Court Opinion

ID: 3721354
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:52:17.652759+00
Date Added: 2024-06-11T18:01:19.366582
License: Public Domain

Although I respect the opinions of my colleagues, I cannot concur with the majority because the result herein, as contended by the second assignment of error, grants what is tantamount to an unlawful monopoly to one of the giants of the oil industry — the Standard Oil Company — monopoly meaning dominant, not necessarily exclusive.
The injunction granted herein does not enjoin one of plaintiff's former employees from competing pursuant to a limited reasonable noncompetition clause of the employment contract. None of the defendants were ever employees of Standard Oil Company — most assuredly not appellant Landmark, who is, and has been, the largest "competitor" of Standard Oil in the area.1
That "competitor" has been for the most flimsy of justifications, enjoined from competing with Standard Oil in a portion of southeastern Franklin County.
But really, the most important factor in this case is that Standard Oil had no business and no customers in the area to protect. I repeat, Standard Oil had absolutely no customers in the area. The only customer Standard Oil had in the area was defendant Ronald Cook who had operated an independent business as a distributor of Standard Oil products in the area under a contract making him an independent contractor. The agreement in paragraph 10 expressly provides that "the business conducted bythe Distributor hereunder is the independent business of theDistributor." Paragraph 10 further provides:
" * * * None of the provisions of this Agreement *Page 240 
shall be construed as reserving to the company any right to exercise any control over the business or operations of the Distributor contemplated hereunder, or to direct in any respect the manner in which the business or any operation shall be conducted, it being the intention hereof that the entire control and direction of the activities of the Distributor's business hereunder shall be and remain with the Distributor. * * *"
In light of the foregoing provisions, there can be no question but that the customers are those of the distributor and not those of the Standard Oil Company. The distributor, Ron Cook, was not an employee or agent of Standard Oil serving Standard Oil customers. In fact, the agreement further expressly provided in paragraph 10:
"* * * Distributor is authorized to use the words `Distributor — The Standard Oil Company (Ohio)' on his stationery, delivery tickets, and equipment, but he shall notrepresent himself as an agent or employee of the company."
Obviously, if the contract called for Ron Cook to deliver Standard Oil products to Standard Oil customers, he, of necessity would be an agent or employee of Standard Oil.
The noncompetition clause further reinforced the concept that the customers were those of Ron Cook, not Standard Oil, by providing that the consideration for the noncompetition clause is "the company's goodwill in the above-mentioned primary area of responsibility which has resulted from the quality of its products, its customer service, its advertising, and other factors." Service to its own customers by Standard Oil would not constitute consideration to Ron Cook but service by Standard Oil to Ron Cook's customers would.
The agreement, in paragraph 10, also makes it clear that persons employed by Ron Cook in connection with his "independent business" were solely the employees of Ron Cook and not in any way employees of Standard Oil. This, of necessity, would include Ron Cook's son, Dan Cook.
Even assuming the validity of the noncompetition clause (which although debatable is not an issue herein *Page 241 
since Ron Cook has not appealed),2 there can be no question that the noncompetition clause does not apply either to Dan Cook (who had no contractual relationship with Standard Oil although a former employee of Ron Cook), nor to appellant Landmark by virtue of its employment of a former employee of Ron Cook or otherwise.
The essential facts are that Ron Cook for approximately twenty-six years operated an independent business as a distributor of Standard Oil products under distributorship contracts with Standard Oil, the last of which became effective June 30, 1975. At the same time, Standard Oil terminated the agreement with Ron Cook insofar as he had been the operator of a bulk station at Pickerington. Ron Cook was accordingly forced to travel a considerable distance to pick up Standard Oil products in another part of the county, adding significantly to Ron Cook's cost of operation. (Ron Cook was changed from "Sohio Bulk Tank Distributor" to "Tank Wagon Distributor.") Cook, on or before August 1975, offered to sell his "independent business" to Fleetway, Marathon, and to Landmark. None were interested since, in light of the noncompetition clause, Ron Cook had nothing to sell despite the 26 years he had spent building up his "independent business."
Dan Cook had been employed by his father Ron Cook. In August 1975, Dan Cook left the employment of Ron Cook and was employed by Landmark in a similar position and was to be paid 1 1/2 cents per gallon for all new business he obtained. Dan Cook used his own recollection and his father's handwritten list of customers to call on those customers of his father he had previously called on while employed by his father and attempted to have such customers of his father continue to purchase from him by switching to Landmark products. Dan Cook also looked in his father's records on occasion to obtain a "K factor" of some customers, which information had been supplied to Dan's father, Ron Cook, by Standard Oil through use of a computer. *Page 242 
Shortly prior to Standard Oil's termination of Ron Cook's agreement as "Sohio Bulk Tank Distributor" and relegation of him to "Tank Wagon Distributor," effective June 30, 1975, Ron Cook had participated in the organization of a "union" of Sohio distributors and became the president of that organization which had sought recognition for collective bargaining with Standard Oil.
