Sep 24, 2014Lawsuit roils Michigan blueberry fields
Editor’s note: This story has been updated from its original version.
The Michigan Blueberry Growers Association, also known as MBG Marketing, has filed a lawsuit against Brenda Reeves and her employer, a group of companies collectively referred to in the lawsuit as True Blue Entities, owned by Dennis and Shelly Hartmann.
The lawsuit, filed Aug. 26 in the U.S. District Court’s Western District of Michigan, pits MBG – a producer-owned cooperative and “the largest marketer of fresh and processed cultivated blueberries in the world,” according to its website – against True Blue, one of the largest blueberry producers and processors in southwest Michigan. Both entities are based in Grand Junction, Michigan.
MBG is suing Reeves, a former employee, and True Blue, a competitor, for, among other things, computer fraud, tortious interference, breach of fiduciary duty, unjust enrichment and conspiracy, according to the nine-count lawsuit. The suit claims the defendants “willfully and maliciously” misappropriated trade secrets by taking MBG’s “entire business model, Produce Track Program, and grower information for their own benefit and to the detriment of MBG.”
The defendants’ actions led to lost profits and damage to good will and reputation for MBG, according to the suit.
The allegations against Reeves are “false and inflated,” according to her attorney, Shaun Willis of Willis Law. MBG’s lawsuit is “over-reaching, a fishing expedition, and a retaliatory business maneuver that will not bear any fruit.”
In court documents, Reeves claimed she has not and will not utilize MBG’s data for any improper purpose.
MBG is seeking compensation for damages, and is requesting that the court restrain Reeves for one year from soliciting or servicing any MBG growers she worked with while employed by MBG. It wants similar restraints placed on True Blue Entities for the year preceding Reeves’ last day of employment at MBG. The suit also seeks to prevent the defendants from using or disclosing MBG’s confidential information and trade secrets and to require them to return all documents, data, files and information obtained from the cooperative.
Reeves, who was hired by MBG in 2000, was the cooperative’s manager of information services when she left to join True Blue in September 2013. In her role at MBG, she was responsible for the maintenance and support of all of MBG’s custom and proprietary applications, including a computer application called Produce Track. Produce Track, which can track 100 million pounds of blueberries from the field to the market, consists of about 600,000 lines of source code. It’s not possible to recreate the highly specific code without unauthorized and unlawful copying, according to the lawsuit.
According to Reeves’ defense, Produce Track is “not a unique concept.” There are many software applications on the open market that contain many of the same functions.
To help her develop Produce Track, MBG said it gave Reeves access to confidential information concerning its growers, contracts, pricing, profits, yields, margins, marketing and sales strategies. She was given a laptop computer on which she stored this information. Reeves signed an agreement with MBG on Feb. 20, 2013, that prohibited her from distributing proprietary software to any third party without express written authorization from MBG’s director of information systems, according to the suit.
The lawsuit states that Reeves resigned from MBG on or about Sept. 16, 2013, and began working with True Blue Entities. Several months later, MBG learned that Reeves might have been communicating with True Blue prior to resigning. The cooperative attempted a forensic analysis of her computer but discovered she had attempted to wipe data. MBG sent the computer to ReNew Data for a third-party analysis.
The analysis revealed that Reeves had engaged in correspondence from her personal Gmail account between Sept. 4 and Sept. 13, 2013, in relation to obtaining employment with True Blue. It also revealed that two external USB drives were attached to her computer on Sept. 13, immediately prior to her resignation, according to the suit.
Reeves denied both allegations, according to court documents.
The forensic analysis could not determine what, if any, files were copied to the USB devices, but did reveal that she opened seven files related to the Produce Track program. Other files related to payroll maintenance, payroll allocations, salary budgets, bonus allocations and compensation history also were opened at the time the devices were attached, according to the suit.
According to Reeves’ defense, the laptop MBG gave her was also intended for personal use, which MBG understood. After resigning, she “tidied up her computer in an effort to make it an easier transition for her replacement at MBG. To that end, she moved files to the server, removed files that were no longer relevant, and deleted her personal files. At no time did she attempt to format the hard drive or otherwise ‘wipe’ the drives clean.”
On March 17, 2014, MBG sent Reeves a cease and desist letter, requesting that she identify all MBG confidential and proprietary information in her possession, cease and desist from any further use of the information and provide the two external storage devices for analysis, according to the suit.
Reeves was “shocked” to receive the cease and desist letter. Her defense documents suggest that MBG’s “true intentions” with this lawsuit were to punish Reeves and True Blue over a deal that never came to fruition. After she left MBG, the cooperative and True Blue tried to negotiate an agreement whereby MBG would market a portion of True Blue’s crop. Negotiations for the deal broke down, and MBG initiated the lawsuit against Reeves and True Blue shortly afterward.
Reeves responded to the cease and desist letter April 4, offering to meet with MBG to remove items on what she deemed her personal backup system. On April 10, MBG asked to inspect her computer equipment to confirm her claim that she had not used its confidential property. On or about April 22, she responded that she had turned over the devices to her attorney and was willing to have them analyzed, subject to a confidentiality agreement, according to the lawsuit.
The parties reached a confidentiality agreement on June 20. The devices were sent to ReNew Data a few days later. On Aug. 12, the “full extent of the information taken by Defendant Reeves became known,” according to the lawsuit.
MBG claims that Reeves accessed more than 93,000 of its files after she left its employment. These files included information related to Produce Track. Reeves denied the claim.
Analysis also revealed that on April 16, 2014, shortly before turning over the USB devices to her attorney, there was a mass uploading and/or deletion of files from the devices, according to the lawsuit.
According to court documents, the files Reeves copied were personal files, taken from her personal external drives prior to turning them over to her attorney. Reeves had been using external devices to back up work-related files since at least 2009.
The defense documents claim that MBG “has not offered a single shred of evidence that (Reeves) did anything other than back files up – consistent with years of practice at MBG that was condoned by her supervisor, Brian Clancy. There has not been an actual or threatened misappropriation of information.”
Reeves also claimed that MBG never subjected her to a non-compete or non-solicit agreement.
One of the accusations in MBG’s lawsuit is that True Blue Entities used the cooperative’s confidential information to contact a builder about constructing a cold storage facility in direct competition with MBG. True Blue used a feasibility study unlawfully taken by Reeves upon her resignation. Use of the study constituted an unfair competitive advantage, as True Blue was relieved of the necessity to finance its own study, according to the lawsuit.
In court documents, Reeves denied the accusation. Her attorney said she is “saddened and disappointed that MBG’s board, staff and grower members, many of whom she worked with closely and who are familiar with her good character and work ethic, are standing behind this lawsuit.”