Can a company prevent an executive from starting a new job at a competitor just because the executive might disclose company trade secrets? Under the “inevitable disclosure” doctrine developed more than a decade ago, “the answer was yes if the disclosure seemed a near certainty.” But in recent years, the doctrine has been in decline and various courts and commentators have essentially proclaimed its demise. However, the recent case of Bimbo Bakeries USA, Inc. v. Chris Botticella, No. 10-0194 (E.D. Pa. Feb. 9, 2010), shows that there is still some breath left in this doctrine.
A dispute arose in January 2010 between Pennsylvaniabased Bimbo Bakeries and Chris Botticella, Bimbo’s Vice President of California Operations, after Bimbo discovered that Botticella secretly accepted a job offer from Hostess Brands, Inc., one of Bimbo’s three major rivals, a few months earlier. Bimbo sued Botticella, seeking a preliminary injunction preventing him from starting employment with Hostess.
The district court, in its determination of whether to issue a preliminary injunction against Botticella, considered four factors: (1) the moving party’s (Bimbo’s) likelihood of success on the merits; (2) the extent to which the moving party will suffer irreparable harm if the injunction is denied; (3) the extent to which the non-moving party (Botticella) will not suffer greater harm than the moving party as a result of the injunction; and (4) the public interest.
Regarding the first factor, the court found that Bimbo would likely prevail on its trade secret misappropriation claim. Botticella had detailed confidential knowledge about Bimbo’s financial, product, and strategic data. In fact, Botticella was one of only seven employees knowing all three of the closely-guarded secrets behind making the “nooks and crannies” in Thomas’ English Muffins, a $500 million Bimbo product. Further, immediately after Hostess accidentally disclosed Botticella’s upcoming move, Botticella accessed–and possibly copied–a number of Bimbo’s highly-confidential documents using his laptop. Botticella said he had accessed the files to practice his computer skills, but the court found this simply not credible.
For the second factor, the court found that Bimbo would suffer irreparable harm without an injunction. The court stated that disclosure of Bimbo’s trade secrets to Hostess would harm Bimbo by giving Hostess a competitive edge against its key rival.
Regarding the third factor, the court found that the harm to Botticella was outweighed by the potential harm to Bimbo if no injunction issued. Botticella argued that an injunction would prevent him from taking one of the few executive positions within his expertise. However, the court noted that a preliminary injunction would only delay Botticella’s employment with Hostess for the few months until the overall case against Botticella was decided, a minor harm.
For the fourth factor, the court found that the public’s interest favored issuing the injunction. The public’s interest in keeping Bimbo’s trade secrets from its direct competitor outweighed Hostess’ freedom to hire whomever it chooses, since the public has an interest in trade-secret preservation.
In view of these facts, the court issued the preliminary injunction against Botticella, finding it inevitable that Botticella would disclose Bimbo’s trade secrets in his new job with Hostess.