Interbake Foods, L.L.C. v. Tomasiello

• Decision Date: 13 November 2006
• Docket Number: No. C06-4089-MWB.,C06-4089-MWB.
• Citation: 461 F.Supp.2d 943
• Parties: INTERBAKE FOODS, L.L.C., Plaintiff, v. Larry TOMASIELLO, BoDeans Baking Company, L.L.C., BoDeans Baking Holding Company, L.L.C., and BoDeans Wafer Company, L.L.C., Defendant.
• Court: U.S. District Court — Northern District of Iowa

461 F.Supp.2d 943

INTERBAKE FOODS, L.L.C., Plaintiff, v. Larry TOMASIELLO, BoDeans Baking Company, L.L.C., BoDeans Baking Holding Company, L.L.C., and BoDeans Wafer Company, L.L.C., Defendant.

No. C06-4089-MWB.

United States District Court, N.D. Iowa, Western Division.

November 13, 2006.

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Brenton D. Soderstrum, Brown Winick Graves Gross Baskerville Schoenebaum, Des Moines, IA, Christopher M. Michalik, Matthew J. Quatrara, Rodney A. Satterwhite, McGuire Woods LLP, Richmond, VA, for Plaintiff.

Thomas W. Foley, Nyemaster Goode West Hansell & O'Brien, PC, Des Moines, IA, for Defendant.

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART THE PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

BENNETT, Chief District Judge.

                TABLE OF CONTENTS
                I.  INTRODUCTION ................................................................947
                      A.  Procedural Background ...................................................947
                      B.  Findings Of Fact ........................................................949
                          1.  The provisional nature of findings and conclusions ..................949
                          2.  The wafer makers and their products .................................949
                          3.  Larry Tomasiello's employment with Interbake.........................951
                          4.  Tomasiello's employment with BoDeansWafer............................954
                 II.  LEGAL ANALYSIS ..............................................................954
                

                A.  Standards For Preliminary Injunction ..............................954
                            B.  Conflict of Laws ..................................................956
                                1.  Iowa's choice-of-law rules in tort cases.......................956
                                2.  Application of Iowa's choice-of-law rules .....................958
                            C.  Application Of The Standards.......................................960
                                1.  Likelihood of success on the merits ...........................960
                                    a.  The law governing trade secrets............................961
                                    b.  The Iowa Uniform Trade Secrets Act.........................962
                                    c.  Is the information in question "trade secrets"?............966
                                    d.  Likelihood of a successful common-law claim................968
                                    e.  Is there a likelihood of disclosure by "improper means"?...969
                                2.  Irreparable harm...............................................975
                                3.  Balance of harm ...............................................976
                                4. The public interest.............................................978
                            D.  The Requirements Of Fed.R.Civ.P. 65(c) & (d)...................978
                                1.  The scope of a preliminary injunction..........................978
                                2.  Fed.R.Civ.P. 65(c)'s security requirement......................979
                III CONCLUSION...........................................................................980
                

Although the court had not imagined that ice cream sandwich wafers could spawn rivalries more intense than that between vanilla and chocolate, the court has discovered in this "trade secrets" case that rival makers of the "sandwich" wafers of ice cream sandwiches defend their alleged proprietary information with as much zeal as any other entrepreneur seeking to secure an advantage in an increasingly sophisticated and competitive commercial market. Presently before the court is the application of one maker of sandwich wafers for a preliminary injunction seeking to protect its "trade secrets" in wafer manufacturing by enjoining a former employee from disclosing those secrets to, or working for, an upstart wafer manufacturer competitor and the competitor's misappropriation of any of those secrets. Choice of Iowa or Virginia law and a balance of equities will determine what are protectable secrets in this case, whether those secrets should be protected by a preliminary injunction, and what is the proper scope of such an injunction, should the court find that one must issue. Obviously, the decisions that are required to be made by the court in this case are of much greater import and undoubtedly will have more far-reaching ramifications than deciding between vanilla or chocolate flavored ice cream, and therefore, are decisions that the court does not take lightheartedly.

