Definitive Solutions Co., Inc. v. Sliper

[Cite as Definitive Solutions Co., Inc. v. Sliper, 2016-Ohio-533.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
DEFINITIVE SOLUTIONS COMPANY, : APPEAL NO. C-150281
INC., TRIAL NO. A-1110530
:
Plaintiff-Appellant,
:
vs. O P I N I O N.
:
MICHAEL SLIPER,
:
CREATIVE ELEMENTS GROUP, LLC,
:
SEAN HUNTER,
:
ROBERT A. FELTNER,
:
and
MELISSA R. MCCLANAHAN, :
Defendants,
:
and :
THE PROCTOR & GAMBLE :
COMPANY,
:
Defendant-Appellee.
OHIO FIRST DISTRICT COURT OF APPEALS
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed
Date of Judgment Entry on Appeal: February 17, 2016
Santen & Hughes, J. Robert Linneman and Brian P. O’Connor, for Plaintiff-
Appellant,
Dinsmore and Shohl LLP, Mark A. Vanderlaan and Mark G. Arnzen, Jr., for
Defendant-Appellee.
Please note: this case has been removed from the accelerated calendar.
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OHIO FIRST DISTRICT COURT OF APPEALS
DEWINE, Judge.
{¶1} This appeal involves four employees of a software- and digital-design
firm that was doing work for the Procter & Gamble Company (“P&G”). The
employees left their jobs, formed their own company, and took P&G’s business with
them. Their old boss sued P&G, saying that P&G had breached an agreement that it
not “directly solicit for employment” employees who had worked on its account, and
also that P&G had tortiously interfered with its relationship with the employees. The
trial court granted summary judgment for P&G, and the design firm appeals. We
affirm the trial court. We think the agreement means exactly what it says: it
prohibits solicitation for employment, not solicitation of another company to
perform work. And we find nothing in P&G’s conduct that rises to the level of
tortious interference.
I. Employees Form a New Business and Steal Their Old Firm’s Client
{¶2} Definitive Solutions Company, Inc., (“DSC”) provided various design
and technology services to P&G on a contract basis. Michael Sliper, Sean Hunter,
Robert Feltner and Melissa McClanahan (“Employee Defendants”) were DSC
employees who were assigned to the P&G account. They worked closely with P&G
employees, were often contacted directly by P&G for work on projects, and
sometimes worked on-site at P&G.
{¶3} In 2011, the Employee Defendants—one by one—left DSC. They joined
a new company, Creative Elements Group, LLC, (“CEG”) that had been formed by
Sliper. As they were leaving, they schemed to make sure that the P&G work followed
them to the new company. They told their P&G contacts that DSC was in a financial
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OHIO FIRST DISTRICT COURT OF APPEALS
crisis, and that they were forming their own business so that P&G could be assured
that the same people who had been working on its projects would continue to do so.
Some of the Employee Defendants even made proposals to P&G on behalf of their
new employer while still employed at DSC. The scheme worked. P&G sent its work
to CEG.
{¶4} In December 2011, DSC figured out what was going on. It fired Sliper,
the only one of the Employee Defendants still at DSC. And it instituted a lawsuit
against CEG, the Employee Defendants and P&G.
{¶5} The trial court granted summary judgment in favor of P&G. It rejected
DSC’s claim that P&G’s actions were in violation of its agreement not to “directly
solicit for employment a current or former [DSC] employee.” And it concluded that
P&G’s actions did not constitute tortious interference with DSC’s employment
relationships.
{¶6} Claims against the other defendants proceeded to trial. Following a
bench trial, the court found Employee Defendants and CEG liable to DSC, and
entered judgment accordingly.
{¶7} DSC now appeals from the trial court’s grant of summary judgment in
favor of P&G.
II. P&G Did Not Violate the Services Agreement
{¶8} In its first assignment of error, DSC argues that the trial court erred in
granting summary judgment to P&G on DSC’s breach-of-contract claim. Specifically,
DSC contends that P&G breached provisions of a “Services Agreement” between the
parties that precluded one party from soliciting for employment an employee of the
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other party. According to DSC, the most “glaring” example of solicitation for
employment occurred when P&G emailed Sliper at his CEG email address, while he
was still employed with DSC, requesting that CEG furnish a proposal for a project
that DSC had been working on.
