639 Fed.Appx. 840 (3rd Cir. 2016), 14-1590, Givaudan Fragrances Corporation v. Krivda

Docket Nº:14-1590
Citation:639 Fed.Appx. 840
Party Name:GIVAUDAN FRAGRANCES CORPORATION, Appellant v. JAMES KRIVDA; MANE USA
Attorney:For GIVAUDAN FRAGRANCES CORP, Plaintiff-Appellant: Deborah Brenneman, Esq., Thompson Hine, Cincinnati, OH; Eric Kraeutler, Esq., Morgan Lewis & Bockius, Philadelphia, PA; Dennis LaFiura, Esq., Day Pitney, Parsippany, NJ; Wendy J. Lario, Esq., Theodore J. McEvoy, Esq., Greenberg Traurig, Florham P...
Judge Panel:BEFORE: VANASKIE, NYGAARD, and RENDELL, Circuit Judges.
Case Date:February 12, 2016
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 840

639 Fed.Appx. 840 (3rd Cir. 2016)

GIVAUDAN FRAGRANCES CORPORATION, Appellant

v.

JAMES KRIVDA; MANE USA

No. 14-1590

United States Court of Appeals, Third Circuit

February 12, 2016

Submitted September 9, 2015, Under Third Circuit LAR 34.1(a)

Page 841

NOT PRECEDENTIAL

Editorial Note:

This opinion is not regarded as Precedents which bind the court under Third Circuit Internal Operating Procedure Rule 5.7. (See Federal Rule of Appellate Procedure Rule 32.1)

On Appeal from the United States District Court for the District of New Jersey. (District Court Civil No. 3-08-cv-04409). District Judge: Honorable Peter G. Sheridan.

For GIVAUDAN FRAGRANCES CORP, Plaintiff-Appellant: Deborah Brenneman, Esq., Thompson Hine, Cincinnati, OH; Eric Kraeutler, Esq., Morgan Lewis & Bockius, Philadelphia, PA; Dennis LaFiura, Esq., Day Pitney, Parsippany, NJ; Wendy J. Lario, Esq., Theodore J. McEvoy, Esq., Greenberg Traurig, Florham Park, NJ; David Leichtman, Esq., Robins Kaplan, New York, NY; Eric J. Magnuson, Esq., Robins Kaplan, Minneapolis, MN; Elliot H. Scherker, Esq., Greenberg Traurig, Miami, FL.

For MANE USA, Defendant-Appellee: Thad M. Barnes, Esq., David B. Owsley, II, Esq., Stites & Harbison, Louisville, KY; Nicole L. DeMaise, Esq., William C. Mead, Jr., Esq., John D. Shea, Esq., Litchfield Cavo, Cherry Hill, NJ.

For JAMES KRIVDA, Defendant-Appellee: Adam N. Saravay, Esq., McCarter & English, Newark, NJ; Marisa J. Steel, Esq.

BEFORE: VANASKIE, NYGAARD, and RENDELL, Circuit Judges.

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OPINION [*]

Introduction

Appellant Givaudan Fragrances Corporation creates and produces flavor and fragrance compounds for foods and beverages, household goods, personal care products and--most relevant to this appeal--fine fragrances and perfumes. Givaudan sued a former employee, Appellee James Krivda, and his new employer, Appellee Mane USA, Inc., claiming Krivda stole more than six hundred fragrance formulas before leaving its employ. Litigation has been ongoing since September of 2008. After granting summary judgment to the Appellees on the vast majority of Givaudan's claims, the District Court permitted some of them to proceed to trial. A jury rejected all of Givaudan's claims and found in favor of Mane USA and Krivda. We will affirm both the District Court's award of summary judgment, and the jury's verdict.

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Background

Inasmuch as our opinion lacks precedential authority, and because the lengthy factual and procedural background is well known to the parties, we summarize only those facts and events that are relevant to the issues raised and to our decision. Krivda left Givaudan's employment in 2008 and went to work for a competitor, Mane USA. Givaudan sued Mane USA and Krivda for a misappropriation of trade secrets, asserting that prior to leaving the company, Krivda removed hundreds of secret fragrance formulas from Givaudan databases.[1] Givaudan claimed the stolen formulas were worth millions of dollars and were the " life blood" of its business.2 The lawsuit proceeded to discovery, which the District Court characterized as contentious.3 The Appellees requested that Givaudan identify, with some specificity, the formulas it believed were misappropriated. Givaudan responded that its formulas were trade secrets and refused to turn over more detailed information.

