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Global Protein Products, Inc. v. Le

California Court of Appeals, Sixth District

November 20, 2019

GLOBAL PROTEIN PRODUCTS, INC., Plaintiff and Respondent,
v.
KEVIN K. LE et al., Defendants and Appellants THE VPS COMPANIES, INC., et al., Interveners and Respondents.

          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 ...


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