Facts

Plaintiffs Cargill Incorporated, one of the nation's largest feed manufacturers, and Can Technologies Inc., sued three former employees who left the company on Jan. 31, 2007 to form their own dairy nutrition consulting business, Progressive Dairy Solutions Inc. The three departing employees, Matt Budine, Brian Sundberg and Luciana Jonkman, had been long-standing employees of Cargill in its dairy feed division, and all had been very successful and profitable for the company, especially in regard to the development of Cargill's participation in the dairy industry throughout the Central Valley of California.

Budine, Sundberg and Jonkman left Cargill for reasons that included the fact that they were unhappy with Cargill's feed formulation practices. Within 30 days of their departure, Cargill and Can Technologies filed suit against these individuals and their newly formed company alleging misappropriation of trade secrets, conversion, breach of confidentiality agreements, breach of loyalty and other related claims, which centered on the allegation that these employees had departed with nutritional date and customer feed formulas. A temporary restraining order was issued for production of computer data.

Immediately upon filing the lawsuit, Cargill launched a massive press campaign designed to advise the dairy industry that a suit had been filed and the reasons for the litigation. Cargill also sent out over 300 letters to dairy customers to advise them of the litigation and alleged reasons.

The defendants denied any misappropriation of any trade secrets or "Cargill confidential information." They also filed their own counter-claim alleging unfair business practices pursuant to California Business and Professions Code section 17200.

Counter-claimants alleged that Cargill has engaged in unfair business practices and that Cargill's true motive behind the lawsuit was not to protect trade secrets, but to launch a press and media campaign designed to "crush" the defendants' new business efforts and to disparage their reputations.

Progressive's claim pursuant to California Business & Professions Code section 17200 is currently pending before the court.

Damages

Cargill alleged damages in the amount of $10.4 million as a result of the alleged misappropriation of trade secrets and breach of confidentiality agreement. They also asserted a claim based on unjust enrichment and civil conspiracy.

Result

Defense verdict. The jury returned a special verdict of 94 questions, not only denying all of Cargill's claims, but also concluding that Cargill's claim of misappropriation of trade secrets was "objectively specious" and completely lacked any evidentiary support.

Other Information

The defendants sought recovery of attorney fees based on California Civil Code section 3426.4. The defendants are also seeking recovery of attorney fees pursuant to their counter-claim based on California Business and Professions Code section 17200 and, specifically, California Civil Code section 1021.5. The issue concerning any violation of Business and Professions Code section 17200, and an award of attorney fees pursuant to California Civil Code section 1021.5 is pending before the court.