Refresco Beverages U.S., Inc. v. Califormulations, LLC
| Decision Date | 22 September 2021 |
| Docket Number | 4:20-CV-181 (CDL) |
| Parties | REFRESCO BEVERAGES U.S. INC., Plaintiff, v. CALIFORMULATIONS, LLC, SYMRISE INC., THE GREEN ORGANIC DUTCHMAN HOLDINGS LTD., 6003 HOLDINGS LLC, EDMUND O'KEEFFE, TYRONE POLHAMUS, KHANH LY, JASON PONTES, DANA KLAYBOR, WANDA JACKSON, and KALEENA GEE, Defendants. |
| Court | U.S. District Court — Middle District of Georgia |
Lawyers sometimes make matters unnecessarily complicated. The Complaint in this action exceeds 600 paragraphs and 90 pages. The briefing on the pending motions to dismiss, which required the analysis of no evidence and should have been restricted to the four corners of the complaint, consumed over 200 pages. Yet the theory of the case that will necessarily be whittled down to its essentials if and when it is presented to a lay jury is relatively simple. Plaintiff (“Refresco”) maintains that its former employees while employed by Refresco's predecessor-in-interest plotted with one of Refresco's competitors to join this competitor after the termination of their employment with Refresco's predecessor-in-interest and in violation of their employment agreements with the intention of using the predecessor-in-interest's proprietary information for the benefit of that competitor and future employer.[1] According to Refresco's Complaint, this conduct gives rise to various claims against the competitor, its affiliated investors, and the former employees. These claims include misappropriation of trade secrets under federal and state law, breach of contract, tortious interference with contract and business relations, breach of fiduciary duty, conversion, and theft of property.
Unable to resist what this Court has on occasion described as the Twombly/Iqbal compulsion, Defendants filed an expansive motion to dismiss every claim instead of targeting those that are truly vulnerable to summary dismissal.[2] For the reasons explained in the remainder of this order, Defendants' motions to dismiss (ECF Nos 46, 48, & 49) are denied as to Refresco's claims for trademark misappropriation, usurpation of corporate opportunity, breach of the duty of loyalty, aiding and abetting, tortious interference with contract, tortious interference with business relationships, breach of contract as to all employees except Pontes and Ly, and granted as to Refresco's claims for breach of contract against Pontes and Ly, violations of the Georgia RICO Act, civil conspiracy violations of the Computer Fraud and Abuse Act, and computer theft and trespass under O.C.G.A. § 16-9-93 et seq.
“To survive a motion to dismiss” under Federal Rule of Civil Procedure 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The complaint must include sufficient factual allegations “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. In other words, the factual allegations must “raise a reasonable expectation that discovery will reveal evidence of” the plaintiff's claims. Id. at 556. But “Rule 12(b)(6) does not permit dismissal of a well-pleaded complaint simply because ‘it strikes a savvy judge that actual proof of those facts is improbable.'” Watts v. Fla. Int'l Univ., 495 F.3d 1289, 1295 (11th Cir. 2007) (quoting Twombly, 550 U.S. at 556).
In deciding the pending motions to dismiss, the Court accepts as true the following facts alleged by Refresco in its complaint.
The Plaintiff in this action, Refresco Beverages U.S. Inc. (“Refresco”), is the successor-in-interest to Cott Beverages LLC (“Cott Beverages”), which it acquired from Cott Holdings Inc. on February 8, 2019. Compl. ¶ 27, ECF No. 1. No. one seriously disputes that Refresco has standing to assert claims that belonged to Cott Beverages prior to this acquisition. Like Cott Beverage's previous operations, Refresco formulates, produces, manufactures, packages, and distributes beverages and concentrates in the United States. Id. ¶ 48. Also like Cott Beverages, Refresco offers various “beverage-related services, ” which include “developing new tastes and flavors, formulation, product development and manufacturing for delivery to retail locations.” Id. ¶ 49. Before acquiring Cott Beverages, Refresco purchased the shares of another Cott subsidiary, Cott Beverages Inc. (“Cott BI”), from Cott Corporation on January 30, 2018.[3] Id. ¶ 26. Between January 30, 2018 and February 8, 2019, when Refresco acquired Cott Beverages, Cott Beverages acted as an independent entity. Id.
