Case 5:22-cv-00461 Document 1 Filed 03/14/22 Page 1 of 14 Page ID #:1
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`TROUTMAN PEPPER HAMILTON
`SANDERS LLP
`Ben Lewis Wagner, Bar No. 243594
`ben.wagner@troutman.com
`Jack F. Altura, Bar No. 297314
`jack.altura@troutman.com
`Ryan A. Lewis, Bar No. 307253
`ryan.lewis@troutman.com
`11682 El Camino Real, Ste. 400
`San Diego, CA 92130-2092
`Telephone: 858.509.6000
`Facsimile: 858.509.6040
`Attorneys for Plaintiff
`PASSPORT FOODS (SVC), LLC
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`PASSPORT FOODS (SVC), LLC, a
`Delaware limited liability company,
`Plaintiff,
`
`v.
`CULINARY INTERNATIONAL,
`LLC, a Delaware limited liability
`company, and SIMPLE FOODS
`LLC, a Delaware limited liability
`company,
`
`Defendants.
`
`Case No. 5:22-cv-00461
`COMPLAINT FOR
`MISAPPROPRIATION OF TRADE
`SECRETS [18 U.S.C. § 1836 ET
`SEQ.], BREACH OF CONTRACT,
`AND INTENTIONAL
`INTERFERENCE WITH
`CONTRACTUAL RELATIONS
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`COMPLAINT
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`Case 5:22-cv-00461 Document 1 Filed 03/14/22 Page 2 of 14 Page ID #:2
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`Plaintiff Passport Foods (SVC), LLC (“Passport”), for its Complaint against
`Culinary International, LLC (“Culinary”) and Simple Foods LLC (“Simple Foods”)
`(collectively “Defendants”) alleges as follows:
`PARTIES
`Plaintiff Passport is a limited liability company organized and
`1.
`operating under the laws of Delaware with its principal place of business in
`Ontario, California.
`2.
`Defendant Culinary is a limited liability company organized and
`operating under the laws of Delaware with its principal place of business in Vernon,
`California.
`Defendant Simple Foods is a limited liability company organized and
`3.
`operating under the laws of Delaware with its principal places of business in
`Vernon, California.
`4.
`Defendants, and each of them, are and at all times mentioned herein
`were, the alter-egos, parents, subsidiaries, agents, partners, associates, joint-
`venturers, servants, employees, and/or other authorized representatives of each of
`the remaining Defendants, and in doing the things herein alleged were acting within
`the course and scope of their authority, agency, and employment, and with the
`knowledge, consent, and approval of their fellow Defendants, and each of them. As
`such, Defendants, and each of them, are directly and vicariously, joint and
`severally, and coextensively liable with each of the remaining Defendants.
`JURISDICTION AND VENUE
`The Court has subject-matter jurisdiction over this action under 28
`5.
`U.S.C. section 1331 because Passport brings claims against Defendants under 18
`U.S.C. section 1836 et seq. and supplemental jurisdiction over the remaining state-
`law claims because they arrive from the same nucleus of operative facts pursuant to
`28 U.S.C. section 1367.
`6.
`Venue is proper in this Court because Defendants reside in this District
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`Case 5:22-cv-00461 Document 1 Filed 03/14/22 Page 3 of 14 Page ID #:3
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`and because a substantial part of the events giving rise to Passport’s claims against
`Defendants occurred in this District.
`GENERAL ALLEGATIONS
`Since 1978, Passport has produced unique and quality foods for
`7.
`restaurants, schools, on-site dining rooms and cafeterias, and for retail sale.
`Passport has established a reputation in its industry as a provider of high-quality
`food products.
`8.
`Passport markets its food products for retail sale under several brand
`names, including under the “Sofia’s Kitchen” brand name. Sofia’s Kitchen products
`are inspired by the enticing blend of Spanish and Aztec influences behind the most
`popular dishes of Mexico.
`9.
`One of Passport’s most successful and sought-after products marketed
`to retail outlets under the Sofia’s Kitchen trade name is Passport’s Sofia’s Kitchen
`Organic Chicken Flautas (“SK Flautas”). Passport’s SK Flautas product has been
`available for retail purchase since 2017. Passport has invested significant time and
`resources into developing the recipe for its popular SK Flautas.
