NEW YORK (Reuters) - Nooks and crannies and Twinkies don’t go together, at least not just yet.
A federal appeals court has upheld an injunction blocking one of only seven people who know the secret recipe for Thomas’ English Muffins from jumping to a rival.
Tuesday’s ruling by the U.S. 3rd Circuit Court of Appeals in Philadelphia lets Grupo Bimbo SAB, a Mexican food company that owns the Thomas’ brand, continue blocking Chris Botticella from jumping to rival Hostess Brands Inc.
The court returned the case to U.S. District Judge R. Barclay Surrick, who may consider whether to let Botticella join privately held Hostess or permanently block such a move.
Elizabeth Ainslie, a lawyer for Botticella, did not immediately return a call on Wednesday seeking comment.
Known for being crunchy on the outside and soft in the middle, Thomas’ English Muffins generate about $500 million of sales a year, court records show.
Hostess’ products include: Twinkies, Drake’s Yodels and Wonder Bread.
While the Irving, Texas-based company does not make English muffins, Bimbo argued that it could learn how from Botticella, who knew the recipe and critical details on the baking process.
“Botticella could produce an English muffin that might look a bit different, but that would nevertheless possess the distinctive taste, texture and flavor character” distinguishing Thomas’ muffins, Bimbo said in its January 15, 2010 complaint.
Bimbo also said Botticella, a vice president of operations, was bound by a confidentiality agreement with the company.
In February, Surrick temporarily blocked Botticella from changing employers, citing the potential for Bimbo to suffer “irreparable harm,” including a loss of market share.
On appeal, Circuit Judge Morton Greenberg wrote for a unanimous three-judge panel that courts can bar workers from changing employers if the facts “demonstrate a substantial threat” that trade secrets will be misappropriated.
“The public interest in preventing the misappropriation of Bimbo’s trade secrets outweighs the temporary restriction on Botticella’s choice of employment,” Greenberg wrote in a 38-page opinion.
Greenberg added that there was a “solid evidentiary basis” to believe Botticella would use Bimbo’s trade secrets at Hostess, including his failure to disclose his new job to Bimbo, and his copying of trade secret information from his laptop computer onto external devices.
Botticella had argued that his confidentiality agreement with Bimbo applied only during his employment with the company, not afterward. He also said he waited until January to make the move so he could get his 2009 bonus, and accepted a 20 percent salary cut to $200,000 from $250,000 to change employers.
Bimbo other brands of baked goods include Entenmann’s, Arnold Bread and Boboli.
The case is Bimbo Bakeries USA Inc v. Botticella, U.S. 3rd Circuit Court of Appeals, No. 10-1510.
Reporting by Jonathan Stempel, editing by Leslie Gevirtz
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