Two consolidated appeals arise from a bench trial involving Horenstein, Nicholson, Blumenthal, L.P.A. (HNB) and defendants John Hilgeman and Christopher Cowan. In the first appeal (Case No. 28581), HNB contests two judgments: the first, from October 22, 2019, found HNB liable for defamation and false light, awarding Appellees $200,000 in damages. The second judgment, from June 9, 2020, granted Appellees prejudgment and post-judgment interest and imposed attorney fees and costs on HNB for frivolous conduct under R.C. 2323.51.
In the second appeal (Case No. 28838), Craig Matthews, HNB's attorney, appeals the June 9, 2020, judgment that similarly imposed attorney fees and costs for frivolous conduct upon him. HNB argues that the trial court erred in its findings regarding defamation and false light claims, the awarding of attorney fees, and the prejudgment interest. Matthews contends the trial court's findings of frivolous conduct against him were erroneous and disputes the amount of fees awarded.
Additionally, the October 22, 2019 judgment found in favor of HNB on a breach of contract claim against Jack Hilgeman, while rejecting Jack's counterclaims for defamation and false light. HNB's claims against Jack for trade secrets violations and fraud were also dismissed without appeal. Jack Hilgeman did not appeal the judgment, and he and the law firm Cowan and Hilgeman (C&H) are not involved in the current appeals.
The trial court erred in ruling in favor of Appellees on their defamation and false light claims against HNB. HNB's complaint and supporting affidavit were deemed absolutely privileged, as the statements were related to a judicial proceeding. Even if statements made by HNB’s attorney in a newspaper and on social media were defamatory, HNB could only be held vicariously liable if it authorized them, which there was no evidence of. Additionally, these statements were not defamatory as a matter of law based on their context and reasonable interpretation.
Consequently, the judgment awarding Appellees prejudgment and post-judgment interest on the counterclaims is reversed. While there was credible evidence supporting the trial court's finding of frivolous conduct by HNB and Matthews regarding trade secret and fraud claims, the decision to assess fees from the complaint's filing date lacked sufficient evidence. Under R.C. 2323.51(A)(2)(a)(iii), minimal support for allegations is required to avoid a frivolous conduct finding, and HNB recognized by September 28, 2018, that their claims were unsupported. Therefore, the attorney fees assessment needs to be reversed and remanded for further proceedings, as it was improperly extended.
The trial court also incorrectly awarded fees to Appellees for work performed by Jack, an attorney and co-defendant, on his own claims, as HNB and Matthews were not guilty of frivolous conduct concerning him. Moreover, the term "attorney" in R.C. 2323.51 implies an agency relationship, so fees charged by an attorney for their own claims do not qualify as "attorney fees." Appellees may seek fees for Jack's work on their behalf if they can prove a legal obligation to pay him.
Matthews's concerns about the fee ratio are moot due to the need for a remand. HNB’s first and third assignments of error are sustained, the second is partially sustained and overruled, while Matthews's assignments are also partially sustained and overruled as moot. The October 22, 2019 judgment is affirmed in part and reversed in part, specifically regarding Appellees' counterclaims for defamation and false light.
The June 9, 2020 judgment on post-trial motions is partially reversed and partially affirmed. Specifically, the judgments for prejudgment and post-judgment interest are reversed. The trial court's finding that HNB and Craig Matthews engaged in frivolous conduct is upheld in part, with a reversal regarding the start date of this conduct and the timeframe for calculating attorney fees. The award of attorney fees is reversed and remanded for further consideration regarding fees linked to claims of trade secrets and fraud.
HNB is a law firm specializing in workers’ compensation, personal injury, social security disability, and veterans’ disability, structured into three profit centers, each operating as a separate business but sharing certain expenses. Bruce Nicholson, a licensed attorney since 1977, managed the workers’ compensation and personal injury profit center until around 2010, when Fred Sommer became a shareholder. Following the economic downturn of 2008-2009, HNB shifted to expand its personal injury practice instead of referring clients elsewhere, leading to substantial growth due to marketing investments.
In May 2012, HNB hired Jack, primarily for personal injury work. He signed two employment agreements, one on May 18, 2012, and another on January 2, 2014. These agreements mandated exclusivity in employment, adherence to professional conduct rules, and ensured that all client files opened by Jack would remain the property of HNB, with obligations to report on file status and ownership retained by the firm upon termination of the employment relationship.
The employment agreement allows either party to terminate it with at least sixty days' written notice. Upon termination, all client cases and files remain the sole property of Horenstein, Nicholson, Blumenthal (HNB), along with all fees generated from those cases. Jack was offered an annual salary and bonuses, with the potential to become a "percentage associate" after three years, contingent on performance and business growth. Over his tenure from 2012 to May 2017, Jack successfully expanded the personal injury (PI) practice from 30-40 clients to approximately 287 clients, resulting in increased bonuses and overall income. In December 2015, discussions about fee allocation led to the drafting of 2016 employment agreements for Jack, Bruce, and Fred, proposing a minimum income level with profit-sharing based on the ratio of fees from PI and workers' compensation (WC) practices. Although Bruce and Fred signed the agreements, Jack did not, and during a meeting on February 29, 2016, he acknowledged his obligation under the 2014 agreement while indicating he would consider signing the new contract.
Bruce emailed Jack the day after their meeting, recalling that Jack was hesitant to sign the agreement but planned to create a proposal. Bruce expressed support for Jack's career and acknowledged their differing perspectives on compensation, emphasizing that financial success alone does not guarantee fulfillment. On August 2, 2016, Bruce sent Jack a draft proposal for an ownership interest in HNB, indicating a need for a profit-sharing agreement and outlining conditions such as liability assumptions, capital contributions, personal financial disclosures, and background checks. Jack responded he would review the proposal but did not get back to Bruce, nor did he execute the document or make a capital contribution.
In October 2016, they discussed staffing needs for the PI practice, and on December 14, 2016, they met with Fred to discuss financials and bonuses. Although Jack had no authority over financial distributions, he was invited to the meeting. Prior to this, Jack emailed Bruce on December 12, 2016, requesting a meeting to discuss concerns about the PI practice's future. Bruce scheduled a meeting for January 9, 2017, asking if Jack could provide a proposal beforehand, but Jack only sent a spreadsheet comparing net profits of the WC and PI practices.
During a meeting on December 14, 2016, Bruce, Fred, and Jack expressed disappointment over a net profit of only $130,000 for the year. Bruce had initially decided to divide the profits equally among the three, believing this to be generous, but Jack was dissatisfied, feeling he deserved the entire amount. Bruce rejected this idea as unreasonable. The discussion shifted to how to allocate bonuses, with Jack advocating for performance-based considerations. The meeting concluded amicably without a firm resolution, and Fred encouraged Bruce to proceed as he saw fit regarding the bonuses. Ultimately, Bruce and Fred decided on a 40/30/30 split for bonuses, hoping to foster Jack’s continued involvement in the practice, which Jack later appreciated.
