The famous "nooks and crannies" in Thomas' brand English muffins -- and the closely guarded manufacturing secrets used to make them -- played a key role in a recent court battle over a top-level executive's decision to switch jobs and a federal judge's injunction that barred him from starting the new job.
In his 37-page opinion in Bimbo Bakeries USA Inc. v. Botticella, U.S. District Judge R. Barclay Surrick granted a preliminary injunction, ruling that Chris Botticella, a former senior vice president at Bimbo, cannot start to work for Hostess Inc. because his extensive knowledge of Bimbo's trade secrets makes it substantially likely, if not inevitable, that he would disclose Bimbo's secrets to Hostess.
According to court papers, Thomas' English Muffins generate about $500 million in annual sales for Bimbo, and there are three secrets for making their "nooks and crannies" texture -- the recipe, the engineering and the process. Most Bimbo employees know only one of the secrets, and Botticella was one of just seven people with knowledge of all three.
And as a senior vice president earning $250,000 plus bonuses, Botticella was in an elite group that had access to Bimbo's competitive planning, including product launch plans and strategies for cutting costs and securing lucrative contracts for store-brand products, Surrick found.
Surrick found that Botticella had continued to work for Bimbo for several months after accepting the Hostess post in October 2009, never telling his bosses of his imminent plans to quit as he continued to attend high-level strategy meetings.
Botticella also surreptitiously accessed highly sensitive documents on his final day of work at Bimbo, Surrick found, and a computer expert showed that an external drive had been connected to Botticella's laptop.
Botticella's attempts to explain his conduct were "simply not credible," Surrick found.
"Defendant's conduct before leaving Bimbo, in not disclosing to Bimbo his acceptance of a job offer from a direct competitor, remaining in a position to receive Bimbo's confidential and trade secret information and, in fact, receiving such information after committing to the Hostess job, and copying Bimbo's trade secret information from his work laptop onto external storage devices, demonstrates an intention to use Bimbo trade secrets during his intended employment with Hostess," Surrick wrote.
The ruling is a victory for attorneys Michael L. Banks, Michael J. Puma, Victoria L. Gorokhovich and Kasturi Sen of Morgan Lewis & Bockius. Banks declined Tuesday to make any comment on the ruling.
Botticella's lawyer, Elizabeth K. Ainslie of Schnader Harrison Segal & Lewis, declined to comment except to say that she disagreed with Surrick's rulings and that she intends to pursue an immediate appeal.
The case is an unusual one because it focused solely on the threatened disclosure of trade secrets and did not involve any restrictive covenant. It was also one of the rare cases in which the court took the ultimate step of completely barring the worker from starting the new job.
But one lawyer who is watching the case said he believes Surrick's ruling was "well within existing law" and properly rejected the higher standard urged by Botticella's lawyer and a lower standard urged by Bimbo's lawyers.
Attorney Paul J. Greco of Conrad O'Brien, who specializes in employee defection litigation (but has no connection to Bimbo v. Botticella), said the case hinged on the application of the "inevitable disclosure" doctrine.
Greco said Bimbo was arguing that it was entitled to an injunction if it could show that Botticella is "likely" to disclose trade secrets to Hostess, while Botticella argued that Bimbo had a much heavier burden and would have to show that it would be impossible for him to work at Hostess without disclosing Bimbo's trade secrets.
Surrick rejected both arguments, Greco said, and instead concluded that Bimbo's burden was to show at least a "substantial threat" of disclosure of a trade secret.
In doing so, Greco said, Surrick "stuck right where the law seems to be."
In reviewing the case, Greco said that he was struck by a series of factors that ultimately proved to be fatal to Botticella's arguments, including the judge's factual findings that Botticella had accessed sensitive documents and had the intent to use the secret information in his new job.
Greco said such cases are always fact-intensive and that he anticipates that Botticella will have a difficult task in convincing the appellate court to overturn Surrick's ruling.
Surrick found that Botticella was "involved with financial, strategic, sales, and product development issues at a company-wide level," and that he was "one of less than 12 people who had access to the 'code books' that contain the formulas and process parameters for Bimbo's products."
Botticella was also "one of the key Bimbo employees" responsible for a plan to increase profitability by $100 million in 2009, Surrick noted, which ultimately resulted in cost savings of $75 million, with Botticella responsible "for close to half of that amount."
Surrick concluded that Botticella's extensive knowledge of Bimbo's trade secrets made it very likely he would disclose those secrets if he began the new job.
"We seriously doubt that Defendant will somehow clear his mind of Bimbo's trade secret information when working on related tasks at Hostess," Surrick wrote.
In his final paragraphs, Surrick found that the harm to Botticella from a preliminary injunction will be minimal because the case will proceed to a final determination within the next two months. In the meantime, Surrick noted, Botticella will be receiving 11 weeks of vacation time that he accrued before leaving Bimbo.
