Home > Regions > North America > Third Circuit Case Explores Nooks and Crannies of Trade Secret Misappropriation Under Pennsylvania Law

Third Circuit Case Explores Nooks and Crannies of Trade Secret Misappropriation Under Pennsylvania Law

A July 27, 2010 decision by the United States Court of Appeals for the Third Circuit, in Bimbo Bakeries USA, Inc. v. Botticella, No. 10-1510, upheld an injunction preventing a senior executive from commencing employment at Hostess Brands, Inc., a bakery rival to the plaintiff Bimbo. The decision is notable in that the Court enjoined Mr. Botticella’s employment, in the absence of any non-competition agreement, on the basis that there was a “substantial likelihood,” but not an “inevitability,” that Mr. Botticella would disclose or use Bimbo’s trade secrets in the course of his planned employment at Hostess.

Mr. Botticella was employed at Bimbo from 2001 through January 13, 2010 as its Vice President of Operations for California, and he signed a “Confidentiality, Non-Solicitation and Invention Assignment Agreement” with Bimbo on March 13, 2009. As one of Bimbo’s senior executives, Mr. Botticella had access to a broad range of confidential information about Bimbo’s products and business strategy. Notably, Mr. Botticella was one of only seven people to possess all of the knowledge necessary to replicate independently Bimbo’s popular line of Thomas’ English Muffins.

The Third Circuit affirmed the District Court’s holding that Bimbo was likely to prevail on the merits of its claim of misappropriation of trade secrets under Pennsylvania’s Uniform Trade Secrets Act (“PUTSA”). The Circuit Court made it clear that it was basing its opinion not upon a theory of “inevitable disclosure,” but rather upon the PUTSA’s proscription of threatened misappropriation. The Circuit Court rejected Mr. Botticella’s argument that an injunction should only issue if Bimbo could show that it would be “virtually impossible” for him to perform his new job at Hostess without disclosing Bimbo trade secrets.

The Court found that the District Court’s injunction was amply supported by evidence adduced at the preliminary injunction hearing; in short, Mr. Botticella was not a “good leaver” when resigning from Bimbo. Mr. Botticella accepted the Hostess position on October 15, 2009, but agreed to begin work in January 2010. During the intervening time, he remained fully engaged in his work (with its attendant exposure to confidential information) at Bimbo, and did not inform Bimbo of his intention to resign until January 4, 2010. The District Court found that Mr. Botticella had accessed highly sensitive Bimbo information via his computer in his last days at Bimbo and had likely copied such information onto external storage devices, and that his explanation at his deposition of such conduct was “confusing at best” and “not credible.”

The Third Circuit also noted that the District Court was entitled to make an adverse inference against Botticella because he did not testify at the preliminary injunction hearing.