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Fast Food Gourmet, Inc. v. Little Lady Foods

April 3, 2008

FAST FOOD GOURMET, INC., PLAINTIFF,
v.
LITTLE LADY FOODS, INC., AND KRAFT FOODS GLOBAL, INC. DEFENDANTS.



The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge

MEMORANDUM OPINION AND ORDER

Fast Food Gourmet, Inc.'s ("FFGI") second amended complaint alleges misappropriation of trade secrets against Little Lady Foods, Inc. ("LLFI") and Kraft Foods Global, Inc. ("Kraft")(Counts I and II, respectively), breach of contract against LLFI (Count III), and unjust enrichment against Kraft (Count IV). Before me are: defendants' motions for summary judgment; defendants' motion to strike portions of FFGI's consolidated statement of additional facts and responses to defendants' Local Rule 56.1 statements; defendants' motion for leave to incorporate motion to bar into pending motion to strike; and plaintiff's motion to strike defendants' replies and additional facts in support of their Local Rule 56.1 statements. For the following reasons, defendants' motion for leave to incorporate motion to bar into pending motion to strike is granted, and defendants' motion to bar is granted in part; defendants' motion to strike is otherwise denied. Plaintiff's motion to strike is denied. LLFI's motion for summary judgment is denied; and Kraft's motion for summary judgment is denied.

I.

Defendants have moved for leave to incorporate their motion to bar into their pending motion to strike. That motion is granted. The motion to bar is granted in part, as explained below.

During discovery, FFGI provided a document entitled Plaintiff's Identification of Trade Secrets (the "Identification") stating that FFGI's trade secrets that it contends were misappropriated by the defendants consisted of "a method for preparing thin-crust frozen pizzas that resulted in an artisan-style crust of a quality not otherwise achievable in the world of frozen pizzas, a crust that is crispy on the bottom, while soft and tender inside." (Defs. Mot. to Bar, Ex. A.) The Identification continues that the "core components that allowed FFGI to achieve this result came from a combination of the following:" (A) stress-free sheeting and pre-sheeting; (B) thin dough sheeting; (C) exceptionally high banking temperature; and (D) the stone-hearth oven. (Id.) The Identification further explains that the FFGI pizza: "utilized a Rheon stress-free dough sheeting system[;]" "was sheeted to a thickness that would permit the final product . . . to have an outer edge thickness of approximately 7 to 8 millimeters[;]" "was baked at a temperature exceeding 600 degrees Fahrenheit[;]" and "was baked on a conveyorized stone-hearth oven utilizing top and bottom heating introduced with impingement."

On December 12, 2006, Kenneth Crouse ("Crouse"), FFGI's vice president of operations -- the person who verified the Identification -- was deposed as a FED. R. CIV. P. 30(b)(6) witness.

Crouse initially testified that, at the time he executed the Identification and as of the date of his deposition, it was an accurate and complete description of the trade secrets and there were no other trade secrets that FFGI contends defendants misappropriated. Crouse also testified that the Identification was not necessarily complete. When asked to list every process, technique, or anything else missing from the Identification, Crouse identified: (1) floor time of 90 minutes; (2) dough temperature of approximately 68 to 72 degrees Fahrenheit when removed from the mixer; (3) introduction of ice into the dough to achieve cold dough; and (4) removal of all dough conditioners. Crouse explained that he would call these "factors relating to (A) stress-free sheeting and pre-sheeting [as set forth in the Identification]." Crouse testified that he "would not say they are our trade secrets." When defendants' counsel asked Crouse if it was accurate that he was not claiming the floor time, temperature, introduction of ice, and removal of dough as trade secrets, Crouse explained that he "feel[s] these things are relative to and important to part A [of the Identification] which is what we are discussing: Stress-free and pre-sheeting, and in the process you are demanding . . . a yes or no pursuant to is it a trade secret or is it not a trade secret. . . . " Defendants' counsel then asked, "My question to you is simply this: Are these things that we just discussed: Floor time, the actual amount of floor time being 90 minutes, the temperature of the dough, the introduction of ice, and the removal of dough conditioners, are you claiming that those factors are . . . FFGI's trade secrets?" Crouse answered, "No."

