Court Opinion

ID: 2689367
Source: CourtListenerOpinion
Date Created: 2014-08-01 19:36:36.298868+00
Date Added: 2024-06-11T09:32:04.653646
License: Public Domain

[Cite as Fern Exposition Servs., L.L.C. v. Lenhof, 2014-Ohio-3246.]
                 IN THE COURT OF APPEALS
             FIRST APPELLATE DISTRICT OF OHIO
                  HAMILTON COUNTY, OHIO

FERN EXPOSITION SERVICES, LLC,                    :                 APPEAL NO. C-130791
                                                                    TRIAL NO. A-1304963
        Plaintiff-Appellant,                      :
                                                                          O P I N I O N.
  vs.                                             :

DONALD LENHOF, JR.,                               :

    Defendant-Appellee.                           :

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Reversed and Cause Remanded

Date of Judgment Entry on Appeal: July 25, 2014

Keating, Muething & Klekamp, PLL, Steven C. Coffaro and Michael T. Cappel, for
Plaintiff-Appellant,

Jacobs, Kleinman, Seibel & McNally, Mark J. Byrne and Kenneth F. Seibel, for
Defendant-Appellee.

Please note: this case has been removed from the accelerated calendar.
                     OHIO FIRST DISTRICT COURT OF APPEALS

D E W INE , Judge.

       {¶1}    This is an appeal from the dismissal of a lawsuit for lack of personal

jurisdiction. An Ohio-based corporation sought to sue a nonresident former employee

who had left to work for a competitor. As part of his duties as general manager of the

corporation’s branch in Charlotte, North Carolina, the employee communicated

regularly with executives in Ohio and remotely accessed client information stored on the

company’s Ohio-based computer servers. The employee’s work-related activities were

supervised and controlled by executives from the corporation’s headquarters in

Cincinnati, and he attended a business meeting at the Cincinnati office on one occasion.

Based on the employee’s contacts with Ohio as part of this employment relationship, we

conclude that the exercise of jurisdiction over the employee satisfies the requirements of

Ohio’s long-arm statute and is consistent with the Due Process Clause of the Fourteenth

Amendment. Therefore, we reverse the judgment below.

                                I. Contacts with Ohio

       {¶2}    Fern Exposition Services, LLC (“Fern”), is a Delaware corporation

headquartered in Cincinnati, Ohio, with satellite offices located throughout the country.

Fern provides exposition, trade show, and corporate event-planning services. Donald

Lenhof was born and raised in Cincinnati and has worked intermittently for Fern since

1980. Mr. Lenhof worked for Fern in Cincinnati from 1980-1990, and then in Columbus

for a few months during 1993. Mr. Lenhof has not resided in Ohio since that time, but

his two sons remained in Ohio after he moved away.

       {¶3}    In 2000, Mr. Lenhof relocated to North Carolina to work for Fern in its

Charlotte office. He was promoted to general manager of that branch in 2003. Between

2008 and 2013, Fern’s general managers traveled to Northern Kentucky two to three

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                     OHIO FIRST DISTRICT COURT OF APPEALS

times each year to attend “managers’ meetings” at the Cincinnati/Northern Kentucky

International Airport. During his visits to the greater Cincinnati area, Mr. Lenhof would

sometimes cross into Ohio to visit his son Chris, who still lived in Ohio. He also entered

Ohio on three other occasions: twice in 2006 for personal reasons, and once in 2008 to

attend a meeting at Fern’s Cincinnati headquarters.

       {¶4}     As part of his duties as general manager, Mr. Lenhof participated in

monthly business review telephone calls with executives in the Cincinnati office,

including Fern’s CEO, to report on Charlotte-based client accounts and discuss the

branch’s profit-and-loss statements. Fern also provided Mr. Lenhof with a laptop, so

that he could access company data and customer files maintained on Fern’s computer

servers located in Ohio.

       {¶5}     One of the North Carolina events overseen by Mr. Lenhof was an auto

show held annually by the Greater Charlotte Automobile Dealers Association (“Auto

Dealers”). Mr. Lenhof testified that the Auto Dealers had contracted with Fern through

2015, but retained the right to cancel the contract with 30 days’ notice for any reason.

