[255
Cal.Rptr.3d 311] Trial Court: Santa Clara County Superior
Court, Superior Court No. 105CV043903, Trial Judge: Hon.
William J. Elfving.
Page 353
[Copyrighted Material Omitted]
Page 354
COUNSEL
Berding
& Weil, Paul Wilfred Windust, Walnut Creek, for
Plaintiff/Respondent.
Berstein
Law, David Alan Berstein, John Dimuzio Jr., for
Defendants/Respondents.
Johnson
& James, Robert K. Johnson, Aptos, for
Interveners/Respondents.
OPINION
Premo,
J.
Page 355
[255
Cal.Rptr.3d 312] 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.
Page 356
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 [255 Cal.Rptr.3d
313] 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.
Page 357
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 [255 Cal.Rptr.3d 314] 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.
Page 358
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.
Page 359
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 [255
Cal.Rptr.3d 315] 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 ...