On February 2, 2007, shortly before the close of fact discovery, FFGI was granted leave to amend its complaint. The motion for leave to file the second amended complaint stated that the only purpose for the amendment was to "add[] the specific allegation that LLFI breached its contractual obligations not to manufacture pizzas that were, in the aggregate, substantially identical to the FFGI pizzas." The motion for leave to file the second amended complaint acknowledged that this allegation overlaps with the existing trade secret allegations, but clarified "that this alleged contractual violation gives rise to a claim for breach independent of the existence of trade secrets." The motion for leave to file the second amended complaint also identified two paragraphs in which the phrase "crust-making methodology" was substituted for "trade secrets."

Kraft propounded interrogatories concerning the second amended complaint, in which it asked FFGI to identify (1) the aspects of its crust-making methodology, as used in the second amended complaint, as well as those aspects that it contends were used by LLFI in connection with manufacturing pizzas for Kraft, and (2) the components of its crust-making methodology that it contends are Proprietary Information as defined in the Private Label Production Agreement (the "Agreement") between FFGI and LLFI. In its April 27, 2007 answers to Kraft's interrogatories, FFGI stated that the crust-making methodology it alleges was used in connection with Kraft's products includes the following items:

(a) utilization of ice in the dough formula; (b) targeting a post-mixture temperature specification of 68-72 degrees Fahrenheit; (c) ambient floor time of 90-120 minutes; (d) placing portions of dough into covered, oiled tubs or troughs; (e) elimination of artificial dough conditioners; (f) oven temperature of approximately 750 degrees Fahrenheit; (g) crust density (2 to 2.3 g/sq. in.); (h) use of stress-free (low stress) sheeting equipment; (i) utilization of stone hearth conveyor impingement oven; (j) water absorption bakers percentage of 58-62 percent. (See Defs. Mot. to Bar, Ex. D.) FFGI further stated that these aspects of the crust-making methodology were Proprietary Information. (See id.) Based on FFGI's interrogatory answers, defendants argue that FFGI is trying to expand its trade secrets by adding six components to the four components previously set forth in the Identification.

Defendants moved to bar any evidence in support of FFGI's trade secrets claims pertaining to the six additional components pursuant to FED. R. CIV. P. 37(c)(1) because FFGI did not amend the Identification as required by FED. R. CIV. P. 26(e)(2).

Specifically, defendants sought to bar evidence concerning the following items identified in FFGI's interrogatory answers: (a) use of ice in the dough mixture; (b) targeting a post-mixture temperature of 68-72 degrees; (c) ambient floor time of 90-120 minutes; (d) placing fifteen pound dough portions in oiled plastic tubs; (e) not using artificial dough conditioners; and (j) targeting water absorption bakers percentage of 58-62 percent. (See Defs. Mot. to Bar at 7-8.) Defendants did not seek to bar evidence regarding the remaining four items identified in FFGI's interrogatory answers, namely: (f) oven temperature of approximately 750 degrees Fahrenheit;*fn1 (g) crust density (2 to 2.3 g/sq. in.);*fn2 (h) use of stress-free (low stress) sheeting equipment;*fn3 and (i) utilization of stone hearth conveyor impingement oven. (See id.) The motion to bar was originally referred to Judge Cole. He ruled, but later vacated his order. Judge Aspen, to whom an objection had been made, also vacated his ruling on the objection. I therefore consider the motion de novo.

Defendants argue that FFGI failed to seasonably supplement the Identification, relying on FED. R. CIV. P. 26(e), which states

A party who has . . . responded to a request for discovery with a disclosure or response is under a duty to supplement or correct the disclosure or response to include information thereafter acquired if ordered by the court or in the following circumstances: . . . (2) A party is under a duty seasonably to amend a prior response to an interrogatory, request for production, or request for admission if the party learns that the response is in some material respect incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.