According to Mr. Lenhof, following the November 2012 show, Fern’s CEO informed him

that Fern intended to replace Mr. Lenhof as general manager. Mr. Lenhof formally

resigned from his position on March 8, 2013, and his last day with the company was

March 22.

       {¶6}     Sometime in late March, Mr. Lenhof accepted a position with Viper

Tradeshow Services (“Viper”)—a competitor of Fern—to oversee a new Viper branch in

Charlotte. The Auto Dealers subsequently canceled their contract with Fern and began

accepting bids from other companies, including Viper. In his deposition, Mr. Lenhof

explained that he assisted the executive director of the Auto Dealers with drafting both a

cancellation letter to Fern and a request for new proposals. The Auto Dealers ultimately

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                      OHIO FIRST DISTRICT COURT OF APPEALS

hired Viper to run the auto show. Based on these events, Fern sued Mr. Lenhof in Ohio,

alleging tortious interference with contract and business relationships, misappropriation

of trade secrets under both the Ohio and North Carolina uniform trade-secret laws, and

breach of the nonsolicitation provisions of Mr. Lenhof’s employment contract.

       {¶7}     Mr. Lenhof filed a motion to dismiss for lack of personal jurisdiction

under Civ.R. 12(B)(2). After reviewing the parties’ briefs, affidavits and other materials

in support of each party’s position, as well as the deposition of Mr. Lenhof, the trial court

granted the motion to dismiss. No evidentiary hearing was held.

       {¶8}     Fern now appeals the trial court’s dismissal of its complaint for lack of

personal jurisdiction over Mr. Lenhof.

                             II. The Burden of Proof Below

       {¶9}     We review the issue of personal jurisdiction de novo.               N. Am.

Software v. Black, 1st Dist. Hamilton No. C-100696, 2011-Ohio-3376, ¶ 11. When a

defendant moves to dismiss a case for lack of personal jurisdiction, the plaintiff bears

the burden of establishing that jurisdiction is proper. Id. “The trial court may hold

an evidentiary hearing and receive oral testimony or ‘hear’ the matter on the

affidavits, depositions, and interrogatories.” Timekeeping Systems v. Safekeeping

Protection Universal, 8th Dist. Cuyahoga No. 99714, 2013-Ohio-3919, ¶ 16, citing

Kauffman Racing Equip. v. Roberts, 126 Ohio St.3d 81, 2010-Ohio-2251, 930 N.E.2d

784, ¶ 27.    The Ohio Supreme Court has explained that when the trial court

“determines a Civ.R. 12(B)(2) motion to dismiss without an evidentiary hearing, the

plaintiff need only make a prima facie showing of jurisdiction.” Fraley v. Estate of

Oeding, 138 Ohio St.3d 250, 2014-Ohio-452, 6 N.E.3d 9, ¶ 11; see Kauffman at ¶ 27;

Black at ¶ 11; Timekeeping Systems at ¶ 16.

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                      OHIO FIRST DISTRICT COURT OF APPEALS

       {¶10}    Mr. Lenhof contends, however, that Fern was required to establish

personal jurisdiction by a preponderance of the evidence because the parties

participated in some discovery and the facts pertaining to the jurisdictional issue are not

disputed. In support of his position, Mr. Lenhof relies on a Sixth Circuit case, Schneider

v. Hardesty, 669 F.3d 693 (6th Cir.2012). The Schneider court affirmed the general

rule that, where no evidentiary hearing is held, the plaintiff need only make a prima

facie showing of jurisdiction. Schneider at 697. But the court also considered

whether a prior Sixth Circuit case, Dean v. Motel 6 Operating L.P., 134 F.3d 1269

(6th Cir.1998), created an exception to that rule. In Dean, some discovery had been

conducted at the trial level, but the trial court did not hold an evidentiary hearing. In

holding that the prima facie standard applied because there had been no hearing, the

Dean court indicated that a higher burden of proof would be appropriate “if the

reason for not having an evidentiary hearing was that there was no ‘real dispute’ as to

the facts or to the extent of discovery.” Dean at 1272.