The following day, Bruce informed Jack and Fred of his impending retirement on June 23, 2017, earlier than anticipated. In his memo, Bruce acknowledged the differing perspectives on financial matters among the trio, attributing these differences to their varying career stages and individual needs, and noting an inherent mistrust. He predicted that the profitability of the workers' compensation practice would not significantly improve before his planned retirement in December 2018. Bruce indicated that he had contemplated retirement for some time and that it was unrelated to the recent meeting, suggesting that his departure might relieve some financial pressure on the practice.
On December 15, Bruce sent an email with the memo and the agreed bonus distribution. The next day, Jack expressed shock at the decision in an email, thanking Bruce for his transparency and offering support during the transition. He indicated his willingness to assist with various tasks and mentioned he would communicate the information to Fred as well.
On January 9, 2017, Bruce, Fred, and Jack convened at a restaurant, an unusual gathering since Fred had not previously attended the annual meeting that Bruce and Jack typically held to review the prior year. Fred's attendance was prompted by Bruce's resignation letter. During the meeting, Jack expressed concerns about his position following Bruce's retirement and reiterated his ideas on a performance-based compensation system, concluding that bonus allocation would remain unchanged. A dispute arose while Bruce was in the restroom regarding a prior offer of partnership made to Jack by Bruce; Fred denied any such offer, insisting that Jack had not met the tenure requirement. Fred claimed their conversation was casual and did not focus on firm matters, although he did mention wanting Jack to become a percentage associate to share in profits.
Jack recounted that Bruce and Fred advised him against seeking partnership due to potential liabilities and promised further discussions on a compensation proposal, which never transpired despite Jack's periodic inquiries. Bruce believed an agreement on Jack’s compensation could have led to Jack becoming a shareholder, but Jack was perceived as evasive about the topic and did not submit any formal proposals regarding shareholder status or financial expectations before his departure.
Additionally, HNB utilized a case management software called "Prevail," but Jack maintained a separate record on the "N" drive within the firm’s server, using complex Excel spreadsheets for tracking cases. Bruce was unaware of Jack’s usage of this drive and had no reason to monitor his activities. Forensic analysis revealed a significant increase in file access on the N drive, indicating a systematic copying of client data files between February and May 2017, suggesting potential misconduct.
On March 22, 2017, Jack scheduled a meeting with his father, John, at John's office for March 27, which also included Chris. Jack presented a confidential agenda that outlined several topics including negotiations with Fred Sommer of HNB, practice areas, office space availability, staff support, phone systems, website development, health insurance, and malpractice insurance. During the meeting, John made notes on the agenda regarding various issues such as staffing timelines and specifics on insurance limits.
By late April, Jack communicated to John his intention to leave HNB due to a lack of communication from Fred. On April 27, John received an email from his tenant regarding changes to a lease that would affect an office suite occupied by Jack, effective May 1, 2017. On the same day, Jack created a mail merge file for PI clients at HNB, which was later recovered through forensic means after its initial deletion. Jack acknowledged creating the file and noted his significant printing activity at the firm during this period.
On May 1, 2017, John received a letterhead proof for C&H that included Jack's name, to which he approved and requested expedited delivery. Jack then requested additional details to be added to the letterhead. The next day, Jack purchased a computer for C&H, as the firm did not provide him with one. On May 4, Jack sent an email to a printing company requesting 400 copies of a document.
On May 4, 2017, at 10:55 a.m., John emailed his tenant a confidential letter regarding new lease arrangements, which included a provision for Jack Hilgeman to purchase office furniture for $450. John indicated he would discuss payment arrangements and formalize the purchase with Jack. Jack, during a meeting with Fred that afternoon, expressed concerns about compensation changes with Bruce's retirement, stating he received 40% previously. Fred suggested Jack's compensation would decrease to 20-25%, reflecting his own past experience. Fred denied discussing Jack's shareholder future and characterized the meeting as brief, with Jack dominating the conversation. Jack, feeling uncertain after the meeting, printed letters to clients that evening, announcing his acceptance of a partnership with Cowan, Hilgeman, effective May 5, 2017. The following morning, Jack had 225-230 sealed letters ready to mail and met with John, where he mentioned his resignation plans. After mailing the letters, Jack worked at HNB without informing anyone of his decision until later that day when he attempted to resign to Fred, who was unavailable. Jack then informed his paralegal, Michelle, of his departure and offered her a position, which she accepted. They subsequently packed their belongings from the office.
On May 5, 2017, at approximately 7:00 p.m., Jack copied all active personal injury client files from the N drive to a personal thumb drive, which included files related to various client types. He then transferred these files to a new computer at C&H. Forensic analysis of Jack's HNB desktop revealed a deliberate deletion of documents typically associated with ongoing use, evidenced by a low percentage of files with 2017 timestamps and empty email folders, the last access being around 7:30 p.m. on the same day.
The workweek at HNB concluded on Fridays at 5:00 p.m., and it was known that Fred did not use a smartphone or check emails on weekends. Bruce was on vacation in Arizona, a fact known to Jack. At 9:45 p.m. on that Friday, Jack emailed Fred to formally resign effective immediately, without informing Bruce. Fred only learned of the resignation upon returning to the office on May 8, 2017, while Bruce was notified earlier through a paralegal's call.
On May 8, 2017, Jack entered a partnership agreement with John and Chris, stipulating shared expenses, individual income retention, and a 30-day notice period for withdrawal. Bruce returned from vacation to find operational disarray following Jack's departure, which included disorganized files and unfiled documents, causing significant disruption that required extensive attention from staff.
On June 6, 2017, HNB filed a complaint against Jack, John, Chris, and C&H with seven claims: violation of Ohio’s Uniform Trade Secrets Act, interference with engagement agreements, interference with business relationships, unjust enrichment, breach of the 2012 Agreement, breach of the 2014 Agreement, and fraudulent concealment.
All claims were made against Jack, while Counts One through Four and Seven were directed at John, Chris, and C&H. A motion for a temporary restraining order (TRO) was filed on the same day, supported by an affidavit from Fred asserting the truth of the allegations in the complaint. On June 7, 2017, a visiting judge was requested and appointed by June 28, 2017. John, Chris, and C&H filed an answer and counterclaim against HNB, along with a third-party complaint against Fred, alleging defamation and false light based on articles in the Dayton Daily News regarding a "midnight raid" at HNB.
