Integrity Express Logistics, LLC v. Grgurich

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION - CINCINNATI

INTEGRITY EXPRESS LOGISTICS, LLC, : Case No. 1:23-cv-581

Plaintiff, Judge Matthew W. McFarland

y .

NEAL GRGURICH, et al.,

Defendants.

ORDER AND OPINION

This matter is before the Court on Defendants Neal Grgurich and Gary

McCutcheon, III’s Partial Motion to Dismiss (Doc. 14). Plaintiff filed a Response in

Opposition (Doc. 19), to which Defendants Grgurich and McCutcheon filed a Reply in

Support (Doc. 22). This matter is therefore ripe for the Court review. For the following

reasons, Defendants’ Partial Motion to Dismiss is GRANTED IN PART AND DENIED

IN PART. Additionally, this matter is hereby STAYED to allow Plaintiff the opportunity

to evaluate resolution of its claims, including against Defendant GD Ventures Brokerage,

LLC.

BACKGROUND

Plaintiff Integrity Express Logistics, LLC is an Ohio-based company that provides

freight brokerage services across the country. (Am. Ver. Compl., Doc. 9, J 2.) Defendants

Neal Grgurich and Gary McCutcheon, ITI (“Individual Defendants”) worked for Plaintiff

as Logistic Account Executives. (Id. at {[ 3-4.) During their employment, Plaintiff trained

Individual Defendants on a variety of topics, including Plaintiff's services, pricing

structure, sales strategies, and operations. (Id. at { 22.) Plaintiff also shared sensitive

customer information with Individual Defendants. (Id. at | 22-24.) Plaintiff identifies —

among other things information pertaining to its customers, carriers, commission and

fee rates, historical and current shipping rate and pricing information, and procedures

and practices as trade secrets. (Id. at J 61.) In turn, Individual Defendants signed an

agreement that included non-competition, non-solicitation, and non-disclosure clauses.

(Id. at |] 16-20.)

On December 9, 2022, while still employed by Plaintiff, Individual Defendants

created limited liability companies in South Carolina. (Am. Ver. Compl., Doc. 9, □ □ 26-

27.) On December 29, 2022, McCutcheon sent emails of Plaintiff’s trade secrets and

confidential information, including information about Plaintiff’s customers, to his

personal account. (Id. at 28-29.) Both Individual Defendants resigned the following day.

(Id. at § 30.) Individual Defendants are now directly competing with Plaintiff through

their employment or association with Defendant GD Ventures, another provider of

freight brokerage services. (Id. at | 5, 35.) Specifically, Individual Defendants have

improperly used Plaintiff's confidential information and solicited Plaintiff's customers.

(Id. at 88.) Six of Grgurich’s ten accounts have come from Plaintiff. (Id. at J 39.)

On October 4, 2023, Plaintiff filed an Amended Verified Complaint against

Individual Defendants and Defendant GD Ventures. (See Am. Ver. Compl., Doc. 9.)

Plaintiff brings the following claims: (1) Breach of the Agreement, (2) Breach of Fiduciary

Duty, (3) Misappropriation of Trade Secrets, (4) Tortious Interference with a Contract,

(5) Tortious Interference with Business Relations, and (6) Unjust Enrichment. (Id. at 7

44-90.) Individual Defendants now move to dismiss Plaintiff's fiduciary duty claim and

unjust enrichment claim for failure to state a claim. (See Motion to Dismiss, Doc. 14.)

LAW & ANALYSIS

A Rule 12(b)(6) motion to dismiss for failure to state a claim tests a plaintiff's cause

of action as stated in a complaint. Golden v. City of Columbus, 404 F.3d 950, 958 (6th Cir.

2005); Fed. R. Civ. P. 12(b)(6). A claim for relief must be “plausible on its face.” Bell All.

Corp. v. Twombly, 550 U.S. 544, 570 (2007). Courts accept all factual allegations as true and

construe them in the light most favorable to the plaintiff. Doe v. Baum, 903 F.3d 575, 581

(6th Cir. 2018). However, courts are not bound to do the same for a complaint’s legal

conclusions. Twombly, 550 U.S. at 555. And, when a complaint contains sufficient facts to

satisfy the elements of an affirmative defense put forth by a defendant, courts may grant

dismissal on that basis. Est. of Barney v. PNC Bank, Nat. Ass’n, 714 F.3d 920, 926 (6th Cir.

2013).

I. Fiduciary Duty Claim

Individual Defendants first move to dismiss Plaintiff's fiduciary duty claim.

Although Plaintiff's second claim is styled as a “breach of fiduciary duty,” the “label

which a plaintiff applies to [its] pleading does not determine the nature of the cause of

action.” Lee v. Ohio Educ. Ass'n, 951 F.3d 386, 391 (6th Cir. 2020) (quotation omitted).

