CNG Financial Corporation v. Brichler

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

CNG FINANCIAL CORP., et al., : Case No. 1:21-cv-460

:

Plaintiffs, : Judge Timothy S. Black

:

vs. :

:

ROBERT BRICHLER, :

:

Defendant. :

:

ORDER DENYING PLAINTIFF’S MOTION FOR

PRELIMINARY INJUNCTION (Doc. 2)

This civil case is before the Court on Plaintiffs CNG Financial Corporation and

Axcess’s motion for preliminary injunction (Doc. 2), and the parties’ responsive

memoranda (Docs. 14, 23).1 Also before the Court is Defendant’s motion for leave to file

a sur-reply (Doc. 25). and the parties’ responsive memoranda (Docs. 26, 31).

I. BACKGROUND

The Court will briefly summarize Plaintiffs’ allegations, and then will relate the

parties’ evidence presented in support of and in opposition to Plaintiffs’ motion for a

preliminary injunction. (Doc. 2).

1 The Court finds that an evidentiary hearing is unnecessary. “[Sixth Circuit] Rule 65

jurisprudence indicates that a hearing is only required when there are disputed factual issues, and

not when the issues are primarily questions of law.” Certified Restoration Dry Cleaning

Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 552 (6th Cir. 2007). Here, the issues presented,

particularly the reasonableness of the non-compete agreement under Ohio law, and whether

certain information is a trade secret, are primarily questions of law, not fact.

Defendant Robert Brichler is a former employee of Plaintiff Axcess. (Doc. 2).

Axcess’s parent company, CNG Financial, is also a Plaintiff.2 Id. Plaintiff corporations

are in the “consumer financial services industry, including consumer loan products and

servicing.” (Id. at 3-4). Brichler served as a Vice President of software for about four

years and then, for over one year, as the Chief Technology Officer (“CTO”). (Id.). As

CTO, Brichler had responsibility for “planning and implementing strategies related to

enterprise infrastructure, technology architecture, data management and IT governance.”

(Id.). He also had alleged insight into business plans and strategies through his high-

ranking position and participation in certain leadership committees. (Id. at 5-6).

Brichler executed a series of Non-Compete agreements with Axcess. (Id. at 8).

He signed one in 2017 upon joining the company and another as a pre-condition to his

promotion to CTO in 2021. (Id.). The 2021 Non-Compete Agreement (“Non-Compete”)

has a duration of 12 months and no geographical limitation. (Id.). The Non-Compete also

contains non-disclosure restrictions for non-public confidential information. It defines

confidential information, in part, as “plans, technology, processes, techniques, methods of

operation, technical data, software and documentation thereof.” (Id. at 9).

Four months after signing the 2021 Non-Compete, Brichler left Axcess to become

CTO at a corporation called Lendly. (Id. at 9). Lendly “services subprime short term or

unsecured personal loans through third-party banking partners….” (Id.). Both Axcess and

2 Hereafter, the Court will refer singularly to “Axcess” to represent both Plaintiff corporations

unless otherwise stated.

Lendly “have contracted with the same third-party vendors to provide business and

technology services related to those products.” (Id. at 10).

After hearing of Brichler’s new role with an alleged competitor, Axcess provided

a written notice on Brichler and Lendly of his contractual obligations under the 2021

Non-Compete. (Id. at 10). Plaintiffs asked for, and did not receive, adequate assurances

from Brichler and Lendly. (Id. at 11).

Plaintiffs request that the Court enjoin Brichler from:

1. Violating his restrictive covenant with Plaintiffs

2. Unlawfully competing with Plaintiffs; and

3. Misappropriating Plaintiffs’ confidential information

and trade secrets. (Id. at 1).

A. Evidence as Presented by the Parties

1. Axcess’s Evidence

i. The Non-Compete agreement

On February 2, 2021, Brichler signed the 2021 Non-Compete agreement (“Non-

Compete”). (Doc. 2-1). The Non-Compete bars employment with a competitor, with no

geographic limitation, for one year after Brichler’s exit from Axcess. (Id. at ¶1.2,

PageID# 22). Specifically, the Non-Compete states:

“Employee will be deemed to be competing with the Company if he/she is ...

employed by. any person or entity that competes with the Company or that may

reasonably be construed to compete with the Company, including but not limited

to any company that engages in the business of deferred presentment services,

subprime short term and/or unsecured lending services, company that engages in

subprime title loans and check cashing, no credit required leasing or rent to own,

or any other business in which the Company engages, or in which the Company is

actively considering and planning to invest or participate in (Doc. 1-2, PageID#

22-23).

.

The Non-Compete also states Brichler shall not “use, divulge, disclose, reveal, or

communicate,” confidential information. (Id., PageID# 21). The Non-Compete continues:

“Confidential Information means any and all confidential and/or proprietary

knowledge, data or information of the Company, its affiliated entities, customers,

potential customers and suppliers, concerning any matters affecting or relating to

the Company, its employees, representatives, agents and contractors, its customers

and potential customers, and/or its vendors and business associates, including

without limitation customer or potential customer lists, vendor or business

associate lists, costs, plans, technology, processes, policies, techniques, trade

practices, finances, accounting methods, methods of operations, technical data,

software and documentation thereof, hardware configuration information, or other

data reasonably considered by the Company or its business associates to be

confidential information.” (Id.).

Finally, the Non-Compete provides that “the Employee acknowledges that

Employee’s breach of [the Agreement] will cause, in addition to any monetary damage,

irreparable damage to the Company for which monetary damages alone will not

constitute an adequate remedy.” (Id., PageID# 25).

ii. Brichler’s work on technology projects

Before receiving his promotion to CTO, Brichler worked at Axcess as a Vice

President of Software. Brichler “was involved in the development and implementation of

Plaintiffs’ lending solutions end-to-end, including the loan application and underwriting

processes, and all components of the technology stack on which Plaintiffs’ products and

services run.” (Doc. 24 at 3; Doc. 17, Rule 30(b)(6) Deposition of Plaintiffs CNG

Financial Corporation and Axcess Financial Services, Inc. “Plaintiff Dep.” at 29:13-24).

Axcess identifies a few projects of particular relevance.