On July 7, 2017, Jack, John, Chris, and C&H moved to dismiss or stay proceedings pending arbitration, claiming that Prof.Cond. R. 1.5(f) obliged HNB to submit fee disputes to arbitration. They also filed a Civ. R. 12(B)(6) motion to dismiss, and HNB responded to both. During an August 3, 2017 TRO hearing, the parties could not agree on an order, leading the trial court to refer the attorney fee dispute to mediation or arbitration with the Dayton Bar Association on August 23, 2017. The court ordered that any fees collected from clients who had discussions with Jack before August 6, 2017, be deposited into an interest-bearing account managed by DBA counsel John Ruffalo and stayed all other matters until receiving Ruffalo’s report.
Arbitration took place on March 6, 2018, with a decision issued on March 15, 2018. Defendants sought confirmation of the arbitration award, while HNB filed a motion to vacate it, claiming arbitrators exceeded their authority. Defendants responded and requested the arbitration decision be sealed. The court sealed the arbitration decision on April 6, 2018, confirmed the award on April 20, 2018, and granted Defendants' motion to strike HNB’s motion to vacate. Subsequently, HNB filed a motion for reconsideration, which the court denied on June 6, 2018, due to HNB's violation of motion page limits and DBA confidentiality provisions.
HNB's motion to resume proceedings was granted, permitting discovery only on the fifth, sixth, and seventh claims related to breaches of the 2012 and 2014 agreements and fraudulent concealment, as the arbitration decision had resolved HNB's first four claims. On June 15, 2018, Jack filed an answer, counterclaim, and third-party complaint against Fred for defamation and false light. HNB and Fred subsequently responded to all counterclaims. In August 2018, all defendants, including Jack, filed motions for summary judgment focused solely on the fifth, sixth, and seventh claims. On October 31, 2018, amended summary judgment motions were filed, with HNB making a separate motion.
The trial court partially granted and denied motions from both Jack and HNB. It found that Jack violated a contract's notice provision, restored the trade secrets claim, and identified existing factual issues concerning that claim. However, the court granted Jack summary judgment on the seventh claim, which it determined related to negligence, conversion, and estoppel. Defendants appealed the summary judgment on January 31, 2019, with HNB cross-appealing on February 8, but the appeal was dismissed for lack of a final appealable order on May 9, 2019.
Before the appeal, the trial court scheduled a trial for August 19, 2019. On August 13, 2019, defendants requested clarification on the claims for trial and rulings on prior summary judgment motions. The court subsequently noted that the claims for trial included breach of contract against Jack, misappropriation of trade secrets, fraud claims against all defendants, and defamation and false light counterclaims against HNB and Fred. A five-day bench trial commenced on August 19, 2019. During the trial, the court dismissed the trade secret and fraud claims against John, Chris, and C&H, and the breach of contract claim based on the 2012 contract, citing its supersession by the 2014 contract.
After the trial, both parties filed post-trial briefs, and the court issued its Findings of Fact, Conclusions of Law, and Judgment on October 22, 2019. The court ruled in favor of Jack on the trade secrets claim but against him on the breach of contract claim, while finding for John and Chris on the defamation and false light claims against HNB, but not against Fred.
The court dismissed Jack's defamation and false light claims against HNB and Fred, but reclassified Count Seven from conversion, estoppel, and negligence to fraud. HNB was awarded $21,672 in damages for economic loss, which was reduced to $12,911 after deducting salaries owed to Jack and his paralegal. John and Chris collectively received $200,000 in damages on their defamation and false light claims, while no damages were awarded to C&H, deemed a nonentity. HNB filed a notice of appeal on October 22, 2019, which was assigned Case No. 28581. The trial court clarified on November 4, 2019, that the award to John and Chris was a lump sum to be divided equally. While the appeal was pending, Appellees filed motions for prejudgment and post-judgment interest, and for attorney fees and costs against HNB and its counsel, Craig Matthews. John, Jack, and C&H later moved to dismiss the appeal for lack of a final appealable order, but the court determined a final appealable order existed and remanded the case for resolution of the post-judgment motions. After a hearing held on May 20, 2020, the court granted John and Chris prejudgment interest on their $200,000 award, post-judgment interest, attorney fees of $152,548.40, and expenses of $10,053, imposing sanctions against HNB and Matthews. Matthews filed an appeal on July 1, 2020, which was docketed as Case No. 28838, while HNB amended its appeal notice in Case No. 28581, and both appeals were consolidated on August 28, 2020. HNB's First Assignment of Error challenged the trial court's judgment on the defamation and false light claims, with the appeal limited to HNB and Matthews, as Jack and C&H did not appeal any judgments. HNB argued that the claims should have failed due to the absence of evidence regarding the alleged defamatory content, while Appellees contended that HNB did not adhere to procedural rules in raising this issue.
The first assignment of error relates to the sufficiency of evidence, specifically questioning the trial court's admission of evidence. If the only evidence supporting a judgment is improperly admitted, the judgment lacks sufficient evidence. HNB argues that Defendant’s Exhibit Q, which allegedly contained defamatory statements, was not identified by any witness and failed to meet authentication requirements under Evid. R. 901(A). The trial court's discretion in admitting evidence is subject to an abuse-of-discretion standard, requiring a showing of material prejudice. An abuse of discretion occurs when the court's decision is unreasonable, arbitrary, or unconscionable.
Exhibit Q is an article published by the Dayton Daily News on June 12, 2017; however, no witnesses specifically identified it. The trial court admitted it based on testimony from Jack, who referenced the article. While there was no direct testimony authenticating Exhibit Q, Jack identified a similar exhibit (Exhibit R) as a screenshot from a Twitter account linked to Mark Govaki, an employee of the Dayton Daily News, which included a tweet referencing an article related to the case. Additionally, testimony confirmed the publication of four articles over time, with specific dates provided. Jack also testified to another exhibit (Exhibit U), a screenshot from opposing counsel’s Twitter feed, which included statements linking to the Dayton Daily News article.
A local attorney has been sued in Montgomery County Common Pleas for allegedly conducting a 'weekend raid' of client information. The evidence presented included various exhibits, notably Ex. Q, which was inferentially identified despite lacking a specific witness to authenticate it. Under Evid. R. 902, printed materials from newspapers are considered self-authenticating; however, the question arose regarding the authenticity of articles from websites. HNB argued that while print newspapers have low forgery risk, website articles do not enjoy the same presumption. Federal courts have assessed the authenticity of web printouts based on distinctive website characteristics, such as design and publication details. In this case, Ex. Q included a URL, publication date, source identification, and links to related stories, which led to the conclusion that the trial court acted within its discretion in admitting it. Additionally, HNB claimed that the defamation and false light claims against the defendants were protected by absolute privilege in judicial proceedings.