       {¶11}    In considering whether Dean created such an exception, the Schneider

court noted that it could find no cases that had actually applied the exception. Instead, it

found that courts had interpreted Dean to confirm the general rule that “the

preponderance-of-the-evidence standard never applies in the absence of an evidentiary

hearing.” Schneider at 698, fn. 6, citing Bridgeport Music, Inc. v. Still N the Water

Publishing, 327 F.3d 472 (6th Cir.2003). Ultimately, however, the Schneider court

declined to decide the issue because it found that jurisdiction had been shown even

under the more rigorous standard.

       {¶12}    Like the Schneider court, we are not aware of any Ohio case law applying

the exception in Dean. Rather, the Ohio Supreme Court has made clear that in the

absence of an evidentiary hearing on the jurisdictional issue, the plaintiff need only

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                        OHIO FIRST DISTRICT COURT OF APPEALS

make a prima facie showing that jurisdiction is proper. See, e.g., Fraley, 138 Ohio St.3d

250, 2014-Ohio-452, 6 N.E.3d 9, at ¶ 11; Kauffman, 126 Ohio St.3d 81, 2010-Ohio-

2251, 930 N.E.2d 784, at ¶ 27; Goldstein v. Christiansen, 70 Ohio St.3d 232, 236, 638

N.E.2d 541 (1994). We see no reason to depart from that general rule. Thus, we

conclude that Fern need only make a prima facie showing that jurisdiction is proper. In

determining whether the plaintiff made a prima facie showing of jurisdiction, we

must view the allegations in the pleadings and documentary evidence in the light

most favorable to the plaintiff. Fraley at ¶ 11; Black, 1st Dist. Hamilton No. C-

100696, 2011-Ohio-3376, at ¶ 11.

                       III. The Exercise of Personal Jurisdiction

       {¶13}    Determining whether an Ohio court may exercise jurisdiction over a

nonresident defendant involves a two-part inquiry. First, we must verify that the

legislature has conferred jurisdiction pursuant to R.C. 2307.382, Ohio’s long-arm

statute. If it has, we must then determine whether the exercise of that jurisdiction would

violate the defendant’s due-process rights.

                            A. The Long-Arm Statute Applies

       {¶14}    Fern contends that Ohio may exercise jurisdiction over Mr. Lenhof

pursuant to R.C. 2307.382(A)(6), which provides:

       A court may exercise personal jurisdiction over a person who acts directly

       or by agent, as to a cause of action arising from the person’s * * *

       [c]ausing tortious injury in this state to any person by an act outside this

       state committed with the purpose of injuring persons, when he might

       reasonably have expected that some person would be injured thereby in

       this state[.]

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                      OHIO FIRST DISTRICT COURT OF APPEALS

Thus, to invoke personal jurisdiction under that provision of the long-arm statute, “it

need only be shown that [Mr. Lenhof] * * * caused tortious injury in this state, and that

[Fern’s] cause of action arose from such * * * tortious conduct.” Maui Toys v. Brown,

7th Dist. Mahoning No. 12 MA 172, 2014-Ohio-583, ¶ 44.

       {¶15}    Fern claims that Mr. Lenhof tortiously interfered with Fern’s business

relationships and misappropriated trade secrets in order to steal clients from Fern for

Viper. Likewise, Fern asserts that Mr. Lenhof reasonably should have known that

misuse of that information would cause injury to Fern in the form of lost revenues.

In his deposition, Mr. Lenhof admitted that he knew that when the Charlotte Auto

Dealers signed with Viper, it meant they were no longer contracting with Fern. He

also admitted to helping the Auto Dealers draft a cancellation letter and request for

proposals. If Mr. Lenhof did, in fact, commit the alleged tortious conduct, any injury to

Fern would occur in Ohio, where that company is headquartered. Construing the

evidence in the light most favorable to Fern, we conclude that Fern has alleged

conduct that brings its claims within the reach of the long-arm statute.

               B. The Exercise of Jurisdiction Satisfies Due Process

       {¶16}     The Due Process Clause of the Fourteenth Amendment imposes a

limitation on the authority of a state to assert jurisdiction over a nonresident defendant.