`10.
`The recipe for Passport’s SK Flautas, and specifically the proportions
`and quantities of ingredients contained in Passport’s SK Flautas, are trade secrets.
`11.
`The market for pre-prepared organic food products is competitive, and
`Passport’s SK Flautas product, including its recipe, are commercially valuable to
`Passport, with significant annual retail sales of the product in the California Bay
`Area alone.
`12. Due to the competitive nature of the organic food retail market, as well
`as cost constraints facing organic food producers, Passport derives independent
`economic value from its trade secret because Passport is able to produce the SK
`Flautas product in a manner that results in a cost-efficient, high quality product that
`is desired by consumers and retail vendors and that surpasses its competition.
`13.
`Passport takes reasonable measures to conceal and protect its trade
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`Case 5:22-cv-00461 Document 1 Filed 03/14/22 Page 4 of 14 Page ID #:4
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`secret, including by strictly limiting the number of employees with access to the
`preparation of the SK Flautas product, limiting and controlling the distribution of
`the SK Flautas recipe, and by requiring third parties engaged in the manufacture
`and/or preparation of SK Flautas to execute confidentiality and/or non-disclosure
`agreements prohibiting disclosure or dissemination of the recipe.
`14.
`Passport’s SK Flautas product is sold at retail locations in at least
`California and Texas.
`15. A key retailer of Passport’s SK Flautas is the Costco Wholesale
`organization (“Costco”), which has sold Passport’s SK Flautas in numerous Costco
`locations in California and Texas. Food companies actively compete for the
`privilege of selling to large retail chains like Costco, and Passport’s success in
`selling its SK Flautas at numerous Costco locations is a reflection of Passport’s
`hard work in developing and creating the SK Flautas product recipe.
`A.
`PASSPORT’S MUTUAL CONFIDENTIALITY AND NON-
`DISCLOSURE AGREEMENT WITH CULINARY
`
`In or about the first quarter of 2020, Passport began preliminary
`16.
`negotiations with Culinary to engage Culinary as a co-packer for Passport food
`products. Under the proposed co-packer arrangement, Culinary was to assist with
`processing, manufacturing, packaging, and palletizing certain Passport products
`according to the formulas, specifications, processes and procedures owned by
`Passport.
`In March 2020, and as a condition of Passport continuing negotiations
`17.
`with Culinary regarding the proposed co-packer arrangement, Passport required
`Culinary to enter into a Mutual Confidentiality and Non-Disclosure Agreement
`(“NDA”).
`18. Culinary’s CEO, Robert Sabahat, executed the NDA on March 12,
`2020.
`19. Under the NDA, Culinary agreed to, inter alia, keep Passport’s
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`Case 5:22-cv-00461 Document 1 Filed 03/14/22 Page 5 of 14 Page ID #:5
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`“Confidential Information strictly confidential.”
`20.
`The term “Confidential Information” is defined in Section A.1. of the
`NDA to include “any and all trade secrets and other confidential information
`obtained from or disclosed by [Passport] or otherwise . . . including without
`limitation all information, data, documents, agreements, files, trade secrets . . .
`intellectual property . . . system designs, product designs, and other material
`whether disclosed orally or disclosed or stored in written, electronic, or other form
`or media . . . including without limitation any information concerning business
`plans, processes and methods, product or process specifications and designs,
`inventions,
`technical know-how, business and marketing plans, financial
`information, customer data, research and development activities and other materials
`or information relating to [Passport’s] business or activities which are not generally
`known to the public[].”
`that “Confidential
`the NDA further provides
`21.
`Section A.2. of
`Information also includes other information that is marked or otherwise identified
`as confidential or proprietary, or that would otherwise appear to a reasonable person
`to be confidential or proprietary in the context and circumstances in which the
`information is known or used.”
