United States District Court, S.D. Ohio, Eastern Division
A. Sargus, Jr. Chief Judge.
OPINION AND ORDER
KIMBERLY A. JOLSON UNITED STATES MAGISTRATE JUDGE.
matter is before the Court on the following: (1)
Plaintiff's request to appoint its Product Development
Manager, Brenda Mortenson to review Defendant's
confidential recipes, (Docs. 56, 57); and (2) Plaintiff's
Motion for Leave to File Notice of Supplemental Evidence
(Doc. 60). The Court finds that, on balance, the use of an
independent, rather than in-house, consultant strikes the
proper balance between allowing the parties to engage in
discovery while also protecting their respective business
interests. In addition, Plaintiff's Motion for Leave to
File Supplemental Evidence is GRANTED. (Doc.
Cheryl & Co. (“Cheryl's”), founded in
1981, by Defendant Cheryl L. Krueger, is a leading seller of
cookies and other baked goods. It is most well-known for its
buttercream frosted cookies, pictured below: (Image Omitted)
(Doc. 1 at 5). Defendant Krueger sold her company in 2005 for
$40 million. (Id., ¶ 12). According to the
Complaint, she recently formed a competing cookie company,
CKE Management, LLC ("CKE"), that allegedly sells
"lookalike cookies using the same secret recipes,
branding, and techniques" as Cheryl's. (Doc. 1,
¶ 17). An example of CKE's alleged "knock-off
branding and desserts" is provided below.
at 6). But Cheryl's accuses CKE of more than selling
"lookalike" cookies. It also alleges that CKE
"pirated" from it "at least four senior
executives"-Defendants David Adell, Amy Coley, T. David
Dalton and Elisabeth Allwein. (Id., ¶ 17).
Cheryl's alleges that CKE hired these executives to
"unfairly compete" against it and to solicit
Cheryl's business accounts. (Id).
in this matter is ongoing-a process which has required the
Court's attention frequently. Currently, the parties
disagree about who should review the other's secret
recipes. Cheryl's seeks to designate its Product
Development Manager, Brenda Mortenson, as an expert witness
to “opine about the similarities between and
derivations from the recipes and baking processes for certain
cookies” made by the respective parties. (Doc. 57 at
1). Cheryl's suggests that CKE, in turn, may designate
its own product development director, Elisabeth Allwein, to
do the same. (Id.).
noted, Ms. Allwein is a Defendant in this case and is one of
the four “senior executives” who switched teams
from Cheryl's to CKE. (Doc. 1, ¶ 17). Ms. Allwein
began working at Cheryl's in 1993 and, until early 2018,
served as its Director of Product Development. (Doc. 1,
¶ 92). Ms. Mortenson has since filled this position at
Cheryl's. (Doc. 57 at 1). Individuals in this role have
access to Cheryl's “top-secret” recipes and
approve new flavors and products. (Id., ¶ 93).
Cheryl's accuses Ms. Allwein of misusing or threatening
to misuse these trade secrets to CKE's competitive
advantage. (Id., ¶ 132). Given Ms.
Allwein's and Ms. Mortenson's expertise, Cheryl's
believes that they are the perfect candidates to review the
recipes at issue and opine on their similarities. (Doc. 57 at
1). CKE, however, asserts that only an independent expert,
one who is not affiliated with either company, should be
permitted to review its secret recipes. (See
generally Doc. 56).
Undersigned held a status conference with the parties to
discuss this matter, among other things, on June 17, 2019.
(Doc. 49). In accordance with the Court's directive, the
parties filed supplemental letter briefs on June 27, 2019.
(See Docs. 56, 57). That same day, the parties
submitted the confidential recipes at issue to the Court for
in camera review. Cheryl's has also moved to
file supplemental exhibits, (Doc. 60), which the Court has
thoroughly reviewed as part of its decision. Accordingly,
this matter is now ripe for resolution.
STANDARD OF REVIEW
Federal Rules of Civil Procedure permit a Court to order that
“a trade secret or other confidential research,
development, or commercial information not be disclosed or be
disclosed only in a designated way.” Fed.R.Civ.P.
26(c)(7). There is however, no absolute bar to the discovery
of trade secrets. See Barry Fiala, Inc. v. Stored Value
Sys., No. 02-2248 MA/AN, 2005 WL 8157408, at *2 (W.D.
Tenn. Feb. 9, 2005). Rather, “courts must exercise
discretion to avoid unnecessary disclosure of such
information.” Id. (citation and quotation
marks omitted); see also R.C. Olmstead, Inc. v. CU
Interface, LLC, 606 F.3d 262, 269 (6th Cir. 2010)
(noting that “[i]t is within the sound discretion of
the trial court to decide whether trade secrets are relevant
and whether the need outweighs the harm of disclosure”)
(citation and quotation marks omitted). Accordingly, it is
the court's job to “consider imposing special
conditions when a trade secret is disclosed during
this dispute boils down to the parties' contrasting views
regarding the consequences of disclosing trade secrets to a
competitor as part of the discovery process. For its part,
CKE believes it should not be forced to disclose its
confidential recipes to Ms. Mortenson, Cheryl's Product
Development Manager, for fear that she will inevitably use
this information to the competitive advantage of
Cheryl's. (See generally Doc. 56). Cheryl's,
however, views this risk as a non-issue, asserting that
parties to litigation routinely rely on in-house experts for
consultation and cost-saving purposes and that the
parties' protective order minimizes any risk of improper
use. (See generally Doc. 57). Good intentions aside,
CKE argues it is impossible for Ms. Mortenson to
“mentally sequester” CKE's confidential
recipes, and her knowledge of the recipes will eventually
permeate her decisions made on behalf of Cheryl's,
ultimately harming the business interests of CKE. (Doc. 56 at
of the practical concerns, Cheryl's posits that “no
legal authority” exists to support CKE's position.
(Doc. 57 at 3). The Court concludes otherwise. CKE's
concern is one that frequently arises in infringement cases.
Often in these cases, one party seeks disclosure of the other
party's trade secrets to its in-house counsel. Despite
this factual distinction, the overarching question from these
cases is equally present here: Whether the risk of disclosure
of trade secrets to a competitor is outweighed by a
party's need for the information. Two cases have emerged
as the leading authority in this area: U.S. Steel Corp.
v. United States, 730 F.2d 1465 (Fed. Cir. 1984), and
Brown Bag Software v. Symantec Corp., 960 F.2d 1465
(9th Cir. 1992). The principles from these cases guide the
Court here. See, e.g., Parker Compound Bows,
Inc. v. Hunter's Mfg. Co., Inc., No. 5:14CV4, ...