Brookville Equip. Corp. v. Cincinnati ( 2012 )

[Cite as Brookville Equip. Corp. v. Cincinnati, 2012-Ohio-3648.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
BROOKVILLE EQUIPMENT CORP., : APPEAL NO. C-120434
TRIAL NO. A-1204469
Plaintiff-Appellant, :
and :
THE CINCINNATI ENQUIRER, : O P I N I O N.
Intervenor-Appellee, :
and :
CAF USA, INC., :
Intervenor, :
vs. :
CITY OF CINCINNATI, :
Defendant. :
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed
Date of Judgment Entry on Appeal: August 15, 2012
Dinsmore & Shohl LLP, Bryan E. Pacheco and Alan H. Abes, for Plaintiff-Appellant,
Graydon Head & Ritchey LLP and John C. Greiner, for Intervenor-Appellee.
Please note: This case has been removed from the accelerated calendar.
OHIO FIRST DISTRICT COURT OF APPEALS
SYLVIA S. HENDON, Presiding Judge.
{¶1} Plaintiff-appellant Brookville Equipment Corporation (“Brookville”)
appeals the judgment of the Hamilton County Court of Common Pleas denying in
part its request for a temporary restraining order and preliminary injunction
prohibiting defendant city of Cincinnati (the “City”) from releasing Brookville’s
unredacted proposals for the construction of the City’s streetcar system to
intervenor-appellee The Cincinnati Enquirer, or to anyone else, pursuant to a public-
records request, during the pendency of Brookville’s lawsuit against the City for
declaratory judgment and permanent injunction. Because we determine that the
trial court did not abuse its discretion in denying Brookville’s request, we affirm that
portion of the trial court’s judgment.
Factual and Procedural Background
{¶2} In September 2011, the City issued a request for proposals for the
construction of a streetcar system (the “RFP”). The RFP provided that documents
submitted to the City as part of a proposal or best and final offer would be subject to
disclosure under Ohio’s Public Records Act. The RFP also provided that information
a proposer believed to be exempt from disclosure, such as trade-secret information,
be set apart on separate pages.
{¶3} Brookville, a manufacturer of various transportation vehicles,
including streetcars, submitted two proposals in response to the RFP (the
“Proposals”). At the request of the City, Brookville then submitted its best and final
offer for the streetcar (the “BAFO”). Brookville redacted information it believed to
be trade secrets from the BAFO.
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶4} The Cincinnati Enquirer (the “Enquirer”) made a public-records
request to the City for proposals submitted in response to the RFP. The City gave
Brookville and the other streetcar proposers an opportunity to remove trade-secret
information from their proposals. Brookville redacted its purported trade secrets
from the Proposals and BAFO, including information related to price, design,
performance, manufacturing, and personnel, and those redacted documents were
given to the Enquirer.
{¶5} Unsatisfied with the redacted documents, the Enquirer made a request
to the City for “unredacted versions of the bid records.” The City then informed
Brookville of the City’s intent to release the unredacted Proposals and BAFO, absent
a court order. Subsequently, Brookville filed a verified complaint in the Hamilton
County Court of Common Pleas requesting a declaratory judgment (1) that its
unredacted Proposals and BAFO contain trade-secret information and (2) that the
City cannot disclose this trade-secret information. Brookville also requested a
temporary restraining order (“TRO”), preliminary injunction, and permanent
injunction prohibiting the City from disclosing its unredacted Proposals and BAFO.
{¶6} Another streetcar proposer, United Streetcar, LLC, also filed suit
against the City to protect its purported trade secrets, which was later consolidated
with Brookville’s action. A third streetcar proposer, CAF USA, Inc., filed a motion to
intervene and also requested injunctive relief prohibiting disclosure of its trade
secrets until such time as the City awarded a final contract. The Enquirer also moved
to intervene in the action and filed a complaint requesting a declaratory judgment
against the City that the streetcar proposals be made available for public inspection.