The relationship between Standard Oil and Ron Cook further deteriorated (stemming at least in part from Dan Cook's activities as an employee of Landmark). Finally, by letter dated September 25, 1975, Standard Oil notified Ron Cook that it was cancelling the distributor agreement between them. By letter dated September 26, 1975, Standard Oil notified Ron Cook's customers of the distributor change directing them to a distributor in Lancaster. By letter dated September 24, 1975, but mailed September 29, 1975, Ron Cook also notified his customers that he was no longer a distributor for Standard Oil.
Ron Cook, however, did not merely stop with such notification. He stated: "we are changing suppliers," and urged his customers to continue with him and Landmark and enclosed a Landmark pamphlet. The pamphlet had been obtained from the Landmark office by Dan Cook at his father's request. The trial court found that Dan Cook furnished the pamphlets to his father on September 29, 1975, knowing that his father intended to send them to his former customers. Eleven days later (October 10, 1975, as found by the trial court), Dan Cook's employment with Landmark ceased because he became incapacitated in an automobile accident.
The trial court made no finding of fact as to whether the acts of Dan Cook in (1) using his father's list of customers, (2) using his father's records to find the "K factor" in some instances, which had been furnished to his father by Standard Oil, and (3) in furnishing his father the Landmark pamphlets, were performed within the scope of his employment with Landmark. Rather, the trial court found this issue as a matter of law. There is no basis in the record for finding as a matter of law that Dan Cook acted within the scope of his employment. In any event, even assuming *Page 243 
that he did, this does not ipso facto entitle Standard Oil to injunctive relief against Landmark. The Supreme Court held inCurry v. Marquart (1937), 133 Ohio St. 77:
"In the absence of an express contract not to engage in a competitive pursuit, an employee, upon taking a new employment in a competing business, may solicit for his employer the trade or business of his former customers and will not be enjoined from so doing at the instance of his former employer where there is no disclosure or use of trade secrets or confidential information relative to the trade or business in which he had been engaged and which he had secured in the course of his former employment." (Syllabus.)
See also Cord Co., Inc., v. S  P Management Services, Inc.
(1965), 2 Ohio App.2d 148.
These cases clearly establish that there was absolutely no wrongdoing of any nature on the part of Landmark in hiring Dan Cook with the full expectation that he would solicit his father's customers whom he had previously served on his father's behalf and attempt to obtain them as customers of Landmark. Likewise, there was no wrongdoing on the part of Dan Cook in agreeing to do so.
As to customer lists, the evidence is clear and overwhelming that the customers upon whom Dan Cook called to solicit for Landmark were former customers of his father in theindependent business he operated on his own behalf. More importantly, it is clear that Dan Cook had never been an employee of Standard Oil. Any information he had or obtainedcould not have been obtained as a result of his employment with Standard Oil because he had never been its employee. Likewise, nothing Ron Cook did resulted from employment with Standard Oil because he had never been an employee of Standard Oil.
For more than 26 years, Ron Cook had operated his own independent business, having a contractual relationship with Standard Oil. Effective June 30, 1975, Standard Oil changed that contractual relationship and then complained that Ron Cook did not sell as many products as he did under the previous arrangement.
At about the same time, Ron Cook learned that the *Page 244 
"independent business" which he he had spent nearly 27 years building up was not sellable because of his contract with Standard Oil. Ron Cook also has since learned that Standard Oil can, overnight, terminate the independent business he spent nearly 27 years establishing, claim his customers as its own, and prohibit him for one year from engaging in the only occupation he has known for 27 years, throwing him into the ranks of the unemployed without the benefit of unemployment compensation, since Standard Oil has avoided paying such taxes by the contract. But, for purposes of this case, Standard Oil insists that Ron Cook not be treated as the operator of an independent business but, rather, as an agent of Standard Oil acting on its behalf dealing with its customers.
If, as the contract expressly provides, Ron Cook was the operator of an independent business, then the customers with whom he dealt were his customers and not customers of Standard Oil. It must be remembered that, during the first six weeks of, approximately, the two-month period Dan Cook was employed by Landmark, he operated in direct competition with his father, Ron Cook, who was still in business.
As to the use of the "K factor," even assuming that Dan Cook acted improperly, there is no showing that this in any way assisted him in convincing customers to purchase from him as an employee of Landmark rather than from his father who was the Standard Oil distributor, or from the Lancaster distributor after September 26, 1975.