Walden v. Fiore, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014), citing World-Wide

Volkswagen Corp. v. Woodsen, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490

(1980). While the defendant’s physical presence in the state is not a prerequisite for the

exercise of jurisdiction, he must have sufficient “minimum contacts” with the forum

state, such that the exercise of jurisdiction would not “offend ‘traditional notions of fair

play and substantial justice.’ ”      Walden at 1121, citing Internatl. Shoe Co. v.

Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945), in turn quoting

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                      OHIO FIRST DISTRICT COURT OF APPEALS

Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940). Thus, the

Due Process Clause “protects an individual’s liberty interest in not being subject to

the binding judgments of a forum with which he has established no meaningful

‘contacts, ties, or relations,’ ” and requires “fair warning” that a person’s conduct may

subject him to suit in a particular state. Burger King v. Rudzewicz, 471 U.S. 462,

471-472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), citing Internatl. Shoe at 319.

       {¶17}    Personal jurisdiction may be either general or specific, and the

distinction turns on the nature of the defendant’s contacts with the forum state. Fern

contends that Mr. Lenhof’s contacts with Ohio were sufficiently pervasive that Ohio may

exercise either general or specific jurisdiction over him.

                                i. General Jurisdiction

       {¶18}    For a court to exercise general jurisdiction over a nonresident

defendant, the defendant must have “continuous and systematic” contacts with the

forum state. See Kauffman, 126 Ohio St.3d 81, 2010-Ohio-2251, 930 N.E.2d 784, at

¶ 46, quoting Bird v. Parsons, 289 F.3d 865 (6th Cir.2002). These contacts must be

“ ‘so substantial and of such a nature as to justify suit against [the defendant] on

causes of action arising from dealings entirely distinct from those activities.’ ” Joffe

v. Cable Tech, 163 Ohio App.3d 479, 2005-Ohio-4930, 839 N.E.2d 67, ¶ 37 (10th

Dist.), quoting Internatl. Shoe at 318.

       {¶19}    The United States Supreme Court has recently revisited the issue of

general jurisdiction in two cases: Goodyear Dunlop Tires Operations v. Brown, 131

S.Ct. 2846, 180 L.Ed.2d 796 (2011), and Daimler AG v. Bauman, 134 S.Ct. 746, 187

L.Ed.2d 624 (2014). In both cases, the court clarified that the proper inquiry is

whether a nonresident defendant’s “affiliations with the State are so ‘continuous and

systematic’ as to render [it] essentially at home in the forum State.” Daimler at

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                     OHIO FIRST DISTRICT COURT OF APPEALS

paragraph (C)(2) of the syllabus, quoting Goodyear at 2851. The court reaffirmed

that “[f]or an individual, the paradigm forum for the exercise of general jurisdiction

is the individual’s domicile[.]” Id.

       {¶20}    During his time as general manager of the Charlotte branch, Mr. Lenhof

attended meetings in Northern Kentucky two to three times per year, and entered Ohio

on an undetermined number of those occasions to visit his son. In addition to his trips

to see his son, Mr. Lenhof physically entered Ohio on at least three more occasions:

twice for personal reasons, and once for a meeting at Fern’s headquarters in Cincinnati.

Although he was born and raised in Ohio, he has not resided here since 1993. We simply

do not think Mr. Lenhof’s contacts rise to such a level that he could be considered

“essentially at home” in Ohio at the time of the events at issue in this case. We,

therefore, conclude that the trial court did not have general personal jurisdiction over

Mr. Lenhof.

                               ii. Specific Jurisdiction

       {¶21}    In the absence of general jurisdiction, a court may exercise specific

jurisdiction over a nonresident defendant “if the defendant has ‘purposefully directed’

his activities at residents of the forum, * * * and the litigation results from alleged

injuries that ‘arise out of or relate to’ those activities[.]” Burger King, 471 U.S. at

472, 105 S.Ct. 2174, 85 L.Ed.2d 528. To comport with due process, three criteria

must be met:

       First, the defendant must purposefully avail himself of the privilege of

       acting in the forum state or causing a consequence in the forum state.