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶7} The trial court held hearings on the motions for temporary and
injunctive relief. Meanwhile, United Streetcar, LLC, reached a settlement with the
Enquirer, and so the Enquirer voluntarily dismissed with prejudice its intervening
complaint against the City as to that company’s proposal. CAF USA, Inc., also
reached an agreement with the Enquirer; Brookville, however, did not. After
conducting an in camera review of the information in Brookville’s Proposals and
BAFO, the trial court denied Brookville’s request for a TRO and preliminary
injunction as to its baseline-pricing information, most of its technical and
manufacturing information, and its staffing information. The trial court granted
Brookville’s motion for a TRO as to the component-pricing information and the
remaining technical and manufacturing information until a preliminary-injunction
hearing could be held.
{¶8} The trial court refused to stay that portion of its order denying
Brookville relief, which would have allowed for immediate disclosure of information.
Brookville then filed this appeal from that portion of the trial court’s order denying
its request for TRO and preliminary injunctive relief. We granted Brookville’s
motion to stay the order of the trial court pending Brookville’s appeal to this court.
Temporary and Preliminary Injunctive Relief
{¶9} In its sole assignment of error, Brookville contends that the trial court
erred in denying in part its request for a TRO and preliminary injunction.
{¶10} The purpose of a TRO or preliminary injunctive relief is to preserve the
status quo. Acordia of Ohio, LLC v. Fishel, 1st Dist. No. C-100071, 2010-Ohio-6235,
¶ 9. This court reviews a trial court’s decision granting or denying temporary or
preliminary injunctive relief for an abuse of discretion. See Garono v. State, 37 Ohio
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St.3d 171, 173, 524 N.E.2d 496 (1988) (“The grant or denial of an injunction is solely
within the trial court’s discretion and, therefore, a reviewing court should not disturb
the judgment of the trial court absent a showing of a clear abuse of discretion.”). A
trial court abuses its discretion when its decision is unreasonable, arbitrary, or
unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140(1983).
{¶11} A party seeking a TRO or preliminary injunctive relief must show, by
clear and convincing evidence, (1) a substantial likelihood that the party will prevail
on the merits, (2) the party will suffer irreparable injury or harm if the requested
injunctive relief is denied, (3) no unjustifiable harm to third parties will occur if the
injunctive relief is granted, and (4) the injunctive relief requested will serve the
public interest. Cincinnati v. Harrison, 1st Dist. No. C-090702, 2010-Ohio-3430, ¶
8, citing The Proctor & Gamble Co. v. Stoneham, 140 Ohio App.3d 260, 267, 747
N.E.2d 268 (1st Dist.2000). A court must balance all four factors in determining
whether to grant or deny injunctive relief, and no one factor is determinative. Toledo
Police Patrolman’s Assn., Local 10, IUPA, AFL-CIO-CLC, v. Toledo, 127 Ohio App.3d
450, 469, 713 N.E.2d 78 (6th Dist.1998).
Likelihood of Success on the Merits
{¶12} As to the first element of preliminary injunctive relief—likelihood of
success on the merits—Brookville asserts that it is likely to prevail on the merits of its
suit seeking a declaratory judgment and permanent injunction because the redacted
portions of its Proposals and BAFO are trade secrets exempt from disclosure by
Ohio’s Public Records Act, R.C. 149.43. “Trade secrets are exempt from disclosure
under the ‘state or federal law’ exemption of R.C. 149.43.” State ex rel. Besser v.
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OHIO FIRST DISTRICT COURT OF APPEALS
Ohio State Univ., 89 Ohio St.3d 396, 399, 732 N.E.2d 373 (2000), quoting R.C.
149.43(A)(1)(v). Trade secret, as defined in Ohio’s Uniform Trade Secrets Act, R.C.
1333.61(D),
means 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.
{¶13} The Ohio Supreme Court established a two-part test for determining
whether information submitted to a public agency is exempt from disclosure as a
trade secret in State ex rel. Allright Parking of Cleveland, Inc. v. Cleveland, 63 Ohio
St.3d 772, 776, 591 N.E.2d 708 (1992): (1) A court must review the documents in
camera to determine whether they contain trade-secret information. If the
documents do not contain trade-secret information, then they must be disclosed. (2)
If the documents contain trade-secret information, however, then the court must
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OHIO FIRST DISTRICT COURT OF APPEALS
determine whether the statutory submission requirements of the public agency place
the information in the public record. State ex rel. The Plain Dealer v. Ohio Dept. of
Ins., 80 Ohio St.3d 513, 523-24, 687 N.E.2d 661 (1997).
