Unitherm Food Systems, Inc. v. Hormel Foods Corporation et al

0:14-cv-04034
July 25, 2016
State Court
Minnesota
United States District Court for the District of Minnesota

Unitherm is a developer of processes and equipment for cooking meat. Hormel is a manufacturer and marketer of brand-name food and meat products. In 2007, the companies entered a joint development agreement to develop an oven that would make bacon products using high levels of steam for cooking.  

Under the agreement, both parties agreed that "following completion of a commercially viable application of the Project, the parties will negotiate an agreement by which Unitherm will be the exclusive supplier to Hormel of equipment related to the Project for an initial period of five (5) years," with the possibility of an extension. The parties also agreed that all information shared relating to the Project would be considered confidential in accordance with the terms of the Mutual Confidential Disclosure Agreement ("MCDA") signed by both parties.

In 2008 Unitherm filed a patent application covering the process of cooking food at high steam levels.  In 2010, Hormel withdrew from the agreement with Unitherm and filed for patent protection of its own method of cooking bacon.  However, Unitherm alleged that the method claimed by Hormel was developed by Unitherm during the course of the joint development agreement and was proprietary. In September 2014, Unitherm filed suit against Hormel, claiming breach of contract, unjust enrichment, trade secrets misappropriation, accounting, and declaratory relief.

On January 27, 2015, the Honorable Paul A. Magnuson dismissed the trade secrets and accounting claims. In turn, Hormel answered and filed breach of contract and declaratory judgment counterclaims. Each remaining claim and counterclaim is covered by one or both of the summary judgment motions.

On July 25, 2016, United States District Judge Joan N. Ericksen ruled on Unitherm's motion for partial summary judgment and Hormel's motion for summary judgment. Unitherm's breach of contract and unjust enrichment claims were dismissed with prejudice, Hormel's breach of contract counterclaim was dismissed with prejudice, Hormel's declaratory judgment counterclaim was dismissed with prejudice to the extent it claims ownership of the Unitherm Process. The claim remains unresolved to the extent it claims ownership of the Hybrid Process. Unitherm's claim for declaratory relief remains unresolved.

Unither's unjust enrichment claim brought in lieu of its breach of contract claim is of significance. "Unjust enrichment is an equitable theory which cannot be asserted where the rights of the parties are governed by a valid contract." Holiday Hosp. Franchising, Inc. v. H-5, Inc., 165 F. Supp. 2d 937 , 941 (D. Minn. 2001). Since Unitherm's claim is based on conduct that is governed by the joint development agreement, the unjust enrichment claim fails. Unitherm's claim based on Hormel's disclosure of confidential information and reverse engineering of the oven also fails because it was governed by the MCDA. Lastly, to the extent that Unitherm's claim is based on the allegations that Hormel stole the Unitherm Process, the claim fails becuase it is based on the same operative facts and is therefore preempted by Unitherm's dismissed claim under Minnesota's Uniform Trade Secrets Act.

INC., Unitherm Food Systems
Hormel Foods Corporation and Hormel Foods Corporate Services, LLC
Uniform Trade Secrets Act, Other state statute