       Second, the cause of action must arise from the defendant’s activities

       there. Finally, the acts of the defendant or consequences caused by the

       defendant must have a substantial enough connection with the forum

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                     OHIO FIRST DISTRICT COURT OF APPEALS

       state to make the exercise of jurisdiction over the defendant

       reasonable.

Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374 (6th Cir.1968).

       {¶22}   When evaluating whether summoning the defendant would violate

the fundamental concerns of “fair play” and “substantial justice,” we must apply “a

constitutional standard defined in the broadest terms of ‘general fairness’ to the

defendant.”    Id. at 382.   “[T]he constitutional touchstone remains whether the

defendant purposefully established ‘minimum contacts’ in the forum State.” Burger

King at 474, citing Internatl. Shoe, 326 U.S. at 316, 66 S.Ct. 154, 90 L.Ed. 95.

 a. Employee Purposefully Availed Himself of the Privilege of Acting in
                                Ohio

       {¶23}   Mr. Lenhof has purposefully availed himself of the privilege of acting

or causing a consequence in Ohio if he “should have reasonably foreseen that [his

actions] would have consequences in that state.” See Southern Machine at 382-383.

While “random, fortuitous, or attenuated contacts” or the “unilateral activity of

another party” are insufficient to meet the purposeful-availment requirement, a

defendant has availed himself of the privilege of conducting business in a forum state

where he “deliberately has engaged in significant activities within a State * * * or has

created continuing obligations between himself and residents of the forum.” Burger

King at 475-476.

       {¶24}   In Burger King, the Florida-based Burger King corporation sought to

sue a Michigan franchisee in Florida. The franchisee contended that Florida could

not exercise jurisdiction because he was not a resident of Florida, the breach didn’t

occur there, and he had never even been to Florida—though his cofrancishee did

attend a Burger King training session there on one occasion. The court disagreed,

holding that the purposeful-availment requirement was satisfied because the

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                     OHIO FIRST DISTRICT COURT OF APPEALS

franchisee caused injury to Burger King in Florida, knew he had involved himself

with a corporation based primarily in Florida, and engaged continuously in direct

communications with the Florida corporation via mail and telephone.

       {¶25}   Another case presenting similar facts is Internatl. Paper Co. v.

Goldschmidt, 872 F.Supp.2d 624 (S.D.Ohio 2012).             The International Paper

Company (“IPC”) was incorporated in Delaware and had its principal place of

business in Tennessee. A division of IPC called “xpedx” was headquartered in Ohio.

Goldschmidt was a general manager of Strategic Paper Group, a subsidiary of xpedx.

Although Goldschmidt lived in California and worked from there, the court held that

he had availed himself of the privilege of conducting business in Ohio because he

frequently communicated with his supervisor and other employees in Ohio, received

confidential information from Ohio through a password-protected xpedx website,

and visited Ohio twice in one year.

       {¶26}   Mr. Lenhof served as general manager from 2003-2013. During that

time, he was physically present in Ohio for business purposes on only one known

occasion. Nonetheless, Mr. Lenhof entered into an employment relationship with a

corporation based in Ohio.      His activities were supervised and controlled by

executives in Ohio, he participated in monthly review meetings with executives in

Ohio over the telephone, and he regularly accessed information on Fern’s computer

servers in Ohio. This was not unilateral activity on the part of Fern. Mr. Lenhof

deliberately entered into a substantial and continuing relationship between himself

and his Ohio-based employer, such that his actions would have consequences in

Ohio. This is sufficient to satisfy the “purposeful availment” requirement.

       {¶27}   As the Burger King court explained: “Jurisdiction in these

circumstances may not be avoided merely because the defendant did not physically

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                     OHIO FIRST DISTRICT COURT OF APPEALS

enter the forum State. * * * [I]t is an inescapable fact of modern commercial life that

a substantial amount of business is transacted solely by mail and wire

communications across state lines, thus obviating the need for physical presence

within a State in which business is conducted.” Burger King, 471 U.S. at 476, 105

S.Ct. 2174, 85 L.Ed.2d 528.