{¶9} We turn first to the applicable provision of the Services Agreement:
10.4 Neither PARTY will directly solicit for employment a
current or former employee of the other PARTY who has
performed any work in connection with this AGREEMENT. This
provision will remain in effect during the term of the SERVICES and
for one (1) year from the date of said former employee’s separation of
employment from P&G or CONTRACTOR. Any exceptions to this
provision will be in writing and signed by the authorized
representatives of each PARTY. For the purposes of this
AGREEMENT, advertisements, use of search firms, and other
conventional means of obtaining employees will not be construed as
direct solicitation unless the PARTY utilizing such conventional means
specifically directs the efforts of the employee(s) of the other PARTY.
Further it is acknowledged that simply hiring an employee of the other
PARTY is not a restricted activity in the absence of an improper
solicitation as described above.
(Emphasis added.)
{¶10} What we have before us is a fairly straightforward matter of contract
interpretation. The question is whether alleged communications by P&G to the
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OHIO FIRST DISTRICT COURT OF APPEALS
Employee Defendants requesting a proposal from CEG constitute a solicitation for
employment of the Employee Defendants.
{¶11} It is undisputed that P&G never tried to directly hire any of the
Employee Defendants. Rather, under DSC’s construction, P&G solicited the
Employee Defendants “for employment” when it solicited a proposal from the new
company that they had formed. Under its reading, employment includes any work
performed, whether an individual is on P&G’s payroll or the payroll of another
company that contracts with P&G. P&G says no: “solicit for employment” means
solicit for employment as a direct employee of P&G, and the solicitation of a different
company to do work doesn’t constitute the solicitation of an employee for
employment.
{¶12} We think P&G has the better of the argument. In our view, an
ordinary reader of the English language would hardly think that recruiting a different
company to perform work under a contract constitutes the “direct[] solicit[ation] for
employment” of an “employee or former employee.”
{¶13} To succeed in its argument, DSC has to show that “employment,” as
the term is used in the agreement, has a broad meaning that includes contract work
performed as an employee of another company. But where an individual works for a
company that is hired by a third party to provide services, we don’t commonly think
of the individual as in the employment of the third party. Suppose a homeowner has
a clogged sink and calls Acme Plumbing for help. We all understand that the
plumber who shows up to snake the drain is in the employment of Acme, not the
homeowner. The same goes for the Employee Defendants in this case. This
common understanding is demonstrated by the definition of an employee in the
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community created and edited “encyclopedia” Wikipedia, which provides that an
employee is “a person who is hired to provide services to a company on a regular
basis in exchange for compensation and who does not provide these services as part
of an independent business.” (Emphasis added.) Wikipedia, Employee,
https://en.wikipedia.org/wiki/Employment#Employee_or_employers (accessed
February 1, 2016).
{¶14} DSC suggests that simply asking the Employee Defendants to perform
work for P&G constitutes a solicitation for employment. But that can’t be right. If
that were the case, P&G violated the Services Agreement every time it asked one of
the Employee Defendants to work on a project, even when DSC still employed the
Employee Defendants, and while P&G paid DSC for the Employee Defendants’ work.
We will not interpret a contractual provision to reach an absurd result. See Kahler v.
Cincinnati Inc., 1st Dist. Hamilton No. C-140407, 2015-Ohio-979, ¶ 16, citing
Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978),
paragraph two of the syllabus.
{¶15} Thus far, we have focused our interpretation on the first sentence of
section 10.4—the restriction on “directly solicit[ing] for employment.” And while
this is certainly the most important part of the provision, the remainder supports our
interpretation as well. When read as a whole, it is clear that the motivating concern
behind the prohibition is with the direct employment of an individual. The provision
makes specific exception for the use of search firms, advertisements and “other
conventional means of hiring employees.” And it makes clear that the “hiring” of an
“employee” without an improper solicitation is not a violation of the agreement.
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Nothing in the provision indicates that it was intended to have any applicability to
contractual relationships beyond the direct employer-employee relationship.
{¶16} DSC also cites cases in which a person in an independent-contractor
relationship with a business has been found to be in an employment relationship for
purposes of a noncompete provision. See, e.g., Am. Healthcare Servs., Inc. v.