The trial court ruled that defamation occurred based on allegations in a complaint, which were made on "information and belief," and supported by Fred's affidavit asserting the allegations were true. The court determined the allegations were "entirely false, totally unsupported by probable cause, and made with reckless disregard of the truth." Key findings included that Cowan and John Hilgeman practiced law together but were not partners, sharing only office expenses while maintaining separate client bases. The court found that HNB waived its absolute privilege for statements made during judicial proceedings by allegedly providing defamatory material to a reporter. Although direct evidence was absent, the court's inference was based on three facts: a picture of Jack in the article likely came from the firm, Bruce's misleading admission about the picture's availability, and the timing of a tweet by HNB’s counsel shortly after the complaint was filed. Appellees contended HNB waived its privilege by not addressing it in their answer to counterclaims; however, the court found HNB properly raised the issue during the trial, which was well-informed after three years of litigation. Notably, the complaint was filed on June 6, 2017, the article published on June 12, 2017, and the tweet posted on June 14, 2017. The court deemed the source of Jack's picture irrelevant, despite its significance during the trial.
HNB's potential provision of a picture for a news article raises the possibility that the reporter requested it, particularly given that the article primarily focused on Jack. The relevance of the picture to John and Chris's defamation and false light claims is minimal, as it does not depict either individual and contains no falsehoods. Under Ohio law, defamation requires a plaintiff to demonstrate: (1) a false statement of fact; (2) that the statement is defamatory; (3) publication of the statement; (4) injury from the publication; and (5) the defendant's requisite fault in publishing. Plaintiffs can be classified as private persons, public officials, public figures, or limited purpose public figures. John and Chris appear to be private persons, which imposes upon them the burden of proving that the statement was false and that HNB was at least negligent in its publication, with this negligence needing to be established by clear and convincing evidence.
The judgment against HNB also involved a false light claim, which became actionable in Ohio in 2007. The elements for false light liability include giving publicity to a matter that places someone in a false light that is highly offensive to a reasonable person, with the actor having knowledge or acting with reckless disregard regarding the falsity of the information.
The Supreme Court of Ohio has not defined a specific standard of proof for false light claims; however, it aligns with the Restatement’s language indicating that fault must be established through knowledge or reckless disregard for the truth, as established in Time, Inc. v. Hill. In Hill, the court determined that constitutional protections prevent the enforcement of state laws against false reports on matters of public interest unless the defendant acted with knowledge of falsity or reckless disregard.
The elements of a false light claim, as clarified in Welling, include the necessity for the statement to be untrue, and for the information to be “publicized,” which differs from mere publication. Publicity means the information reaches a broad audience, while publication involves communication to a third party. Additionally, the misrepresentation must be serious enough to be highly offensive to a reasonable person.
HNB argues that the trial court made an error by not recognizing the absolute privilege of statements made in judicial proceedings. The Supreme Court of Ohio supports this doctrine, stating that defamatory claims based on statements in judicial pleadings do not constitute a cause of action if related to the judicial process, as affirmed in Surace and Reister. This privilege applies to all parties involved, including non-parties, emphasizing the public policy need for unrestricted communication in judicial settings to uphold the truth-seeking process. Despite potential harsh outcomes for some parties, the court favors a liberal rule of absolute immunity to avoid excessive litigation over defamatory statements made in judicial contexts, while still allowing judges to manage courtroom conduct.
Absolute privilege extends to witnesses, allowing them to testify without fear of repercussion, as emphasized in Justice v. Mowery. This privilege is vital for maintaining freedom of speech in judicial contexts. Appellees argue that sharing a complaint with a newspaper lacks a reasonable connection to judicial proceedings, thus not qualifying for privilege. However, the trial court determined that the allegations in the complaint, supported by Fred's affidavit, were defamatory, accusing John and Chris of participating in unauthorized access to confidential files and misappropriation of trade secrets.
The court's analysis focused on whether these allegations were connected to an actionable claim related to breach of contract, business interference, and fraud tied to Jack's transition from HNB to C&H. The court concluded that the statements were indeed relevant to the judicial proceedings, making them absolutely privileged regardless of the potential outcome of the claims.
Despite this, the trial court found HNB potentially liable, citing out-of-state cases suggesting that disseminating defamatory statements to the media could negate or waive such litigation privileges. The referenced cases included Bochetto v. Gibson, where an attorney was sued for defamation after a complaint was shared with a reporter, but ultimately, the court upheld the privilege since the transmission occurred post-filing of the complaint.
The Pennsylvania Supreme Court determined that while a complaint enjoys absolute privilege, that privilege can be forfeited through "overpublication." Specifically, the court ruled that Gibson's act of sending the complaint to a reporter constituted a "republication," which was extrajudicial and unrelated to the judicial proceedings. This contrasts with the New Mexico Supreme Court's position in Helena II, which upheld absolute privilege for statements made by litigants or their attorneys to the press if those statements merely repeated or explained the allegations in a filed complaint. In Helena II, the court addressed a defamation case involving statements made during a public meeting and a press conference, ultimately granting summary judgment for the defendants based on absolute privilege. The court rejected the notion that republication or explanation of a complaint removes this privilege, arguing that, in the digital age, protecting allegations in a publicly filed complaint but not their repetition or explanation outside the courthouse is illogical. The New Mexico court emphasized that the harm from delivering pleadings to the media is equivalent to the media discovering the pleadings independently, and that informing the media about a lawsuit has little practical difference from providing the pleadings directly. The discussion reflects policy considerations on both sides: preserving the litigation privilege while also recognizing the potential for overextending absolute privilege beyond the litigation process.
The Supreme Court of Ohio has not yet addressed the legal issue at hand, prompting reliance on its prior decision in *Am. Chem. Soc. v. Leadscope*, which involved a lawsuit by the American Chemical Society (ACS) against former employees and a company they formed, Leadscope, concerning the alleged misuse of proprietary code. Following the filing of the lawsuit, ACS distributed a memorandum instructing employees not to comment on the matter. Shortly after, a local business newspaper published an article quoting ACS's counsel regarding the lawsuit's purpose and included statements from Leadscope's representatives challenging the lawsuit's validity.
Initially filed in federal court, the lawsuit was dismissed and refiled in state court, where the defendants counterclaimed for defamation among other claims. A jury ruled in favor of the defendants on several counterclaims, including tortious interference and unfair competition, while upholding a judgment against ACS. The appellate court affirmed this judgment, but the Ohio Supreme Court later reversed the defamation judgment and associated damages against ACS.
In its analysis of the defamation claim, the court did not specifically address the republication issue raised in previous cases. It emphasized that determining whether statements are actionable as defamatory is a legal question for the court, which must assess the statements in the context of the totality of circumstances.
The Supreme Court of Ohio ruled that a memorandum distributed to ACS employees instructing them not to discuss litigation was not defamatory, as it was deemed reasonable and related to an important legal matter. The court also assessed whether an article published about the case was defamatory, concluding it was not. Key reasons included the article's balanced presentation of both parties' arguments, the context of ACS’s allegations, the opportunity provided for both parties to comment, the article's clarity regarding the nature of the allegations, and the public's interest in judicial proceedings. Furthermore, the court noted that while ACS was held liable for statements made by its outside counsel, this case was significant as it established that a client may only be vicariously liable for an attorney's torts if the client authorized or ratified the conduct. The court referenced various cases highlighting that clients are not responsible for unauthorized defamatory statements made by their attorneys.