One of Refresco's competitors and a defendant in this action, Symrise Inc., specializes in “developing and selling flavors and scents, including flavors and scents for beverages.” Id. ¶ 1. In November 2017, Symrise launched what it described as a “beverage incubator, ” which it called Califormulations. Id. ¶¶ 1-2. Califormulations was trumpeted as “an entirely new concept offering a dedicated suite of product development services to beverage entrepreneurs.” Id. ¶ 1. A business entity, Califormulations, LLC, was formed in March 2019 by Symrise, The Green Organic Beverage Corp. (“TGOBC”), and 6003 Holdings LLC to implement this beverage incubator vision. Id. ¶ 53. Symrise owned 34% of Califormulations, LLC, which became a competitor of Refresco.
Another defendant in this action, The Green Organic Dutchman Holdings Ltd. (“TGOD”), was instrumental in the formation of Califormulations. TGOD is a Canadian producer of organic cannabis products.[4] Id. ¶ 263. Its subsidiary, TGOBC, eventually became a 15% owner of Califormulations, LLC, and TGOD had a representative on the Califormulations, LLC board. Id. ¶ 21. Before Califormulations was formed, TGOD began communicating in 2018 with Edmund O'Keeffe and Tyrone Polhamus, who were high level Cott Beverages executives at the time and are defendants in this action, about investing in a venture described at that time as NewCo/Califormulations. Id. ¶¶ 10-13. O'Keeffe was the President of Cott Beverages in 2018 but was terminated when Refresco purchased Cott Beverages in 2019. Id. ¶¶ 393, 396. Polhamus was the Vice President of Technical Services & Operations for Cott Beverages but was terminated when Refresco purchased Cott Beverages. Id. ¶¶ 399, 402. After their employment with Cott Beverages ended, O'Keeffe became Chairman of the Board of Califormulations, LLC and Polhamus became its President. Id. ¶¶ 398, 403. Before departing Cott Beverages, Polhamus had access to a safe deposit box holding Cott Beverages's trade secrets. Id. ¶ 400.
Five other former Cott Beverages employees who went to work for Califormulations are also named as defendants in this action. Three of them, Jason Pontes, Khanh Ly, and Wanda Jackson, joined O'Keefe and Polhamus to form 6003 Holdings, which eventually obtained a 51% ownership stake in Califormulations, LLC. Id. ¶¶ 46-47. These former Cott Beverages employees had valuable information and experience from their tenure at Cott Beverages. Khanh Ly was a top research and development scientist for Cott. Id. ¶ 404. In this role, Ly “gained a deep knowledge of the company's manufacturing infrastructure, ” “developed significant relationships with the company's customers and suppliers, ” and “had access to and used confidential information and trade secrets” such as beverage formulae and laboratory processes and procedures. Id. ¶ 405. After Refresco acquired Cott Beverages in 2019, Ly resigned from Refresco and began working for Califormulations. Id. ¶¶ 406-07.
Jason Pontes was a plant manager for Cott Beverages. In this role, Pontes was “responsible for plant management, concentrate supply, and procurement activities of ingredients for the facilities.” Id. ¶ 409. Pontes “developed significant relationships with the company's suppliers” and “had access to and used confidential information and trade secrets.” Id. Pontes resigned from Refresco in April 2019 and later joined Califormulations. Id. ¶¶ 410-11.
Wanda Jackson was a material planner for Cott Beverages. Id. ¶ 416. She was responsible for “working with the company's suppliers to have sufficient inventory of raw materials at the Columbus facility to meet production requirements” and had access to and used confidential information. Id. ¶ 417. Jackson resigned from Refresco in April 2019 and joined Califormulations, LLC. Id. ¶ 418.
The two other former Cott Beverages employees named as defendants, Dana Klaybor and Kaleena Gee, had valuable experience from their employment at Cott Beverages, but they had no ownership interest in Califormulations, LLC. Klaybor started at Cott Beverages as a senior laboratory technician and worked her way up to Director of Lab Services. Id. ¶ 412. Klaybor was “responsible for carrying out ingredient evaluations driven by supply issues and/or cost reduction, providing plant quality support and product development support, and formula management.” Id. ¶ 413. Klaybor also developed significant expertise in areas important to Cott and Refresco's operations, including optimizing beverage formulas in a plant setting, and had access to and used confidential information about Cott and Refresco trade secrets. Id. ¶ 414. Klaybor resigned from Refresco in April 2019. Id. ¶ 415.
Gee began working for Cott Beverages as a flavor development expert and was later promoted to beverage scientist. Id. ¶ 419. Gee oversaw flavor selection evaluation, and beverage application development. She also had access to confidential information and trade secrets and “often used laboratory equipment and conducted testing on ingredients, concentrates,...
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