Akabuaka, 1oth Dist. Franklin No. 10AP-777, 2010-Ohio-5631. And it is true that a
noncompete provision may extend beyond individuals who perform work as direct
employees to also include persons who do work as independent contractors. Id. at ¶
20-21. Thus, a hairdresser who signs a noncompete is bound by it even though she is
not an “employee” of the salon for IRS purposes, but rather an independent
contractor. See, e.g., Albert v. Shiells, 10th Dist. Franklin No. 02AP-354, 2002-
Ohio-7021. But here, P&G never solicited any of the individual Employee
Defendants to work as independent contractors for P&G, it solicited—and contracted
with—CEG. Because it did not try to hire any of the individual Employee Defendants
as P&G employees, it did not violate the agreement.
{¶17} DSC additionally argues that P&G violated the Services Agreement by
failing to act in good faith towards DSC. Almost every contract contains an implied
duty of good faith and fair dealing. Littlejohn v. Parrish, 163 Ohio App.3d 456,
2005-Ohio-4850, 839 N.E.2d 49, ¶ 21 (1st Dist.). DSC contends that P&G violated
this implied duty by allowing CEG to undercut DSC prices. But we find nothing in
the record that suggests a lack of good faith on the part of P&G. As the trial court
determined, P&G and the Employee Defendants had a good working relationship.
After Sliper convinced P&G that DSC was suffering financially, P&G simply made a
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OHIO FIRST DISTRICT COURT OF APPEALS
business decision to retain CEG so that it could continue to receive the services it
needed.
{¶18} Thus, the trial court properly granted summary judgment in favor of
P&G on DSC’s breach-of-contract claim. We overrule DSC’s first assignment of
error.
III. P&G did not Tortiously Interfere with DSC’s Employment
Relationship with its Employees
{¶19} DSC’s second assignment of error challenges the trial court’s grant of
summary judgment on its claim for tortious interference with an employment or
business relationship. In its complaint, DSC alleges that P&G, as an “outsider” to the
employment relationship, tortiously interfered with DSC’s relationship with the
Employee Defendants by intentionally soliciting the Employee Defendants and by
inducing them to leave DSC.
{¶20} As this court has recognized, “the right to non-interference in an
employment relationship is limited.” Wilson v. Proctor & Gamble, 1st Dist.
Hamilton No. C-970778, 1998 Ohio App. LEXIS 5290, *14 (Nov. 6, 1998).
Businesses frequently recruit at-will employees from other businesses and absent
some form of improper conduct, the law offers little protection. The law does allow a
claim for interference with an employment relationship to be brought against an
“outsider” to the relationship. Such an action, however, requires a showing of
malicious conduct on the part of the outsider. Id. at *14-15, citing Anderson v.
Minter, 32 Ohio St.2d 207, 214, 291 N.E.2d 457 (1972).
{¶21} DSC argues that the trial court applied the wrong standard when it
granted summary judgment. It says the trial court required evidence of intimidation
or coercion in soliciting the employees, when all that was required under Ohio law
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was evidence of malicious conduct or improper interference by P&G. Compare
Kenker Box Co. v. Riemeier Lumber Co., 1st Dist. Hamilton Nos. C-990803 and C-
990824, 2000 Ohio App. LEXIS 6198 (Dec. 29, 2000) with Wilson and Anderson.
{¶22} But even if we apply the malicious-conduct or improper-interference
standard, DSC still cannot succeed. The record shows that P&G had virtually no
contact with DSC ownership, and that P&G had a good working relationship with the
Employee Defendants. Once P&G was convinced that DSC was struggling
financially, it simply sought to protect its interests by contracting with a company
(CEG) that it believed would fulfill its needs. Because there is no evidence in the
record that P&G maliciously or improperly interfered with DSC’s relationship with
the Employee Defendants, DSC cannot succeed on its tortious-interference claim.
We overrule DSC’s second assignment of error.
IV. Conclusion
{¶23} The trial court properly granted summary judgment in favor of P&G
on DSC’s claims for breach of contract and tortious interference with an employment
or business relationship. We affirm the judgment of the trial court.
Judgment affirmed.
HENDON, P.J., and CUNNINGHAM, J., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
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