Working with a team, Brichler rolled out a third-party loan management software

called LoanPro. (Plaintiff Dep. 67:11-16; Doc 23-4, Declaration of Chris Sibila,3 “Sibila

Decl.” at ¶12). LoanPro required the development of “middleware” and other

integrations to make it functional with Axcess’s existing systems. (Plaintiff Dep. 67-68).

According to Brichler himself, Brichler road-mapped and organized the LoanPro

integration project, creating planning documents and other materials. (Doc. 18,

Deposition of Robert Brichler, “Brichler Dep.,” 63:11-65:12). The LoanPro integration

was long, requiring “learning” and “adjusting.” (Id.). Axcess alleges that “the decision-

making process and the resulting middleware itself is confidential and proprietary.” (Doc.

24 at 8).

Brichler was involved with a similarly complex integration of another third-party

platform, called GDS Link, which supports underwriting of loans and “credit-

decisioning.” (Brichler Dep., 55:2-56:10; Sibila Decl. at ¶18). As with LoanPro,

Brichler had to develop proprietary underwriting components to make GDS Link work

within Axcess’s technology infrastructure. (Brichler Dep., 55:21-56:14, 19-25). Axcess

states that “[t]he selection of components to build outside of GDS Link, how those

components were set up and further developed, and the middleware required to integrate

GDS Link, Axcess’ proprietary underwriting components, and LoanPro together are all

proprietary and confidential information belonging to Axcess.” (Doc. 24 at 8).

3 Sibila is the Chief Information Officer of Axcess’s parent company CNG Financial. (Sibila

Decl. at ¶2).

Brichler, furthermore, developed “eligibility rules” to determine eligibility of

certain consumers for certain loan products. Brichler “figured out” how to “establish

rules” and “run them in real time” during the application process. (Brichler Dep., 46:6-

24).

Also in the area of regulatory compliance, Brichler developed processes for

sending out Notices of Adverse Action (“NOAA”) to consumers who were denied loans.

Brichler Dep., 36:1-25. Axcess considers its “rigorous approach to and proprietary

solution for regulatory compliance in this regard…industry leading.” (Doc. 24 at 9);

Plaintiff Dep., 82-83.

Brichler worked with a third-party to build out Axcess’ identity authentication and

fraud detection capacities. (Doc. 23-8, Declaration of Evan Davis,4 “Davis Decl.” at ¶14).

Axcess asserts, likewise, that these capacities are “industry-leading.” (Id.).

iii. Brichler’s access to strategic information

Brichler was also on three leadership committees, including the Executive

Leadership Team (“ELT”). (Sibila Decl. at ¶7). Because of his role on ELT and his high-

ranking position, he had access to high-level business strategy. (Id.). This included, for

example, knowledge of companies Axcess was considering for partnerships or

acquisitions. (Plaintiff Dep., 30:6-31:19). Brichler also had access to allegedly

confidential information because of committee meetings where “strategies were

discussed.” (Id. at 32:7).

4 Davis is the Senior Director, Strategic Initiatives for Axcess. (Davis Decl. at ¶2).

Axcess states Brichler “was privy to confidential and proprietary information

regarding Axcess’ business and operations, including with respect to Axcess’ financial

information, marketing strategies, growth metrics and operational information, and

including business performance and current and future initiatives.” (Doc. 24 at 10).

iv. Brichler’s work at Lendly

Lendly also operates in the sub-prime consumer loan space. (Brichler Dep., 93:5-

11; Plaintiff Dep., 56:5-14); Rule 30(b)(6) deposition of Lendly “Lendly Dep.,” 18:7-9).

Brichler abruptly left Axcess to take the same title, CTO, at Lendly. (Lendly Dep.,

158:13-160:23). Lendly understood it would have to “fight later” with regards to the

Non-Compete—which is to say after hiring Brichler. (Doc. 23-10).

Axcess alleges Brichler’s role is similar to his role at Axcess because “oversight

and responsibility for all of Lendly’s technology functions” belong to Brichler. (Lendly

Dep., 158:13-160:23). Lendly uses both GDS Link and LoanPro. Specifically, Axcess

states, Brichler has “worked closely with the data team to advance several initiatives,

including extracting data from Lendly’s legacy loan management system (Brichler Dep.,

164:12-24), extracting loan application information from GDS (Brichler Dep., 162:1-25),

extracting personally identifiable information from LoanPro (Brichler Dep., 169:4-170:6)

and taking a “deep dive” into all data issues relating to Lendly’s business.” (Doc. 24 at

16) (citations in original).

2. Brichler’s Evidence

i. Work at and departure from Axcess

Brichler worked as an IT professional for six years before coming to Axcess.

(Brichler Decl. at ¶ 3). As CTO at Axcess, Brichler says he managed Axcess “IT

organization” and its “technology team.” (Id. at ¶8). The hiring of Chris Sibila as CIO

effectively demoted Brichler. (Id. at ¶10). Brichler lost job responsibilities and earning

capacity. (Id. at ¶15; Plaintiff Dep. at 84, 88). After Sibila was hired, Brichler lost his

place on leadership committees. (Brichler Decl. at ¶15).

Brichler states he did not work on the credit decisioning software that links to

GDS. Brichler states “a separate Credit Risk team built and maintained these models.”

(Brichler Decl. at ¶14).

A third-party recruiter reached out to Brichler on behalf of Lendly. (Brichler

Decl. at ¶16). Lendly’s interviewers spoke generally about the position and did ask about

his experience with LoanPro and GDS Link. (Id. at ¶17). Brichler declares he accepted

the position because it would advance his career. (Id. at ¶19). Brichler gave notice of his

resignation and disclosed that he would take a job with Lendly. (Id. at ¶20). Brichler took

nothing with him and acted, according to Axcess, “above board.” (Id. at ¶¶23-24;

Plaintiff Dep. at 33). Brichler says Lendly instructed him to not take customers or

employees or use proprietary information. (Doc. 14-5, Declaration of Andrew Swartz5,

“Swartz Decl.,” at ¶13). Brichler declares he has not revealed confidential information or

trade secrets. (Brichler Decl. at ¶31). He also declares he has not taken or solicited any

customers or employees of Axcess. (Id.).

5 Swartz is the Chief Executive Officer of Lendly. (Swartz Decl. at ¶2).

ii. Business of Lendly and Brichler’s role

Lendly services loans targeted at “subprime borrowers.” (Swartz Decl. at ¶3).

