Biomin America, Inc. v. Lesaffre Yeast Corporation

District Court, D. Kansas·Decided May 12, 2020·No. 2:20-cv-02109·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

BIOMIN AMERICA, INC.,

Plaintiff,

v. Case No. 2:20-cv-02109-HLT

LESAFFRE YEAST CORPORATION, BRETT BELL, and ANNA CROCKETT,

Defendants.

MEMORANDUM AND ORDER Plaintiff Biomin America, Inc. (“Biomin”) brings this action against Defendant Lesaffre Yeast Corporation (“Lesaffre”) and two former Biomin employees—Defendants Brett Bell and Anna Crockett—who now work for Lesaffre. Biomin asserts a claim for misappropriation of trade secrets under the federal Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836 (“DTSA”), and a slew of state law claims, including breach of contract, tortious interference, civil conspiracy, and unfair competition. The gravamen of this action is that Bell and Crockett misappropriated trade secrets and violated restrictive covenants contained within their Biomin employment agreements. Defendants move to dismiss this action. Doc. 47. Defendants principally argue that Biomin fails to state a DTSA misappropriation claim and, because this claim is the jurisdictional hook, the Court should decline to exercise supplemental jurisdiction over the remaining state law claims. As discussed more fully below, the Court grants Defendants’ motion. The Court agrees that Biomin fails to state a DTSA claim and therefore dismisses that claim without prejudice under Rule 12(b)(6). Given this holding, the Court declines to exercise supplemental jurisdiction over the remaining state law claims and thus dismisses those claims without prejudice for lack of subject matter jurisdiction under Rule 12(b)(1). I. BACKGROUND1 A. The Parties The following is a high-level summary of the allegations in this case. Additional facts and allegations are incorporated into the Court’s analysis as necessary. Biomin is an animal health and nutrition company based in Overland Park, Kansas. Doc. 36 ¶¶ 6, 14. Biomin develops and delivers

feed additives for livestock—including poultry, swine, ruminants, and aquaculture—and is considered a market leader in mycotoxin risk management products and solutions as well as salmonella control products and solutions. Id. at ¶¶ 14-15. Biomin’s products include Biofix®, a next generation feed additive proven to counteract mycotoxins, and Poultry Star®, which, among other things, promotes beneficial gut microbiota and reduces bacteria like salmonella and E. coli in multiple species of poultry. Id. at ¶ 17. Lesaffre, meanwhile, is based in Wisconsin and also operates in the animal nutrition and livestock feed additive solution market. Id. at ¶¶ 8, 20. Like Biomin, Lesaffre’s Phileo Division produces and markets animal feed additive products aimed to reduce and remove mycotoxins and

pathogens like salmonella and E. Coli. Id. at ¶¶ 21, 23. Although the two companies employ different technological strategies for reducing or removing mycotoxins and pathogens in livestock, Lesaffre and Biomin market their products to the same customers, and, indeed, those customers view Lesaffre and Biomin as industry competitors. Id. at ¶¶ 24, 44. At least two of Lesaffre’s products, SafWall® and SafMannan®, directly compete with Biofix® and Poultry Star®. Id. at ¶ 21-22.

1 This background accepts as true Biomin’s well-pleaded factual allegations and construes those allegations in the light most favorable to Biomin. Both Bell and Crockett are former Biomin employees who are currently employed by Lesaffre. Id. at ¶¶ 50, 56, 69-70. For more than five years, Bell was Sales Director of Biomin’s Ruminant and Poultry Divisions. Id. at ¶ 50. In this position, Bell was responsible for and oversaw Biomin’s entire ruminant sales team in every state of the United States and, as of May 2018, also assumed responsibility of Biomin’s nationwide poultry sales team. Id. at ¶ 51. Crockett,

meanwhile, was a Key Account Manager for Biomin’s Swine and Poultry Divisions, wherein she reported directly to Bell (until his resignation) and was assigned Biomin’s key customer accounts, meeting with customers in a total of 16 states (including Kansas) and Canada. Id. at ¶¶ 56-57. By virtue of their employment with Biomin, both Bell and Crockett had access to, and acquired knowledge of, Biomin’s confidential and trade secret information. Id. at ¶ 62. B. Bell and Crockett’s Departure for Lesaffre On or about July 5, 2019, Bell voluntarily resigned from his employment with Biomin to accept a position as the North American Director of Lesaffre’s Phileo Division. Id. at ¶¶ 66, 69. In his position with Lesaffre, Bell is responsible for and oversees the marketing and sales efforts of

Lesaffre’s Phileo products and solutions (including SafMannan® and SafWall®) in the United States and Canada. Id. at ¶ 69. Approximately six months after Bell’s departure, Crockett followed suit, resigning from Biomin to accept a position as a Regional Sales Manager with Lesaffre’s Phileo Division. Id. at ¶ 70. Crockett’s resignation from Biomin was effective January 10, 2020. Id. In connection with her employment with Lesaffre, Crockett markets Lesaffre’s Phileo products and solutions (again, including SafMannan® and SafWall®) to customers and prospective customers in the same states in which she formerly marketed Biomin’s products. Id. at ¶ 72. Therefore, in their new positions with Lesaffre—which, again, is a direct competitor of Biomin— Bell and Crockett are performing roles substantially similar to the roles they performed at Biomin. Id. at ¶ 2. C. The Dispute After Crockett resigned and left to join Lesaffre, Biomin began to suspect Bell and Crockett were violating certain restrictive covenants contained within Biomin’s Proprietary Information,

Confidentiality, Non-Solicitation, and Non-Competition Agreement, which both Bell and Crockett executed at the inception of their employment with Biomin (collectively, the “Employment Agreements”).2 See Docs. 36-1, 36-2. Specifically, Biomin suspected that Bell and Crockett had solicited Biomin’s employees and customers to join Lesaffre, and also that Bell and Crockett were using Biomin’s confidential information and trade secrets to market Lesaffre’s competitive products. Doc. 36 ¶¶ 73-80. Biomin accordingly sent cease-and-desist letters to Bell, Crockett, and Lesaffre on or about January 10, 2020, requesting (among other things) that they provide written assurances that Bell and Crockett were in compliance with the Employment Agreements and that Lesaffre had taken

steps to ensure that neither Bell nor Crockett was using or disclosing Biomin’s confidential information and trade secrets or otherwise violating the Employment Agreements. Id. at ¶ 83. The discussions between the parties and counsel were ultimately unsuccessful, and, on March 6, 2020, Biomin sued Lesaffre, Bell, and Crockett. Id. at ¶ 84. Three days after filing its initial complaint, Biomin also filed a motion for a temporary restraining order, which the Court denied on

2 The pertinent provisions are nearly identical in both Employment Agreements—the only difference being that the Confidentiality Provision in Bell’s Employment Agreement defines “trade secrets” under Missouri law and Crockett’s defines “trade secrets” under Texas law. See Docs. 36-1 at 1, 36-2 at 1. But this distinction does not come into play in the Court’s holding. The Court also notes that Texas law appears to govern both Employment Agreements. See Docs. 36-1 at 4, 36-2 at 4. March 30, 2020. On April 22, 2020, Biomin filed its first amended verified complaint.3 Doc. 36. Defendants now move to dismiss the amended complaint under Rules 12(b)(6) and 12(b)(1). Doc. 47. II. ANALYSIS A. DTSA Claim

As discussed, the bulk of the briefing pertains to Biomin’s DTSA claim (Count V).

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Biomin America, Inc. v. Lesaffre Yeast Corporation, (D. Kan. 2020).

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