CleanFish LLC, a seafood wholesaler and importer, faced an early setback in its case against its founder who allegedly started a competing company by using CleanFish’s confidential customer lists and information. CleanFish alleged state and federal trade secret misappropriation claims and breach of contract based on confidentiality and proprietary-rights agreements.
In a March 17, 2020 ruling, the U.S. District Court for the Northern District of California dismissed CleanFish’s trade secret claims because it failed to identify any trade secret with sufficient particularity. CleanFish’s general descriptions of “customer lists, customer purchasing data, customer sales figures[,] and other related customer purchasing analysis and trends” were too broad and vague, making them indistinguishable from matters of general knowledge in the seafood-distribution business. On the other hand, the court allowed that the breach-of-contract claim could proceed because the contracts did not require CleanFish to allege a defined trade secret. (CleanFish has since amended its complaint, and defendants moved to dismiss).
Although courts are often lenient at the pleading stage, this case is a reminder that courts can force a trade secret plaintiff to allege an actual and identifiable trade secret. This hurdle is especially salient when the alleged trade secret may otherwise appear to be publicly available, such as customer-related information. While customer-related information can sometimes constitute trade secrets, specificity at the pleading stage can help a plaintiff’s claim survive.
The case is CleanFish, LLC v. Sims, No. 19-CV-03663-HSG, 2020 WL 1274991 (N.D. Cal. Mar. 17, 2020).