Brichler began his employment with Lendly on June 24, 2021. (Id. at ¶12). Brichler’s

role with Lendly will include “building and managing the IT team in general.” (Brichler

Decl. at ¶25). But a substantial part of Brichler’s work will involve the Direct Deposit

product where the borrower pays back the loan through payroll contributions. (Id.).

Brichler declares that his employment with Lendly will only require that he use his

“general skills and knowledge.” (Id. at ¶35).

Lendly does indeed use LoanPro and GDS. (Swartz Decl. at ¶¶25,26). However,

Brichler states that Lendly implemented those products before Axcess did. (Id. at ¶¶28,

30). Moreover, Lendly already has an existing and “robust” technological and data

infrastructure. (Swartz Decl. at ¶24). Brichler will not be involved in a proprietary engine

underwriting or GDS integration at Lendly. (Brichler Decl. at ¶29). For these reasons,

Brichler declares he has no need to use “confidential or trade secret information

belonging to Axcess.” (Brichler Decl. at ¶34). Instead, Brichler will use “general skills

and knowledge” he has developed from working in the profession. (Id. at ¶35).

Brichler says he has not brought any proprietary tools with him, it would be

impossible for him to recreate such tools, and that they would be no use to Lendly, which

runs on its own software. (Id. at ¶38).

II. MOTION FOR PRELIMINARY INJUCTION

Plaintiff bears the heavy burden of demonstrating its entitlement to injunctive

relief. An “injunction is an extraordinary remedy which should be granted only if the

movant carries his or her burden of proving that the circumstances clearly demand it.”

Overstreet v. Lexington-Fayette Urban Cty. Gov’t, 305 F.3d 566, 573 (6th Cir. 2002)

(emphasis added).

In determining whether to grant injunctive relief, this Court must weigh four

factors: (1) whether the moving party has shown a strong likelihood of success on the

merits; (2) whether the moving party will suffer irreparable harm if the injunction is not

issued; (3) whether the issuance of the injunction would cause substantial harm to others;

and (4) whether the public interest would be served by issuing the injunction. Hall v.

Edgewood Partners Ins. Ctr., Inc., 878 F.3d 524, 526–27 (6th Cir. 2017). These four

considerations are factors that must be balanced, not prerequisites that must be met.

McPherson v. Mich. High Sch. Athletic Ass’n, Inc., 119 F.3d 453, 459 (6th Cir. 1997).

“Although no one factor is controlling, a finding that there is simply no likelihood of

success on the merits is usually fatal.” Gonzales v. Nat’l Bd. of Med. Exam’rs, 225 F.3d

620, 625 (6th Cir. 2000).

III. ANALYSIS

A. Likelihood of Success

The first preliminary injunction factor is whether Plaintiff has established a strong

likelihood of success on the merits. To establish a strong likelihood of success on the

merits, a plaintiff “is not required to prove [its] case in full.” Univ. of Tex., 451 U.S. at

395. However, a plaintiff “must show more than a mere possibility of success.” Six

Clinics Holding Corp., II v. Cafcomp Sys., Inc., 119 F.3d 393, 402 (6th Cir. 1997). In

this case, Axcess alleges two claims against Brichler: breach of contract related to the

Non-Compete and misappropriation of trade secrets. The Court considers each in turn.

1. Breach of Contract (Non-Compete)

Under Ohio law, to succeed on a breach of contract claim, a plaintiff must show

(1) that a contract existed, (2) that the plaintiff fulfilled his contractual obligations,

(3) that the defendant failed to fulfill his contractual obligations, and (4) that the plaintiff

incurred damages as a result of the defendant’s failure. Langfan v. Carlton Gardens Co.,

916 N.E.2d 1079, 1087 (Ohio Ct. App. 2009).

Seemingly because Lendly is a sub-prime personal lender, Brichler does not

materially challenge that his employment with Lendly violates the Non-Compete based

on its own terms. Instead, Brichler challenges the reasonableness of the Non-Compete.

In Ohio, reasonable non-compete agreements are enforced, and unreasonable non-

compete agreements are enforced, to the extent necessary to protect an employer’s

legitimate interest. Procter & Gamble Co. v. Stoneham, 747 N.E.2d 268, 275 (Ohio Ct.

App. 2000). The Supreme Court of Ohio has held that “[a] covenant restraining an

employee from competing with his former employer upon termination of employment is

reasonable if the restraint is no greater than is required for the protection of the employer,

does not impose undue hardship on the employee, and is not injurious to the public.”

Raimonde v. Van Vlerah, 325 N.E.2d 544, 547 (Ohio 1975).

When determining the validity on a non-compete, “each case must be decided on

its own facts.” Id. Courts consider the following nine factors in assessing the

reasonableness of a non-compete agreement: (1) whether the covenant imposes temporal

and spatial limitations; (2) whether the employee had contact with customers; (3) whether

the employee possesses confidential information or trade secrets; (4) whether the

covenant bars only unfair competition; (5) whether the covenant stifles the employee’s

inherent skill and experience; (6) whether the benefit to the employer is disproportionate

to the employee’s detriment; (7) whether the covenant destroys the employee’s sole

means of support; (8) whether the employee’s talent was developed during the

employment; and (9) whether the forbidden employment is merely incidental to the main

employment. Basicomputer Corp. v. Scott, 973 F.2d 507, 512 (6th Cir. 1992) (citing

Raimonde, 325 N.E.2d at 544). If a non-compete agreement is unreasonable, courts are

empowered to modify the terms to create a reasonable covenant between the parties.

Rogers v. Runfola & Assoc. Inc., 565 N.E.2d 540, 544 (Ohio Sup. Ct. 1991).

Considering these factors and the evidence presented by the parties, the Court

finds that Axcess has not carried its burden of showing that the Non-Compete is

reasonable and enforceable in scope.6

Time and Space Limitations. The 2021 Non-Compete has a reasonable time

limitation, and Brichler does not challenge it. See Ak Steel Corp., v. Miskovich, No.

1:14CV174, 2014 WL 11881029, at *15 (S.D. Ohio Apr. 17, 2014) (“[a]s for the one-

6 In a footnote, Axcess states that “Defendant accepted the exact same role he held with Plaintiffs

with a direct competitor 40 miles away” so even if the Non-Compete is overboard in some places

it is not with regards to Brichler. (Doc. 24 at 19, n.4). Axcess further argues courts can impose

injunctive relief after presuming a modification that would make a restrictive covenant

reasonable. Ak Steel Corp., v. Miskovich, No. 1:14CV174, 2014 WL 11881029, at *16 (S.D.

