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 PlaintiffAppellant,

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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DEWINE, Judge.

{1} This appeal involves four employees of a softwareand 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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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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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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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, (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 -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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