## Facts

- RECO Equipment, Inc. distributed and serviced heavy construction equipment.
- Jeffrey S. Wilson and Joseph Craig Russo worked for RECO after RECO purchased their prior employer; Russo remained an at-will employee without a written agreement.
- In 2019, Wilson signed an employment agreement requiring return of RECO property, protecting confidential information, and imposing a three-year, 50-mile noncompete around any RECO facility.
- In 2020, Wilson resigned, formed Republic Equipment Holding, LLC (a competitor), and recruited Russo to join Republic.
- Wilson did not return his RECO-issued cell phone and retained RECO customer/account information stored on the device.
- Shortly before departing, Russo downloaded “hundreds” of RECO electronic files (customer information, pricing/financial data, and detailed repair/rebuild materials) stored in password-protected, access-limited locations, and sent access to his new Republic email via a Google Drive link.
- RECO alleged Wilson and Russo used the information to solicit RECO customers.
- RECO sued in federal court (diversity) asserting, among other claims, breach of contract (Wilson) and trade-secret misappropriation under federal and Ohio law (Wilson and Russo).
- The district court granted a preliminary injunction requiring return of the phone and files, prohibiting use of confidential/trade-secret information to solicit RECO customers, and compelling Wilson’s compliance with the noncompete.
- Wilson and Russo took an interlocutory appeal challenging likelihood-of-success findings for the noncompete-based contract claim and the trade-secret claims.

## Issues

1. Whether RECO showed a likelihood of success that Wilson’s three-year, 50-mile noncompete was enforceable under Ohio reasonableness limits.
2. Whether RECO showed a likelihood of success that the taken information qualified as trade secrets and was misappropriated under federal and Ohio law.
3. Whether the preliminary injunction’s scope (noncompete enforcement, nonuse/return orders, and phone return) properly fit the preliminary-injunction factors.

## Decision

- The Sixth Circuit affirmed in part, reversed in part, and remanded.
- The court reversed the portion of the preliminary injunction enforcing the three-year, 50-mile noncompete because RECO failed to show it was no broader than necessary under Ohio law on the record presented.
- The court affirmed trade-secret-related relief prohibiting Wilson and Russo from using RECO trade secrets to solicit RECO customers and requiring return of RECO information.
- The court affirmed the order requiring Wilson to return the RECO-issued cell phone.

## Legal Principles

- A preliminary injunction is evaluated under four factors: likelihood of success on the merits, irreparable harm, balance of equities, and public interest; likelihood of success often carries substantial weight.
- Under Ohio law, a covenant not to compete is enforceable only to the extent it is reasonable and does not impose greater restrictions than necessary to protect legitimate employer interests; the employer bears the burden to justify temporal and geographic scope.
- Under the Defend Trade Secrets Act and Ohio trade-secret law, a plaintiff must show (1) information with independent economic value from not being generally known and subject to reasonable secrecy measures, and (2) misappropriation by improper acquisition, disclosure, or use.
- Evidence of restricted access and confidentiality controls supports trade-secret status; bulk downloading and transferring company files shortly before departure supports an inference of improper acquisition and threatened use.
- For trade-secret claims, threatened loss of goodwill and competitive position from misuse of confidential information can constitute irreparable harm, supporting tailored injunctive relief focused on nonuse and return of materials rather than broad restraints on competition.

## Conclusion

The Sixth Circuit vacated preliminary enforcement of a broad noncompete for lack of evidentiary support that its three-year and 50-mile scope was necessary under Ohio law, but upheld narrower injunction provisions requiring return of company property and restricting use of alleged trade secrets to prevent customer solicitation.


RECO Equip., Inc. v. Wilson, 2021 U.S. App. LEXIS 32413 (6th Cir. 2021)