A client is vicariously liable for an attorney's defamatory statements only if the client authorized or ratified those statements, as holding otherwise would disrupt the legal system. Ohio law does not prohibit attorneys from communicating with the media; they retain First Amendment rights to discuss claims and defenses within the bounds of protected speech and ethical guidelines. Specifically, attorneys involved in litigation must avoid making extrajudicial statements that could materially prejudice a case. While attorneys can make public statements, they cannot defame others under the pretense of litigation. The court's ruling in *Am. Chem. Soc.* dictates that attorney statements to external sources are permissible, and a client's liability for those statements is limited. The excerpt also addresses a specific case involving an attorney accused of conducting a "weekend raid" on a former firm’s clients and confidential information, leading to a lawsuit. The allegations suggest that the attorney misappropriated sensitive data to solicit clients without the firm's knowledge, framed as a narrative of greed and deception.
The primary focus of the legal document is the protection of clients' legal interests, a professional duty upheld by the firm. A defendant allegedly raided the firm after hours, prompting a court filing for a temporary restraining order and preliminary injunction against Jack Hilgeman, who had been employed at HN&B since 2012. The motion seeks to freeze all of Hilgeman's tangible and intangible property obtained during his employment and requests a complete accounting of transactions involving the firm's clients following his abrupt departure. The complaint claims Hilgeman failed to express any dissatisfaction at work and violated his contract, which required a 60-day notice for termination. Instead of using the firm's software, he allegedly transferred client information into personal spreadsheets.
The complaint further alleges that shortly after joining a new firm, Cowan, Hilgeman began to inappropriately obtain settlement proceeds, leaving HN&B in disarray. Defendants in the case include Hilgeman and others who are accused of benefiting from his actions. The case has been assigned to Judge Mary Kate Huffman, who requested disqualification due to conflicts of interest.
The document also addresses a publication related to the case, concluding that the article was not defamatory. It primarily quoted the complaint or used the term "alleged," which would inform readers it summarized HN&B’s allegations. The article was published before the defendants had an opportunity to respond, and Hilgeman chose not to comment when contacted. Additionally, the lawsuit was not sealed, making the complaint publicly accessible. A tweet by HNB's counsel, which referred to Hilgeman as a "trusted associate" involved in the alleged exploitation of the firm, was also deemed non-defamatory, as it echoed the article's content. The trial court found that while some statements were somewhat false, they were substantially true, leading to the dismissal of the C&H firm as a "nonentity."
Matthews’s comments were specifically directed at “an attorney” (referring to Jack) and the defendant's weekend raid, not at John or Chris. Even if the comments were defamatory, the Appellees did not prove that HNB authorized or ratified these statements. There was no evidence that HNB permitted Matthews to make the comments or share the article through social media. Additionally, there was no post-factum ratification from HNB. The only testimony from HNB witnesses indicated that Bruce hired Matthews due to Jack's refusal to manage personal injury fees in an independent trust account, which Bruce found unacceptable. The mere hiring of an attorney does not render a client vicariously liable for the attorney's statements, absent evidence of authorization or ratification.
The trial court improperly attributed Matthews’s actions to HNB as his principal, contrary to Ohio Supreme Court standards, which require clear evidence of client authorization for defamatory statements. The court's conclusion regarding the timeline of events was also inaccurate. The Appellees' false light claim similarly lacked support, as the trial court found that the leaking of the complaint to the Dayton Daily News was reckless and waived its privileged status. However, the absolute privilege for the complaint and affidavit, as established by case law, protects against such claims.
Even if there were distinctions between the defamation and false light claims, Appellees needed to demonstrate HNB's authorization or ratification of the complaint leak, which they failed to do. The trial focused on the picture accompanying the article, which was deemed irrelevant as it did not contribute to any defamatory content. Furthermore, Appellees did not call the reporter to clarify details about the complaint's dissemination, and Jack chose not to subpoena the reporter for testimony.
The document addresses inconsistencies in qualified immunity standards among different Ohio districts, specifically noting that absolute immunity is not applicable in this case as it does not involve pre-litigation statements. The authors clarify that disseminating a complaint to the media is not inherently actionable under Ohio law, referencing the absolute privilege of judicial proceedings. They argue that simply providing a copy of a complaint to a reporter does not constitute grounds for a false light or defamation claim.
The trial court's judgment is criticized for applying an incorrect legal standard. It found that the Appellees proved their defamation claim by a preponderance of the evidence, whereas Ohio law requires proof of negligence in defamation cases to be established by clear and convincing evidence. The document emphasizes that the trial court failed to mention this standard in its findings.
Furthermore, it is noted that the court also applied a preponderance of evidence standard to the false light claim, despite using terminology suggesting a higher standard may have been considered. While Ohio state cases do not specifically define the burden of proof for false light claims, various federal and state courts have applied a clear and convincing standard. The excerpt concludes by reinforcing that malice is a necessary element of false light claims, irrespective of the plaintiff's public or private status.
In *Graboff v. Colleran Firm*, the court noted that the jury was instructed under a preponderance of evidence standard, while *Dadd v. Mt. Hope Church* affirmed that the jury was properly instructed on false light invasion of privacy. The trial court's confusion regarding the applicable standard was deemed harmless due to the application of absolute privilege to both defamation and false light claims. Consequently, the defamation and false light judgments favoring the Appellees were reversed, as they failed to prove that HNB authorized or ratified Matthews’s statements.
HNB argued that the defamation and false light claims were invalid because the published statements were true. The article in question referred to the statements as "alleged," which accurately represented the situation without asserting the truth of the claims. A false statement is defined as one that is not true, while a statement can have some truth and still be misleading. The article’s nature of presenting allegations allowed for dispute, which was crucial. Additionally, although Fred's affidavit confirmed the allegations, it was not mentioned in the article or tweet and was protected by absolute privilege as part of the judicial proceedings.
The Supreme Court of Ohio emphasized that absolute privilege in judicial contexts prevents frivolous defamation lawsuits that could obstruct legal processes. Consequently, HNB's First Assignment of Error was sustained, leading to the reversal of the trial court's October 22, 2019 judgment regarding counterclaims, with instructions for judgment in favor of HNB, while affirming other aspects of the judgment.