          b. The Claim Arose from Employee’s Contacts with Ohio

       {¶28}   The Ohio Supreme Court has summed up the second Southern

Machine requirement this way: “ ‘If a defendant’s contacts with the forum state are

related to the operative facts of the controversy, then an action will be deemed to

have arisen from those contacts.’ ” Kauffman, 126 Ohio St.3d 81, 2010-Ohio-2251,

930 N.E.2d 784, at ¶ 70, quoting CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1267

(6th Cir.1996). The cause of action need not “formally ‘arise from’ defendant’s

contacts with the forum,” as long as it has “ ‘a substantial connection with the

defendant’s in-state activities.’ ” Kauffman at ¶ 70, quoting Third Natl. Bank in

Nashville v. Wedge Group Inc., 882 F.2d 1087, 1091 (6th Cir.1989), and Southern

Machine, 401 F.2d at 384, fn. 27.

       {¶29}   The causes of action in this case are related to Mr. Lenhof’s

employment relationship with Fern, which was controlled and supervised from

Fern’s headquarters in Ohio. Fern claims that Mr. Lenhof interfered with its existing

contractual relationships and used confidential business information to steal clients

from Fern for Viper. That information was acquired by Mr. Lenhof through his

employment with Fern, by accessing client data on Fern’s Ohio-based computer

servers and discussing confidential business information in communications with

executives in the Ohio office. Thus, the claims are related to his contacts with Ohio.

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                     OHIO FIRST DISTRICT COURT OF APPEALS

                          c. Jurisdiction is Reasonable

       {¶30}   The final due-process inquiry considers whether the claim has a

substantial enough connection with Ohio to make it reasonable to compel Mr.

Lenhof to defend the suit here. As the Southern Machine court put it, “once the first

two questions have been answered affirmatively, resolution of the third involves

merely ferreting out the unusual cases where [Ohio’s interest in resolving the

dispute] cannot be found.” Southern Machine at 384.

       {¶31}   By enacting the long-arm statute, the legislature has made manifest

that Ohio has an interest in any cause of action in which the tortious conduct of an

out-of-state actor causes an injury in Ohio. See id. (Tennessee’s legislators “have

declared that State’s interest in any cause of action arising from any business

transaction in Tennessee”). And where the injury is to a corporation headquartered

in Ohio, Ohio’s interest in providing a forum for relief is clear. “A State generally has

a ‘manifest interest’ in providing its residents with a convenient forum for redressing

injuries inflicted by out-of-state actors.” Burger King, 471 U.S. at 473, 105 S.Ct.

2174, 85 L.Ed.2d 528. Although litigating the claim in Ohio is no doubt inconvenient

for Mr. Lenhof, the forum is not so inconvenient as to render the exercise of

jurisdiction constitutionally unreasonable. As the Goldschmidt court explained, “this

case does not present one of those rare instances where Defendant’s contacts with

the forum state are so minimal that such burden outweighs the interests of Ohio and

an Ohio-based business.” Goldschmidt, 872 F.Supp.2d at 633.

       {¶32}   “We should be careful not to subvert the expressed interest of [the

forum state] by a too grudging interpretation of the long arm statute or a too

restrictive view of the requirements of due process.” Southern Machine, 401 F.2d at

385.   “Due process requires only that a defendant not be ‘compelled to defend

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                       OHIO FIRST DISTRICT COURT OF APPEALS

himself in a court of a state with which he has no relevant connection.’ ” Id. at 386,

fn. 34.

                                     IV. Conclusion

          {¶33}   Jurisdiction is proper where a defendant has “purposefully ‘reach[ed]

out beyond’ ” his home state and into another, and has created “continuing obligations”

between himself and residents of the forum. Walden, 134 S.Ct. at 1122, 188 L.Ed.2d 12,

citing Burger King at 479-480. By willingly entering the employ of an Ohio-based

corporation, and subjecting himself to the supervision and control of his Ohio bosses,

Mr. Lenhof did just that. We find that Mr. Lenhof’s contacts with Ohio were sufficient to

satisfy traditional notions of fair play and substantial justice. We, therefore, sustain

Fern’s sole assignment of error, reverse the trial court’s judgment, and remand the cause

for further proceedings.

                                                  Judgment reversed and cause remanded.

H ILDEBRANDT , P.J., and H ENDON , J., concur.

Please note:

          The court has recorded its own entry on the date of the release of this opinion.

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