`22. Under Section E.1. of the NDA, Culinary further agreed that
`Passport’s “Confidential Information is valuable and unique,” that Passport’s
`“ability to reserve the Confidential Information for [Passport’s] exclusive
`knowledge and use is of great competitive importance and commercial value to
`[Passport]” and that Culinary’s “disclosure thereof in breach of this Agreement may
`result in irreparable harm and injury” to Passport and “money damages would not
`be a sufficient remedy for any breach or potential breach of” the NDA by Culinary.
`23. Culinary further agreed under Section E.2. of the NDA that in “the
`event of a breach or threatened breach by [Culinary] of any provision of this
`Agreement, [Culinary] hereby consents and agrees that [Passport], without
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`Case 5:22-cv-00461 Document 1 Filed 03/14/22 Page 6 of 14 Page ID #:6
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`prejudice to any other rights and in addition to all other remedies, monetary
`damages, or other available forms of relief it may be entitled to, shall be entitled to
`seek specific performance and injunctive or other equitable relief without the
`necessity of showing any actual damages or that monetary damages would not
`afford an adequate remedy, and without the necessity of posting any bond or other
`security as a remedy for any such breach or potential breach.”
`24.
`Section E.2. of the NDA further provides that “in the event that
`[Passport] institutes any legal suit, action, or proceeding against [Culinary] arising
`out of or relating to this Agreement, [Passport] shall be entitled to receive in
`addition to all other damages to which it may be entitled, the costs incurred by
`[Passport] in conducting the suit, action, or proceeding, including reasonable
`attorney’s fees and expenses and court costs.
`B.
`CULINARY RECEIVED CONFIDENTIAL INFORMATION AND
`TRADE SECRETS RELATED TO PASSPORT’S SK FLAUTAS
`UNDER THE NDA
`25.
`Following Culinary’s execution of the NDA, Culinary and Passport
`continued negotiations in anticipation of the proposed co-packing arrangement
`between Passport and Culinary.
`26. As part of the negotiations following execution of the NDA, and
`pursuant to the confidentiality provisions set forth therein, Passport disclosed to
`Culinary confidential information regarding the processes for manufacturing its
`products, including confidential and trade secret information regarding the SK
`Flautas recipe.
`27.
`In anticipation of the proposed co-packing arrangement, and subject to
`the provisions of the NDA, Passport shared with Culinary on a confidential basis
`the trade secret SK Flautas recipe, including the proportions and quantities of
`ingredients contained in the SK Flautas product.
`28. After Passport had shared its confidential and trade secret information
`regarding its SK Flautas product with Culinary, Passport engaged Culinary and the
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`use of Culinary’s facilities to assist in producing the SK Flautas product on behalf
`of Passport.
`29. During the time that Culinary participated in producing the SK Flautas
`product on behalf of Passport, and subject to the terms of the NDA, Culinary had
`access to and made use of Passport’s confidential and trade secret information
`regarding the SK Flautas recipe. At the request of Passport, Culinary provided pre-
`cooked ingredients in specific containers and packaging, and Passport sent its staff
`to Culinary to train Culinary’s staff on the exact quantities of ingredients to mix at
`the “vat” level to produce SK Flautas, including how to break-up the mixed vat into
`the predetermined quantity of SK Flautas product.
`30. Culinary continued to participate in the production of the Passport SK
`Flautas product for several months until Culinary’s services were no longer needed.
`Ultimately, a long-term co-packing agreement was negotiated but never signed due
`to what Passport understood to be the parties’ inability to agree upon pricing
`details.
`C.
`DEFENDANT SIMPLE FOODS LAUNCHES ITS COMPETING
`PRODUCT
`
`31. Defendant Simple Foods is a competitor to Passport and markets food
`products for retail sale under the name Market Street. Simple Foods is also a
`related company to Culinary, operating out of the Culinary warehouse and managed
`by Culinary.
`32. On or about April 12, 2018, Simple Foods filed a “Statement of
`Information” with California’s Secretary of State, a true and correct copy of which
`is attached hereto as Exhibit A.
`33.
`Simple Foods’ Statement of Information states that defendant Culinary
`is a manager and/or member of defendant Simple Foods. See Ex. A.
`34.
