Chris Botticella accepted an offer to join Hostess Inc. as vice president of bakery operations for eastern Texas in October 2009. He didn’t get around to informing his then-employer, competitor Bimbo Bakeries USA Inc., until January 2010.
Following Botticella’s disclosure of the job offer and the discovery of a series of suspicious actions he took leading up to his departure–including copying confidential documents containing trade secrets onto external storage devices–Bimbo sought an injunction barring him from beginning employment with Hostess. In February, Bimbo scored a victory when U.S. District Judge R. Barclay Surrick issued a preliminary injunction, prohibiting Botticella from beginning work at Hostess at least until a full hearing scheduled for April.
Botticella appealed immediately, however, claiming that the injunction was invalid because of a misapplication of the inevitable disclosure doctrine, which would have required Bimbo to prove that it was “virtually impossible” for him to perform his job at Hostess without disclosing trade secrets.
In his position at Bimbo, Botticella was exposed to several confidential pieces of information. Most notably, he was one of just seven individuals who knew all three secrets to the “nooks and crannies” texture of Thomas’ English Muffins, a brand that generates about $500 million in sales annually for Bimbo.
Despite Botticella’s claims that he “blocked out” confidential information after accepting the position at Hostess (a claim the court rebuked, saying it was “quite uncertain as to how an individual can block out information from his head for a human mind does not function like a computer”), the district court sided with Bimbo, and the 3rd Circuit upheld that ruling in Bimbo Bakeries USA, Inc. v. Botticella on June 27.
“There’s a growing body of law that recognizes that once the genie’s out of the bottle, it’s very difficult to put it back,” says Michael Banks, a partner at Morgan Lewis & Bockius, who represented Bimbo in the case. “Courts are coming to terms with procedures and steps that they can take to protect employers, which sometimes entrust their most valuable trade secrets with executives and employees who then go to work for
Despite the exposure to trade secrets inherent in his role as a senior vice president at Bimbo, Botticella’s behavior leading up to his exit likely played a key part in both the district court’s decision to issue an injunction against him and the appeals court’s decision to uphold it.
In the months prior to his departure from Bimbo, Botticella continued to attend confidential meetings and engaged in suspicious behavior, such as copying sensitive electronic files. In one such instance, during the Christmas holiday of 2009, he deleted several documents–some containing personal information, such as his resum?, and others containing confidential information–from his company-issued laptop. Though Botticella testified that he didn’t think the documents would have “any value to anybody,” he nonetheless asked a Bimbo computer tech to restore the files on January 4, 2010, “just in case for the next weeks we needed to have a meeting or something.”
“I have no doubt that his behavior had a lot to do with this,” says James Gehrke, an associate at Gehrke and Associates and blogger for the firm’s Intellectual Property and Tech Law Reports blog. “It’s a radical step for the court to enjoin someone from employment, because he needs to have a salary and obviously Hostess wants his resources. But to be transferring files and then offering some pretty suspicious excuses for why he was doing that certainly didn’t help
After Botticella finally disclosed his Hostess offer and left Bimbo, a computer forensics expert examined his company computer use. He found that a user logged in as Botticella (which Botticella does not deny was him) accessed several confidential documents on multiple occasions during his final weeks of employment. In one such instance, 12 files were accessed in 13 seconds, just minutes after the phone call in which Botticella was told not to continue working for Bimbo.
Botticella claimed that the questionable behavior had an innocent purpose–that he was simply practicing his computer skills in preparation for his new position at Hostess. The district court didn’t buy it, however, calling the explanation “confusing at best” and “not credible.”
Setting the Standard
It’s likely that this behavior helped motivate the court to apply the “substantial threat” standard, which allows courts to enjoin an individual if the facts of the case indicate a significant risk of disclosure of trade secrets, in favor of the “inevitable disclosure doctrine,” which requires that the company show proof that it would be virtually impossible for the individual to assume his or her new role without disclosing trade secret information. The
3rd Circuit’s opinion upholding the injunction is one step in Botticella’s case, but one giant precedent for trade secret litigation moving forward.
There are very few cases–especially appellate cases–on the application of trade secret protection in the employment context outside of a noncompetition agreement, and this decision establishes just how far courts can go in precluding someone from employment based on the risk that he or she might expose trade secrets, experts say. In this case, the court determined that even absent a noncompetition agreement, the facts of the case showed that the threat of disclosure was great enough to warrant the injunction and that Bimbo didn’t need to satisfy the inevitable disclosure doctrine.
“Courts are consistently working to find a balance between, on the one hand, the right of an individual to change jobs, but on the other hand, the right of an employer to protect its most important information,” Banks says.