Veronica's 'Trade Secrets' Are No Secret, Judge Finds

Summary

A California fed­eral judge dis­missed a law­suit by olive oil dis­trib­u­tor Veronica Foods against a for­mer employee and rival com­pany due to lack of evi­dence that trade secrets were taken. The judge crit­i­cized Veronica Foods for mak­ing con­clu­sory asser­tions about trade secret mis­use and gave them until July 31 to file an amended com­plaint.

A California fed­eral judge has dis­missed a law­suit by the olive oil dis­trib­u­tor Veronica Foods against a for­mer employee and the rival com­pany he went to work for, cit­ing a lack of evi­dence that its trade secrets were taken or, for that mat­ter, secret.

Veronica Foods, which sup­plies more than 800 spe­cialty shops across North America, accord­ing to its com­plaint, alleged that for­mer employee, Kurt Ecklin, shared trade secrets in the form of cus­tomer lists, con­fi­den­tial busi­ness infor­ma­tion, and sup­plier lists with his new employer (and co-defen­dant), MillPress Imports in vio­la­tion of both the U.S. Defend Trade Secrets Act, and the California Uniform Trade Secrets Act.

Millpress Imports and Ecklin moved to have the case dis­missed for fail­ure to pro­vide suf­fi­cient evi­dence to sup­port Veronica’s claims. On June 29, U.S. Magistrate Judge Joseph C. Spero accepted the motion to dis­miss but gave Veronica Foods until July 31, 2017 to amend their com­plaint for a sec­ond time.

While the June 29 deci­sion deals only with the ques­tion of whether to accept the motion to dis­miss, it con­tains a detailed (some might say long-winded) analy­sis of the facts in the case and whether the mate­r­ial in ques­tion did con­sti­tute trade secrets, given that much of the infor­ma­tion is pub­licly avail­able.

In his crit­i­cism of the action as filed, Judge Spero said, ​“Here, Veronica Foods‘ alle­ga­tions of the par­tic­u­lar trade secrets that defen­dants mis­used are largely con­clu­sory — an every­thing-but-the-kitchen-sink asser­tion that defen­dants ​‘have made improper and unau­tho­rized use of Veronica Foods’s cus­tomer list, sup­plier list, and con­fi­den­tial busi­ness infor­ma­tion’ to solicit cus­tomers…. Such ​‘naked asser­tions’ and ​‘con­clu­sions’ are not the sort of fac­tual alle­ga­tions that the court must accept as true at the plead­ing stage.”

The judge gave Veronica Foods until July 31 to file a sec­ond amended com­plaint, say­ing ​“the mere fact that MillPress began sell­ing oil and vine­gar to stores pre­vi­ously sup­plied by Veronica Foods is to be expected from a new whole­saler enter­ing the mar­ket,” and is not in and of itself evi­dence of trade secret vio­la­tion.

• Law360


• Olive Oil Times


• Veronica Foods Company v. Kurt Ecklin, et al