Filed: Jan. 07, 2008
Latest Update: Mar. 02, 2020
Summary: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 08a0012n.06 Filed: January 7, 2008 No. 07-3403 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT HEARTLAND HOME FINANCE, INC.; ) MORTGAGE DATA INC., ) ON APPEAL FROM THE ) UNITED STATES DISTRICT Plaintiffs-Appellants, ) COURT FOR THE NORTHERN ) DISTRICT OF OHIO v. ) ) OPINION ALLIED HOME MORTGAGE CAPITAL ) CORPORATION, ) Defendant-Appellee. BEFORE: DAUGHTREY and COLE, Circuit Judges; COLLIER, District Judge.* R. GUY COLE, JR., Circuit Judge
Summary: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 08a0012n.06 Filed: January 7, 2008 No. 07-3403 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT HEARTLAND HOME FINANCE, INC.; ) MORTGAGE DATA INC., ) ON APPEAL FROM THE ) UNITED STATES DISTRICT Plaintiffs-Appellants, ) COURT FOR THE NORTHERN ) DISTRICT OF OHIO v. ) ) OPINION ALLIED HOME MORTGAGE CAPITAL ) CORPORATION, ) Defendant-Appellee. BEFORE: DAUGHTREY and COLE, Circuit Judges; COLLIER, District Judge.* R. GUY COLE, JR., Circuit Judge...
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 08a0012n.06
Filed: January 7, 2008
No. 07-3403
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
HEARTLAND HOME FINANCE, INC.; )
MORTGAGE DATA INC., ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
Plaintiffs-Appellants, ) COURT FOR THE NORTHERN
) DISTRICT OF OHIO
v. )
) OPINION
ALLIED HOME MORTGAGE CAPITAL )
CORPORATION, )
Defendant-Appellee.
BEFORE: DAUGHTREY and COLE, Circuit Judges; COLLIER, District Judge.*
R. GUY COLE, JR., Circuit Judge. Plaintiffs-Appellants Heartland Home Finance,
Inc. (“Heartland”), an Illinois-based corporation, and Mortgage Data, Inc. d/b/a Active Response
Marketing (“ARM”), appeal the district court’s grant of summary judgment to Defendant-
Appellee Allied Home Mortgage Capital Corporation (“Allied”). Heartland and ARM cooperate
in the business of mortgage brokering and lending in the State of Ohio. Heartland is responsible
for actually providing the funds and services for homeowners, while ARM solicits prospective
customers for various mortgage brokers, including Heartland. Allied is a Texas-based
*
The Honorable Curtis L. Collier, Chief United States District Judge for the Eastern
District of Tennessee, sitting by designation.
corporation engaged in much of the same business as Heartland.
Heartland and ARM allege that Allied stole and used confidential internet “leads”—or
records of prospective customers—and unjustly profited by accepting business from customers
solicited as a result of those misappropriated leads in violation of Ohio Revised Code (“O.R.C.”)
§ 1333.61, et seq. Heartland and Allied contend that these leads, which are records containing
the names, address, contact information, and some basic credit information of people interested
in obtaining a new loan, constitute proprietary trade secrets under Ohio law.
Ohio defines trade secret to mean:
Information, including the whole or any portion or phase of
any scientific or technical information, design, process,
procedure, formula, pattern, compilation, program, device,
method, technique, or improvement, or any business
information or plans, financial information, or listing of
names, addresses, or telephone numbers, that satisfies both
of the following: (1) It derives independent economic
value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its
disclosure or use. (2) It is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
O.R.C. § 1333.61(D). In order to prevail on a misappropriation-of-trade-secret claim, a plaintiff
must show by a preponderance of the evidence: (1) the existence of a trade secret; (2) the
acquisition of a trade secret as a result of a confidential relationship; and (3) the unauthorized use
of a trade secret. Hoover Transp. Serv., Inc. v. Frye, 77 F. App’x 776, 782 (6th Cir. 2003) (per
curiam).
The Supreme Court of Ohio has adopted six factors for consideration in determining
whether an item constitutes a trade secret:
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(1) The extent to which the information is known outside the
business; (2) the extent to which it is known to those inside the
business, i.e., by the employees; (3) the precautions taken by the
holder of the trade secret to guard the secrecy of the information;
(4) the savings effected and the value to the holder in having the
information as against competitors; (5) the amount of effort or
money expended in obtaining and developing the information; and
(6) the amount of time and expense it would take for others to
acquire and duplicate the information.
State ex rel. Plain Dealer v. Ohio Dept. of Ins.,
687 N.E.2d 661, 672 (Ohio 1997). Although the
court has never found one factor dispositive, it has emphasized that “[a] business or possessor of
a potential trade secret must take some active steps to maintain its secrecy in order to enjoy
presumptive trade secret status.”
Id. Indeed, “[o]nce material has been publicly disclosed, it
loses any status it ever had as a trade secret.” State ex rel. Rea v. Ohio Dept. of Educ.,
692
N.E.2d 596, 601 (Ohio 1998). Moreover, the plaintiffs bear the burden to identify and
demonstrate that the information at issue is protected information under Ohio law.
Id.
Considering the six factors enumerated above, the district court concluded that: (1) the
sheets containing internet leads were not trade secrets; (2) Heartland did not take adequate
precautions to guard the internet leads; and (3) Heartland failed to present sufficient evidence
from which a jury could conclude that Allied misappropriated the trade secrets. Although we
review de novo a district court’s grant of summary judgment, Miller v. Admin. Office of the
Courts,
448 F.3d 887, 893 (6th Cir. 2006), the persuasive reasoning that supports the judgment in
favor of Allied has been clearly articulated by the district court in its opinion below. After the
benefit of hearing oral argument, we conclude that the issuance of a detailed written opinion by
us would be unnecessarily duplicative. The judgment rendered by the Honorable Patricia A.
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Gaughan on February 5, 2007, is accordingly affirmed on the basis of the reasoning contained in
those documents.
In adopting the district court’s opinion below, we note one minor caveat. The district
court found in favor of Allied on both the second and third factors, which ask whether Heartland
took sufficient active steps to maintain the secrecy of the leads both inside and outside of the
company. Contrary to the district court’s analysis, we conclude that the protections need only be
“reasonable” under the circumstances. For example, in Siegel v. Arter & Hadden,
707 N.E.2d
853 (Ohio 1999), the court found that the customer list at issue was a trade secret because the
employer maintained the list on a computer in a password-protected file; kept copies of the
customer list in a filing cabinet that was sometimes locked; and “probably” told its employees
that its customer list was confidential and not to be removed from the office.
Id. at 862. Here,
the record reflects that Heartland had a policy of non-disclosure with its own loan officers, even
if it did not with ARM or Lake Data. The record also reflects that the compilation and
distribution of internet leads were subject to at least some protective measures similar to the ones
in Siegel.
With this caveat in mind, we conclude that the district court correctly found that the other
factors weighed heavily in favor of Allied. The leads in question do not disclose any information
about the business of Heartland or its business plans, and the fact that the leads may have been
converted into successful sales is irrelevant. As represented by Heartland, the documents are
merely “raw data” used to garner mortgage sales and not, for example, carefully developed
product designs, sale goals, or client lists. Plainly stated, information that is openly available on
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the market at minimal cost is not the type of data Ohio courts have considered to be trade secrets.
See Carp Corp. v. Linder, No. 80589,
2002 WL 31667316, *5 (Ohio App. 8th Dist. Nov. 27,
2002) (readily ascertainable customer lists do not constitute trade secrets).
For the aforementioned reasons, we affirm the judgment rendered by the district court.
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