May a court stop someone from starting a new job when they are accused of stealing trade secrets from their old job?

The United States Court of Appeals for the Third Circuit was recently asked to prevent an individual from starting a new job after he was accused of stealing trade secrets from his old job.  Bimbo Bakeries USA, Inc. v. Botticella, No. 10-1510, 613 F.3d 102 (3d Cir. 2010).

Chris Botticella was employed as Vice President of Operations for Bimbo Bakeries USA, Inc. (“Bimbo”) from 2001 to January 2010.  In early 2009, he signed a “Confidentiality, Non-Solicitation and Invention Assignment Agreement” (the “Agreement”) with Bimbo.  Bimbo claimed that he possessed a broad range of confidential information about Bimbo, its products and its business strategy; including the secret behind the “nooks and crannies” of Thomas’ English Muffins.  The Agreement restricted Botticella from competing directly with Bimbo, prevented him from disclosing confidential or proprietary information and required him to return to Bimbo every work-related document in his possession upon termination of his employment.  The Agreement did not include a restriction on where Botticella could work if he left Bimbo.

In October 2009, Botticella accepted a job with Hostess Brands, Inc. (“Hostess”).  He did not immediately tell Bimbo about this new position, so he continued receiving confidential and proprietary information from Bimbo.  Hostess made Botticella sign an “Acknowledgment and Representation Form” (“Form”) before he began working there.  The Form stated that Hostess was not interested in any confidential information, proprietary information or trade secrets that Botticella obtained from Bimbo.  The Form also prevented Botticella from disclosing any such information to Hostess.  Botticella gave Bimbo notice of his resignation on January 4, 2010 and he was officially terminated by Bimbo on January 13, 2010.

Bimbo sued Botticella after he began working for Hostess and requested a preliminary injunction to prevent him from working there.  The United States District Court for the Eastern District of Pennsylvania granted Bimbo’s request for a preliminary injunction.  That injunction prohibited Botticella from working for Hostess; from divulging to Hostess any of Bimbo’s confidential or proprietary information; and directed him to return any confidential or proprietary information in his possession to Bimbo.  Botticella appealed the District Court’s decision and all proceedings were stayed while the United States Court of Appeals for the Third Circuit heard the case.

The Third Circuit reviewed Pennsylvania law and determined that the District Court properly exercised its discretion in preventing Botticella from working for Hostess if it believed there was a threat he would expose Bimbo’s trade secrets.  The Third Circuit also determined that the District Court made the proper inquiry when deciding whether to grant the injunction, which is: “whether there is sufficient likelihood, or substantial threat of a defendant disclosing trade secrets.”  Id. at 26.

The Third Circuit held that Botticella’s position with Hostess was substantially similar to his position with Bimbo.  The record supported that conclusion since Botticella’s position with Hostess would involve broad oversight over bakery operations, just like his position with Bimbo.  The Third Circuit also agreed that the evidence supported the conclusion that Botticella intended to use Bimbo’s trade secrets while employed with Hostess.  This evidence included Botticella’s failure to immediately disclose his acceptance of a job from a direct competitor which permitted him to remain in a position to receive Bimbo’s confidential information.  The evidence also showed that Botticella received confidential information after accepting the Hostess job and that he copied Bimbo’s trade secret information from his work laptop onto external storage devices.  As a result, the Third Circuit concluded that Bimbo was likely to succeed against Botticella on its claim for misappropriation of trade secrets.

The Third Circuit similarly held that Bimbo would suffer irreparable harm without an injunction because disclosure of its trade secrets to Hostess would put it at a competitive disadvantage.  The Third Circuit also held that the potential harm to Botticella was outweighed by the potential harm to Bimbo and agreed that an injunction was warranted and the restraint necessary to prevent greater irreparable harm from befalling Hostess.

The Third Circuit agreed with the District Court’s conclusion that granting the injunction was consistent with the public interest.  The Third Circuit was “satisfied on the facts of this case that the public interest in preventing the misappropriation of Bimbo’s trade secrets outweighs the temporary restriction on Botticella’s choice of employment.”  Id. at 38.

In conclusion, the Third Circuit affirmed the preliminary injunction issued in favor of Bimbo which prevented Botticella from continuing to work with Hostess.  The case was remanded to the District Court with the injunction in place for a trial on whether Botticella actually misappropriated Bimbo’s trade secrets.

Download Bimbo Bakeries USA, Inc. v. Botticella, No. 10-1510, 613 F.3d 102 (3d Cir. 2010)

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