CHARLES RONALD NORGLE, District Judge.
Plaintiff Gold Medal Products Co. ("Plaintiff") brings this action against Bell Flavors and Fragrance Inc. ("Bell") and William Todd Sunderhaus ("Sunderhaus") (collectively "Defendants") under the Defense of Trade Secrets Act ("DTSA") and Illinois Trade Secrets Act ("ITSA") for Defendants' alleged misappropriation of Plaintiff's caramel "Glaze Pop" recipe and flavor profile. Plaintiff brings a claim against Sunderhaus individually for breach of contract (Count III). Before the Court is Defendants' motion for summary judgment. For the following reasons, Defendants' motion for summary judgment is denied.
On March 8, 2016, Plaintiff sued Defendants in the U.S. District Court for the Southern District of Ohio, Case No. 16-CV-365. On April 14, 2017, the U.S. District Court for the Southern District of Ohio ruled that the court lacked personal jurisdiction over Bell with regard to Plaintiff's federal and state trade secret claims, and that Bell was an indispensable party. Defs'. Statement of Material Facts SOMF, Ex. C.,
Plaintiff a Cincinnati, Ohio based concessions supplier, produces and sells: salt, glazes, oil, seasonings for popcorn, and a product line called Glaze Pop, which is comprised of different flavored glazes and used for coating popcorn while it cooks. Plaintiff's methods and recipes for Glaze Pop are kept confidential. Plaintiff's alleged secret recipe includes non-public ingredients, bought from specific suppliers. Plaintiff asserts that it is not the names of these ingredients which are not public (i.e. toffee), but rather the specific chemical composition of each ingredient that are kept confidential. Plaintiff executes confidentiality agreements with third party suppliers to further limit public access to the components of its recipe. Plaintiff also limits its own employees' access to the Glaze Pop recipe and only those employees who were responsible for the production of Glaze Pop — fourteen employees — have access to the secret recipe. Plaintiff keeps a paper copy of the recipe in a locked safe and a digital copy on a password protected network.
From March, 2005 through March, 2014, Sunderhaus worked for Plaintiff at its headquarters in Cincinnati, Ohio, as its sole food technologist. While working for Plaintiff, Sunderhaus signed an employee handbook which states in part:
("SOMF"), Ex. A at 23. Among other responsibilities, Sunderhaus oversaw quality control for the ingredients, sourcing flavors and other ingredients from third parties, and the mixing process for Plaintiff to produce the caramel Glaze Pop. To carry out his job duties, he had to know Plaintiff's caramel Glaze Pop recipe. The parties dispute, however, whether Plaintiff required oral assurances of confidentiality from Sunderhaus while he was employed with Plaintiff.
In March, 2014, Sunderhaus left Plaintiff's employment and began working for Bell as a Senior Flavorist. Bell, a "flavor house", develops specific flavors and fragrances to meet the requirements of its customers. A flavorist works to create and develop the flavors that flavor companies (Bell) sell to food companies (Plaintiff). Sunderhaus worked in Bell's laboratory developing flavor ingredients for Bell's customers. Plaintiff purchases flavor ingredients, such as those used in its Caramel Glaze, from flavor houses. Shortly after joining Bell, Sunderhaus began working on a caramel popcorn coating for Shanghai Angke, a customer of Bell and one of Plaintiff's competitors. Bell directed Sunderhaus to use Plaintiff's caramel Glaze Pop as a target and make the flavor as close as possible — 95% or above. Bell's caramel flavor product differs from Plaintiff's because it is not a consumer ready product like Plaintiff's Glaze Pop; rather the customer's own factory determines its own ratio of sugar to add to create a consumer-ready popcorn glaze. Additionally, Bell uses a spray dry manufacturing process which only mixes dry ingredients, whereas Plaintiff's manufacturing process mixes both liquid and dry ingredients.
Plaintiff asserts that its caramel Glaze Pop recipe and flavor profile constitute a trade secret and that Defendants misappropriated this trade secret — and Sunderhaus violated his duty of confidentiality to Plaintiff — when Sunderhaus helped Bell create a competitive caramel popcorn coating. In support of its breach of contract claim against Sunderhaus, Plaintiff contends that he signed its employee handbook which created a contractual duty of confidentiality or, alternatively, that he made oral promises of confidentiality which in turn created an enforceable oral contract.
"Summary judgment is appropriate when `the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'"
Defendant argues that Plaintiff has not established that it possesses a trade secret. Under the ITSA, the term trade secret means information that "(1) is sufficiently secret to derive economic value, from not being generally known to other persons who can obtain economic value from its disclosure; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality."
The existence of a trade secret ordinarily is a question of fact.
Here, while Plaintiff has some evidence showing that it may possess a trade secret relating to Glaze Pop, the record here is insufficient to engage in any conclusive analysis as to whether the Glaze Pop recipe and flavor profile constitute a trade secret. Moreover, Defendants point to no undisputed facts which show, as a matter of law, that Plaintiff does not possess a trade secret related to Glaze Pop. Put simply, neither parties can resolve what the Seventh Circuit has called "one of the most elusive and difficult concepts in the law."
Notwithstanding the Court's conclusion above, the Court rejects Defendants' arguments that Plaintiff cannot, as a matter of law, claim a trade secret since the name of the ingredients are public or because it does not have patent rights over some of the ingredients in Glaze Pop. "A trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret."
Finally, the Court rejects Defendants' manufacturing argument. The Court notes that a difference in the manufacturing process resulting in a modification to a recipe does not necessarily preclude a misappropriation claim.
Plaintiff asserts a breach of contract claim against Sunderhaus. The parties agree that Ohio law governs the breach of contract claim. Plaintiff, an Ohio corporation, hired Sunderhaus to work in its Cincinnati, Ohio, headquarters where Sunderhaus signed the employee handbook and according to Plaintiff made oral promises of confidentiality regarding Glaze Pop. Plaintiff argues that the signed employee handbook is an enforceable contract or, alternatively, that Sunderhaus's alleged promises to maintain confidentiality created an oral contract. Under Ohio law "[a] cause of action for breach of contract requires the claimant to establish the existence of a contract, the failure without legal excuse of the other party to perform when performance is due, and damages or loss resulting from the breach."
As to whether a contract existed, Plaintiff's argues its employee handbook is the basis for a written contract, notwithstanding it expressly states that "[t]his handbook is not an employment contract, expressed or implied." Def. SOMF. Ex. A at 23. In
Additionally, under Ohio law, a contract cannot be enforced without mutuality of obligation.
Alternatively, Plaintiff argues Sunderhaus created an oral contract by making repeated promises of confidentiality. The parties dispute whether Sunderhaus made such promises, and if so, the when, where, how, and to whom. Because there is a genuine dispute as to a material fact, summary judgement is not appropriate. Accordingly, Defendant Sunderhaus's motion for summary judgment of Count III of Plaintiff's Complaint is denied.
The record is insufficient to conclude whether Plaintiff maintained a trade secret in its caramel Glaze Pop recipe and flavor profile or whether Sunderhaus made any enforceable oral promise of confidentiality. Therefore, Defendants motion for summary judgment is denied as to Counts I, II, and III.
IT IS SO ORDERED.