`Simple Foods’ Statement of Information filed with the California
`Secretary of State also states that Simple Foods maintains its business address at
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`3280 E. 44th Street, Vernon, California 90058. See Ex. A. Culinary’s Statement of
`Information filed with the California Secretary of State also shows Culinary’s
`business address as 3280 E. 44th Street, Vernon, California 90058. A true and
`correct copy of that document is attached hereto as Exhibit B.
`35. Robert Sabahat, the CEO of Culinary who executed the NDA, is also
`listed as the “Authorized Person” on Simple Foods’ Statement of Information filed
`with the California Secretary of State. See Ex. A.
`36.
`Passport is informed and believes that Simple Foods is an affiliate,
`alter-ego, parent, joint-venture, and/or subsidiary of Culinary, and that Defendants
`share common ownership and control.
`37.
`In August 2021, Simple Foods launched a competing organic chicken
`flautas product for retail sale in Costco stores. Simple Foods’ organic chicken
`flautas product, which is sold under the name Market Street Specialty Foods
`Organic Chicken & Cheese Flautas (“Market Flautas”), competes with, and has in
`many instances displaced, Passport’s SK Flautas in Costco stores.
`38.
`Simple Foods’ Market Flautas product resembles and is largely
`identical to Passport’s SK Flautas product.
`39.
`Passport undertook an investigation of Simple Foods’ Market Flautas
`product through its counsel of record, Troutman Pepper Hamilton Sanders LLP
`(“Troutman Pepper”).
`40.
`Troutman Pepper engaged a third-party food testing laboratory to
`chemically compare samples of Simple Foods’ Market Flautas product with
`Passport’s SK Flautas product. By taking chemical measurements, similarity across
`the entire profile demonstrates to a certainty that the quantities of ingredients in the
`filling are the same. Although differences in quantities or ingredients could change
`some parts of the profile, a small number of differences indicates only minor or
`trivial differences in ingredients and their quantities. The greater the specificity of
`the measurements, the stronger the resulting conclusion of copying confidential
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`information not available through reverse engineering.
`41.
`The third-party laboratory’s chemical analysis of the Simple Foods’
`Market Flautas product and the Passport SK Flautas product confirmed Market
`Flautas were copied from the confidential filling ingredient quantities supplied by
`Passport to Culinary under the NDA. The chemical, elemental, and fatty acid
`composition of the products are very similar. Both the SK Flautas product and the
`Market Flautas product exhibit a similar pH, total moisture, total fat, total ash,
`mineral content, and very similar fatty acid profile. The third-party laboratory’s
`chemical analysis led the laboratory to conclude that the SK Flautas and Market
`Flautas fillings use very similar quantities of each ingredient. A true and correct
`copy of the laboratory’s report is attached hereto as Exhibit C.
`42.
`The third-party laboratory’s analysis of the Market Flautas product and
`Passport’s SK Flautas product is consistent with the conclusion that Simple Foods
`used Passport’s trade secrets regarding the SK Flautas recipe, including the
`proportions and quantities of Passport’s ingredients, to formulate and produce its
`Market Flautas.
`43. Culinary, which is a member and/or manager of Simple Foods, which
`shares a common address, and which shares common personnel with Simple Foods
`(i.e. Robert Sabahat), misappropriated Passport’s confidential and trade secret SK
`Flautas recipe by, inter alia, disclosing the confidential recipe to its affiliated entity
`Simple Foods.
`44.
`Simple Foods further misappropriated Passport’s confidential and
`trade secret SK Flautas recipe by receiving such confidential information from
`Culinary and by commercializing it for its own benefit in the form of the competing
`Market Flautas product.
`45.
`Simple Foods manufactures and produces its Market Flautas product
`using Passport’s confidential and trade secret SK Flautas recipe.
`46. Unless Defendants’ misappropriation of Passport’s trade secrets is
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`Case 5:22-cv-00461 Document 1 Filed 03/14/22 Page 10 of 14 Page ID #:10
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`enjoined, Passport will suffer irreparable injury in the form of lost market share,
`lost business opportunities, brand dilution, brand confusion, and lost competitive
`advantage through the misappropriation of its valuable intellectual property and
`trade secrets.
`
`FIRST CLAIM
`MISAPPROPRIATION OF TRADE SECRETS (18 U.S.C. § 1836 et seq.)