Ohio Apr. 17, 2014). Alas, Axcess makes no case for either a global limitation or a 40-mile

radius. In general, it is simply not clear to this Court, without more information from Axcess,

what modifications would make this Non-Compete presumptively reasonable.

year time limitation, it is facially reasonable under Ohio law”) (collecting Ohio cases).

The unlimited geographical scope requires more scrutiny. Ohio courts have accepted

global restrictive covenants when the employer’s operations are likewise global. See e.g.,

Convergys Corp. v. Wellman, No. 1:07-CV-509, 2007 WL 4248202, at *7 (S.D. Ohio

Nov. 30, 2007).

Axcess here gives no fact-based justification for the global scope of the Non-

Compete. Instead, it simply cites to cases where the global scope of a non-compete has

been upheld. (Doc. 24 at 19). As Brichler points out, Axcess “fail[] to show how a global

restriction is reasonable.” (Doc. 14 at 34). The Court agrees that the absence of any

substantive justification for a global scope weighs against Axcess here.

Contact with Customers. The evidence suggests Brichler did not have contact

with customers at Axcess. Both parties describe his role as one where he managed teams

who worked through software integrations and built data systems. This factor weighs in

favor of Brichler.

Confidential Information and Trade Secrets. The Court analyzes confidential

information here, and trade secrets in its own section infra. Plaintiffs contend Brichler

possesses “confidential information,” because Brichler worked on several components in

Axcess’s “technology stack.” (Doc. 24 at 6). For example, Brichler developed

customized integrations between third-party platforms—like LoanPro and GDS Link—

and Axcess’s proprietary software. (Id.). Brichler also implemented a series of “eligibility

rules” that “govern consumer eligibility for certain produces and services.” (Brichler

Dep., 46:6-24). Brichler built-out fraud detection capabilities, working with a third-party.

(Davis Decl., ¶14). Finally, Brichler had access to strategic information like which

companies Axcess targeted for acquisition, business plans and operations. (Plaintiff Dep.,

30:6-31:19). The Court creates two sub-categories of analysis for the confidential

information: technology projects and business strategy.

In general, it is Axcess’ claim that Brichler’s work on technology projects give

him access to confidential information that he will be unable to compartmentalize in his

employment with Lendly. However, the Court cannot conclude that Brichler’s experience

in crafting unique technological solutions, such as third-party platform integrations, by

itself, imbues him with confidential information. The reasons are three-fold.

First, there is no evidence, circumstantial or direct, of disclosure of confidential

information. Axcess argues that it is impossible for Brichler to compartmentalize his

confidential knowledge and cite to Lendly planning documents showing Lendly may

soon work on technology issues similar to those Brichler worked on at Axcess. (Doc. 24

at 30). True as that may be, the Court is not convinced, to take one of Axcess’ examples,

that because Brichler worked on automating the NOAA process in the Axcess system he

will necessarily disclose confidential information if tasked with improving NOAA

procedures for Lendly. It would be different if Axcess alleged that Brichler had simply

re-built Axcess’s NOAA functionality at Lendly or had plans to do so. But, even after

getting the benefit of some discovery, Axcess makes no claims on that level.

Second, Brichler and his team developed third-party software integrations based

specifically on Axcess’s existing infrastructure such that the value of Brichler’s

knowledge to another company with its own infrastructure cannot be assumed. Axcess

readily and repeatedly asserts the extent to which Brichler and his team had to configure

and reconfigure custom integrations so that programs like LoanPro—the loan

management platform—could run seamlessly within Axcess’s larger data infrastructure.

(Doc. 24 at 7). Knowing the specifications of such a custom-build, it seems, may have

limited value to Lendly—which integrated LoanPro before Axcess did. (Swartz Decl., at

¶¶ 26, 27).

The Court here notes that Axcess asserts confidentiality over both Brichler’s

technology solutions and the processes used to reach them. Axcess states, for example,

that “[t]he selection of components to build outside of GDS Link, how those components

were set up and further developed, and the middleware required to integrate GDS Link,

Axcess’ underwriting components, and LoanPro together are all proprietary and

confidential information.” (Doc. 24 at 8). With regards to the LoanPro integration,

Axcess states that “[t]he decision-making process regarding which integrations to make

and how, along with the resulting middleware itself is confidential and proprietary.” (Id.).

Axcess, though, is unexacting in explaining which confidentiality concerns apply

to the processes and which apply to the tangible results. Axcess makes no allegation that

Brichler has taken—in his memory or on an external drive—anything tangible, like

Axcess’s middleware or proprietary underwriting components. Because of the

customization involved, there is also little evidence that Brichler would inevitably

disclose their specifications. As for the intangible items, like “the decision-making

process” for the LoanPro integration, Axcess does not make a convincing argument for

its confidentiality or propriety. As described by Axcess, Brichler and his team arrived at

the final LoanPro configurations through “learning,” “re-prioritizing” and “trial and

error.” (Doc. 24 at 7-8, 22). The gist of Axcess’s claims suggests that the label of

“confidentiality” may be stretched to everything within Brichler’s ability—from his

application of an iterative process like “trial and error” to his “knowledge of how” to

create a custom solution for NOAAs.

This is prologue to the Court’s third issue with the allegedly confidential

information Brichler is said to possess: it is not clearly distinguished from Brichler’s

general skills and knowledge of his trade. Jacono v. Invacare Corp., 2006-Ohio-1596,

2006 WL 832451, (Ohio Ct. App. 2006). The line between general know-how and

confidential information may not be a bright one. That said, it is Axcess’s burden to

prove the reasonableness of its Non-Compete as it seeks to have it enforced. Shouldering

that burden, Axcess fails to direct the Court to relevant authority suggesting that

knowledge of how to devise custom solutions to recurring industry problems is

“confidential.”

With regards to Brichler’s technology projects, Axcess may yet prove that the

information it seeks to protect is confidential and impossible to compartmentalize. At this

stage, it is not clear to the Court that Brichler has disclosed or inevitably will disclose

such information. As for the confidentiality alleged over more generalized know-how and

common process-skills like trial-and-error, the Court is not convinced such is properly

considered confidential.

