NFS reveals Whole Foods link in trade secrets case

Published on
November 6, 2018

A major factor in National Fish and Seafood’s trade secrets lawsuit against Tampa Bay fisheries and a former employee was the two suppliers’ battle over Whole Foods Market's business, new court documents reveal.

In its original complaint, NFS alleged that Kathleen Scanlon, former director of research, development and quality assurance, stole information on NFS’s clam production process for its Matlaw’s brand and funneled the information to her new employer, Tampa Bay.

In a new, amended complaint, NFS revealed additional details on its competition with Tampa Bay for Whole Foods’ business. In 2017, it competed with Tampa Bay for the opportunity to supply private label stuffed clams to Whole Foods – a contract it won, according to NFS. 

In 2018, NFS and Tampa Bay also competed to earn breaded fish business from Whole Foods. NFS has reached the next stage in that process, according to the supplier.

While competing for the clam and breaded fish business, Whole Foods required NFS and Tampa Bay to present their respective quality control and assurance processes to Whole Foods representatives

“Scanlon, as NFS’ Director of Quality Assurance, helped NFS win the Whole Foods private label stuffed clam business and advance NFS’ bid for Whole Foods’ breaded fish products, defeating Tampa Bay,” NFS said in the complaint.

Whole Foods awarded the clam business to NFS and the  company advanced on the breaded fish business, in part, “because of the quality of NFS’ clam-based and breaded fish products and NFS’ quality control and assurance processes, for example, paperwork, documents, forms and certifications, which Tampa Bay lacked,” the complaint said.

Tampa Bay’s clam production process is less automated than NFS’ process, requiring it to use more expensive manual labor and impacting its profit margin, according to the complaint. Conversely, NFS uses specialized and modified equipment which “allows for more efficient and rapid production of NFS’ seafood products, when compared to manual clam production processes,” the supplier said. 

“NFS devoted many hours of engineering, consulting, and testing to refine and perfect the Clam Production Process and spent millions of dollars for its research, development, and customization. The Clam Production Process runs full time throughout the year and accounts for a significant portion of NFS’ revenue,” the complaint said.

Scanlon and Mark Pandolfo, vice president of sales for Kitchens Seafood, an unregistered affiliate of Tampa Bay, discussed obtaining Whole Foods’ business after Scanlon agreed to take the job at Tampa Bay, the complaint alleged.

However, in a recent court filing, Tampa Bay challenged NFS’ request for all documents regarding NFS and Tampa Bay’s bids to supply Whole Foods Market with frozen seafood products. 

In addition to Scanlon and Tampa Bay, the second amended complaint names Red Chamber; Rob Paterson, CEO of Tampa Bay; Pandolfo (who is also a former employee of NFS); and Mark Marsh, director of information technology for Tampa Bay, as defendants in the case.

Red Chamber, which was in talks to buy NFS last year, unsuccessfully petitioned the court to be left out of the case.

Meanwhile, both NFS and Tampa Bay agreed to put off the trial in the contentious trade secrets lawsuit until late July 2019. The trial will be heard by a jury in United States District Court in Boston, Massachusetts, U.S.A., beginning 22 July, 2019.

Contributing Editor

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