The U.S. Court of Appeals for the Third Circuit affirmed a preliminary injunction barring a senior bakery executive from beginning employment with a competitor, finding that the “likely” disclosure of bakery’s trade secrets to the new employer was sufficient harm to support the injunction. Bimbo Bakeries USA, Inc. v. Chris Botticella, Case No. 10-1510 (3rd Cir., July 27, 2010) (Greenberg, J.).
As Bimbo’s vice president of operations for California, Botticella had access to a broad range of Bimbo’s confidential information. Botticella was one of only seven people who knew the recipe for Bimbo’s Thomas’ English Muffins, with their unique “nooks and crannies” texture. In October 2009, Botticella accepted an employment offer from Hostess Brands, one of Bimbo’s primary competitors. When Bimbo learned that Botticella was going to be working for Hostess, it moved for injunctive relief and presented evidence that Botticella continued to receive and copy Bimbo’s confidential information after accepting the job with Hostess and without disclosing such acceptance to Bimbo. After the district court preliminarily enjoined Botticella from beginning employment with Hostess to prevent the likely disclosure of Bimbo’s trade secrets, Botticella appealed.
The Third Circuit affirmed, finding under Pennsylvania law that an injunction prohibiting the commencement of employment can issue on a showing of the “likely” disclosure of trade secret information and also finding that a showing that the trade secret disclosure was inevitable was not required. The court reasoned that the injunction in this case was not issued pursuant to the doctrine of inevitable disclosure, which is recognized by Pennsylvania law, but rather based on the basis showing of likely disclosure. The court rejected Botticella’s argument that an injunction against employment could only issue when it would be “virtually impossible” for an employee to fulfill his employment duties without disclosing a former employer’s trade secrets, finding that a prior Third Circuit case supporting this argument had incorrectly interpreted Pennsylvania law. The court also rejected the argument that the inevitable disclosure doctrine only applied to “technical” trade secrets, concluding that an injunction could issue “if the facts of the case demonstrate a substantial threat of trade secret misappropriation,” regardless of whether the trade secrets are of a technical or non-technical nature.
While affirming the injunction against the commencement of Botticella’s employment, the court suggested that such an injunction could only be “temporarily” imposed. Noting the “severe restriction” imposed by prohibiting someone from pursuing his livelihood, the court cautioned that if Bimbo was found to be entitled to relief following a disposition on the merits, the district court “should fashion a remedy appropriate to protect Bimbo’s trade secrets without unduly imposing on Botticella’s right to pursue his chosen occupation.”
Practice Note: This case highlights the risks involved when employees move between competitor companies. Departing employees should be careful to distance themselves from access to confidential information, at the risk of possibly being enjoined from commencing their new employment. Companies hiring employees from competitors should take active measures to ensure that the employee brings no confidential information. Simply obtaining a representation from the employee to this effect—as Hostess did here—is not alone sufficient to avoid the risk of the employee being enjoined from commencing his new job.