Brichler’s access to allegedly confidential business strategy, broadly categorized,

is a closer question. Axcess does identify at least one discrete piece of information that

could benefit a competitor if disclosed. This information is related to “acquisition targets”

or “partnerships” related to third-party “lead buy”7 services. (Plaintiff Dep., 30:6-31:19).

It is straightforward and intuitive that such information, if disclosed, could benefit a

competitor because another company could unfairly compete for the same partnership or

acquisition.

However, there is no allegation that Brichler has disclosed such information and it

is not clear that it would be helpful to Lendly. Lendly is not pursuing partnerships or

acquisitions for lead buy services. (Swartz Decl. at ¶31). Moreover, Lendly, given its

current market position, is likely not a competitor with Axcess for acquisition targets

anyway. For this reason, while the Court agrees the information is confidential, it cannot

conclude that it is of value to Lendly specifically or that Brichler must disclose it to fulfill

his obligations for Lendly.8

The rest of Axcess’s assertions are about confidential information are simply too

abstract or conclusory. Axcess asserts Brichler “was privy to confidential and proprietary

information regarding Axcess’ business and operations, including with respect to Axcess’

financial information, marketing strategies, growth metrics and operational information,

and including business performance and current and future initiatives.” (Doc. 24 at 10).

But Axcess has eschewed any explanation of what this information actually is and why it

7 Lead buy services refer generally to a third-party finding eligible consumer for loan products.

(Plaintiff Dep., 30:6-31:19).

8 Per the Court’s ultimate Order, infra., Brichler is not to disclose whatever confidential

information he may have.

is confidential.

As discussed more in-depth infra., Axcess also fails to convince the Court it has a

reasonable likelihood of success on the merits of its trade secrets claim. Accordingly, this

factor favors Brichler.

Limiting Unfair or Ordinary Competition. This factor considers whether the

Non-Compete prohibits not only unfair competition but stifles ordinary competition. In

the common law sense, unfair competition usually involves the “subjective intent to

injure [another] party's ability to be competitive.” Am. Chem. Soc. v. Leadscope, Inc.,

2012-Ohio-4193, ¶ 93, 133 Ohio St. 3d 366, 392, 978 N.E.2d 832, 855 (Ohio 2012). “The

concept of unfair competition may also extend to unfair commercial practices such as

malicious litigation, circulation of false rumors, or publication of statements, all designed

to harm the business of another.” Water Mgmt., Inc. v. Stayanchi, 15 Ohio St. 3d 83, 85,

472 N.E.2d 715, 717 (Ohio 1984).

The breadth of the Non-Compete here suggests it restrains more than unfair

competition. According to Axcess, the Non-Compete prohibits Brichler from taking any

job with any sub-prime or unsecured personal lending company anywhere in the world.

(Plaintiff Dep. at 121-123). Seemingly, the Non-Compete would operate to do so

whether or not Brichler stole customers or trade secrets; whether or not Brichler had the

subjective intent to harm Axcess’s competitive capacity; and whether Brichler went to

work for a juggernaut or an upstart.

To that last point, the Court is not convinced the two companies are

“competitors”9 beyond the fact that they both exist in the sub-prime personal lending

space. Axcess has over 1000 employees, around 650 brick-and-mortar stores, and

originates loans in addition to servicing them. Plaintiff Dep. 56:8-23. Lendly, on the other

hand, has around 100 employees, seemingly no brick-and-mortar stores, and, now at

least, does not originate loans. (Deposition of Andrew Swartz, “Swartz Dep.,” 48:18,

71:23).

For these reasons, this point cuts in favor of Brichler.

Stifle Employee’s Inherent Skills/Employees Skills Developed During

Employment/Benefit to Employer and Detriment to Employee/Employee’s Sole

Means of Support.

Brichler has now worked around five years in sub-prime consumer loans industry.

(Brichler Decl. at ¶5). At the end of his Axcess term, he held the role of CTO. (Id. at ¶6).

Brichler took the same position at Lendly but states he did so to advance his career. (Id.

at ¶19). It is not clear whether Brichler could easily transfer his skillset to a similar role

in, for example, mortgages or large-scale commercial lending. It does seem safe to

conclude that enforcement of the Non-Compete would not foreclose his sole means of

support—a point in Axcess’s favor.

The record is also not clear on the source of Brichler’s skills. Axcess points out

that before joining Axcess Brichler had no experience in the consumer loan industry.

(Doc. 24 at 3). But Axcess undercuts the implication that they are responsible for

9 Sibila suggests he is generally not focused on Axcess’s competitors and that he only knew of

Lendly once Brichler went to work there. Plaintiff Dep. 61:2-15.

Brichler’s development by highlighting the extent to which Brichler’s work involved a

trial-and-error process. (Id. at 8). Axcess makes no mention of any attempts to

specifically train Brichler. Considering the extent to which Axcess seeks to enforce the

Non-Compete against generalized problem-solving skills, this point falls in Brichler’s

favor.

The comparative benefit to the employer and detriment to the employee is

straightforward. Brichler would have to lose or standdown from his job if the non-

compete were enforced. Brichler, as mentioned, considers his employment with Lendly a

career-advancing move. Of course, such a detriment would be the result of his breach.

See Avery Dennison Corp. v. Kitsonas, 118 F. Supp. 2d 848, 855. Axcess contends that

the enforcement of the Non-Compete would protect its proprietary information and

prevent unfair competition but the existence and disclosure of confidential information is

still in question. Axcess also gave Brichler special compensation incentives in

consideration for signing the Non-Compete. (Doc. 24 at 5, n.3). If the Non-Compete goes

unenforced, Axcess would arguably lose the benefit of providing such incentives.

When considering the foregoing, these factors weigh slightly in favor of Axcess.

Forbidden Employment Incidental to the Main Employment. Here the

evidence is in conflict and seems to come down to the level of generality in which the

respective roles are explained. Axcess highlights the similarities—the job title, the third-

party software vendors, and the industry. Brichler argues he will simply apply his

general skills and knowledge; that he will operate in a managerial function and work

closely with a single product for which Axcess has no equivalent.

The divergent descriptions notwithstanding, the overlap in roles seems substantial

enough to conclude that this factor falls in Axcess’s favor.

