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Unitherm Food Systems, Inc. v. Hormel Foods Corp.

United States District Court, District of Minnesota

January 27, 2015

Unitherm Food Systems, Inc., Plaintiff,
v.
Hormel Foods Corporation, and Hormel Foods Corporate Services, LLC, Defendants.

MEMORANDUM AND ORDER

Paul A. Magnuson, United States District Court Judge

This matter is before the Court on Defendants’ Motion to Dismiss. For the reasons that follow, the Motion is granted in part and denied in part.

BACKGROUND

Plaintiff Unitherm Food Systems, Inc., is a corporation headquartered in Bristow, Oklahoma. As relevant to the allegations here, Unitherm develops processes and equipment for cooking meat and other food products. (Compl. ¶ 1.) The Complaint alleges that at some unspecified time in the past, Unitherm developed what it called the “Unitherm Process” for preparing pre-cooked sliced bacon. (Id. ¶ 5.) This process involved the use of a spiral ovens and super-heated steam. (Id.) According to Unitherm, before it developed this process, there was no acceptable process for pre-cooking sliced bacon because all attempts had resulted in bacon that did not resemble a pan-fried product. (Id. ¶ 7.)

Unitherm contends that its “Process” was a “closely held, confidential trade secret.” (Id. ¶ 8.) In June 2007, Unitherm and Defendant Hormel Foods Corporation met to discuss a joint venture to develop the Process and produce commercially viable pre-cooked bacon. (Id. ¶ 12.) On July 16, 2007, Hormel sent Unitherm a mutual confidential disclosure agreement. (Id. Ex. 1 (July 16, 2007, email from Hormel to Unitherm).) There is a copy of this disclosure agreement attached to the Complaint as Exhibit 1, but the attachment is unsigned and undated, and the Complaint does not allege when the parties Dated this agreement, only that they did sign it. (A later Exhibit is a letter from Hormel to Unitherm’s President, David Howard, referencing a “Mutual Confidential Disclosure Agreement dated July 20, 2007.” (Id. Ex. 4.)) In any case, Hormel does not dispute that the parties executed this confidentiality agreement on or around July 20, 2007.

In September 2007, the parties executed a joint development agreement. (Id. Ex. 2.) That agreement provided that Hormel and Unitherm would “work together to develop an oven that uses very high (approaching 100%) steam levels for cooking.” (Id.) The agreement further provided that “[a]ll Inventions relating to the Project will be owned by Hormel, ” including “Inventions involving (1) Confidential Information from UNITHERM and/or Confidential Information from HORMEL and, [sic] (2) having personnel from both UNITHERM and HORMEL as inventors.” (Id. ¶ 5(i)-(ii).)

At about the same time that Hormel and Unitherm were discussing their joint venture in June 2007, Hormel was in similar discussions with Unitherm’s competitor, FMC Technologies. According to Unitherm, Hormel disclosed to FMC some of Unitherm’s confidential information at that time. (Compl. ¶ 22.) In December 2007, FMC issued a press release claiming to have developed a process substantially similar to the Unitherm Process. (Id. ¶ 23.) Unitherm asked Hormel to remedy its disclosure of Unitherm’s information to FMC, and according to the Complaint, Hormel “took immediate affirmative action with FMC to contain and remedy the disclosure.” (Id. ¶ 24.) The document to which the Complaint references in this regard gives July 11, 2007, as the date Hormel made the disclosure to FMC. (Id. Ex. 3.) This date is before the parties signed the Hormel/Unitherm confidentiality agreement on or about July 20, 2007. Ostensibly because of Hormel’s assurances of commitment to the joint development agreement and the confidentiality agreement, Unitherm “elected to continue working with Hormel . . . notwithstanding Hormel’s initial breach of confidence.” (Id. ¶ 25.)

On January 11, 2008, Unitherm filed a patent application for its Process. (Id. ¶ 26.) This patent was published on July 16, 2009. (Id. ¶ 27.)

In April 2010, Hormel “suddenly and without prior written notice” terminated the parties’ joint development agreement. (Id. ¶ 30.) Hormel told Unitherm that it was terminating the agreement because “the project was not producing a viable result after 2 ½ years.” (Id.) Unitherm alleges that, despite Hormel’s assurances that it had no further interest in pursing the spiral-oven process for cooking bacon, Hormel was actually attempting to patent as its own the Unitherm Process. (Id.) And indeed, less than five months after terminating the joint development agreement, Hormel applied for a patent allegedly based on the Unitherm Process. (Id. ¶ 32.) This patent was published in February 2012. (Id.) Hormel now markets a product called “Bacon 1, ” which, according to Unitherm, is precooked bacon “that incorporates Unitherm’s pre-cooked sliced bacon process.” (Id. ¶ 41.)

The Complaint contains five Counts. Count I claims that Hormel breached the parties’ contract. Count II asserts that Hormel misappropriated Unitherm’s trade secrets. Count III raises a claim for unjust enrichment, and Count IV claims that Unitherm is entitled to an accounting. Count V, as noted above, seeks a declaration that the Process is “in whole or in large part owned by Unitherm.” (Id. ¶ 75.) According to Unitherm, this declaration is necessary “to determine that the subject matter of the Hormel patent applications . . . is based at least in part on the Unitherm process.” (Id. ¶ 76.) Hormel seeks dismissal of Counts I through IV.

DISCUSSION

When evaluating a motion to dismiss under Rule 12(b)(6), the Court assumes the facts in the Complaint to be true and construes all reasonable inferences from those facts in the light most favorable to Unitherm. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). However, the Court need not accept as true wholly conclusory allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999), or legal conclusions that Unitherm draws from the facts pled. Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990).

To survive a motion to dismiss, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007). Although a complaint need not contain “detailed factual allegations, ” it must contain facts with enough specificity “to raise a right to relief above the speculative level.” Id. at 555. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” will not pass muster under Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). In sum, ...


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