A new company headed by former Rubicon executives poached Kroger’s private label shrimp business from High Liner and stole trade secrets, High Liner Foods alleges in a lawsuit.
Lunenberg, Nova Scotia, Canada-based High Liner spent more than USD 100 million (EUR 89 million) to develop the trade secrets in question, according to the complaint, filed in federal court in California, on 11 June.
Former Rubicon executives Justin Kirby, Nicholas Leonard, Lucas Biging, and Ernest Dominguez, who worked in High Liner’s frozen shrimp division, utilized proprietary information to snatch Kroger’s “Simple Truth” shrimp business from High Liner, the complaint alleges.
Kirby was vice president of merchandising, Leonard served as director of sourcing, Biging was a national account manager, and Dominguez was Rubicon’s former inventory manager. Neither Kirby nor Leonard responded to SeafoodSource's requests for comment.
Kirby and Leonard incorporated Los Angeles, California, U.S.A.-based Haven Foods in early February, and the company is based at a cold storage facility previously used by Rubicon to house millions of dollars of inventory for Rubicon’s customers, the complaint said.
In May 2017, High Liner purchased Rubicon for USD 107 million (EUR 95 million), “in large part due to Rubicon’s trade secrets and unrivaled success in the sustainable shrimp industry,” the complaint stated.
Rubicon’s procurement process and long-term strategic partnerships with shrimp farmers and producers throughout Southeast Asia are integral to its business model and value, the company stated.
“Rubicon’s virtual vertical integration in Thailand allows it to operate a flexible and reliable supply chain that differentiates its business from competing suppliers who are all about price,” High Liner said.
That vertically integrated sustainable sourcing model was a key reason for its business with Kroger and other customers who require sustainably- sourced seafood, according to the complaint.
“Over the years, they [the defendants] developed detailed knowledge of Rubicon’s internal strategies, pricing, marketing, procurement processes and sales. Given Leonard’s and Kirby’s senior positions within Rubicon’s Sourcing and Procurement team, they had intimate knowledge of Rubicon’s confidential information and trade secrets, including supply chain, pricing, margins, information on customer preferences and terms of Rubicon’s supply agreements…” the complaint stated.
A week before Biging resigned, he received a request from Kroger inviting Rubicon to submit a bid for the opportunity to supply “Simple Truth” bagged shrimp to Kroger for two years. Biging did not notify his Rubicon superiors about the request until six days after he received it.
“Biging appears to have intentionally waited six days to disclose the Kroger request for proposal (RFP) in an effort to give Haven Foods a head start in assembling its own bid to the Kroger RFP, while jeopardizing Rubicon’s ability to compete,” the complaint said.
Two months later, Kroger employees whom Kirby and Biging met with in Cincinnati and Los Angeles sent a letter stating that Rubicon “would not be awarded any of the Kroger shrimp business [that was the subject of the Kroger RFP] moving forward,” the complaint said.
Then, Haven Foods was awarded a portion of Kroger’s shrimp business in the RFP.
High Liner and Rubicon have also filed a separate arbitration demand against Leonard and Kirby (who both executed an arbitration agreement with Rubicon) to address “their ongoing breaches of contract, their unlawful, unfair, and tortious interference with Rubicon’s customers and employment relationships, and their breaches of the duty of loyalty,” the complaint stated.
High Liner and Rubicon also brought a separate state court lawsuit asserting the same claims against Biging (who did not execute an arbitration agreement with Rubicon).