{¶14} In Allright Parking, the court of appeals in a mandamus action had
determined that certain documents submitted to the city of Cleveland as part of a
tax-abatement application under R.C. 1728.06 were not exempt from disclosure as
trade secrets under R.C. 149.43 because R.C. 1728.06, which governs such
applications, provides that the applications are a matter of public record. 63 Ohio
St.3d at 774. On direct appeal to the Ohio Supreme Court, the Court held that the
court of appeals had erred in reaching its conclusion with regard to waiver of trade
secrets without first conducting an in camera review of the documents to determine
whether they had become public record or were merely “ancillary to” the application.
Id. at 775.
{¶15} Specifically, the Court determined that
[t]he court of appeals erred in its assumption that once
an application is ‘a matter of public record,’ materials
that are ancillary to, but submitted with, the application
are automatically subject to disclosure. Although the
court of appeals was correct that the application itself
was a public record because the statute directly provides
for its inspection by the public, it incorrectly ruled that
all of the documents relating to or submitted with the
application were public records and subject to release
under R.C. 149.43.
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OHIO FIRST DISTRICT COURT OF APPEALS
Id., quoting R.C. 1728.06.
{¶16} In determining whether Brookville’s Proposals and BAFO were exempt
from disclosure, the trial court examined the City’s requirements for submitting
competitive proposals in the Cincinnati Municipal Code. Cincinnati Municipal Code
321-61 provides that “[a]ll proposals shall be opened at the time, date and place
specified in the request for proposal and the proposals shall be available for public
inspection.” Cincinnati Municipal Code 321-1-P1 provides that “ ‘[p]roposal’ shall
mean an offer in response to a ‘Request for Proposal.’ ” The trial court determined
that the phrase “public inspection” in Cincinnati Municipal Code 321-61 means that
the public has the right to review, at a minimum, essential terms of any proposal to
the City. The trial court then relied on Allright Parking to determine that Brookville
waived any trade-secret protection as to the baseline-pricing information and most
of the technical and manufacturing information, because those categories were
essential to public inspection of the Proposals and BAFO.
{¶17} Brookville argues that the trial court erred in holding that it waived
trade-secret protection. Brookville contends that Allright Parking is distinguishable
because in that case a state statute, as opposed to a municipal ordinance, operated to
waive trade-secret protection. Brookville is correct insofar as the City’s competitive-
proposal process is governed by Cincinnati Municipal Code 321-51 et seq. and not by
statute. As the trial court correctly noted, however, under the Home Rule
Amendment of the Ohio Constitution, a municipality has the authority to exercise all
powers of local self-government, meaning that a municipal ordinance relating solely
to matters of local self-government is valid even in the face of a conflicting a state
statute. Am. Fin. Serv. Assn. v. Cleveland, 112 Ohio St.3d 170, 2006-Ohio-6043, 858
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OHIO FIRST DISTRICT COURT OF APPEALS
N.E.2d 776, ¶ 22-23. Because the result of the City’s competitive-proposal process
affects the City itself more than the state as a whole, it is a matter of local self-
government, and thus Cincinnati Municipal Code 321-61 sits on equal footing with
the tax-abatement statute in an analysis under Allright Parking. See Cleveland Elec.
Illuminating Co. v. Painesville, 15 Ohio St.2d 125, 129, 239 N.E.2d 75 (1968).
{¶18} Brookville also argues that the trial court erred in determining that
Brookville waived its trade secrets because it complied with the City’s RFP, which
protected trade secrets from disclosure. The language contained in the RFP
represented to potential proposers that any disclosure would conform to Ohio’s
Public Records Act. The procedures contained in the RFP were promulgated by a
city purchasing agent to whom authority to promulgate procedures for the
competitive-proposal process had been delegated. See Cincinnati Municipal Code
321-51(f). As the trial court correctly noted, however, an administrative rule that
conflicts with a legislative enactment is invalid. See, e.g., Nestle R&D Ctr., Inc. v.