Summary of Factors. There are many factors that weigh in favor of Axcess and

finding the agreement reasonable: the one-year time limitation; the possibility that

Brichler does possess some, even if minimal, confidential information; Brichler’s

compensation package in consideration for the Non-Compete; the fact that Brichler is not

likely to lose his sole means of support; and the fact that Brichler has gone to work in a

somewhat similar role for a sub-prime personal lending company. But, the remaining

factors, at this preliminary stage, demonstrate that enjoining Brichler’s employment with

Lendly and enforcing the agreement would be unreasonable. Axcess lacks justification

for the global scope of the Non-Compete. Brichler is not, and was not with Axcess, in a

customer facing position. Brichler would face detriment if the agreement were enforced,

forcing him to forego a career advancement opportunity. The Non-Compete, as Axcess

seeks to enforce it, eliminates ordinary, not only unfair, competition. And, Axcess is

likely not prejudiced to the extent Brichler has knowledge of any of Axcess’s purported

confidential information. The Court is particularly concerned that Axcess seeks to

enforce this Non-Compete against general processes Brichler applied to solve novel

technology issues on the basis that such processes are “confidential.” Such could

constitute a restraint on Brichler’s inherent skill.

Thus, considering the foregoing, Axcess has not met its heavy burden of showing

that the Non-Compete is reasonable and enforceable, and, at this preliminary stage, the

Court cannot conclude that Axcess has shown a substantial likelihood of success on the

merits on its breach of contract claim.

2. Misappropriation of Trade Secrets

Axcess’s second claim against Brichler is for misappropriation of trade secrets. An

“[a]ctual or threatened misappropriation” may be enjoined. Ohio Rev. Code § 1333.

62(A). Under Ohio law, a “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.

Ohio Rev. Code. § 1333.61(D); see also Handel’s Enterprises, Inc. v. Schulenburg, 765

Fed. App’x. 117, 122 (6th 2019). “An entity claiming trade secret status bears the

burden to identify and demonstrate that the material is included in categories of protected

information under the statute and additionally must take some active steps to maintain its

secrecy.” Id.

To succeed on a claim under this statute, a plaintiff must demonstrate the

following by a preponderance of the evidence: (1) the existence of a trade secret; (2) the

acquisition of a trade secret as a result of a confidential relationship; and (3) the

unauthorized use of a trade secret. MEMC Elec. Materials, Inc. v. Balakrishnan, No.

2:12-cv-344, 2012 WL 3962905, at *6 (S.D. Ohio Sept. 11, 2012) (citing Heartland

Home Fin., Inc. v. Allied Home Mortg. Capital Corp., 258 F. App’x 860, 861 (6th Cir.

2008)). Under the inevitable disclosure doctrine, a threatened misappropriation of trade

secrets can be shown by “facts establishing that an employee with detailed and

comprehensive knowledge of an employer’s trade secrets and confidential information

has begun employment with a competitor of the former employer in a position that is

substantially similar to the position held during the former employment.” Polymet Corp.

v. Newman, Case No. 1:16-cv-734, 2016 WL 4449641, at *4 (S.D. Ohio Aug. 24, 2016)

(citing Proctor & Gamble Co. v. Stoneham, 747 N.E.2d 268, 279 (Ohio Ct. App. 2000)).

In this case, Axcess has not carried its heavy burden of showing a likelihood of

success on the merits of its trade secret claim. Axcess designates the following as trade

secrets: (1) implementation of LoanPro; (2) integration of GDS; (3) implementation of

loan origination services; and (4) design and implementation of a proprietary

underwriting engine. (Doc. 2). In its reply, Axcess further lists (5) fraud detection and

(6) regulatory monitoring functionality with regards to NOAA notices. (Doc. 24).

Since Axcess does not provide evidence of direct misappropriation, it necessarily

relies on the inevitable disclosure doctrine. As described above, the Court is content with

Axcess’s showing that Brichler is working for Lendly in a position substantially similar

to his role at Axcess. Notwithstanding doubts about their status as competitors, the Court

assumes, for current purposes, that Lendly is a competitor of Axcess. The Court now

turns to the arguments.

In a typical way of framing its trade secret claims, Axcess argues that:

Both the design of the LoanPro implementation, consisting of months of re-

prioritizing, re-ordering and trial and error to arrive at optimal configurations, as

well as the individual middleware integrations Defendant and his teams built that

allow various components to work together on LoanPro’s unified platform,

constitute proprietary information and Axcess’ trade secrets. (Doc. 24 at 22).

Further refining the argument, in part to rebut Brichler’s claim that Lendly already had a

robust LoanPro integration, Axcess states:

As long as Lendly continues to use LoanPro, Defendant will inevitably draw upon

the knowledge he acquired in developing custom solutions to enhance Axcess’ use

of the platform, it will be impossible for Defendant to compartmentalize the

knowledge he acquired through months of trial and error developing middleware

and integrating data and components with LoanPro. (Id.).

It is important to recall that Axcess does not allege actual misappropriation by

Brichler of “the design of LoanPro implementation” or “individual middleware

integrations” or any other component of the projects he worked on. There is no claim that

Lendly has copied versions of the “solutions” Brichler developed at Axcess. And

indeed, Axcess’s argument is that because Brichler cannot compartmentalize such trade

secrets, he will inevitably disclose them.

This argument must fail because, at this stage, Axcess has not shown clear and

convincing evidence of a trade secret. A few problems present.

As an initial matter, Axcess has not demonstrated the “independent economic

value” of the trade secrets it alleges. As for such projects like the LoanPro

“implementation design” and its “middleware,” the highly customized specifications

suggest they might not derive their independent value, if any, from not being generally

known to a competitor.10 Brichler and his team had to customize those designs and

integrations for Axcess’s existing infrastructure. (Doc. 24 at 21). For that reason, their

independent value of not being known to a competitor with its own infrastructure is

simply not a given.

These integrations and other technology solutions may have independent

economic value from not being known to competitors. The Court, though, cannot assume

it. And Axcess has not demonstrated such value.

Second, Axcess does not show that the alleged trade secrets cannot be ascertained

by “proper means.” Brichler and his team arrived at many of their solutions through trial

and error rather than any proprietary design. This suggests that competitors may arrive at

similar solutions through a general process. See Brakefire, Inc. v. Overbeck, 2007-Ohio-

6464, ¶ 25, 144 Ohio Misc. 2d 35, 52, 878 N.E.2d 84, 96 (Ohio 2007).

