In the spring of 1999, Source Associates, Inc. (Source), and Conrad A. Mamajek, Inc. (CAM), entered into a joint venture to act as a middleman for the sale of polymers manufactured by Mitsui Chemicals America, Inc. (Mitsui). Under their agreement with Mitsui, Source and CAM paid all the invoice costs associated with the purchase of the product; handled sales, marketing, and technical support; and negotiated supply, product, and pricing between Mitsui and its customers.
The identities of these customers were known only to Source and CAM; the joint venture would purchase polymer from Mitsui and then resell it to buyers. Source and CAM alleged that they spent considerable time, effort, and resources identifying potential customers and servicing these relationships and that this information had substantial economic value to them. As part of the agreement between the joint venture and Mitsui, Mitsui was barred from using the customer information for its own ends.
Bushman was an employee of Mitsui until his retirement in 2013. Source and CAM allege that Bushman “came into possession of secret and proprietary customer information, buying history and pricing policies utilized by Source and CAM” through his position at Mitsui. Shortly before his retirement, Bushman advised Source and CAM that Mitsui would cease delivering to them. Indeed, Mitsui sent notices of termination of distribution of polymer to Source and CAM a few months later. Following Bushman’s retirement, Mitsui diverted all its sales through Bushman and his company, who allegedly began selling to Source and CAM’s customers. Source and CAM sued Mitsui, Bushman, and Bushman’s partner, Breon, for several claims, including unjust enrichment under a quasi-contract theory.
JUDGE LIOI To set forth a claim of unjust enrichment, a quasi-contractual claim, plaintiffs must allege the following elements: “(1) a benefit conferred by a plaintiff upon a defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment (‘unjust enrichment’).” Hambleton v. R.G. Barry Corp., 465 N.E.2d 1298, 1302 (Ohio 1984).
In their fifth claim, plaintiffs allege that defendants Bushman, Breon, and Mitsui, without spending “any time, effort or resources” of their own, benefited from their use of Source/CAM’s “considerable time, effort and resources in identifying customers and their needs in the market, developing pricing policies and in nurturing the relationship with and servicing Brindle and Complex.” … The complaint further alleges that “[t]hrough their misuse of Source’s and CAM’s information for their own benefit and other misconduct, Defendants have deprived Source and CAM of its valuable customer base, business line and stream of profit with Brindle and Complex and divided upon [sic] the advantages derived therefrom among themselves.” (Id. ¶ 44.) Plaintiffs seek an accounting and disgorgement of the benefits realized by the defendants. …
Bushman and Breon argue that the complaint fails to allege any contractual or business relationship between plaintiffs and Bushman and/or Breon sufficient to support a quasicontractual claim. They further assert that “[t]here is no unjust enrichment claim based on tortious interference with contract.”
The Court need not address the argument that there is no allegation of a contractual relationship because that is not an element of the claim of unjust enrichment. In fact, that is the whole point of a claim of quasi-contract, which “is not a true contract, but instead a liability imposed by courts in order to prevent unjust enrichment.” Reisenfeld & Co. v. Network Grp., Inc., 277 F.3d 856, 860 (6th Cir. 2002) (citation omitted).
In arguing that there is no unjust enrichment claim based upon tortious interference, defendants cite Developers Three v. Nationwide Ins. Co., 582 N.E.2d 1130, 1135-36 (Ohio Ct. App. 1990). But that case was addressing the correct measure of damages for tortious interference, and held that such damages cannot be recovered under an unjust enrichment theory. In other words, damages for tortious interference could not be based on defendant’s gain, but only on plaintiff’s loss. Developers Three is not helpful and defendants make no other argument. Although they assert that plaintiffs do not allege any benefit conferred upon Bushman and/or Breon, the Court disagrees. The complaint alleges that defendants enjoyed the benefit of Source/CAM’s customer development and all that that entailed. Plaintiffs essentially allege that they did all the leg work and defendants walked away with the benefits, including the business of Source/CAM’s two customers, Brindle and Complex.
Although a close call, the Court cannot conclude that the fifth claim fails to state a claim against Bushman and/or Breon. To that extent, defendants’ motion is denied.
Motion DENIED in part and GRANTED in part.
CRITICAL THINKING:
This decision held that the plaintiff had made enough of a case that the defendant’s motion to dismiss was denied. What additional information might the plaintiff bring to court to try to win the case on its merits?
ETHICAL DECISION MAKING:
Had the defendant operated in accordance with the Golden Rule, how might he have behaved differently in this situation?