Rather, courts consider “the substance of the allegations.” Id. (quoting Minger v. Green,

239 F.3d 793, 799 (6th Cir. 2001)). In this case, Plaintiff’s second claim revolves around

Individual Defendants’ alleged breaches of the duty of loyalty and good faith that they

owed as Plaintiff's employees. (Ver. Am. Compl., Doc. 9, |] 55-56.) The Court will view

this claim accordingly. See, e.g., Ret. Corp. of Am. v. Henning, No. C-180643, 2019-Ohio-

4589, 2019 WL 5856005, at *7 (Ohio Ct. App. Nov. 8, 2019) (examining claim labeled as

“breach of fiduciary duty” under the employee's duty of loyalty framework).

Ohio common law provides that “an employee owes a duty to act in ‘the utmost

good faith and loyalty toward his employer.’” Orbit Elecs., Inc. v. Helm Instrument Co., 855

N.E.2d 91, 100 (Ohio 2006) (quoting Connelly v. Balkwill, 116 N.E.2d 701, 707 (Ohio 1954)).

“The duty of loyalty is based on an implied condition of employment that an employee

will ‘act in good faith and not act to the detriment’ of the employer.” Cheryl & Co. v.

Krueger, 536 F. Supp. 3d 182, 212 (S.D. Ohio 2021) (quoting Roberto v. Brown Cnty. Gen.

Hosp., 571 N.E.2d 467, 469 (Ohio Ct. App. 1989)). This duty is breached, for instance,

“when an employee engages in competition with the employee’s present employer while

still employed.” Henning, 2019 WL 5856005, at *7. Here, Plaintiff alleges that Individual

Defendants breached their duty of loyalty by competing against their employer. (Am.

Ver. Compl., Doc. 9, §] 56.) Specifically, the Individual Defendants — while still employed

by Plaintiff— formed other companies to compete with Plaintiff and emailed themselves

Plaintiff's trade secrets. (Id. at 57-58.)

Individual Defendants contend that Plaintiff has insufficiently pled a claim under

the faithless servant doctrine. (Reply, Doc. 22, Pg. ID 580-82.) But, this doctrine is a

specific “subset of a claim for breach of the duty of loyalty” that allows an employer to

forgo paying an employee if dishonesty and disloyalty permeated the employee’s service

to his employer. Krueger, 536 F. Supp.3d at 212; see also Mollett v. Lawrence Cnty. Bd. of Dev.

Disabilities, 242 N.E.3d 744, 762 (Ohio Ct. App. 2024) (explaining the two additional

elements of the faithless servant doctrine). Because Plaintiff's claim encompasses the duty

of loyalty, it does not fully turn upon the faithless servant doctrine. Thus, Plaintiff's claim

for breach of the duty of loyalty will not be dismissed at this time.

Il. Unjust Enrichment Claim

Individual Defendants next argue that Plaintiff's unjust enrichment claim should

be dismissed because it is preempted by the Ohio Uniform Trade Secrets Act (“OUTSA”).

(Motion to Dismiss, Doc. 14, Pg. ID 472-76.) The OUTSA “displace[s] conflicting tort,

restitutionary, and other laws of this state providing civil remedies for misappropriation

of a trade secret.” Ohio Rev. Code § 1333.67(A). There are a few exceptions. Most

pertinent here, the OUTSA does not preempt “other civil remedies that are not based on

misappropriation of a trade secret.” Ohio Rev. Code § 1333.67(B)(2).

As the OUTSA “prevents a plaintiff from merely restating their trade secret claims

as separate tort claims, . . . the key inquiry is whether the same factual allegations of

misappropriation are being used to obtain relief outside the [OUTSA].” Hanneman Fam.

Funeral Home & Crematorium v. Orians, 235 N.E.3d 361, 366-67 (Ohio 2023) (quotation

omitted). “[C]ourts analyzing whether OUTSA preempts a particular claim must look to

whether that claim relies on the same operative facts that formed the basis for the party’s

trade secrets misappropriation claim.” Campfield v. Safelite Grp., Inc., 91 F.4th 401, 414 (6th

Cir. 2024) (citing Stolle Mach. Co., LLC v. RAM Precision Indus., 605 F. App’x 473, 485 (6th

Cir. 2015)). “Where the state-law claim has a factual basis independent from the facts

establishing the OUTSA claim, the portion of the claim supported by an independent

factual basis survives preemption.” Id. (cleaned up). Ultimately, the OUTSA “should be

understood to preempt not only causes of action for misappropriation of trade secrets but

also causes of action that are based in some way on misappropriation of trade secrets.”