Last, as with the confidential information claim, Axcess fails to fully distinguish

Brichler’s general skills from a trade secret. Axcess again assumes Brichler’s know-how

can be restrained—this time, as a trade secret.

Axcess contends, for example, that “[i]t will be impossible for Defendant to avoid

using his knowledge developed at Axcess about how to improve core underwriting

functions that are essential to Lendly’ s business.” (Doc. 24 at 23). In another attempt to

identify a trade secret, Axcess claims, “[a]s Lendly explores and builds custom NOAA

10 Axcess representatives do state that the fraud detection platform was a “differentiator.”

Plaintiffs Dep 135:25. But Plaintiffs also seem “unsure” about Brichler’s role in the fraud

detection development. Plaintiffs Dep. 135:18.

compliance solutions, it will be impossible for Defendant to compartmentalize and avoid

using his knowledge of how to develop and implement such a solution.” (Id. at 24).

The Court is hesitant to determine that Brichler’s “knowledge of how” to

customize a technology solution to a recurring industry issue, like NOAAs, is a trade

secret. In such instances, there is little to distinguish the alleged trade secrets from

Brichler’s general ability as a technology professional. Outside of trade secrets, “[a]n

employee may use his knowledge and experience, for the benefit of [a] new employer.”

A&P Tech., Inc. v. Lariviere, No. 1:17-CV-534, 2017 WL 6606961, at *6 (S.D. Ohio

Dec. 27, 2017) (internal citations omitted).

The trade secrets recognized by courts in cases relied upon by Axcess, moreover,

are generally more discrete and often related to products or customers. Moreover, even in

inevitable disclosure cases, courts can usually pinpoint some circumstantial evidence of

misappropriation.

For example, in Polymet v. Newman, the plaintiff alleged a trade secret claimed

over, among other things, its specifications for a one-of-a-kind hot extruded wire. No.

1:16-CV-734, 2016 WL 4449641, at *1 (S.D. Ohio Aug. 24, 2016). Polymet also

involved direct evidence of customer stealing and an allegation of misappropriation. Id. at

*4. On the surface, ALTA Analytics, Inc. v. Muuss appears on all fours with Axcess’s

trade secret because that case determined that the company’s “software’s unique

technology, design, and marketing features” warranted trade secret protection. 75 F.

Supp. 2d 773, 785 (S.D. Ohio 1999). But Alta Analytics -so-ld- the software in question and

there was direct evidence of misappropriation by an employee who left for Alta

Analytics’ only competitor. Id.

In other cases, such as Goken Am., LLC v. Bandepalya, the trade secret is not

described in explicit terms but it is inferable. No. 2:14-CV-1445, 2014 WL 6673830, at

*6 (S.D. Ohio Nov. 24, 2014). The Goken court states the defendant “copied onto his

external hard drive information that a reasonable business owner would not want a

competitor to know” including 8,659 files from a restricted folder. Id. In Dayton Superior

v. Yan, the plaintiff alleged that the defendant had “contacted several of [plaintiff’s]

customers, offering products for sale that were identical or similar to [plaintiff’s]

products.” 288 F.R.D. 151, 159 (S.D. Ohio 2012).

The alleged trade secret here bears more in common with the “operational”

knowledge claimed as a trade secret in Concentrix v. Daoust. See No. 1:21-CV-131, 2021

WL 1734284 (S.D. Ohio May 3, 2021). There, as here, a high-ranking employee operated

in a non-customer facing role. Id. There was no evidence that defendant took anything

with him on his way out except his knowledge of “the manner [the employer] organizes

and manages its call-center teams.” Id. at *16. In denying injunctive relief, this Court

found the plaintiff failed to carry its burden in showing its operational procedures were a

trade secret. Id.

Here, Axcess has likewise failed to identify and demonstrate a trade secret by clear

and convincing evidence. It has not shown that Brichler’s knowledge of middleware or

custom integrations derive their independent value from not being known to competitors.

It has also not demonstrated by clear and convincing evidence that the processes Brichler

used to do his work are trade secrets rather than a general skill widely practiced in the

industry. Furthermore, Axcess has not provided even circumstantial evidence of

misappropriation of any tangible or intangible asset. While Axcess is not required to

prove actual misappropriation under the inevitable disclosure doctrine, its inability to

coherently describe what Brichler will inevitably appropriate is telling. As with the

plaintiff in Lavierre, Axcess here “[f]ails to answer the question of exactly

what…[defendant] is alleged to have taken with him when he left….” No. 1:17-CV-534,

2017 WL 6606961, at *10 (S.D. Ohio Dec. 27, 2017).

B. Irreparable Harm

The second preliminary injunction factor is whether the moving party will suffer

irreparable harm if the injunction is not issued. A plaintiff's harm is irreparable if it

cannot be fully compensated by money damages. Overstreet v. Lexington-Fayetee Urban

County Gov’t., 305 F.3d 566, 578 (6th Cir. 2002). “[T]o demonstrate irreparable harm

under the preliminary injunction test, a plaintiff must show that they will suffer “‘actual

and imminent’ harm rather than harm that is speculative or unsubstantiated.” Cincinnati

Indus. Mach., Inc. v. VMI Holland BV, No. 1:09-CV-604, 2010 WL 597820, at *12 (S.D.

Ohio Feb. 17, 2010) (cleaning up).

Axcess first argues that the duly-executed Non-Compete itself states that a breach

of its restrictive covenants “will cause, in addition to any monetary damage, irreparable

damage to the Company for which monetary damages alone will not constitute an

adequate remedy.” (Doc. 24 at 28; Doc. 1-2 at ¶4.1). Relying on York Risk v. Couture,

Axcess states that “a contractual stipulation to irreparable harm is one piece of evidence

to consider in finding irreparable harm.” (Doc. 24 at 29), see 787 F. App'x 301, 308 (6th

Cir. 2019). The Court, duly, accepts the Non-Compete provision as “one piece” of

evidence.11

But the Court must also discount the weight of this stipulated “irreparable harm”

based on its blunt, foretelling posture. By stating that “any” future breach of the material

terms of the Non-Compete “will” cause irreparable harm, the document manifests a

certainty that would not be available to the parties who signed it. While it is evidence, it

will not suffice on its own to show the inadequacy of monetary damages.

