Restivo v. Fifth Third Bank

I respectfully dissent from the decision of the majority as to the bank's first assignment of error.

In resolving whether to issue an injunction in a case such as the one before us, a trial court must engage in a tripartite test. Levine v. Beckman (1988), 48 Ohio App.3d 25 at 27,548 N.E.2d 267 at 270-271. The first element consists of determining whether the covenant not to compete is valid; the second requires the application of a rule of reasonableness in order to decide if the covenant is enforceable. Id., citing Raimonde v.Van Vlerah (1975), 42 Ohio St.2d 21 at 25, 71 O.O.2d 12 at 14,325 N.E.2d 544 at 546-547. Finally, the court must find that the party seeking the injunctive relief proved actual irreparable harm. Id. An injunction is, however, a form of relief employed to prevent future injury, not to redress prior wrong. State exrel. Great Lakes College, Inc. v. Ohio Med. Bd. (1972), 29 Ohio St.2d 198,201-202, 58 O.O.2d 406, 408-409, 280 N.E.2d 900,903-904. Accordingly, an injunction enforcing a covenant not to compete can be issued upon a showing of the actual threat of irreparable harm. Levine v. Beckman, 48 Ohio App.3d at 27,548 N.E.2d at 270-271.

In applying these principles to the case before us, the common pleas court engaged in a thorough discussion of the first two elements and determined that no question of fact existed as to the validity of the covenant and its enforceability, as modified. The court then addressed the third element, clear and convincing evidence of actual irreparable harm. It concluded that the bank's failure to offer evidence of actual damages in the past rendered the court "unable and unwilling" to presume that injury could occur in the future. Apparently, the majority agrees with this analysis. I cannot.

The record discloses that the bank committed several years, as well as the expenditure of funds, to the development of appellee's skills in the area of automobile leasing and floor plan financing. The affidavit of Victor Profitt, a senior vice-president for the bank, and appellee's own deposition reveal that appellee, as the administrator of the retail lending department (motor vehicle and boat financing) for the bank, had access to confidential and proprietary information, including customer lists and information as to the method used by the bank to set loan rates. In his own deposition, appellee stated that, until a very short time ago, he held the same position with National City Bank that he had with appellant and was dealing with most, if not all, of the same automobile dealers.

I believe that in the world of business it is reasonable to assume that an employee who possesses such inside information as appellee had about his former employer's business presents the actual threat of serious injury to that business. This is particularly true when, as here, the employee takes a job with a business directly in competition with the former employer. Further, the very purpose of an injunction is to prevent such irreparable harm from occurring. Failure to recognize the potential for serious injury undermines the basic purpose of a covenant not to compete, which is to prevent, as far as possible, unfair competition from someone using inside information or skills gained from his or her former employer. As it stands, the bank has a valid, but useless, covenant not to compete, and appellee is now free to employ the customer contacts and financing information he obtained through his former employment to undermine the bank's business.

For these reasons, I would find that the bank offered sufficient operative facts to create, at the least, a question of material fact on the issue of the actual threat of irreparable injury.