I. INTRODUCTION

A. Procedural Background

Plaintiff, Interbake Foods, L.L.C., (hereinafter "Interbake") filed its complaint in this matter on October 24, 2006, against defendant Larry Tomasiello, the former production manager of Interbake's premier wafer manufacturing facility in Front Royal, Virginia, and defendants BoDeans Baking Company, L.L.C., BoDeans Baking Holding Company, L.L.C., and Bo-Deans Wafer Company, L.L.C. (hereinafter collectively referred to as "BoDeans") — Tomasiello's current employer (Doc. No. 3). Interbake is a Delaware corporation, with its principal place of business in Front Royal, Virginia. Tomasiello is a citizen of the State of Iowa. He is currently employed at BoDeans and is responsible for overseeing and managing all aspects of the company's wafer production. Defendant BoDeans Baking Holding Company, L.L.C. (hereinafter "BoDeans Baking") is an Iowa corporation with its principal place of business in Le Mars, Iowa. BoDeans Wafer Company, L.L.C. (hereinafter "BoDeans Wafer") and BoDeans Cone Company, L.L.C., (hereinafter "BoDeans Cone") are wholly-owned subsidiaries of BoDeans Baking, and are also Iowa corporations with their principal places of business in Le Mars, Iowa.

Interbake's complaint in this matter is in seven counts, each alleging misconduct under Iowa law following Tomasiello's termination of his employment with Interbake and subsequent employment with BoDeans, which Interbake asserts is trying to become one of its direct competitors by entering into and gaining a significant market share of the wafer manufacturing and distributing industry. Interbake's claims center upon alleged disclosure by Tomasiello of Interbake's trade secrets and BoDeans's alleged misappropriation of Interbake's trade secrets.¹

The matter immediately pending before the court is Interbake's motion for a preliminary injunction, filed the same day as Interbake's complaint, seeking to enjoin the defendants' actual or threatened misappropriation of trade secrets. In its motion for a preliminary injunction, Interbake also requested an expedited evidentiary hearing. On October 31, 2006, the court granted the request for an expedited hearing, and scheduled a hearing on the Motion for a Preliminary Injunction for November 8, 2006, in Sioux City, Iowa. Thereafter, on November 6, 2006, the defendants' filed their joint resistance to Interbake's Motion for Preliminary Injunction.

This matter proceeded to hearing on Wednesday, November 8, 2006. At the hearing, plaintiff Interbake was represented by counsel Brenton D. Soderstrum of Brown, Winick, Graves, Gross, Baskerville, & Schoenebaum, P.L.C., in Des Moines, Iowa; and Rodney A. Satterwhite and Christopher M. Michalik of McGuire Woods, L.L.P., in Richmond, Virginia. Defendants BoDeans and Tomasiello were represented by Thomas W. Foley of Nyemaster, Goode, West, Hansell & O'Brien, P.C., in Des Moines, Iowa. During the course of the hearing, which extended long into the evenings over the course of two days, in addition to the numerous exhibits presented by the parties, Interbake called three witnesses — Denise Bullock, Vice President and General Manager of Interbake's Front Royal division; Jonathon Fowler, Senior Manager of Electronic Evidence with First Advantage Litigation Consulting; and Terrence Glackin; Senior Manager of Interbake's Research and Development Department. Similarly, the defendants called three witnesses — Dean Jacobsen, the President and CEO of BoDeans; Larry Tomasiello, General Manager of BoDeans Wafer; and Joseph Cardinali, a self-employed engineer of Cardinal Engineering who primarily performs consulting for bakeries, and is currently employed by BoDeans.

B. Findings Of Fact

1. The provisional nature of findings and conclusions

Although the court is disposing of Interbake's Motion for a Preliminary Injunction following briefing by all parties and an evidentiary hearing, it is well to remember that in the context of preliminary injunction applications, the court typically operates under severe time constraints and must customarily decide the motion "on the basis of procedures that are less formal and evidence that is less complete than in a trial on the merits." University of Tex. v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.E d.2d 175 (1981). Thus, the Supreme Court in University of Texas v. Camenisch stated the general rule that "the findings of fact and conclusions of law made by a court granting a preliminary injunction are not binding at trial on the merits." Id.; accord Henderson-v. Bodine Aluminum, Inc., 70 F.3d 958, 962 (8th Cir.1995) (citing this statement from Camenisch as the "general rule" for findings of fact and conclusions of law in preliminary injunction rulings); United States v. Barnes, 912 F.Supp. 1187, 1190 (N.D.Iowa 1996) (applying the "general rule" of Camenisch, to a preliminary injunction ruling on the government's request for a preliminary injunction pursuant to 18 U.S.C. § 1345 to enjoin activities of defendants who were allegedly engaged in mail fraud in violation of 18 U.S.C. § 1341). Any findings of fact in this ruling, made either in this section or in the course of the legal analysis, as well as any conclusions of law forming part of the court's determination of whether the issuance of a preliminary injunction is proper in this case, are intended to be subject to this "general rule" and are not to be considered "final." With this caveat in mind, the court turns to the findings of fact upon which Interbake's Motion for a...