By Lois A. Gruhin
In a unanimous decision delivered on February 6, 2008, the Ohio Supreme
Court ruled that trade secrets stored in a former employee’s memory –
such as customer lists – are protected under Ohio’s Uniform Trade
Secrets Act (“UTSA”), R.C. 1333.61, et seq.
In Al Minor & Assoc., Inc. v. Martin, 2008-Ohio-292,
the Court resolved a five-year dispute between a pension administration
services company and a former employee. Al Minor & Associates,
Inc. (“AMA”) is an actuarial firm that designs and administers
retirement plans and employs analysts, like Martin, to work with its
more than 500 clients. AMA was founded by Al Minor who developed the
company’s confidential client list.
Robert Martin began working for AMA in 1998. At no time
during his employment with AMA did Martin execute either a
non-competition agreement or an employment agreement. Throughout his
employment, Martin was an “at will” employee. In 2002, he organized
Martin Consultants, L.L.C., which provided the same services as AMA.
Martin resigned from AMA in the following year.
When Martin left AMA, he did not take any confidential
documents, including the company’s client list. However, based upon
information gleaned from AMA’s list and stored in his memory, Martin
successfully solicited 15 clients to switch to his firm.
AMA sued Martin alleging that his conduct was an unlawful
violation of the UTSA. The trial court agreed and awarded AMA $25,973
in damages. On appeal, the 10th District upheld the verdict but
certified to the Supreme Court that the result was in conflict with a
previous 8th District decision.
The UTSA defines a “trade secret” to include “information,
including … (a) listing of names, addresses, or telephone numbers, that
satisfies both of the following: [i]t derives independent economic value
… from not being generally known to … other persons who can obtain
economic value from its disclosure or use; (and) [i]t is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy.”
Writing for the Court, Justice O’Donnell stated that the
legislature could have excluded memories from protection under the UTSA
and limited enforcement of the statute to written documents or other
tangible media. The Court’s plain language review of the law, however,
concluded that they did not. The Court further held that the six-part
analysis of the definition of a “trade secret” it uses to determine
whether a client list qualifies for protection does not distinguish
between a documented list and one stored in a person’s memory.
Consequently, according to Al Minor & Assoc., Inc., “trade secrets” can include the memories of a former employee that are subject to protection under the UTSA.
While the Court’s decision broadens what is actionable under
the UTSA, Justice O’Donnell noted that employees who leave their jobs
will inevitably have memories tied to their former employment. Under
Ohio law, only memories that are “trade secrets” (which can include
client lists) are protected by the UTSA.
