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Fast Food Gourmet, Inc. v. Little Lady Foods

October 18, 2007

FAST FOOD GOURMET, INC., A MISSOURI CORPORATION, PLAINTIFF,
v.
LITTLE LADY FOODS, INC., AN ILLINOIS CORPORATION, AND KRAFT FOOD GLOBAL, INC., A VIRGINIA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Judge Marvin E. Aspen

MEMORANDUM OPINION AND ORDER

Defendants Little Lady Foods, Inc. ("LLFI") and Kraft Foods Global, Inc. ("Kraft") filed a Rule 37 Motion to Bar the plaintiff, Fast Food Gourmet, Inc. ("FFGI"), from defining its trade secret claim differently than it had done in "Plaintiff's Identification of Trade Secrets" ("Identification"), which was filed on June 28, 2006. On July, 26, 2007, Magistrate Judge Cole issued a decision that granted in part and denied in part defendants' motion. Defendants have now filed a Rule 72 Motion objecting to Magistrate Judge Cole's decision. For the reasons set forth below, that motion is denied in part and granted it in part.

BACKGROUND

FFGI alleges that defendants are guilty of misappropriating its trade secrets related to its process for preparing its artisan-style frozen pizza crust. In addition, FFGI has filed a breach of contract claim against LLFI and an unjust enrichment claim against Kraft.

In response to defendants' motion to compel, on May 25, 2006, Magistrate Judge Cole ordered FFGI to specifically identify its trade secrets. FFGI filed "Plaintiff's Identification of Trade Secrets" on June 28, 2006, which stated that FFGI's method for preparing thin-crust frozen pizzas with an artisan-style crust was derived from a combination of four components: (A) Stress-free sheeting and pre-sheeting; (B) Thin Dough Sheeting; (C) Exceptionally High Baking Temperature; and (D) the Stone Hearth Oven.

On December 12, 2006, defendants deposed Kenneth Crouse, FFGI's Vice President of Operations. During his deposition, Mr. Crouse indicated that the Identification was a "complete and accurate description of the trade secrets that are at issue in this matter." (Crouse Deposition at 10). However, in response to further questioning, Mr. Crouse stated that the Identification was "accurate" but "not necessarily complete." Id. at 61. He specified that 90 minutes floor time, temperature of the dough, use of ice, and the absence of dough conditioners were "factors relating to stress-free sheeting and pre-sheeting listed in paragraph (A) of the Identification of Trade Secrets." Id. at 68. Defendants' counsel then asked whether these additional factors were the trade secrets being claimed in the case, to which Mr. Crouse responded no. Id.

With our permission, on February 2, 2007, FFGI filed a Second Amended Complaint to clarify that its breach of contract claim is independent of its trade secrets claim. In addition to adding a breach of contract claim paragraph, FFGI altered the phrasing of its trade secret allegations. Instead of alleging that LLFI was using FFGI's "trade secrets," the Second Amended Complaint substituted the phrase "crust-making methodology," and alleged LLFI's improper use and Kraft's improper utilization of this methodology.

In response to these changes, defendants presented FFGI with new interrogatories, which included a request that FFGI identify every aspect of its "crust-making methodology." Discovery closed on March 1, 2007, but FFGI responded to defendants' interrogatories on April 27, 2007. In its response, FFGI described ten components that make up its "crust-making methodology," four of which were mentioned in the Identification, four of which were mentioned in Mr. Crouse's deposition and discovery documents, and two of which were previously mentioned only in documents produced before FFGI had filed its Identification.

Defendants filed a Rule 37 Motion to Bar FFGI from offering any evidence of its trade secrets other than the four components included in its Identification. On July 26, 2007, Magistrate Judge Cole granted defendants' motion in part and denied it in part. Specifically, Magistrate Judge Cole held that in addition to the four components listed in its Identification, four additional components were also admissible because Mr. Crouse had "clearly and unambiguously" identified, despite confusing questioning, that these components were meant to be factors associated with the sheeting and pre-sheeting process indicated in paragraph (A) of the Identification. In other words, Magistrate Judge Cole found that due to Mr. Crouse's testimony about the four additional components, FFGI did not have to supplement its Identification in order to include these components in its trade secret allegation because the components had "otherwise been made known" during the course of discovery under Rule 26(e)(2). However, Magistrate Judge Cole barred the remaining two components in FFGI's April 27, 2007 interrogatory response because it was not "clear and unambiguous" during the course of discovery that these two components were meant to be included within FFGI's trade secret allegations and because permitting their introduction would prejudice the defendants.

Defendants object to Magistrate Judge Cole's decision to admit the four components mentioned in Mr. Crouse's testimony and his failure to acknowledge differences in the definitions of two components between FFGI's Identification and its April 27, 2007 interrogatory response. In addition, defendants have moved for Rule 37 sanctions against FFGI for failure to comply with Magistrate Judge Cole's May 25, 2006 Order.

STANDARD OF REVIEW

A district court's review of a magistrate judge's non-dispositive order is governed by Rule 72(a) of the Federal Rules of Civil Procedure, which provides, "The district judge to whom to the case is assigned shall consider such objections and shall modify or set aside any portion of the magistrate's order found to be clearly erroneous or contrary to law." Fed. R. Civ. P. 72(a). "A finding is clearly erroneous when, although there may be some evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Thornton v. Brown, 47 F.3d 194, 197 (7th Cir. 1995) (internal citations omitted). "If there are two permissible views, the reviewing court should not overturn the decision solely because it would have not chosen the other view." Am. Motors Corp. v. Great Am. Surplus Lines Ins. Co., No. 87 C 2496, 1988 WL 2788, at *4 (N.D. Ill. Jan. 8, 1988). Thus, in order to overturn Magistrate Judge Cole's July 26, 2007 ruling, we must have a definite and firm conviction that he made a mistake.

ANALYSIS

Defendants' motion presents three main objections to Magistrate Judge Cole's ruling: (1) Magistrate Judge Cole erred in applying Rule 26(e) to any alleged supplementation because the alleged supplement was in FFGI's possession at the time of the initial disclosure; (2) Magistrate Judge Cole erred in finding that Mr. Crouse's deposition unambiguously supplemented the Identification because Mr. Crouse never specifically identified the four components as trade secrets and testified that they were not trade secrets; and (3) Magistrate Judge Cole failed to sanction plaintiff under Rule ...


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