reasonableness—by clear and convincing evidence—before that plaintiff can enforce the

restrictive covenant.98

The Ohio Supreme Court has developed a nine-factor list (often known as the

factors) for courts to consider when assessing the reasonableness of a restrictive

employment covenant:

1. Whether the restriction is temporally and spatially limited;

2. Whether the employee represents the sole contact with the customer;

3. Whether the employee is possessed with confidential information or

trade secrets;

4. Whether the covenant seeks to eliminate competition which would

be unfair to the employer or merely seeks to eliminate ordinary

competition;

5. Whether the covenant seeks to stifle the inherent skill and experience

of the employee;

6. Whether the benefit to the employer is disproportional to the

detriment to the employee;

7. Whether the covenant operates as a bar to the employee's sole

means of support;

8. Whether the employee's talent which the employer seeks to suppress

was actually developed during the period of employment; and

9. Whether the forbidden employment is merely incidental to the main

employment.99

97 , 521 F. App'x 521, 526 (6th Cir. 2013) (citing , 325 N.E.2d 544,

544 (Ohio 1975)).

98 , 706 N.E.2d 336, 340 (Ohio Ct. App. 1997) (citing

, 681 N.E.2d 484, 485–86 (Ohio Ct. App. 1996)); , 521 F. App'x at 526

(quoting , 487 F. 3d 985, 991 (6th Cir. 2007)).

b. Factors

The first, third, fifth, sixth, seventh, and eighth factors each suggest that

Fusco’s non-solicitation clause is unreasonable.

While the non-solicitation clause has no explicit

spatial limitation, it contains a de facto limitation. Since Legacy Roofing primarily operates

in Ohio and Pennsylvania,100 the fact that Fusco’s non-solicitation clause is limited to Legacy

clients effectively limits the reach of the non-solicitation clause to Ohio and Pennsylvania as

well. This is a reasonable geographic scope.

However, the temporal limitation is not reasonable. Fusco’s non-solicitation clause

would apply for two years.101 As the Court has described above, most of the Legacy

information that Fusco took was likely to become stale after only six months.102 For this

reason, Legacy Roofing has little interest in enforcing the non-solicitation clause more than

six months. So overall, the non-solicitation clause’s limitations are not reasonable.

As the Court found above, Legacy

Roofing does not show that Fusco took trade secret or other valuable confidential

information.103 Many of the files contained old, stale information, or information about

customer floor plans or photographs that could easily be acquired straight from the potential

customers. Customer or project information on long-ago-awarded work has no obvious

value. The lack of valuable information in Fusco’s possession cuts against enforcing his non-

solicitation clause.

100 Doc. 1 at ¶ 10.

101 Doc. 1-1 at 3 (Page ID #: 41).

102 , Section III.B.1.

Fusco began working in the commercial

roofing industry in 2006, meaning that he now has eighteen years of experience.104 Of those

eighteen years, Fusco spent only three years at Legacy Roofing, from 2020 to early 2023.105

Since much of Fusco’s skill and experience developed outside of Legacy, this factor weighs

against reasonableness as well.

Fusco’s non-solicitation clause bars

Fusco from soliciting or working for both actual Legacy clients and potential Legacy

clients.106 The actual client restriction could be reasonable standing alone. But by sweeping

in potential clients, the non-solicitation clause disproportionately restricts competition

without relation to protectable Legacy Roofing interests.

Although the scope of potential clients covered by the non-solicitation clause is

limited to those clients that Fusco “received confidential information” about,107 this limitation

is too nebulous to be meaningful. Not only would the limitation include potential clients

that Fusco directly worked with, but it would also include any potential client that Fusco

may have heard about from others at Legacy Roofing. As such, this factor weighs against

reasonableness.