HNB's third assignment of error contends the trial court improperly awarded prejudgment interest on a $200,000 judgment for defamation and false light, asserting that HNB did not make a good faith effort to settle the case. The trial court based its decision on HNB's rejection of an offer from Appellees to dismiss their counterclaims in exchange for HNB dropping its claims during a court appearance on August 12, 2019. The court determined that HNB failed to act in good faith by September 18, 2018, after it had secured depositions revealing that Appellees had no involvement in Jack's personal injury practice. R.C. 1343.03(C)(1) permits prejudgment interest if a party fails to make a good faith settlement effort after a judgment has been rendered. However, since the underlying judgment is set to be reversed, no prejudgment interest is statutorily due, and the trial court will be instructed not to award it upon remand. The issue of post-judgment interest under R.C. 1343.03(B) is also deemed unwarranted.
Regarding HNB's second assignment of error, which concerns the award of frivolous conduct damages, HNB argues that it had a reasonable basis for not settling the claims, citing an absolute privilege for statements made during litigation. HNB further contends that Appellees did not provide sufficient evidence of frivolous conduct. In parallel, Matthews argues that the determination of frivolous conduct should rely solely on evidence presented at the hearing, rather than any prior submissions or records.
Matthews asserts that Appellees presented no evidence at the hearing beyond attorney fees and argues that the trial court improperly awarded fees for Jack's self-defense and applied an incorrect ratio. Appellees counter that they had to defend against unfounded claims of dishonesty for several years, and the trial court found no evidence against them when dismissing the trade secret and fraud claims. They maintain that the trial court could take judicial notice of the case proceedings, negating the need for additional evidence. The trial court determined that HNB and Matthews engaged in frivolous conduct, awarding Appellees attorney fees amounting to $152,548.50 and expenses of $10,053 under R.C. 2323.51(A)(2)(a)(ii), which addresses allegations lacking evidentiary support. R.C. 2323.51(B)(1) allows parties affected by frivolous conduct to seek costs and fees incurred in the civil action, with "frivolous conduct" defined as allegations without evidentiary support or unlikely to gain support after further investigation. The award for attorney fees cannot exceed what the aggrieved party reasonably incurred, and the party seeking sanctions bears the burden of proving incurred costs. The standard of review varies depending on whether legal or factual decisions are at issue, with factual findings receiving deference if supported by competent evidence. An essential issue to resolve is whether there was competent, credible evidence to support the trial court’s decision, especially in light of Matthews’s claim regarding the lack of an evidentiary hearing on the alleged frivolous conduct.
R.C. 2323.51(B) outlines the procedural requirements for awarding attorney fees due to frivolous conduct. Firstly, a court must schedule a hearing to assess whether the conduct in question was frivolous, determine if any party was adversely affected, and if so, decide the amount of the award (R.C. 2323.51(B)(2)(a)). Secondly, the court is required to notify all implicated parties and their counsel of the hearing date (R.C. 2323.51(B)(2)(b)). Thirdly, during the hearing, the court must allow evidence presentation, establish the frivolous nature of the conduct, confirm adverse effects on a party, and determine the award amount (R.C. 2323.51(B)(2)(c)). Evidence referred to in R.C. 2323.51(B)(5) includes itemized lists of legal services rendered, time spent, and costs incurred due to the frivolous conduct, such as expert witness fees (R.C. 2323.51(B)(5)(a) and (b)). Certain requirements within R.C. 2323.51(B)(2) can be waived, as established in Whitt v. Whitt.
On November 20, 2019, Appellees filed a motion for attorney fees and costs against HNB and its counsel, including supporting affidavits and billing records. HNB requested a hearing stay on December 5, 2019, until after a pending appeal, but the court did not rule on this request. The case was remanded on January 29, 2020, for the trial court to address pending post-judgment motions. Subsequently, on February 27, 2020, the trial court set deadlines for expert identification, depositions, and a hearing for May 20, 2020, fulfilling the notice and scheduling requirements of R.C. 2323.51(B)(2). On March 2, 2020, HNB changed its counsel, substituting Martin Foos and Terry Posey for Matthews.
Due to the Covid-19 emergency, deposition timelines were extended. On April 27, 2020, Appellees notified Matthews of depositions for Jack and expert Jeff Ireland scheduled for April 29, 2020, and also provided responses to discovery requests and a hearing notice regarding attorney fees. On May 14, 2020, HNB submitted a prehearing brief outlining its position on the fee award, noting potential reductions but did not address frivolous conduct. George Johnson appeared as counsel for Matthews on May 15, 2020; however, Matthews did not file any motions or responses to Appellees' attorney fee motion.
A hearing on post-judgment motions was conducted on May 20, 2020, attended by all parties and their counsel. At the hearing, Appellees' counsel announced stipulations regarding the qualifications of experts and the authenticity of a fee agreement. Matthews’ counsel did not voice any objections or indicate a desire to present witnesses or evidence regarding frivolous conduct. HNB’s counsel indicated that they had filed a prehearing brief for legal guidance and planned to present opposing evidence.
Testimony was provided by experts Ireland, Green, and Jack, focusing on the review process, fee charges, and the reasonableness of fees. Limited testimony was offered regarding settlement discussions. The parties chose to address prejudgment and post-judgment interest through oral argument rather than evidence. Matthews’ counsel sought to submit a post-trial brief, but the court opted to allow time for oral arguments instead.
During closing arguments, HNB stated that no additional testimony was necessary beyond the existing record to address frivolous conduct. Matthews’ counsel highlighted the absence of evidence from both HNB and Appellees regarding Matthews's alleged frivolous conduct and noted that HNB had previously considered dismissing claims against Appellees, a decision Matthews had influenced. The only conduct mentioned by the court related to Matthews's tweet about defamation, which Matthews’s counsel argued was unrelated to the issue of frivolous conduct.
Matthews's counsel did not argue for the presentation of evidence but claimed there was no evidence against Matthews relevant to attorney fees. Consequently, Matthews waived his right to this argument, and the trial court did not err in not requiring evidence under R.C. 2323.51(B)(2)(c). Similarly, HNB waived its argument regarding the lack of evidence for frivolous conduct during the hearing. The core issue is whether there was competent, credible evidence supporting the trial court's finding of frivolous conduct. Frivolous conduct is defined as allegations without evidentiary support, where no reasonable lawyer would have pursued the action based on existing law. The plaintiff alleged that John Hilgeman and Christopher Cowan misused the firm's trade secrets with willful malice and engaged in unethical conduct. However, these allegations were dismissed at trial due to a lack of proof. The court's prior determination regarding the frivolous nature of the plaintiff's actions was supported by no evidence presented during the trial. Furthermore, the court incorrectly asserted that certain allegations remained in the case until trial dismissal; these were actually resolved in an arbitration proceeding prior to trial. The trial court later allowed HNB to proceed on a trade secret claim, but this did not extend to the previously dismissed allegations. The Tenth District Court of Appeals noted similarities between R.C. 2323.51(A)(2)(a)(iii) and Federal Rule of Civil Procedure 11(b)(3), indicating a broader context for evaluating claims of frivolous conduct.