`[AGAINST ALL DEFENDANTS]
`Passport incorporates by reference paragraphs 1 through 46 above as if
`47.
`fully set forth herein.
`48.
`Passport has created protectable trade secret information within the
`meaning of 18 U.S.C. section 1839. This trade secret information consists of the
`recipe for Passport’s SK Flautas product, and specifically the proportions and
`quantities of ingredients contained in Passport’s SK Flautas.
`49.
`Passport’s protectable trade secret information is related to its SK
`Flautas product that is used in and intended for use in interstate commerce.
`50.
`Passport’s trade secrets had and have economic value because they
`enable Passport to compete successfully against others in the marketplace and to
`generate sales from its customers. Passport has earned a reputation for creating
`high-quality organic food products, including Passport’s SK Flautas product.
`Passport relies on its trade secrets to give it an advantage in the marketplace.
`51.
`Passport has taken reasonable steps to maintain the secrecy of its trade
`secret information regarding the recipe for its SK Flautas product, including by
`strictly limiting the number of employees with access to the preparation method,
`limiting and controlling the distribution of the SK Flautas recipe, and by requiring
`third parties engaged in the manufacture and/or preparation of SK Flautas to
`execute confidentiality and/or non-disclosure agreements prohibiting disclosure or
`dissemination of the preparation method. Passport would never voluntarily share its
`trade secrets with competitors or provide competitors with access to them. Other
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`than through the unlawful means alleged herein, Defendants had no practical or
`effective means of obtaining access to the aforementioned trade secrets.
`52. Culinary misappropriated Passport’s trade secret information regarding
`its SK Flautas recipe, and specifically the proportions and quantities of ingredients
`contained in Passport’s SK Flautas, by disclosing the trade secret information to
`Simple Foods in violation of 18 U.S.C. 1839(5)(b).
`53.
`Simple Foods unlawfully acquired Passport’s trade secret information
`from Culinary in violation of 18 U.S.C. 1839(5)(A), and Simple Foods was aware
`or had reason to be aware that Culinary acquired Passport’s trade secret information
`by improper means.
`54. Defendants unlawfully used Passport’s trade secret information by
`commercializing it for their own benefit in the form of the competing Market
`Flautas product causing harm to Passport, including the displacement of Passport’s
`SK Flautas product by Simple Foods’ Market Flautas product in Costco stores in
`California and Texas.
`55. As a direct and proximate result of Defendants’ misappropriation of
`trade secrets, Passport has suffered actual damages in an amount to be proven at
`trial.
`
`56. As a direct and foreseeable result of Defendants’ misappropriation of
`trade secrets, Passport has suffered and will continue to suffer irreparable harm,
`including but not limited to further misappropriation and exploitation of its trade
`secrets, loss of its competitive advantage, lost market share, lost business
`opportunities, brand dilution, and brand confusion. Unless Defendants are enjoined,
`they will continue to inflict irreparable harm, including the further misappropriation
`of Passport’s trade secrets. Passport’s remedy at law is not by itself adequate to
`compensate it for the harm inflicted by Defendants and Passport is accordingly
`entitled to injunctive relief.
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`SECOND CLAIM
`BREACH OF WRITTEN CONTRACT
`[AGAINST CULINARY]
`Passport incorporates by reference paragraphs 1 through 56 above as if
`57.
`fully set forth herein.
`58.
`Passport and Culinary entered into the NDA under which, and in
`consideration for the opportunity to enter into a co-packing arrangement, Culinary
`agreed to refrain from disclosing Passport’s confidential information, including
`Passport’s trade secret information related to the SK Flautas product.
`59.
`Passport has performed its obligations under the NDA with Culinary.
`60. Culinary has breached its obligations owed to Passport under the NDA
`by disclosing confidential and trade secret information relating to Passport’s SK
`Flautas product recipe to Simple Foods resulting in damages to Passport, including
`the displacement of Passport’s SK Flautas product by Simple Foods’ Market
`Flautas product in Costco stores in California and Texas. In doing so, Defendants
`have usurped the business opportunities that Passport had with Costco’s California
`and Texas regions.