There is little in the record about Fusco’s ability

to perform other work if the Court were to enforce Fusco’s non-solicitation clause. However,

given that Fusco has worked in commercial roofing sales for the past eighteen years, it is

reasonable to conclude that Fusco’s primary marketable skills are in commercial roofing

sales. Restricting Fusco’s ability to sell commercial roofing services to actual and potential

104 Doc. 30-2 at 18:25–19:3.

105 Doc. 1 at ¶¶ 11, 29.

106 Doc. 1-1 at 3 (Page ID #: 41).

Legacy clients in Ohio and Pennsylvania would probably either force Fusco to move or

greatly restrict Fusco’s ability to earn a living. So, this factor weighs against reasonableness

too.

As noted above, Fusco learned the commercial

roofing business long before he came to Legacy Roofing.108 Legacy Roofing added little new

training. Moreover, at least some of Fusco’s client relationships were developed before

Fusco joined Legacy.109 Since it does not appear that Legacy did much to develop Fusco’s

sales talent, this factor weighs against reasonableness.

* * *

The second, fourth, and ninth factors weigh in favor of finding Fusco’s non-

solicitation clause to be reasonable.

The record contains little information on whether Fusco

was the sole contact with many of Legacy’s customers. However, at hearing, the parties

agreed that Fusco was the primary contact for most of the customers Fusco worked with

while at Legacy Roofing. So, this factor weighs in favor of reasonableness.

The Sixth Circuit has found that it could be considered unfair

competition for an employee to target his former employer’s clients.110 Therefore, a non-

solicitation clause protecting an employer’s clients would be reasonable under this factor.

Here, the

work that Fusco does for Facility Products is very similar to the work that he did for Legacy

108 Doc. 30-2 at 18:25–27:21.

109 at 65:2–16.

Roofing. Because Fusco sells commercial roofing services in both jobs, this factor weighs in

favor of enforcing the non-solicitation clause.

* * *

Taken together, the factors show that Fusco’s non-solicitation clause is

unreasonable. That said, when a restrictive covenant is unreasonable, Ohio law permits

courts to “construct a reasonable covenant between the parties, and to grant injunctive

relief,” “to the extent necessary to protect an employer’s legitimate interests.”111

Here, the Court finds that it would be inappropriate to reconstruct Fusco’s non-

solicitation clause to grant any injunctive relief. Most of the potentially valuable, potentially

proprietary information in Fusco’s possession became stale six months after Fusco left Legacy

Roofing.112 More than six months have already passed since Fusco resigned from Legacy.

Given that most of the files taken by Fusco are now stale, the primary effect of

enforcing Fusco’s non-solicitation clause would be to limit Defendants’ ability to benefit from

Fusco’s personal customer relationships. As Legacy conceded at hearing, Legacy has no

proprietary interest in Fusco’s personal relationships. That is especially so for customer

relationships that Fusco developed before he joined Legacy Roofing.113

The Court finds that Legacy is unlikely to prove that Fusco’s non-solicitation clause is

enforceable. As such, Legacy is unlikely to succeed in its breach of contract claim against

Fusco or in its tortious interference claim against Facility Products.114

111 , 325 N.E.2d at 548–49.

112 , Section III.B.1.

113 Doc. 30-2 at 65:2–16.

114 , 536 F. Supp. 3d 182, 209 (S.D. Ohio 2021) (a tortious interference claim fails when there is

C. Irreparable Harm

Legacy Roofing has also failed to demonstrate that it would suffer irreparable harm if

the Court were to deny a preliminary injunction.

Legacy argues that loss of customer goodwill is irreparable harm.115 As a general

matter, Legacy is correct. But Legacy has not shown that it will lose goodwill or customers

without a preliminary injunction.

For as the Court has repeatedly emphasized, any valuable information taken by Fusco

likely became stale six months after Fusco left Legacy.116 More than six months have passed

since Fusco resigned, so moving forward, any harm will be minimal.

Additionally, Legacy Roofing is only harmed if it loses business to Facility Products.

If Legacy loses a bid to a third-party competitor, the cause of that loss is neither trade secret

misappropriation nor breach of Fusco’s non-solicitation clause.