An attorney or unrepresented party certifies that their factual claims in court pleadings are supported by evidence or will likely be supported after reasonable investigation. This principle is grounded in R.C. 2323.51, which, while a statute, parallels the behavior sanctioned under Fed. R. Civ. P. 11 concerning claims lacking evidentiary support. The Tenth District Court of Appeals referenced the 1993 Advisory Committee Notes for Fed. R. Civ. P. 11, emphasizing that parties may need further discovery to substantiate their allegations but must undertake a reasonable investigation into the facts before making claims. The court clarified that if a party cannot obtain evidentiary support for a claim after investigation, they are obligated not to pursue that claim further. Minimal evidentiary support suffices to avoid a finding of frivolous conduct, but persistence in unsupported allegations constitutes frivolous conduct under R.C. 2323.51. Notably, an attorney's personal knowledge is irrelevant in assessing frivolous conduct; the standard is objective, focusing on whether the party's claims meet the outlined criteria.
A court's determination of frivolous conduct does not rely on the knowledge or beliefs of the parties or their attorneys, but rather on the existence of evidence supporting the allegations made. According to R.C. 2323.51(A)(2)(a)(iii), frivolous conduct requires egregious behavior, and merely losing a case or having incorrect factual assertions does not establish frivolity. A claim is deemed frivolous only if it is clear that no reasonable lawyer could argue it under existing law.
The trial court found sufficient evidence to support its conclusion that HNB and Matthews engaged in frivolous conduct related to trade secret and fraud claims against John and Chris, starting on September 28, 2018. However, the court's decision to impose fees from the date the complaint was filed lacked adequate evidence and sound justification. HNB's trade secret claim was based on the belief that its client list and work products were proprietary, while the fraud claims arose from Jack's departure and the circumstances surrounding it.
The court had previously indicated that client lists might qualify as trade secrets under R.C. 1336.61, and there were unresolved questions regarding whether Jack appropriated those documents. The Appellees did not challenge the merits of the trade secret or fraud claims through a summary judgment motion, arguing instead that the claims were barred by an arbitration decision and that the fraud claim was mischaracterized as involving negligence, estoppel, and conversion. Ultimately, while the court found the claims against John and Chris factually unproven, it did not determine that those claims were frivolous at the time the complaint was filed.
The court determined that HNB's efforts to maintain trade secrecy were inadequate and that Jack breached the contract without committing fraud. The judgment highlighted failures in factual proof. After filing complaints, litigants are allowed to conduct discovery; however, if a party continues to rely on unsupported allegations, it constitutes frivolous conduct under R.C. 2323.51(A)(2)(a)(iii). The court found that HNB and Matthews engaged in such conduct by September 28, 2018, after they took depositions and recognized the lack of evidence for their claims against Appellees. Consequently, the trial court awarded prejudgment interest from that date, although it ruled that attorney fees could only be awarded from then onward due to the frivolous nature of their claims.
Regarding attorney fees, HNB contended the trial court erred by not deducting fees related to Jack's defense and by including expenses that would have been incurred regardless of the lawsuit. The trial court initially awarded $168,348.40 in attorney fees, minus specific deductions totaling $15,820, resulting in a net award of $152,528.40, plus $10,053 in necessary expenses. However, the court noted that the award of necessary expenses was incorrect, as Appellees claimed a higher amount of attorney fees and costs during the post-judgment hearing. The court indicated that these issues regarding attorney fees would need to be revisited on remand.
The total amount of $168,348.40 included $10,053 in arbitration fees, which HNB’s expert argued should not be counted. The trial court agreed and deducted this amount from attorney fees, but subsequently added it back as “necessary expenses,” which was deemed erroneous and did not accurately reflect costs. Any fees awarded should have commenced after September 28, 2018, when HNB and Matthews no longer had a reasonable basis for their claims against the Appellees, as indicated in Ex. B of the Supplemental Application. Similarly, costs or expenses should also be calculated from that date.
Under R.C. 2323.51(B)(3)(b), reasonable attorney's fees awarded cannot exceed the fees reasonably incurred, granting trial courts discretion to award less than the total incurred fees, potentially down to zero. The lodestar method, which calculates fees as the reasonable hourly rate multiplied by hours worked, is mandated for determining fee amounts. The Ohio Supreme Court reaffirmed the lodestar method in Phoenix Lighting Group, stating that while it can be modified, it is generally considered presumptively reasonable, with enhancements being rare and only justified when necessary for adequate compensation. This approach aligns with the factors set forth in Prof.Cond. R. 1.5(a), which are typically incorporated into the hourly fee used to determine the lodestar.
The results obtained are included within the lodestar calculation and do not enhance it. Modifications to the lodestar must be justified with a rationale. Fees incurred after September 28, 2018, should not have been awarded, as the finding of frivolous conduct applied only to Appellees John and Chris, not Jack. Therefore, no attorney fees should be awarded for defending claims against Jack or for his counterclaim for defamation. Appellees were also not entitled to fees for their counterclaims of defamation and false light, as they did not prevail, rendering those fees not “reasonably incurred.”
The trial court agreed with HNB and Matthews that Jack could not recover fees for representing his own interests, leading to the deduction of fees for his pro se work. Jack sought fees for defending claims against his father and Chris and for his own defamation claims. The Plaintiff contested the recovery based on the lack of a signed Entry of Appearance and discrepancies in fee agreements. Despite these issues, the court recognized the substantive legal relationship among the defendants. Jack was involved in defending against claims primarily against others, with 6/7 of his fees relating to those defenses, leading to an entitlement of $21,463 from the total $25,040 claimed. However, the trial court's analysis was flawed, as only four claims remained against HNB before trial, along with two counterclaims, totaling six claims instead of seven, and Jack was solely representing himself on two claims. The court's reasoning was therefore deemed incorrect.
Jack was awarded 6/7 of $25,040 in attorney fees, reflecting that his pro se breach of contract claim constituted only one-seventh of the overall case. HNB's expert noted that this deduction of $25,040, representing 125.2 hours, pertained solely to Jack's claims and excluded any work related to defending other defendants or counterclaims. Specifically, Jack spent 77.2 hours (valued at $15,440) representing John and Chris, which the expert later added to the attorney fees that Chris and John could claim for frivolous conduct.
The trial court's ruling caused confusion by awarding Jack the fees rather than to John and Chris, who were the parties affected by the frivolous conduct. The order indicated that while Jack sought fees for his efforts, he was not entitled to recover them for his own claims since neither HNB nor Matthews engaged in frivolous conduct concerning those claims. Therefore, the fees Jack incurred while representing himself were deemed irrelevant to his entitlement to reimbursement.
