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08/25/97 CHRISTOPHER M'S HAND POURED FUDGE v. CLYDE

August 25, 1997

CHRISTOPHER M'S HAND POURED FUDGE, INC.,
v.
CLYDE L. HENNON, AN INDIVIDUAL AND THE FUDGE WORKS, INC., A CORPORATION, APPELLANTS.



Appeal from the Order entered March 29, 1996, Court of Common Pleas, Allegheny County, Civil Division at No. GD 95-18376. Before JAMES, J.

Before: Cirillo, Johnson and Ford Elliott, JJ. Opinion BY Johnson, J.

The opinion of the court was delivered by: Johnson

OPINION BY JOHNSON, J.:

Filed August 25, 1997

In this appeal, we must decide whether a trade secret injunction that permanently enjoins the defendants from engaging in the manufacture of a product is too broad. We hold that such an injunction is a proper means to protect trade secrets where the defendants' manufacture of that product is inextricably connected to their knowledge of the plaintiff's trade secrets. Accordingly, we affirm the order granting the injunction.

Christopher M. Warman is the founder and president of Christopher M's Hand Poured Fudge, Inc. ("Christopher M's"), which manufactures and sells gourmet fudge. The fudge is made from a secret recipe that Warman purchased for $140,000 and which he has subsequently refined.

Warman hired Clyde L. Hennon to work as his assistant in the daily operations of Christopher M's. Hennon had no prior experience in the fudge-making business. In the course of his employment, Hennon learned the details of Christopher M's fudge recipe and also gained knowledge of the unique manufacturing process employed by Christopher M's; Warman had kept this information secret from most of his employees. During negotiations between Christopher M's and the Hershey Foods Corporation ("Hershey"), regarding an agreement by which Christopher M's would manufacture fudge for Hershey, Warman assigned Hennon the sensitive task of preparing documents that listed the ingredients of Christopher M's fudge. Hennon also had access to Christopher M's customer lists, business plans, and other confidential business and financial information.

Hennon left Christopher M's after approximately one year of employment; the parties dispute whether he left voluntarily or was fired. On the day that his employment ended, Hennon took from Christopher M's certain documents and computer discs containing confidential business information. Specifically, Hennon misappropriated the following information: customer lists; vendor lists; quality assurance information; general management practices, hazard analyses and critical control points; product cost analysis; market analysis; financial reports and projections; expansion plans; business plans; documents relating to negotiations with Hershey; and other miscellaneous documents. Joint Stipulation of Facts P 21.

After leaving Christopher M's, Hennon launched his own fudge-making business, The Fudge Works, Inc. ("The Fudge Works"). Christopher M's subsequently sued Hennon and The Fudge Works, alleging that Hennon was improperly utilizing Christopher M's secret fudge recipe and other trade secrets in the operation of The Fudge Works. Christopher M's then filed a petition for a preliminary injunction in which it sought to enjoin Hennon and The Fudge Works from, inter alia, utilizing its trade secrets in the manufacture of fudge and from engaging in the manufacture or sale of fudge. The parties agreed, by stipulation, to treat the injunction proceedings as a hearing for a permanent injunction. Docket Entry No. 15. After the hearing, the court granted the injunction. Hennon and The Fudge Works now appeal.

Initially, we note that Hennon and The Fudge Works failed to file post trial motions. Normally, the failure to file post trial motions results in the waiver of all issues for appellate review. Midlake on Big Boulder Lake Condominium Ass'n v. Cappuccio, 449 Pa. Super. 124, 126 n.1, 673 A.2d 340 n.1, appeal denied, 544 Pa. 684, 679 A.2d 230 (1996). In an equity action, however, when the trial court enters an opinion and order, instead of findings of fact and a decree nisi, as required by Pennsylvania Rule of Civil Procedure 1517(a), this Court will excuse the failure to file post trial motions. Id. at 126 n.1, 673 A.2d at 340-41 n.1; Winkelman v. Pennsylvania Fin. Responsibility Assigned Claims Plan, 418 Pa. Super. 439, 442-43, 614 A.2d 717, 718-19 (1992). In this equity action, the trial court filed an opinion and order, rather than findings of fact and a decree nisi. Docket Entries No. 18 and 19, Opinion filed April 1, 1996 and Order dated March 29, 1996. Accordingly, we will excuse the defendants' failure to file post trial motions and proceed to the merits of this appeal. Cappuccio, supra; Winkelman, supra.

Hennon and The Fudge Works present three questions for our review: (1) whether the lower court erred by concluding that Christopher M's fudge recipe is a trade secret; (2) whether the court erred by enjoining their use of Christopher M's trade secrets in the absence of a restrictive covenant; and (3) whether the court issued an overly broad injunction. We will reverse an order granting injunctive relief only if we conclude that the trial court committed an abuse of discretion or error of law. Den-Tal-Ez Inc. v. Siemens Capital Corp., 389 Pa. Super. 219, 227, 566 A.2d 1214, 1217 (1989) (en banc).

The defendants first argue that Christopher M's fudge recipe is not a trade secret. The Pennsylvania Supreme Court has adopted the definition of "trade secret" that is set forth in comment b to section 757 of the Restatement of Torts:

"A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and gives him an opportunity to obtain an advantage over competitors who do not know or use it."

Felmlee v. Lockett, 466 Pa. 1, 9, 351 A.2d 273, 277 (1976), quoting Restatement of Torts ยง 757 cmt. b; Van Products Co. v. General Welding and Fabricating Co., 419 Pa. 248, 258-59, 213 A.2d 769, 775 (1965). Some factors that a court may consider in ...


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