The record shows that most projects that Facility Products bids for are open bids

involving multiple competitors.117 So, when Facility Products competes against Legacy

Roofing for a project, there are third-party competitors bidding as well. Nothing in the record

suggests that Facility Products would otherwise win most of those projects, or win even a

significant number of those projects.

Although Legacy Roofing obtains some work outside of open bids,118 the above

analysis does not change. Legacy can only be harmed when it competes with and loses to

Facility Products. If Facility Products is not competing for Legacy Roofing’s potential

projects, there is no harm. Indeed, the fact that Facility Products more usually submits open

115 Doc. 6-1 at 15 (citing , 878 F.3d 524, 530 (6th Cir. 2017)).

116 , Section III.B.1.

117 Doc. 30-1 at 56:25–57:18.

bids while Legacy generally submits private proposals suggests that the two companies

compete for mostly different projects. It would be unusual if a customer approached Facility

Products for an open bid while approaching Legacy for a private proposal for the same

project.

Lastly, to the extent that Legacy Roofing argues it has already been harmed by lost

customers, Legacy raises past harms that are less relevant to a preliminary injunction.

Injunctions can prevent only ongoing or future harms.119 For the reasons above, Legacy

Roofing has not demonstrated any ongoing or future harms.

D. Harm to Others and the Public Interest

In deciding whether to issue a preliminary injunction, the Court must also weigh the

potential for significant harm to others and the public interest.

As the Court explained above, granting the preliminary injunction would restrict

Fusco’s ability to support himself.120 Because Fusco has a family,121 this would also restrict

his ability to support his family. The potential harm to his family weighs against the

preliminary injunction.122

Because Legacy Roofing shows little evidence that it gave Fusco any specialized

training or gave Fusco customer access that Fusco did not already have, Legacy mostly seeks

119 , 978 F.3d 378, 386 (6th Cir. 2020) (“To win declaratory or injunctive relief,

a plaintiff must show actual present harm or a significant possibility of future harm.”) (internal quotations and citation

omitted).

120 , Section III.B.2.b.

121 Doc. 30-2 at 123:3–14.

122 , No. 1:21-cv-76, 2022 WL 974341, at *10 (S.D. Ohio Mar. 31, 2022) (loss of ability to

support family is a substantial harm weighing against a preliminary injunction), , No. 22-3411, 2023 WL

142260 (6th Cir. Jan. 10, 2023), , No. 22-3387, 2023 WL 142443 (6th Cir. Jan. 10, 2023);

, No. 1:08-cv-449, 2009 WL 10679467, at *13 (S.D. Ohio Sept. 30, 2009) (inability to or

difficulty in supporting family is a substantial harm); , No. 06-2679, 2007 WL 2746940, at

*4 (W.D. Tenn. Sept. 18, 2007) (barring a defendant from working in the field where he has established expertise and

benefit from reduced market competition. But in a free market economy, society benefits

where productive inputs are used where they make their greatest contribution.

Absent some protectable interest, the public interest benefits by the free flow of

productive assets that would come from denying the preliminary injunction.

IV. CONCLUSION

The Court finds that Legacy Roofing has not established any likelihood of success and

has not shown that it will suffer irreparable injury. The lack of either one of these factors on

their own is sufficient grounds to deny the preliminary injunction. So, Legacy’s failure to

establish either factor is fatal to its preliminary injunction request.

Even if Legacy Roofing had successfully demonstrated that it has a likelihood of

success and will suffer irreparable injury, for the reasons above, Legacy has at most made a

weak showing of each factor. Since both the substantial harm and public interest factors

weigh against an injunction, Legacy Roofing still would not have made the “clear showing”123

necessary for an injunction.

Therefore, the Court DENIES Legacy’s preliminary injunction motion.

IT IS SO ORDERED.

Dated: January 8, 2024

JAMES S. GWIN

UNITED STATES DISTRICT JUDGE