Instead, Givaudan provided Mane USA and Krivda with a document it labeled a 'print list.' This document identified the name of each formula Givaudan believed Krivda improperly accessed. Givaudan's list also related an identification number, and the date Krivda printed it. This list was 48 pages in length and contained 40 formulas per page, but did not reveal the specific ingredients for each fragrance formula. Appellees made repeated requests for additional information about the allegedly stolen formulas, but Givaudan demurred. Ultimately, Givaudan did provide detailed ingredient information and specific percentage amounts for 34 fragrance formulas, but continued to balk at disclosing formula specifics for the remaining recipes. The District Court granted summary judgment to the Appellees on claims where Givaudan refused to provide further detailed information, but allowed claims on 34 formulas to proceed to trial.

A five-week jury trial ensued. The jury unanimously ruled in favor of Mane USA and Krivda on all claims, finding that Givaudan failed to prove that Krivda violated his employment contract or that any of Givaudan's formulas were misappropriated. Givaudan has timely appealed, challenging the District Court's summary judgment and assigning error to decisions of the District Court during trial. We will affirm.4

The Summary Judgment Ruling

We review the District Court's grant of summary judgment de novo, viewing the facts in the light most favorable to the non-moving party, in this case, Givaudan.5 At summary judgment, Mane USA and Krivda6 argued that the lack of specific

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information made it impossible for them to defend against claims that Krivda provided Mane USA with any misappropriated formulas. In other words, without knowing the specific components of Givaudan's fragrance formulas, Mane USA and Krivda had no basis for investigation and/or comparison. For its part, Givaudan responded that it had provided access to its formulas through the print list. Givaudan further argued that it had also allowed Mane USA and Krivda to access the allegedly stolen formulas during discovery, but with some restrictions: first, the formulas would be displayed on a computer screen at Givaudan's corporate offices; second, Givaudan's counsel would be present; and third, no copying or taking notes would be permitted.

The District Court found that Givaudan sufficiently identified 34 formulas, but rejected the fragrance company's arguments on the remaining formulas. The District Court noted Givaudan's burden to put Mane USA and Krivda on " specific notice of trade secret protection, or else lose that protection," and found that the company failed to meet that burden.7 Givaudan's print list, the District Court determined, failed to provide any details as to the ingredients or percentages of ingredients

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in each formula.8 The District Court also took a dim view of Givaudan's efforts to restrict access to its alleged trade secrets. It found the restrictions prohibiting copying and note-taking particularly onerous.[9] Lastly, the District Court rejected Givaudan's argument that a jury could infer that Krivda misappropriated hundreds of other suspected formulas based on circumstantial evidence gleaned from the 34 formulas it did disclose. The District Court noted that Givaudan's failure to provide specific details made it impossible to disprove such an inference: " Givaudan could have disclosed the specification of each formula, and then appropriate discovery procedures could have precisely identified whether Mane had received any or all of the allegedly purloined formulas." 10

Issues on Appeal Related To Summary Judgment

It is patently obvious that trade secrets must be identified with enough specificity to put a defendant on notice of what is actually alleged to have been stolen.11 Like the District Court, we believe Givaudan failed to provide enough specific information about many of the formulas it believed had been misappropriated. Summary judgment on those claims was proper on this basis alone. Out of hundreds of formulas alleged to have been stolen, Givaudan disclosed sufficient information on just 34. Information the company did provide on the remaining formulas was too vague because the exact ingredients for each formula were not disclosed and the nonspecific formula names that did appear on the list (such as " Jasper," " Bombs Away," and " Savage Girl" )12 did not provide Mane USA and Krivda with any information from which they could compare formulas in Mane USA's database.

On appeal, Givaudan re-raises arguments it presented to the District Court on summary judgment. For example, Givaudan argues that the District Court should not have granted summary judgment on the vast majority of its formulas because it could have proven their misappropriation at trial by relying on inferences derived from circumstantial evidence. We disagree. We initially note that the District Court did permit Givaudan to present circumstantial evidence to the jury on the 34 formula claims that proceeded to trial.13 That circumstantial evidence included Mane USA's recruitment of Krivda, Krivda's printing actions before leaving Givaudan, and formula name changes and similarities.14 The jury, however, rejected this evidence and unanimously found against Givaudan on the 34 formulas before it. We agree with the Appellees that, given this, a different decision on the unnamed formulas could not have been expected. Givaudan points to our decision in SI Handling Systems, Inc. v. Heisley

15 to support its position that it should have been permitted to use circumstantial evidence to establish the misappropriation of the remaining

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trade secrets. In SI Handling, we did note that, [i]n trade secret cases [m]isappropriation and misuse can rarely be proved by convincing direct evidence. In most cases plaintiffs must construct a web of perhaps ambiguous circumstantial evidence from which the trier of fact may draw inferences which convince him that it is more probable than not that what plaintiffs allege happened did in fact take place. Against this often delicate construct of circumstantial evidence there frequently must be balanced defendants and defendants' witnesses who directly deny everything.16

But unlike here, the court and the parties in SI Handling were well aware of the components of each trade secret at issue.17 In this...

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