Stolle Mach. Co., 605 F. App’x at 485.

As a preliminary matter, Plaintiff contends that dismissal of its unjust enrichment

claim would be premature because it serves as an alternative theory of relief. (Response,

Doc. 19, Pg. ID 567-69.) However, courts routinely consider OUTSA preemption at the

motion-to-dismiss stage. See, e.g., Mesa Indus., Inc. v. Charter Indus. Supply, Inc., No. 1:22-

CV-160, 2022 WL 3082031, at *18 (S.D. Ohio Aug. 3, 2022) (explaining that “the great

weight of the case law” considers OUTSA preemption despite the argument that the

claims may proceed in the alternative); Cincom Sys., Inc. v. LabWare, Inc., No. 1:20-CV-83,

2021 WL 675437, at *5 (S.D. Ohio Feb. 22, 2021) (collecting cases). The Court therefore

finds it appropriate to address OUTSA preemption at this time.

Individual Defendants argue that Plaintiff’s unjust enrichment claim is based on

the same operative facts that form the misappropriation claim. (Motion to Dismiss, Doc.

14, Pg. ID 475.) The Court agrees. Plaintiff's misappropriation of trade secrets claim

identifies—among other things—information pertaining to its customers, carriers,

commission and fee rates, historical and current shipping rate and pricing information,

and procedures and practices as trade secrets. (Am. Ver. Compl., Doc. 9, 61.) Within

this same claim, Plaintiff alleges that “Individual Defendants have misappropriated and,

unless restrained, will continue to misappropriate trade secrets of [Plaintiff] for their own

use and for the use of GD Ventures to compete with [Plaintiff].” (Id. at J 64.) Plaintiff

further alleges that Defendants “have unjustly enriched themselves and have caused and

are continuing to cause [Plaintiff] actual and potential loss of business opportunities” as

a result of this misappropriation of trade secrets. (Id. at § 70.) For instance, six of

Grgurich’s ten accounts came from Plaintiff. (Id. at J 66.)

Plaintiff's unjust enrichment claim is similarly based on Defendants “illegally and

improperly utiliz[ing Plaintiff's] confidential and proprietary information and trade

secrets for their financial benefit and to the detriment of [Plaintiff],” as well as

Defendants’ solicitation of Plaintiff's customers. (Am. Ver. Compl., Doc. 9, J 88-89.) The

unjust enrichment claim therefore shares the same operative facts as the

misappropriation claim. See, e.g., Off. Depot, Inc. v. Impact Off. Prods., LLC, 821 F. Supp. 2d

912, 922 (N.D. Ohio 2011) (dismissing unjust enrichment claim to the extent it was based

on misappropriation of trade secrets); C.R.H. Indus. Water, LLC v. Eiermann, No. 1:23-CV-

01805, 2024 WL 4856109, at *6 (N.D. Ohio Nov. 21, 2024) (dismissing unfair competition

claim to the extent it related to defendant’s use of confidential information to compete

with plaintiff); Hanneman, 235 N.E.3d at 366-67 (finding that the OUTSA preempted

claims premised on the same allegations of defendant stealing client information and

then contacting them).

Plaintiff resists this conclusion by emphasizing that the unjust enrichment claim is

additionally based upon the solicitation of customers. (Response, Doc. 19, Pg. ID 568.)

Though true, these allegations are also part and parcel to the misappropriation claim. (See

Am. Ver. Compl., Doc. 9, { 64 (“Individual Defendants have misappropriated . . .

[Plaintiffs’] trade secrets [including customer information] for their own use and for the

use of GD Ventures to compete with [Plaintiff].”), | 66 (Six of Grgurich’s ten accounts

with GD Ventures have come from Plaintiff.)) Simply put, the alleged solicitation of

customers through the use of trade secrets forms the operative facts of both claims.

Therefore, the unjust enrichment claim is preempted by the OUTSA and must be

dismissed.

CONCLUSION

For the foregoing reasons, Individual Defendants’ Partial Motion to Dismiss (Doc.

14) is GRANTED IN PART AND DENIED IN PART:

1. Plaintiff's Sixth Claim for Unjust Enrichment is DISMISSED against Neal

Grgurich and Gary McCutcheon, III;

2. Plaintiff's Second Claim for Breach of the Duty of Loyalty SHALL PROCEED;

and

3. In light of Plaintiff's Status Report (Doc. 35), this matter is hereby STAYED to

allow Plaintiff the opportunity to evaluate resolution of its remaining claims,

including against Defendant GD Ventures Brokerage, LLC.

IT IS SO ORDERED.

UNITED STATES DISTRICT COURT

; SO Ot, hae IO

By: | W. “ □

JUDGE MATTHEW W. McFARLAND