Luigino's, Inc. v. Peterson, 02-1521.

• Decision Date: 30 January 2003
• Docket Number: No. 02-1521.,02-1521.
• Citation: 317 F.3d 909
• Parties: LUIGINO'S, INC., a Minnesota corporation, Plaintiff/Appellant, v. Robert PETERSON, individually; IBP, Inc., a Delaware corporation, Defendants/Appellees,
• Court: U.S. Court of Appeals — Eighth Circuit

317 F.3d 909

LUIGINO'S, INC., a Minnesota corporation, Plaintiff/Appellant, v. Robert PETERSON, individually; IBP, Inc., a Delaware corporation, Defendants/Appellees,

No. 02-1521.

United States Court of Appeals, Eighth Circuit.

Submitted: November 6, 2002.

Filed: January 30, 2003.

David H. Simmons, argued, Orlando, FL (Dale T. Gobel and Stephen J. Jacobs, on the brief), for appellant.

Ronald J. Schutz, argued, Minneapolis, MN (Emmett J. McMahon and Rita Coyle DeMeules, on the brief), for appellees.

Before WOLLMAN, LAY, and LOKEN, Circuit Judges.

WOLLMAN, Circuit Judge.

Luigino's, Inc. appeals the district court's¹ grant of summary judgment to Robert Peterson and IBP, Inc. on Luigino's claims of breach of fiduciary duty, negligent misrepresentation, corporate usurpation, misappropriation of trade secrets, and breach of confidentiality agreement. We affirm.

I.

Luigino's is a Minnesota corporation engaged in the manufacture and sale of frozen food entrees under the brand names Yu Sing and Michelina's. At all times relevant to this litigation, IBP was a publicly held company headquartered in South Dakota with approximately $13 billion in annual sales and 56 direct or indirect subsidiaries. In May 1997, IBP acquired Specialty Brands, Inc. (SBI), a manufacturer of frozen Mexican foods, when it acquired SBI's parent company, Foodbrands America, Inc. (Foodbrands). For more than two years prior to its acquisition by IBP, SBI sold frozen Mexican food through convenience stores, warehouse clubs, and grocery stores under four different brand names: Butcher Boy, Posada, Little Juan, and Marquez. Patrick O'Ray, the president of SBI, began the process of consolidating these brands shortly after he became president of SBI in 1995. O'Ray presented this idea to the Foodbrands directors in September 1996, and by early 1998 had hired several people to assist with the launch of the new brand.

In 1997, Jeno Paulucci, founder and Chairman of the Board of Luigino's, contemplated selling Luigino's. On February 13, 1998, IBP and Luigino's entered into a confidentiality agreement so that IBP could examine Luigino's and decide whether to purchase the company. Paulucci rejected IBP's highest offer during the summer of 1998. In September 1998, SBI's Director of Marketing, Robert Berry, began the market research that would lead to the launch of the consolidated José Olé brand. Through copies of IBP's 1997 Annual Report and by sampling SBI's frozen Mexican foods, Paulucci and other Luigino's employees knew of IBP's offerings in the frozen food market. In a December 23, 1998, letter, Paulucci invited Peterson to sit on the Luigino's Board of Directors, suggesting he could "keep an eagle eye on this business." Peterson agreed to sit on the board and completed a questionnaire at Luigino's request for purposes of Luigino's January 1999 bond offering. In response to one question, Peterson stated that he sat on the board of IBP, that IBP and its subsidiaries manufacture food products, and that none of IBP's products directly competed with Luigino's products. Peterson attended Luigino's board meetings on April 13, 1999, July 13, 1999, and November 9, 1999. Several Luigino's employees and directors who knew of IBP's ownership of SBI and of SBI's frozen Mexican food business also attended these meetings.

On February 18, 2000, SBI submitted a capital expenditure request to Peterson and the IBP board of directors. Peterson attended no Luigino's board meetings after he received this request. SBI's launch of José Olé was announced in April and the products began appearing in stores in June 2000. By this time, the Luigino's Howlin' Coyote line had been in several markets for several months. The José Olé line included 26 items, 21 of which were products that SBI had previously offered under another brand name. The five new items were twelve-ounce items sold in bowls. SBI conducted market tests on the bowl products beginning in February 1999. In June 2000, Stouffer's launched a line of frozen Mexican food products under its Ortega brand. Anticipating great difficulty competing with two extensively marketed lines, Luigino's suspended work on the Howlin' Coyote line on June 14, 2000.

II.

We review the district court's grant of summary judgment de novo, viewing the evidence in a light most favorable to the nonmoving party. Toghiyany v. AmeriGas Propane, Inc., 309 F.3d 1088, 1091 (8th Cir.2002). "Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Viking Supply v. National Cart Co., 310 F.3d 1092, 1095 (8th Cir.2002).

The district court held that Luigino's failed to assert facts sufficient to support a finding of a causal link between any of the defendants' alleged improprieties and Luigino's alleged damages. Luigino's bears the burden of demonstrating causation on each claim. Nguyen v. Control Data Corp., 401 N.W.2d 101, 105-06 (Minn. Ct.App.1987) (affirming judgment as a matter of law on negligence, misrepresentation, contract, and fiduciary obligation claims for lack of evidence of causation). "A mere possibility of causation is not enough." Id. at 105; see also Klimstra v. Granstrom, 95 F.3d 686, 692-93 (8th Cir. 1996) (finding lack of causation on both contract and negligence claims and citing Nguyen). We agree with the district court that each claim fails for lack of causation because Luigino's failed to present evidence sufficient to support an inference that IBP used Luigino's confidential information to its advantage or to Luigino's detriment.

As a preliminary matter, Luigino's alleged that IBP obtained Luigino's confidential information, either through Peterson's attendance at board meetings or during IBP's failed negotiations to purchase Luigino's. This information included: (1) Luigino's research and development information, (2) Luigino's financial information, (3) income statements and documents reflecting volume and sales margins, (4) details pertaining to the launch of Howlin' Coyote, (5) Luigino's top ten customers by volume, (6) the Offering Circular, (7) a second Offering Circular pertaining to snack items, and (8) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) projections for Luigino's through 2004. We agree with the district court that the first three items are merely general categories of information, insufficiently specific to qualify as trade secrets. See Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 897-99 (Minn. 1983). Although these general categories of information are not actionable under Luigino's misappropriation claim, we consider this confidential information under Luigino's breach of contract and breach of fiduciary duty claims.

In support of its causation argument, IBP relies principally on the timing of IBP's launch of José Olé and the similarity between some of the José Olé food items and those offered by Luigino's under the Howlin' Coyote brand. Luigino's directs us to the following record evidence: (1) prior to IBP's introduction of José Olé in 2000, no IBP or SBI products had been sold in the frozen entree section of grocery stores; (2) prior to the launch of José Olé, SBI's products were low-end handheld products, only a small number of which were...