`61. Culinary’s breach of the NDA has damaged Passport in an amount to
`be proven at trial.
`62. As a result of Culinary’s breach, Passport is entitled to injunctive relief
`as set forth in Sections E.1. and E.2. of the NDA.
`63. As set forth in Section E.2. of the NDA, Passport is entitled to
`reasonable attorney’s fees, expenses, and Court costs incurred by Passport in
`bringing this action for Culinary’s breach.
`SECOND CLAIM
`INTENTIONAL INTERFERENCE WITH ECONOMIC RELATIONS
`[AGAINST ALL DEFENDANTS]
`Passport incorporates by reference paragraphs 1 through 63 above as if
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`COMPLAINT
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`64.
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`SAN DIEGO,CA92130-2092
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`SUITE 400
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`11682EL CAMINO REAL
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`TROUTMAN PEPPER HAMILTON SANDERS LLP
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`Case 5:22-cv-00461 Document 1 Filed 03/14/22 Page 13 of 14 Page ID #:13
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`fully set forth herein.
`65.
`Passport and Costco were in an economic relationship under which
`Costco had agreed to, and was, selling Passport’s SK Flautas product at numerous
`Costco locations in California and Texas.
`66.
`Passport’s economic relationship with Costco for the sale of SK
`Flautas product would have resulted in an economic benefit to Passport.
`67. Defendants were aware of Passport’s economic relationship with
`Costco regarding the sale of Passport’s SK Flautas products at Costco retail
`locations.
`68. Defendants intended to and did disrupt the relationship between
`Passport and Costco by wrongfully and unlawfully misappropriating Passport’s
`trade secret information regarding its SK Flautas recipe, wrongfully acquiring
`Passport’s confidential and trade secret information regarding its SK Flautas
`product, wrongfully disclosing without permission Passport’s SK Flautas
`confidential and trade secret information, and wrongfully using Passport’s
`confidential and trade secret information by commercializing for their own benefit
`in the form of the Market Flautas product.
`69. Defendants’ wrongful and unlawful conduct disrupted Passport’s
`economic relationship with Costco, including through the displacement of
`Passport’s SK Flautas product by Simple Foods’ Market Flautas product in Costco
`stores in California and Texas.
`70. Defendants’ wrongful and unlawful conduct has damaged Passport in
`an amount to be proven at trial.
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`PRAYER
`WHEREFORE, Passport prays for judgment against Defendants, and each
`of them, as follows:
`restraining
`relief
`injunctive
`(a)
`For preliminary and permanent
`Defendants, and each of their officers, agents, servants, employees, and attorneys,
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`SAN DIEGO,CA92130-2092
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`SUITE 400
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`11682EL CAMINO REAL
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`TROUTMAN PEPPER HAMILTON SANDERS LLP
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`Case 5:22-cv-00461 Document 1 Filed 03/14/22 Page 14 of 14 Page ID #:14
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`and those persons in active concert or participation with any of them and having
`notice of this action from acquiring, using, or disclosing Passport’s trade secrets
`now or in the future;
`(b)
`For preliminary and permanent injunctive relief restraining Defendants
`from selling Simple Foods’ Market Flautas, subject to a brief phase-out period for
`Costco locations;
`(c)
`For an award of actual, compensatory, special, and consequential
`damages according to proof;
`(d)
`For an award of reasonable attorney’s fees, expenses, and costs
`incurred by Passport in bringing and prosecuting this action;
`(e)
`For prejudgment and post-judgment interest as provided by law; and
`(f)
`For other and further relief as the Court deems just and proper.
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`Dated:
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`March 11, 2022
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`TROUTMAN PEPPER HAMILTON
`SANDERS LLP
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`By: /s/ Ben L. Wagner
`Ben L. Wagner
`Jack F. Altura
`Ryan A. Lewis
`Attorneys for Plaintiff
`PASSPORT FOODS (SVC), LLC
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`COMPLAINT
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`SAN DIEGO,CA92130-2092
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`SUITE 400
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`11682EL CAMINO REAL
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`TROUTMAN PEPPER HAMILTON SANDERS LLP
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