FED. R. CIV. P. 26(e)(2). Defendants assert that, under FED. R. CIV. P. 37(c)(1), FFGI should not be permitted to present evidence related to additional information provided in its April 27 interrogatory answers. FED. R. CIV. P. 37(c)(1) provides that a party that "without substantial justification fails . . . to amend a prior response to discovery as required by Rule 26(e)(2), is not, unless such failure is harmless, permitted to use as evidence at trial, at a hearing, or on a motion any . . . information not so disclosed . . . . " Defendants seek to bar FFGI from presenting evidence regarding the following items identified in its April 27 interrogatory answers: (a) use of ice in the dough mixture; (b) targeting a post-mixture temperature of 68-72 degrees; (c) ambient floor time of 90-120 minutes; (d) placing fifteen pound dough portions in oiled plastic tubs; (e) not using artificial dough conditioners; and (j) targeting water absorption bakers percentage of 58-62 percent. (See Defs. Mot. to Bar at 7-8.) Defendants do not seek to bar evidence regarding the remaining four items listed in FFGI's interrogatory answers, namely: (f) oven temperature of approximately 750 degrees Fahrenheit; (g) crust density (2 to 2.3 g/sq. in.); (h) use of stress-free (low stress) sheeting equipment; and (i) utilization of stone hearth conveyor impingement oven. (See id.)

First, Crouse testified about items (a), (b), (c), and (e) in his deposition. Thus, this information was sufficiently "otherwise made known" to defendants during discovery. Defendants contend that this information should be barred because Crouse specifically testified that these four items were not FFGI's trade secrets. That is correct as far as a specific answer to a specific question, but mischaracterizes Crouse's testimony regarding these factors. It is unmistakable from other portions of Crouse's testimony that he indicated the Identification was incomplete, explained the additional information necessary to complete it, and stated that such additional information was "relative" and "important" to the stress-free sheeting and pre-sheeting component of FFGI's trade secrets listed in the Identification.

Second, items (d) and (j) were not covered in Crouse's deposition. FFGI attached a document to its response brief that it claims "contains virtually all" of the aspects identified in its April 27 interrogatory answers. (See Pl. Opp'n to Defs. Mot. to Bar at 11, Ex. 5.) This document was identified in response to LLFI's interrogatories in April 2006 in answering an interrogatory asking FFGI to "[i]dentify each and every 'specification' as referenced in Paragraph 3 of the Amended Complaint that FFGI contends is a trade secret." (See id.; Defs. Mot. to Bar, Ex. H.) With regard to item (d), this document does not mention placing portions of the dough into covered, oiled tubs or troughs. FFGI has not identified any means by which item (d) was otherwise disclosed to defendants during discovery. With regard to item (j), on one page of this document, FFGI appears to argue that it was referenced as "62.7% TOTAL MOISTURE ABSORPTION." (See Pl. Opp'n to Defs. Mot. to Bar at 11, Ex. 5.) Item (j) of FFGI's crust-making methodology states "water absorption bakers percentage of 58-62 percent." It is not clear that the document discloses the information contained in item (j), particularly as the percentage contained in the document is actually higher than the range stated in the interrogatory answers. Unlike the information clearly set forth in Crouse's deposition testimony, the information contained in the document is not sufficient to have otherwise disclosed to defendants the information set forth in item (j). Therefore, FFGI is barred from presenting evidence related to items (d) and (j).

Accordingly, in addition to evidence regarding the information set forth in the Identification, FFGI may present evidence related to: utilization of ice in the dough formula; targeting a post-mixture temperature specification of 68-72 degrees Fahrenheit; ambient floor time of 90-120 minutes; and elimination of artificial dough conditioners. FFGI may also present evidence regarding oven temperature of approximately 750 degrees Fahrenheit, crust density (2 to 2.3 g/sq. in.), use of stress-free (low stress) sheeting equipment, and utilization of stone hearth conveyor impingement oven as set forth its interrogatory answers -- even to the extent the information relating to temperature, crust density, and sheeting differ from its initial Identification -- because defendants did not seek to bar such evidence. FFGI may not present evidence related to: placing portions of dough into covered, oiled tubs or troughs; and water absorption bakers percentage of 58-62 percent.

II.

