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CAMPBELL SOUP CO. v. CONAGRA

November 7, 1991

CAMPBELL SOUP COMPANY, PLAINTIFF,
v.
CONAGRA, INC., SALLIE ROSENTHAL, DEFENDANTS.



The opinion of the court was delivered by: Brotman, District Judge.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Presently before the court is plaintiff Campbell's application for a preliminary injunction for misappropriation of trade secrets, breach of contract, tortious interference with a contract and breach of fiduciary duty. Campbell seeks to enjoin defendants ConAgra and Rosenthal from using and disclosing Campbell's trade secrets and other proprietary and confidential information relating to the process for making a low calorie frozen food product which has the texture, taste and appearance of fried food, but which has never been fried. Campbell also seeks to enjoin ConAgra and Rosenthal from using or exploiting a patent allegedly based on Campbell's trade secrets. Hearings were held from August 27, 1991 until September 4, 1991. After considering the evidence presented and the arguments and submissions of counsel, the court makes the following findings of fact and conclusions of law.

Findings of Fact

1. Plaintiff Campbell Soup Company (Campbell) is in the business of selling, manufacturing and developing food products. It markets its frozen food products under the trademarks "Swanson," "Mrs. Paul's," and "Le Menu Healthy."

2. Defendant ConAgra, Inc. (ConAgra) is in the business of selling, manufacturing and developing food products and competes with Campbell in the retail frozen food market throughout the United States. It markets its frozen food products under the trademarks "Banquet" and "Healthy Choice."

3. Defendant Sallie Rosenthal (Rosenthal), formerly Sallie O'Brien, received a B.S. in Food Science from Cornell University in 1979, and a M.S. in Food Science from Cornell in 1981. On March 5, 1984, Campbell hired Rosenthal as a Product Development Technologist in the Poultry Product Development section of Campbell's research facility in Camden, New Jersey.

4. As a condition of her employment at Campbell, Rosenthal was required to execute a Patent-Trade Secret Agreement Relating to Inventions, Business Ideas and Trade Secrets. The Agreement prevented Rosenthal from using any trade secrets, inventions or business ideas which she conceived or to which she was exposed while working for Campbell if those ideas were used by or useful to Campbell. She was also required to keep all Campbell's trade secrets strictly confidential. The Agreement further vested Campbell with the exclusive right to all inventions and business ideas conceived by Rosenthal within one year following her termination of employment provided such inventions and ideas resulted from and related to her work for Campbell. The Agreement defined Campbell's trade secrets to include such things as recipes, manufacturing processes, research results and manufacturing layouts.

5. In the late 1970s, Campbell began an internal research and development program directed to the development of a nutritional frozen food product which was later identified as "Never Fried Chicken". In forming some of the "Never Fried Chicken" samples, Campbell's research personnel worked on and developed a product wherein skinless chicken was first injected with a phosphate solution and then coated with a predust layer. The predusted product was then covered with a batter. Next, a bread crumb mixture containing 13% encapsulated or beaded shortening and known as Japanese bread crumbs was applied. Liquid margarine or oil was then sprayed or misted onto the bread crumb mixture to form the coating of the "Never Fried Chicken." The battered and breaded product was then passed through a high temperature humidified oven or multi-purpose oven (MPO) for baking.

6. Campbell assigned Rosenthal to work on the "Never Fried Chicken" project. Rosenthal set forth formulas and procedures to be used on at least five different scale-up runs of the "Never Fried Chicken" project at Campbell's Farmington pilot plant. The process involved no frying and was intended for a product that was to be frozen after it was cooked so that the consumer could buy it in its frozen state and reheat it for consumption.

7. On June 5, 1984, Rosenthal wrote a memorandum to Campbell's marketing group identifying the following concepts at Campbell as unique:

a. the use of encapsulated fat and a margarine spray to achieve a product which had the textural attributes of fried chicken;

b. the use of an MPO or humidified oven to bake a battered and breaded chicken product which had all the flavor and textural attributes of prefried chicken without ever being fried.

8. In late 1984 or early 1985, Rosenthal engaged in discussions with an executive recruiter regarding potential career opportunities at ConAgra. During her discussions with ConAgra, Rosenthal disclosed that she was currently engaged in new product development on new frozen poultry products for Campbell. On Friday, February 22, 1985, Rosenthal traveled to St. Louis to interview with ConAgra. After arriving in St. Louis, Rosenthal completed a formal application for ConAgra in which she falsely represented that she had no "currently effective agreement with employers or others concerning inventions [she had] made or [might] make" in the future. By letter dated February 25, 1985, ConAgra extended Rosenthal a formal written offer for the position of Food Technologist. In late February, 1985, Rosenthal knew that the position she had been offered at ConAgra involved new poultry product development for its Banquet frozen foods division.

9. Rosenthal resigned from Campbell on March 4, 1985, the same day that she accepted a position at ConAgra as a Food Technologist in the Research & Development Department with principal responsibility in the poultry unit. When an employee involved in research announced that he or she would be leaving to work for a competitor, it was Campbell's policy thereafter to exclude that employee from Campbell's research facilities. In keeping with this policy, Campbell personnel promptly informed Rosenthal that March 4, 1985 would be her last day and Rosenthal thereafter ceased working for Campbell. She started working for ConAgra on March 12, 1985.

10. Campbell took substantial measures to safeguard the confidentiality of proprietary information relating to its "Never Fried Chicken" product. Upon commencement of employment, Campbell provided all employees working on or exposed to the "Never Fried Chicken" technology with a lockable desk and a corresponding key and instructed such employees to keep all research documents in the desk under lock and key. Campbell's research facilities in Camden and Farmington were secured from the public so that outsiders could enter Campbell's research premises only after signing a register, obtaining a pass and only under the escort of a Campbell employee.