Levin, 122 Ohio St.3d 22, 2009-Ohio-1929, 907 N.E.2d 714, ¶ 40. Therefore, the
language contained in the RFP could not trump the plain language of Cincinnati
Municipal Code 321-61, which provides for public inspection of competitive
proposals.
{¶19} Moreover, the Ohio Supreme Court in Allright Parking determined
that the party who had submitted the tax-abatement application waived its trade
secrets despite the fact that the party had been given assurance from the city of
Cleveland that such information would be kept confidential. State ex rel. Allright
Parking of Cleveland, Inc. v. Cleveland, 8th Dist. No. 57881, 1991 Ohio App. LEXIS
890, *3 (Mar. 1, 1991), rev’d by Allright Parking, 63 Ohio St.3d 772, 591 N.E.2d 708.
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OHIO FIRST DISTRICT COURT OF APPEALS
Thus, the indication from the RFP language that the City would protect Brookville’s
trade secrets from disclosure does not change the waiver analysis.
{¶20} Brookville argues that the use of “public inspection” in Cincinnati
Municipal Code 321-61 invokes the trade-secret exemption under R.C. 149.43
because R.C. 149.43 also contains the phrase “public inspection.” This argument is
not well-taken. If city council had intended proposals to be available for public
inspection, subject to the exemptions listed in R.C. 149.43(A)(1), then it could have
provided for that expressly within Cincinnati Municipal Code 321-61. Because
council chose not to include language in the ordinance, a court will not add that
language when undertaking an interpretation of such ordinance. See, e.g., State ex
rel. Lorain v. Stewart, 119 Ohio St.3d 222, 2008-Ohio-4062, 893 N.E.2d 184, ¶ 36
(refusing to add language to a statute when engaging in statutory interpretation).
City council also could have chosen to leave out Cincinnati Municipal Code 321-61
altogether, which would have made R.C. 149.43 the default governing provision.
{¶21} Although we do not agree with Brookville’s purported definition of the
phrase “public inspection” in Cincinnati Municipal Code 321-61, we do not agree
with the trial court’s interpretation either. The trial court determined that “public
inspection” in that ordinance means that the public has the right to review, at a
minimum, the essential terms of a proposal. In this case, the trial court reasoned
that the public must be able to review the essential price terms and significant
performance measures in the streetcar proposals. The trial court’s interpretation
conflicts with the plain meaning of the ordinance: The public has the right to review
proposals—not just essential terms.
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶22} Applying Cincinnati Municipal Code 321-61 and Allright Parking to
Brookville’s request for relief, we determine that Brookville has waived any trade-
secret protection as to its Proposals and BAFO. Nothing in the record indicates that
the information Brookville seeks to protect as trade secrets is merely related to or
ancillary to its Proposals or BAFO as was the case in Allright Parking. See Allright
Parking, 8th Dist. No. 57881, 1991 Ohio App. LEXIS 890 at *1 (where the relator had
requested “all documents relating to any tax abatement request(s)”), rev’d by
Allright Parking, 63 Ohio St.3d 772, 591 N.E.2d 708. Brookville stated affirmatively
in its verified complaint that its trade-secret information was contained within its
Proposals and BAFO. Therefore, Brookville has not shown that it is likely to succeed
on the merits of its complaint for declaratory judgment and permanent injunction.
The Remaining Factors
{¶23} Along with likelihood of success on the merits, a party seeking a TRO
or preliminary injunctive relief must also show that irreparable injury would result in
the absence of injunctive relief. Stoneham, 140 Ohio App.3d at 267, 747 N.E.2d 268.
Irreparable injury means a harm for which no plain, adequate, or complete remedy
at law exists. Cleveland v. Cleveland Elec. Illum. Co., 115 Ohio App.3d 1, 14, 684
N.E.2d 343 (8th Dist.1996). A party does not have to demonstrate actual harm—
threatened harm is sufficient. Convergys Corp. v. Tackman, 169 Ohio App.3d 665,
2006-Ohio-6616, 864 N.E.2d 145, ¶ 9 (1st Dist.).