Additionally, Axcess cites Certified Restoration Dry Cleaning v. Tenke for the

proposition that “the loss of fair competition that results from the breach of a non-

competition covenant is likely to irreparably harm employer.” 511 F.3d 535, 550 (6th Cir.

2007). The Court notes that the irreparable harm in York Risk and Tenke both result from

the solicitation of customers and the ensuing loss of “customer goodwill.” York Risk, 787

F. App'x at 307; Tenke, 511 F.3d at 549. The customer solicitation in those cases also

helps explain why movants could credibly allege a “loss of fair competition.” Id. The

Court cannot accept, however, Axcess’s implied assumption that any breach of a non-

compete, regardless of reasonableness, always results in a loss of fair competition.

In any case, if Axcess has lost its ability to fairly compete, it does not say how. On

the record before the Court, there is no evidence that Axcess has suffered a loss of

11 In York Risk, the stipulated language was not the only piece of evidence. That court held that

“[w]e need not decide if language in a contract presuming irreparable harm is sufficient to show

irreparable harm, however, because the district court made other findings sufficient to make that

showing here. York Risk Servs. Grp., Inc. v. Couture, 787 F. App'x 301, 308 (6th Cir. 2019).

customer goodwill. Brichler has not taken Axcess’s customers or employees. While

Brichler is not long into his employment with Lendly, there is no suggestion that his

hiring was part of a larger plan to target Axcess specifically or to pre-empt Axcess’s

product offerings. Cf. Stoneham, 140 Ohio App. 3d at 275 (finding a defector from

Plaintiff’s company could use knowledge to destroy the “marketability of [an ex-

employer’s] product”).

An alternative way to establish the inadequacy of a legal remedy is to show that

monetary damages are difficult to calculate. In Basicomputer, for example, employees

absconded en masse with customer information and used that information at a competing

retailer. 973 F.2d at 512 (6th Cir. 1992). The movant testified that, although the company

could calculate some harm directly, there was no way to measure the “unfair price

situation” with regards to the competing company. Id.

Axcess does not say that its damages would be impossible to calculate. To be sure,

Axcess is not here required to give complete proof of “inadequacy of money damages.”

At the same time, Axcess cannot merely assume the inadequacy of monetary

compensation from a boilerplate agreement that portends to foresee the proper measure of

damages notwithstanding the nature of the breach. Accordingly, the Court finds Plaintiffs

have not demonstrated irreparable harm by clear and convincing evidence.

Having already found that the Axcess cannot, as of now, demonstrate a trade

secret by clear and convincing evidence, the Court does not engage on subject of

irreparable harm with regards to its trade secret claims.

C. Harm to Others

The third preliminary injunction factor is whether granting the injunction would

cause harm to others. “The irreparable injury [the plaintiff] will suffer if [its] motion for

injunctive relief is denied must be balanced against any harm which will be suffered by

[others] as a result of the granting of injunctive relief.” Martin-Marietta Corp. v. Bendix

Corp., 690 F.2d 558, 568 (6th Cir. 1982). If injunctive relief were granted, those harmed

would be Defendant Brichler and non-party Lendly. But this harm would be largely of

the parties’ own making. The evidence shows Lendly expected to deal with the Non-

Compete issue when it hired Brichler. (Doc. 23-10). If enforced, Lendly would have to

wait out the Non-Compete period or hire another person to fill the role. This is not the

kind of harm that would move the Court, without more context, to refrain from issuing

injunctive relief.

Accordingly, the Court finds little reason to believe injunctive relief would cause

significant harm to third parties.

D. Public Interest

The final preliminary injunction factor is whether granting the injunction would

harm the public interest. Under Ohio law, “[p]reserving the sanctity of contractual

relations and preventing unfair competition have traditionally been in the public interest.”

Total Quality Logistics, LLC v. OTC Logistics LLC, No. 1:19-CV-151, 2019 WL

1300223, at *5 (S.D. Ohio Mar. 21, 2019) (quoting UZ Eng’red Prods. Co. v. Midwest

Motor Supply Co., Inc., 770 N.E.2d 1608, 1081 (Ohio Ct. App. 2001)). Setting aside

reasonableness, the evidence suggests Brichler and Lendly were probably aware that

Axcess considered a company like Lendly a competitor according to the Non-Compete.

Brichler went to work at Lendly anyway. On other hand, as mentioned, Lendly’s hiring

of Brichler does not constitute “unfair competition” on its own and there is very little

other evidence of unfairness.

Contrastingly, there is also an interest in “not restricting employment

opportunities for employees.” Convergys, 2007 WL 4248202. As already stated, at this

stage of the litigation, the relief requested by Axcess appears similar, in the Court’s eye,

to a broader restraint on Brichler’s skill as a technology professional. For intuitive

reasons, a decision from this Court imposing injunctive relief without a principled

distinction between general skill and a trade secret could harm the public interest.

Based on the foregoing, this element weighs slightly against the issuance of a

preliminary injunction.

In balancing the four factors pertaining to injunctive relief, the Court finds Axcess

has not sustained its heavy burden of establishing that it is entitled to a preliminary

injunction.

Having found this, the Court reiterates its finding that the Non-Compete is a valid

agreement12 between Brichler and Axcess, even if Axcess has not proven at this stage, by

clear and convincing evidence, that it is reasonable as Axcess would have it enforced

against Brichler. Brichler, therefore, shall continue not to solicit or attempt to solicit any

12 In addition to being facially valid, the Court has also found that the most recent Non-Compete

supersedes an earlier-in-time arbitration agreement executed by the parties. (Doc. 37). For that

reason, the Court denied Defendant’s motion to compel arbitration. (Id.).

of Axcess’s customers known to Brichler; solicit or attempt to solicit any of Axcess’s

employees; or provide any actual trade secret or confidential information in his

possession to Lendly.

IV. CONCLUSION

Based upon the foregoing, Plaintiffs’ motion for a preliminary injunction (Doc. 2)

is DENIED. Defendant’s motion for leave to file a sur-reply (Doc. 25) is DENIED as

moot.

IT IS SO ORDERED.

Date: 9/14/2021 s/Timothy S. Black

Timothy S. Black

United States District Judge