11. Prior to Rosenthal's employment with either Campbell or ConAgra, many companies in the food industry tried to develop a chicken product which was not fully fried but which tasted like chicken that had been fried. These efforts included those of General Foods with its "Shake-N-Bake" and "Oven Fry" products which had been underway for approximately twenty years.

12. It is common to incorporate beaded shortening in bread crumbs to coat poultry products. Crumbs containing beaded shortening were generally available before, during and after Rosenthal's employ with Campbell.

13. The application of edible oil to a baked product in either a mist or spray form has been a widely known practice in the baking industry since the 1970's. Modern Maid Food Products, Inc. described this process of spraying oil on a breaded product in a 1981 memo to Campbell.

14. A multi-purpose oven, or MPO, is a type of humidified oven which has been in general use since the early 1980's by food processors.

15. By letters dated April 25, 1985, Campbell notified ConAgra and Rosenthal of Rosenthal's Agreement with Campbell pertaining to inventions, business ideas and trade secrets. Campbell provided ConAgra with a copy of the Agreement and informed ConAgra that Rosenthal had worked on several enumerated projects including Campbell's non-fried chicken project, wherein she was made privy to Campbell's trade secrets. None of Rosenthal's supervisors at ConAgra made any inquiry of Rosenthal concerning her non-fried chicken work at Campbell.

16. By letter dated June 3, 1985, ConAgra responded to Campbell's letter stating that it was not interested in acquiring any trade secrets belonging to Campbell. Rosenthal does not recall reviewing or even being requested to review ConAgra's June 3, 1985 letter, nor does she recall being questioned by anyone representing ConAgra on the subject thereof.

17. For roughly a year prior to Rosenthal's employment with ConAgra, ConAgra had worked on a new line of nutritional chicken products, which it termed "Project Nova." As part of this project in 1984, ConAgra considered introducing a premium quality frozen chicken that was baked not fried.

18. As part of these efforts, ConAgra experimented with prototypes of an oven-fried chicken employing "Oven Fry," a breading product manufactured by General Foods. David Scherpf, the head of Research and Development for Banquet Foods both before and after Rosenthal's employment, was a former General Foods executive and had responsibility for the "Shake-N-Bake" and "Oven Fry" products.

19. Prior to Rosenthal's arrival at ConAgra, ConAgra had not attempted to use a bread crumb mixture which included encapsulated or breaded shortening to form the coating of its "Project Nova" chicken product. ConAgra also did not use sprayed or misted vegetable oil or margarine on the coating of its "Project Nova" chicken product.

20. In an interoffice memorandum dated March 18, 1985, ConAgra's Ron Wesley, who was then the researcher in charge of ConAgra's "Project Nova" chicken product, described the status of the project. The three cooking methods described in Wesley's memorandum all involved frying. The memorandum did not discuss the use of a high temperature humidified oven or MPO-type oven to bake a skinless chicken product which has been injected with a phosphate solution, predusted, battered and breaded. It also failed to show the use of a bread crumb mixture containing 13% beaded shortening or encapsulated fat or the use of sprayed or misted oil applied to the bread crumb mixture to form the coating of non-fried chicken product.

21. Within two months after arriving at ConAgra, Rosenthal developed a process which allowed ConAgra to eliminate all frying from its "Project Nova" chicken product. Her procedure for making a frozen non-fried chicken product included the following steps: 1) skinless chicken was injected with a phosphate solution; 2) the injected chicken was coated with a predust mixture; 3) the predusted product was covered with batter; 4) the battered product was covered by a bread crumb mixture containing Japanese and extruded bread crumbs containing 13% encapsulated or beaded shortening; 5) the bread crumb mixture was sprayed with vegetable oil to form the coating; 6) the battered and breaded product was then baked in a high temperature humidified oven; and 7) the product is subjected to surface browning in a browning oven.

22. The use of extruded crumbs or crumbs manufactured from extruded flour is a widespread practice which preceded Rosenthal's employment with either Campbell or ConAgra. Before Rosenthal came to ConAgra, ConAgra also used extruded crumbs on chicken products that were not fully fried. The extruded and Japanese bread crumb mixture used by Rosenthal at ConAgra contained 13% encapsulated or beaded shortening, the same amount of shortening used at Campbell.

23. On a work-related assignment for ConAgra, Rosenthal was exposed to the use of a browning unit on her trip to Heat and Control, Inc. in San Francisco in April, 1985. Campbell had previously achieved a dark appearance on its poultry products by using double toasted or pre-browned bread crumbs.

24. On June 20, 1985, ConAgra assigned "TOP SECRET" status to its "Nova Chicken" project. In a memorandum to those employees involved in the project, ConAgra stated that there were "several major competitors that could potentially preempt our entry into the market. One proprietary conversation over-heard on an airplane or in the mens room . . . could end up costing us millions on the bottom line. Please make this a top priority."

25. As of May, 1985, ConAgra did not have either a pilot plant or a pilot size MPO oven which could be used to test the "Project Nova" chicken prototypes. On May 24, 1985, Rosenthal addressed a memorandum to her superiors at ConAgra advocating that such a pilot plant line be installed at ConAgra's research facility. She stated that the pilot plant line could be used initially to further develop and refine "Project Nova." In connection with that memorandum, Rosenthal disclosed to her superiors at ConAgra that Campbell had a pilot production line. ConAgra adopted Rosenthal's recommendations and in late 1985 installed a pilot plant line ...


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