{¶24} As a general matter, no adequate remedy at law exists for the
disclosure of trade secrets. Empower Aviation, LLC v. Butler County Bd. of
Commrs., 185 Ohio App.3d 477, 2009-Ohio-6331, 924 N.E.2d 862, ¶ 18 (1st Dist.).
Brookville’s allegation of irreparable harm is greatly weakened, however, given our
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OHIO FIRST DISTRICT COURT OF APPEALS
determination that Brookville has waived trade-secret protection as to its Proposals
and BAFO. Therefore, this factor does not weigh in favor of injunctive relief.
{¶25} As to the remaining factors, the trial court merged the inquiries
regarding unjustifiable harm to third parties and the public interest and found that
these factors weighed in favor of denying an injunction with respect to the baseline-
pricing information, most of the technical and manufacturing information, and the
staffing information because the public has a strong interest in access to public
records. Brookville argues that the trial court ignored the private and public interest
in protecting trade secrets, but Brookville’s argument is undercut in this instance by
its decision to participate in a public, competitive-proposal process, which waived
trade secrets. Thus, the public interest weighs in favor of denying an injunction, and
no unjustifiable harm to third parties exists.
Conclusion
{¶26} In conclusion, because we determine that Brookville waived any trade
secrets contained within its Proposals and BAFO, Brookville failed to show a
likelihood of success on the merits of its complaint for a declaratory judgment and
permanent injunction against the City prohibiting the release of its unredacted
Proposals and BAFO. Nor did Brookville establish that the other factors for a TRO or
preliminary injunction weighed in favor of granting such relief. Therefore, that
portion of the trial court’s decision from which Brookville has appealed denying
Brookville a TRO and preliminary injunction was not abuse of discretion.
{¶27} Consequently, we overrule Brookville’s sole assignment of error, and
we affirm that part of the trial court’s decision denying Brookville’s requested relief.
Judgment affirmed.
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OHIO FIRST DISTRICT COURT OF APPEALS
DINKELACKER, J., concurs.
FISCHER, J., dissents.
FISCHER, J., dissenting.
{¶28} Because I believe that the trial court abused its discretion in denying in
part Brookville’s request for a TRO and preliminary injunction by applying an
incorrect legal standard, I respectfully would sustain Brookville’s assignment of error
and remand the cause to the trial court to apply in the first instance the test in
Allright Parking, 63 Ohio St.3d 772, 591 N.E.2d 708.
{¶29} Although the majority implicitly determines that the trial court did not
correctly apply Allright Parking and Cincinnati Municipal Code 321-61, the majority
nonetheless concludes that the trial court’s judgment in denying Brookville’s request
for a TRO and preliminary injunction was not an abuse of discretion. In reaching
this conclusion, the majority determines that Brookville has no likelihood of
succeeding on the merits of its complaint for permanent injunction and declaratory
judgment because it has waived any trade-secret protection with regard to the
Proposals and BAFO—a determination not reached by the trial court. Because the
majority determines that Brookville has no likelihood of success on the merits, the
majority then necessarily determines that the other factors for granting preliminary
injunctive relief do not weigh in favor of Brookville’s requested relief.
{¶30} I believe that the majority goes somewhat too far in deciding the
merits of Brookville’s complaint at this early stage in the proceedings. I would
remand the cause to the trial court with instructions to properly apply the test
required by the Supreme Court of Ohio in Allright Parking. Specifically, I would
instruct the trial court to conduct an evidentiary hearing to determine whether
Brookville’s redacted information is part of its proposal, as defined in Cincinnati
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OHIO FIRST DISTRICT COURT OF APPEALS
Municipal Code 321-61, or merely related or ancillary to such a proposal. See
Allright Parking, 63 Ohio St.3d at 776, 591 N.E.2d 708. Until the trial court in the
first instance applies the correct legal standard on the likelihood-of-success factor,
this court cannot appropriately review any decision by the trial court as to whether
the other preliminary-injunction factors might weigh in favor of Brookville’s request
for temporary relief.
{¶31} Therefore, I must respectfully dissent.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
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