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US Foods-PFG legal spat comes to an end

Jonathan Spiers August 22, 2016 0

PFG is headquartered in the West Creek office park in Goochland County.

PFG is headquartered in the West Creek office park in Goochland County.

A lawsuit accusing a local food distribution company of stealing a competitor’s trade secrets has been tossed out.

The case against Goochland-based Performance Food Group, which competitor US Foods accused of inducing two employees to share proprietary information after they left US Foods for PFG, was dismissed by a federal court judge on June 14.

The dismissal, which was requested by PFG and agreed upon by both parties, came nine months after the suit was filed in Illinois, where US Foods principally operates and where PFG maintains an office under the name Fox River Foods.

The suit alleged that two employees – Don Harris and Ira Fenton, who were also named as defendants – took jobs with PFG in late 2014 and orchestrated a scheme, with assistance from a PFG manager, to share information that US Foods said put it at a competitive disadvantage.

In PFG’s response to the suit, filed last November, Harris, Fenton and Fox River generally denied the bulk of the allegations and asked that the case be dismissed with prejudice.

PFG was represented locally by Rodney Satterwhite with Richmond-based McGuireWoods. US Foods was represented by Chicago law firm Proskauer Rose.

Calls to attorneys involved in the suit were not returned. Satterwhite deferred to PFG, which said through a spokesman that it denied any wrongdoing in the case and had no further comment.

According to the suit, Harris and Fenton were employees of US Foods until late 2014, when they resigned to take jobs with PFG. The suit alleged that before doing so, they copied proprietary information from US Foods computers to USB drives and personal email accounts.

They then allegedly embarked on a scheme to give some of their previous US Foods accounts to a “shill employee” at PFG who has since left PFG for US Foods.

The suit stated the arrangement was facilitated by a PFG regional sales manager and known to a PFG district manager.

Proprietary information described in the suit includes product pricing, price margins, business strategy regarding current and prospective customers, specific orders and needs of customers, customer order guides and customer pricing history.

The suit alleged five counts: tortious interference with contract, misappropriation of trade secrets in violation of the Illinois Trade Secrets Act, breach of customer non-solicit and non-disclosure agreement, breach of employee non-solicitation agreement, and violation of the Computer Fraud and Abuse Act.

Among PFG’s arguments for dismissal was the stance that the defendants’ alleged conduct fell within competitor’s privilege and was not tortious or actionable.

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