Summary judgment is appropriate where the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). A genuine issue for trial exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The movant initially bears the burden of "identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has met this burden, the non-movant "may not rest upon the mere allegations or denials of the adverse party's pleading," but rather "must set forth specific facts showing that there is a genuine issue for trial." See FED. R. CIV. P. 56(e). I must construe all facts in the light most favorable to the non-movant and draw all justifiable inferences in favor of that party. See Anderson, 477 U.S. at 255.

Along with the summary judgment briefs, the parties have filed motions to strike relating to the opposing parties' Local Rule 56.1 statements. Specifically, plaintiff moves to strike defendants' replies and additional facts in support of their Local Rule 56.1 statements as not permitted under the local rules. Defendants move to strike certain portions of plaintiff's consolidated statement of additional facts that (1) do not allege short specific facts, (2) constitute legal argument, and (3) contain undisclosed expert opinion testimony. Defendants also move to strike certain portions of plaintiff's responses to defendants' Local Rule 56.1 statements that (1) neither admit nor deny the alleged fact, (2) do not cite to evidence to support denials, and (3) consist of improper legal argument. While I deny these motions, I will not consider any objected to aspect of any party's statement of facts, response thereto, or reply in support thereof, that does not comport with the local rules. Accordingly, the facts set forth below are taken from the properly pled portions of the parties' Local Rule 56.1 statements and accompanying exhibits.

FFGI, a Missouri corporation with its principal place of business in Kansas, develops and produces frozen pizzas. LLFI, an Illinois corporation with its principal place of business in Elk Grove Village, Illinois, is the largest contract manufacturer of frozen pizza in the United States. Kraft is a Delaware corporation with its principal place of business in Illinois. Kraft markets and sells the DiGiorno Thin Crispy Crust frozen pizza.

During the 1990s, FFGI wanted to create a non-traditional "tart flambee" type of pizza with gourmet toppings, and Crouse traveled to Europe to investigate pizzas. FFGI eventually arrived at a combination of techniques to mass produce its frozen thin-crust pizza, Stillwell's Stone Fired Pizza. FFGI claims that these techniques include: stress-free (low stress) sheeting and pre-sheeting,*fn4 a Gouet conveyorized, impingement stone-hearth oven,*fn5 thin dough sheeting, crust density of 2-2.3 g/sq. in., baking temperature exceeding 600 - approximately 750 - degrees Fahrenheit, cool dough temperature of 68-72 degrees Fahrenheit, the use of ice in the dough, floor time of 90-120 minutes, and the elimination of dough conditioners.

In October 1998, FFGI chose Custom Foods, Inc. ("Custom Foods") to act as its co-packer. FFGI initially sold its product primarily in the Kansas area. By spring 2002, it had attracted the interest of Whole Foods and Wild Oats. And, by the following year, FFGI's product appeared in Costco.

On November 30, 2001, the Kansas City Business Journal published an interview with Crouse. In this interview, Crouse revealed FFGI's use of: "stress-free" sheeting; baking temperature of 750 degrees for one minute; a blast freezer; and a stone-hearth oven from Europe. In addition, FFGI's 2001 marketing materials referred to its sixty-second cooking time at "over 750 degrees F" and its flash freezing techniques. In his declaration, Crouse now claims that the baking time and temperatures in both the article and the marketing materials "do not reflect the actual specifications in use on the FFGI pizza as manufactured at [LLFI]."

In a letter dated May 2, 2002, Custom Foods terminated its manufacturing agreement with FFGI due to FFGI's failure to pay rent. On August 23, 2002, FFGI and LLFI entered into the Agreement. The Agreement restricts LLFI's use of FFGI's "Proprietary Information," which is defined in Section 7(a) as: all information, materials and data, whether communicated orally, in writing or in any other format, which is (a) sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use, and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality.

The Agreement also lists "[b]y way of illustration, but not limitation," various types of information included in the definition of Proprietary Information. The Agreement requires the parties to identify "[t]o the extent practicable," all information entitled to protection "by appropriate markings on any documents exchanged, or, if the disclosure has been orally, then the disclosing Party shall identify the information as 'confidential' at the time the disclosure is made ...


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