Santa
Clara County Superior Court Super. Ct. No. 105CV043903 Hon.
William J. Elfving Trial Judge
Counsel for Plaintiff/Respondent: Global Protein Products,
Inc. Berding & Weil Paul Wilfred Windust
Counsel for Defendants/Respondents: Kevin Le West Coast AG
Berstein Law David Alan Berstein John Dimuzio Jr.
Counsel for Interveners/Respondents: The VPS Companies, Inc.
Inn Foods, Inc. Johnson & James Robert K. Johnson
Premo,
J.
Appellants
Kevin K. Le and West Coast AG, LLC (WCA)[1] appeal from the
trial court's denial of their renewed motion to dissolve
a stipulated permanent injunction filed pursuant to Code of
Civil Procedure section 1008, subdivision (b).[2] The
stipulated permanent injunction prohibits appellants from
acquiring, disclosing, or using a trade secret developed by
respondent Global Protein Products, Inc. (GPP). According to
appellants, dissolution of the stipulated permanent
injunction under section 533 is required because recently
discovered evidence demonstrates that GPP does not have a
valid trade secret. Thus, appellants claim that the
underlying basis for the stipulated permanent injunction no
longer exists.
Although
an order denying a renewed motion under section 1008,
subdivision (b) is not appealable, we exercise our discretion
to treat appellants' appeal as a petition for writ of
mandate and deny the constructive petition. The trial court
reasonably concluded that appellants did not meet the
requirements of section 533. Thus, the trial court did not
abuse its discretion when it denied appellants' renewed
motion.
Background
1.
Le's Employment with Global Protein Products
and The Stipulated Permanent Injunction
Global
Protein Products is a protein based coating company that
claims as a trade secret a proprietary formula and process
for treating field cored iceberg lettuce. GPP's trade
secret product, when applied to lettuce, prolongs shelf life
by preventing dehydration, browning, and pinking of the
lettuce's cut surface.
Le, a
scientist, was employed by GPP from 2000 to 2003. According
to facts later stipulated to by Le, during Le's
employment, GPP disclosed to Le the proprietary formula for
its trade secret product and the identity of an organic acid
used in the product. Le signed a confidentiality agreement
with GPP that required him to withhold GPP's confidential
information.
Le
formed WCA after he left GPP. After he formed WCA, Le and WCA
competed with GPP and attempted to sell WCA's products to
GPP's customers.
On June
28, 2005, GPP filed a lawsuit against appellants alleging
causes of action for trade secret misappropriation, breach of
contract, and unfair competition.
GPP
requested a temporary restraining order and a preliminary
injunction against appellants. Mark Kierstead, GPP's
president and founder, prepared a declaration in support of
GPP's request. According to Kierstead, an inventor
invented a process and formula for making a zein film in pure
water in 1993. A patent was issued for this invention in 1997
(the 880 patent), which GPP subsequently
acquired.[3] Thereafter, GPP began researching
whether its patented process for making zein film in pure
water could be used on fresh produce. GPP's head
scientist discovered that a particular organic acid, if used
with the 880 patent, could extend the shelf life of lettuce
for seven days. Kierstead declared that GPP never disclosed
the identity of this organic acid, and GPP did not patent the
combined use of the unnamed organic acid in conjunction with
the 880 patent. Instead, GPP treated the unidentified organic
acid, used in conjunction with the 880 patent, as a trade
secret. Kierstead asserted that in 2005, he received a call
from Dole Fresh, one of GPP's customers. A Dole Fresh
employee told Kierstead that he had received e mails from
appellants promoting a new product that Le had purportedly
developed. In a subsequent e mail exchange between the Dole
Fresh employee and Le, Le sent a “Material Safety Data
Sheet” that included the undisclosed organic acid used
in GPP's trade secret. Le said that his product used the
same organic acid used in GPP's trade secret.
On June
27, 2005, the trial court granted GPP a temporary restraining
order against appellants. The temporary restraining order
enjoined appellants from acquiring, disclosing, using, or
attempting or threatening to acquire, disclose, or use
GPP's trade secret, and from directly or indirectly
soliciting GPP's customers using GPP's trade secret.
On July 18, 2005, the trial court granted GPP a preliminary
injunction, enjoining appellants from engaging in these same
acts.
On
January 11, 2006, GPP and appellants agreed to a stipulated
permanent injunction that would “fully and finally
resolve all existing and potential differences between
them” arising from appellants' use of GPP's
trade secret. The parties stipulated that “GPP
claim[ed] as a trade secret a proprietary formula and process
for treating field cored iceberg lettuce to increase shelf
life of the lettuce (‘GPP's Trade Secret
product').” The parties further stipulated that
“[t]he formulation of GPP's Trade Secret product
and the identity of the organic acid used in the formulation
and process were disclosed to Mr. Le during his employment at
GPP.”
Pursuant
to the stipulated permanent injunction, appellants were
permanently enjoined from: (1) “Acquiring, disclosing,
using, or attempting or threatening to acquire, disclose, or
use, GPP's Trade Secret product, including any
information relating to its formulation and process and the
identity of the organic acid used in said product, ”
(2) “Directly or indirectly soliciting any of GPP's
customers using GPP's Trade Secret product and/or any
information related thereto, ” and (3) “Doing any
other act using GPP's Trade Secret or any other
information subject to Mr. Le's Confidentiality Agreement
with GPP in order to compete with GPP.”
2.
