FAST FOOD GOURMENT, INC. v. Little Lady Foods, Inc.

Majority - Elaine E. Bucklo

Yes, a genuine issue of material fact exists as to whether FFGI's pizza production process constitutes a trade secret and was misappropriated by LLFI and Kraft, precluding summary judgment. The court denied summary judgment on the trade secret misappropriation claims (Counts I and II) because genuine issues of material fact existed regarding whether FFGI's pizza production process qualifies as a trade secret and whether it was misappropriated. Under the Illinois Trade Secrets Act (ITSA), a trade secret requires information to be sufficiently secret to derive economic value and subject to reasonable efforts to maintain secrecy. While defendants' expert opined that individual components and even combinations were generally known, FFGI presented evidence that its unified process (e.g., specific oven type, combination of stress-free sheeting with extremely high baking temperatures) was unique and not generally known or easily duplicated in the frozen pizza industry, satisfying the "trade secret" element, which is ordinarily a question of fact. Furthermore, the extent of FFGI's efforts to guard secrecy (e.g., non-disclosure agreements, marking documents confidential, emphasizing confidentiality orally) and the value of the information were also disputed, raising questions under the Restatement factors. For misappropriation, the court found disputed facts regarding whether FFGI properly labeled its information as confidential per its agreement with LLFI, and whether LLFI improperly disclosed that information to Kraft, making LLFI's potential breach of duty and Kraft's knowledge thereof unresolved. The court noted that LLFI's agreement allowed it to use the "stone firing process" and FFGI's equipment line for other customers, but still "subject to the restrictions in this Section," meaning it could not disclose any information deemed confidential under the Agreement. The extent of LLFI's involvement in Kraft's development process was also disputed, with evidence suggesting "co-development." Yes, there is a genuine dispute of material fact regarding whether LLFI breached its contract with FFGI by failing to maintain confidentiality or by producing substantially identical pizzas for Kraft, preventing summary judgment. The court denied summary judgment on FFGI's breach of contract claim against LLFI (Count III). First, the court reiterated that LLFI's duty of confidentiality under the Agreement hinged on the proper labeling of Proprietary Information, and FFGI presented conflicting evidence (e.g., Kenneth Crouse's declaration of emphasizing confidentiality and providing confidential listings vs. LLFI's denial), thus creating a material factual dispute. Second, regarding the claim that LLFI breached by producing "substantially identical" pizzas for Kraft, the court found the term "pizzas" in Section 7(a) of the Agreement to unambiguously refer to the whole pizza, not just its crust. However, the meaning of "existing specifications" within the contract was found to be ambiguous, with both parties offering reasonable but differing interpretations (specifications at the time of the Agreement's signing vs. at the time of the offending production). Because the interpretation of an ambiguous contract term is a question of fact, summary judgment was inappropriate. Yes, a genuine issue of material fact exists as to whether Kraft was unjustly enriched by using FFGI's equipment line at LLFI without paying for its use, precluding summary judgment. The court denied summary judgment on the unjust enrichment claim against Kraft (Count IV). Kraft argued it paid LLFI for use of the facility and equipment line on a per-unit basis. However, the court found that the Kraft Agreement's pricing components (raw materials, packaging, and conversion costs) did not expressly state they encompassed payment for Kraft's use of FFGI's specific equipment line. Furthermore, the Agreement between FFGI and LLFI provided for reduced pricing to FFGI based upon more frequent use of the equipment line, whether by FFGI or another customer, implying FFGI might be entitled to compensation for third-party use. The court could not determine from the evidence presented that Kraft had paid, or continued to pay, LLFI for the use of FFGI's equipment, particularly for the initial period before the Kraft Agreement was effective, and for any period after its initial term. These unresolved factual issues precluded summary judgment.