The letter dated September 24, 1975, and mailed September 29, 1975, poses a different problem. Ron Cook in sending the letter probably violated paragraph 15 of his agreement with Standard Oil, assuming its validity. The very language of the letter constituted a solicitation by Ron Cook for his customers tocontinue to deal with him but as a distributor for Landmark, rather than Standard Oil.3
Ron Cook told his customers in the letter that he was continuing in business, but that "it is impossible to supply *Page 245 
your oil needs through Sohio," but that "Landmark has agreed to supply us and you with oil for your needs adequately." The first statement was true; the second was not. There is no evidence that Landmark ever agreed to supply oil to Ron Cook. The letter concluded "let us continue to serve you."
To bind Landmark to that letter is both contrary to the evidence and unrealistic. Landmark neither had any arrangement with Ron Cook nor authorized the letter. The only "connection" was that Dan Cook obtained the Landmark pamphlets which Ron Cook enclosed with the letter. This is far too nebulous a basis for justifying the wide-sweeping injunction enjoining a nonprofit corporation like Landmark from competing with an industrial giant like Standard Oil.
In order to justify an injunction, irreparable injury must be demonstrated. Where the alleged unfair competition is by a nonprofit corporation against a large corporate industry, more than some isolated "loss" of 186 "customers" (of 504 served in the area) must be demonstrated. It must be demonstrated that the ability of the large industry to compete with the nonprofit corporation has been substantially impaired by the alleged act of unfair competition. There is no such showing here.
Even assuming that an act of unfair competition attributable to Landmark can properly be found predicated upon the record herein, Standard Oil is not entitled to the relief granted. There must be demonstrated that the injunctive relief is necessary to maintain the competitive balance. Here, instead of attempting to restore and maintain the competitive balance, the trial court granted a virtual monopoly to Standard Oil for a period of one year.
In any case of alleged unfair competition between businesses, the relative competitive position of the businesses is of concern. The law first tends to protect the small business from being forced out of business by a much larger business with an inherent competitive advantage. Of concern next is the protection of businesses of substantially equal size and competitive advantage. Of last and least concern is protection for the large company from *Page 246 
being "sniped" at, even unfairly, by a much smaller business. To justify injunctive relief, the large company must demonstrate that the "unfair competition" by the much smaller competitor has irreparably affected the overall business of the company. Here, the most that has been demonstrated is a slight temporary effect that can easily be overcome by Standard Oil in having a distributor available to call upon Ron Cook's customers.
By the time of trial, any vestige of competitive advantage obtained "unfairly" had been eliminated. In fact, the "high-handed" tactics utilized by Standard Oil, as demonstrated by the record, has probably caused more loss of good-will and business for Standard Oil than any act of Landmark, Dan Cook, or Ron Cook.
Finally, even assuming an "injury" to Standard Oil, it was not irreparable. Only 186 of some 504 customers of Ron Cook, and claimed by Standard Oil, were obtained by Dan Cook for Landmark.
The amount of oil that Landmark sold to such customers during the one-year period of the injunction would be easily provable as would the amount Ron Cook sold to the same customers the previous year. Likewise, the amount of profit Standard Oil would have made from "selling" such oil to Ron Cook (or to the Lancaster distributor) for delivery to such customers should also be easily provided. In other words, money damages are readily and easily provable in this case. Any argument that Standard Oil would lose some competitive advantage by Landmark's not being enjoined from servicing the customers is spurious. Neither Cook would be involved in deliveries for either Landmark or Standard Oil. Each would "deal" with the customers on their own merits if no injunction had been granted.
I am especially reluctant to extend the doctrine of restraint of trade to the circumstances herein involved even if I could agree with the majority in other respects. There is no precedent for the type of restrain of trade hereby imposed and I feel public policy favors a continuation of competition under such circumstances. *Page 247 
For the foregoing reasons, I would sustain all the assignments of error except the fourth, finding noprejudicial error with respect to the rulings on the objections to the depositions. Accordingly, I would reverse the judgment of the trial court as to Landmark (the other defendants not having appealed), and remand the cause to that court for a proper modification of the judgment, leaving Landmark free to seek relief from the injunction bond because of the improperly obtained preliminary injunction.
1 Actually, Landmark was a distributor of oil and thus a competitor of Ron Cook rather than Standard Oil, there being no evidence that Landmark was an oil company in that sense.
2 See annotation, 26 A. L. R. 2d 219.
3 There is no evidence Landmark induced Ron Cook to do anything. Rather it unsuccessfully attempted to dissuade him.