GPP's Ex Parte Application for Order to Show
Cause Regarding Contempt, VPS's
Complaint in Intervention, and Subsequent
Proceedings
In
October 2013, Bob Cyr, GPP's chief executive officer
(CEO), met with representatives of Inn Foods, Inc., and its
parent company, intervenor and respondent VPS Companies, Inc.
(VPS), to discuss GPP's shelf life extender products. At
the time, VPS notified Cyr that it was subject to legal
restrictions due to a settlement from a prior lawsuit with
appellants. VPS was not permitted to use shelf life extenders
provided by Le and was restricted from engaging in
development of shelf life extenders.
After
learning this information, GPP conducted its own
investigation. Based on its investigation, GPP believed that
Le had attempted to sell VPS a trade secret formula that he
had created called “WCA Blend T6.” GPP believed
that the trade secret formula that Le created and sold was
derived from GPP's trade secret. According to statements
made by Le in his prior litigation with VPS, Le began
consulting with Inn Foods in 2005 and began an employment
relationship with VPS in 2007. Le previously stated in the
prior VPS litigation that “ ‘[o]n July 31, 2012,
Defendant MID CON AG, LLC purchase[d] all ownership rights,
title, and interest to the proprietary polysaccharide
formulations developed by LE/WCA.' ” Thus, GPP
claimed that appellants had violated the permanent injunction
previously issued by the trial court.
On July
29, 2014, GPP filed an ex parte application for an order to
show cause regarding contempt. That same day, the trial court
issued an order to show cause to appellants.
On
October 30, 2014, the trial court granted VPS's motion to
intervene, and VPS filed a complaint in intervention.
VPS's complaint in intervention alleged that Le
misappropriated GPP's shelf life extenders and falsely
claimed to be the owner or inventor of the shelf life
extenders that he had provided to VPS. VPS sold products to
Kidco Farms Processing until Le's resignation. After
Le's resignation, Kidco stopped purchasing products from
VPS and began purchasing products from appellants. VPS sued
appellants, Kidco, and Mid Con Ag, LLC. Subsequently, VPS
entered into a settlement in that case relying on
appellants' purportedly false statements that they, not
GPP, had developed the shelf life extender at issue.
Appellants
opposed the order to show cause, filed an opposition, and
engaged in discovery. Appellants also demurred to VPS's
complaint in intervention, moved to compel GPP to identify
its trade secrets, and moved for a protective order
preventing GPP from conducting discovery until it had
identified its trade secrets. GPP later filed an amended
disclosure of its trade secret products, which appellants
argued was deficient.
On
February 26, 2015, the trial court overruled appellants'
demurrer to VPS's complaint in intervention. The trial
court denied appellants' motion to compel a trade secret
designation and for a protective order after determining that
GPP's alleged trade secrets were described with
reasonable particularity in their amended trade secret
designation as required under section 2019.210.[4]
3.
Motion to Modify or Dissolve the Stipulated Permanent
Injunction
Appellants
continued to engage in discovery and sent GPP requests for
admissions. In their sixth request for admission, appellants
asked GPP to admit that the organic acid identified in the
first paragraph of the stipulated permanent injunction was
citric acid, which GPP admitted. In their seventh request,
appellants asked GPP to admit that the organic acid
identified in the first paragraph of the stipulated permanent
injunction was sodium benzoate, which GPP denied. GPP's
answers were both subject to objections that the requests
were improper in form and were not full and complete in and
of itself.
On July
20, 2016, appellants filed a motion to modify or dissolve the
stipulated permanent injunction under section 533. Appellants
argued that newly discovered facts-that citric acid was the
previously undisclosed organic acid in the stipulated
permanent injunction-demonstrated that GPP's trade secret
did not possess a commercial advantage, and GPP's trade
secret was previously publicly disclosed in a patent (the 880
patent). Appellants further argued that the stipulated
permanent injunction's language was overly broad and
failed to provide appellants adequate notice of the specific
actions that were enjoined. Appellants also claimed that
citric acid was widely used for food preservation.
Appellants
argued that GPP itself could not define its own trade secret.
Appellants' motion quoted excerpts taken from depositions
taken of GPP employees. In one quote, Cyr stated that
Kierstead would know the identity of the trade
secret.[5] In another quote, Kierstead stated
that the trade secret was “ ‘the formula'
” as well as the “ ‘organic acid that Tony
Jabar figured out.' ” Jabar, however, was quoted as
saying, “ ‘I don't know what an undisclosed
acid is. So I don't have any way of knowing.' ”
GPP
opposed the motion to modify or dissolve the stipulated
permanent injunction. GPP maintained that it had not
disclosed the organic acid used in its trade secret product
and had continued to take reasonable steps to protect its
proprietary formula. GPP argued that the stipulated permanent
injunction's language was purposefully vague to maintain
GPP's trade secret, and appellants had previously
conceded that they knew the formula for GPP's trade
secret and was thus aware of what they were enjoined from
using. VPS also opposed appellants' motion.
On
August 1, 2016, GPP moved to amend its responses to
appellants' first set of requests for admissions. GPP
sought to amend its response to the sixth request for
admission (whether the undisclosed organic acid was citric
acid) to denied, and its response to the seventh request for
admission (whether the undisclosed organic acid was sodium
benzoate) to the information is protected by trade secret
privilege. Both answers were subject to GPP's objection
that the requests were improper in form and were not full and
complete in and of itself.
In its
motion, GPP argued that it had mistakenly admitted that
citric acid was the unidentified organic acid in its trade
secret. GPP explained that the mistake occurred because
citric acid was one of the organic acids used in
GPP's trade secret; however, it was not the
unidentified organic acid used in GPP's trade
secret. GPP argued that an amendment should be permitted
...