Even if considered relevant, a cited case, DiPaolo v. Moran, supported the conclusion that pro se attorney litigants cannot recover attorney fees for self-representation. This case involved a police officer who sued multiple defendants, including an attorney, after being fired for refusing to cooperate in an investigation. The court found that the language of relevant rules implied an attorney-client relationship, which was absent when an attorney represented themselves, thus precluding recovery of fees.
Two Circuit Courts of Appeals have determined that pro se attorney litigants cannot receive attorney fees for self-representation due to the language in Rule 11 and 28 U.S.C. § 1927. Specifically, in *Massengale v. Ray*, the Eleventh Circuit ruled that a pro se party has not incurred attorney fees as an expense, thus a district court cannot order a violating party to pay such fees. The court emphasized that the term "attorney" implies an agency relationship and that fees charged to oneself do not qualify as attorney fees.
Additionally, the Federal Circuit in *Pickholtz v. Rainbow Technologies, Inc.* reiterated that one cannot "incur" fees payable to oneself, aligning with the Eleventh Circuit's interpretation regarding the agency relationship inherent in the term "attorney."
A contrasting decision from the Ninth Circuit in *Ellis v. Cassidy*, which allowed attorney fees for a pro se attorney under the Civil Rights Act, was not followed by DiPaolo. He critiqued *Ellis* for not addressing the implications of the term “attorney” and questioned its validity in light of the Supreme Court's ruling in *Kay v. Ehrler*. In *Kay*, the Supreme Court similarly denied an attorney's request for fees for self-representation, emphasizing that "attorney" denotes an agency relationship and reflecting on definitions from various dictionaries. The Court concluded that Congress likely intended for an attorney-client relationship to be a prerequisite for attorney fee awards under 42 U.S.C. § 1988.
The court articulated several reasons against granting attorney fees to pro se attorneys, emphasizing that even experienced lawyers face disadvantages when representing themselves in contested litigation. Ethical concerns can limit their ability to testify, and they lack an independent party's judgment in structuring their case, presenting evidence, and navigating courtroom dynamics. The saying “a lawyer who represents himself has a fool for a client” reflects the consensus among seasoned litigators regarding self-representation. Granting attorney fees to pro se litigants, even if they are bar members, could discourage hiring counsel, undermining the goal of promoting the prosecution of valid claims.
Following the Kay decision, which influenced the Ninth Circuit's perspective, the court in DiPaolo determined that while an attorney cannot claim fees for defending himself, he could seek fees related to defending his law firm due to the creation of an attorney-client relationship. This distinction requires evidence concerning the law firm’s ownership and fee arrangements with the attorney.
The court aligned its reasoning with Kay and DiPaolo, noting the parallels to Federal Rule of Civil Procedure 11 and state law concerning reasonable attorney fees. It concluded that Jack was not entitled to fees for his self-defense, as there was no finding of frivolous conduct; thus, the trial court's inclusion of Jack's expenses in the awarded fees was deemed erroneous. However, Appellees might be eligible for fees related to Jack's representation of them in fraud and trade secret claims, leading to a remand for reassessment of the appropriate fee amount, which may include charges attributed to Jack's representation of Appellees.
The court directs attention to Marshall v. Cooper, Elliott, 2017-Ohio-4301, which interprets the term “incur” as it pertains to R.C. 2323.51(B)(1). In Marshall, the trial court awarded $0 in attorney fees, concluding the claimant failed to demonstrate any obligation to pay legal fees. The Eighth District Court of Appeals clarified that the trial court's decision was not solely based on a lack of prior billings or a written fee agreement but on the absence of any fee agreement with legal enforceability. The court defined “incurred” fees as those for which a party has a legal obligation to pay, regardless of payment status. It distinguished this case from Grove v. Gamma Ctr. and Mikhael v. Gallup, where attorneys indicated intentions not to collect fees owed, affirming that in Marshall, no fee agreement existed between the attorney O'Shea and the client Dolan. O'Shea testified to having no written or oral agreement with Dolan regarding fees. Consequently, the trial court found no evidence of Dolan's legal obligation to pay any attorney fees. Furthermore, at a subsequent hearing, no evidence was presented to establish that the Appellees incurred attorney fees to Jack, who lacked an appearance as co-counsel and provided no evidence of a fee agreement. The court refrains from commenting on the fees to be awarded and notes that the trial court’s fee calculation ratio has been challenged by Matthews.
Matthews argues that the trial court improperly included defamation and false light claims in its attorney fee ratio, asserting that an award of fees was not warranted for those claims. He proposes a more suitable ratio; however, since the judgment on these claims is being reversed, this argument is rendered moot. The court concludes that the Appellees cannot recover any attorney fees incurred by Jack for defending against breach of contract, fraud, or trade secret claims, nor for prosecuting counterclaims for defamation and false light. Appellees may, however, recover fees related to their defense against trade secret and fraud claims.
Additionally, the Supreme Court of Ohio has disapproved of “block billing,” which involves grouping multiple tasks into single time entries, and will no longer accept fee applications that utilize this practice. Instances of block billing were identified in the Supplemental Application for Attorneys’ Fees, and this will be considered in future fee determinations.
The court's analysis results in a mixed ruling on various assignments of error from both HNB and Matthews. The October 22, 2019 judgment in favor of John Hilgeman and Christopher Cowan regarding counterclaims for defamation and false light is reversed, but other aspects of that judgment are affirmed. Similarly, the June 9, 2020 judgment on post-trial motions is partially reversed and affirmed, with prejudgment and post-judgment interest being reversed. The finding of frivolous conduct by HNB and Craig Matthews is similarly mixed, affirming some findings while reversing others concerning the timeline for calculating attorney fees.
A dissenting opinion acknowledges the absolute privilege of the initial complaint but disagrees on the liability regarding its dissemination through media channels, advocating for the affirmation of the damages and prejudgment interest awarded by the trial court.
Fred Sommers’ testimony demonstrated that the allegations against John Hilgeman and Chris Cowan were entirely unfounded and made with reckless disregard for the truth. The trial court concluded that the complaint's claims, including misappropriation of trade secrets and involvement in a raid of the HNB office, were completely false and lacked probable cause. HNB shareholder Fred Sommer affirmed the allegations as true in an affidavit submitted with the complaint. However, the trial court found that HNB’s agent spread these false claims to the media, constituting a “republication” that was extrajudicial and irrelevant to the case's proceedings, as supported by precedents such as Bochetto v. Gibson and Landry's, Inc. v. Animal Legal Defense Fund. The court's judgment regarding damages for defamation and false light was affirmed, yet it was acknowledged that the trial court deemed the litigation frivolous starting September 28, 2018. If the frivolous conduct had been determined to start with the complaint's filing, the record would have supported that conclusion. Consequently, the award of attorney fees and costs needs to be reconsidered in line with the majority opinion.
