Better Meat Co. v. Emergy, Inc.

District Court, E.D. California·Decided July 28, 2022·No. 2:21-cv-02338·Unknown

Opinion

BETTER MEAT COMPANY, No. 2:21-cv-02338-KJM-CKD Plaintiff, v. ORDER EMERGY, INC., dba MEATI FOODS, et al., Defendants.

Plaintiff Better Meat Company (“Better Meat”) moves for an order compelling discovery, including depositions and further production of documents, including attorney-client privileged documents. (ECF No. 70.) The parties appeared for a hearing on this matter via videoconference on July 27, 2022. Counsel Jeffrey Theodore and Eric Scott Schlabs appeared for Better Meat, Jeffrey Daniel Smyth, David Mroz, and Sonja Sahlsten for defendant Emergy, Inc. (“Emergy”), and Michael Jones and Kate McKenney for Bond Capital Management LP and Paul Vronsky (“Bond defendants”). Better Meat alleges it invented a meat substitute called “Rhiza,” whose underlying technology resulted from “extensive time, effort, and resources devoted by [Better Meat] to researching mycelium- and mycoprotein-based foods.” (Compl. ¶¶ 16–17, ECF No. 1.) In connection with Rhiza and its underlying technology, a patent issued to Better Meat in July 2021. (Id. ¶¶ 18–19.) Augustus Pattillo, Better Meat’s co-founder and former Chief Technology Officer, was listed as the sole inventor. (Id. ¶¶ 30, 69.) Three days after Better Meat obtained its patent, Emergy, a competitor in the animal-free meat business, sent “twin letters” to Better Meat and Pattillo. (Id. ¶ 30; ECF No. 33-9 & 10.) The letters asserted Pattillo had worked for Emergy and had used and disclosed Emergy’s confidential and proprietary information to develop and patent Better Meat’s products. (Id.) Emergy accused Better Meat and Pattillo of trade secret misappropriation and unfair competition and demanded Better Meat withdraw Rhiza from the market, “correct” the patent, and assign ownership to Emergy. (Id.) Better Meat refused and denied Emergy’s allegations but offered to consider whatever evidence Emergy could offer. (See ECF No. 33-11.) Emergy responded but Better Meat was unmoved. (See ECF Nos. 33-12, 33-13.) In late November 2021, Better Meat formally engaged with potential investors in a “Series A financing round.” (Compl. ¶¶ 36–38.) Better Meat hoped to secure funding to build a facility capable of commercial-scale production. (Id. ¶ 38.) To those ends, Better Meat signed a term sheet with a “lead investor” for the Series A investment round, a “prominent and well-regarded California private equity investor with many years in the industry and extensive contacts and name recognition.” (Id. ¶ 39.) Better Meat “used that investor’s name while soliciting further investors to fill out the round, including other investors in California.” (Id.) Then, on December 15, 2021, Emergy and one of its investors, Paul Vronsky, sent the two communications that spurred this litigation. (See id. ¶¶ 41–51.) Mr. Vronsky is a partner at defendant Bond Capital Management LP, an Emergy investor. (See id. ¶ 46; ECF No. 33-15.) First, Emergy sent Better Meat a letter reiterating its accusations of trade-secret misappropriation and unfair competition. (See ECF No. 33-14.) Emergy expressed its intent to “move forward with legal action” and “fil[e] a complaint . . . in the immediate future.” (Id.) Emergy further stated it would seek an order “directing the Director of the United States Patent and Trademark Office to correct the inventorship” of Better Meat’s patent by naming Emergy’s founders as the rightful inventors. (Id.) Second, thirteen minutes after Emergy’s counsel sent his letter, Vronsky sent Better Meat’s “lead investor” the following email: I wanted to give you a heads up that one of our portfolio companies, [Emergy], is in a pretty significant trade secret and patent dispute with a company you might be evaluating, The Better Meat Co. I don’t know really more than that but as a matter of friendship and courtesy, I thought I would reach out and let you know. I’m happy to connect with your counsel if that is helpful. (Vronsky Email at 2.) Better Meat filed this lawsuit against Emergy, Bond Capital, and Vronsky two days later, seeking a declaratory judgment of inventorship, and asserting state-law claims for tortious interference and unfair competition under California Business & Professions Code section 17200 et seq. (ECF No. 1.) Better Meat alleges the Emergy and Vronsky communications were sent with the “sole intent” of forcing Better Meat to “disclose Emergy’s baseless allegations to potential investors as a means of suppressing [Better Meat’s] fundraising.” (Id. ¶ 4; see also id. ¶ 50.) Emergy filed a separate lawsuit against Better Meat and Pattillo ten days later (see ECF No. 33-1); it also filed an anti-SLAPP motion to strike Better Meat’s state-law claims, arguing the communications at issue are protected by California’s litigation privilege as a matter of law (ECF No. 31).1 Better Meat requested and was granted an opportunity to conduct expedited discovery to oppose the anti-SLAPP motion. (ECF No. 66 at 7.)2 The May 25, 2022, order granting expedited discovery states as follows: The court grants Better Meat’s request for discovery. Better Meat may conduct expedited discovery, including making targeted document requests and taking the deposition of Tyler Huggins, narrowly focused on the question whether Emergy had a good-faith intent of filing a lawsuit at the time of the contested communications. (Id.) On July 6, 2022, Better Meat filed the instant motion to compel. (ECF No. 70.) The parties filed a joint statement addressing the discovery dispute on July 13, 2022. (ECF No. 73.)

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Better Meat Co. v. Emergy, Inc., (E.D. Cal. 2022).

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