IP Law Daily, TRADE SECRETS—W.D. Pa.: Local Yokels Fudge unable to vacate jury’s trade secret award, (Oct 31, 2024)

By Thomas K. Lauletta, J.D.

The motion to vacate the finding that the defendants had misappropriated the plaintiff’s trade secret fudge recipe was denied where the defendants failed to prove that the plaintiff testified fraudulently at trial.

The federal district court in Pittsburgh, Pennsylvania denied the motion of defendant Local Yokel Fudge and others, to vacate a jury award that concluded that the defendants had misappropriated plaintiff Christopher Warman’s trade secret for making fudge. After the award of the jury verdict, the plaintiff sought an injunction against the defendants, which the court denied based on its conclusion that Warman’s declarations supporting the injunction materially contradicted his trial testimony. Although this was so, the court in the instant action refused to set aside the jury award because under the stringent standards of Federal Rule 60(b)(3), the defendants failed to prove that the plaintiff lied at trial (Warman v. Local Yokels Fudge, LLC , No. 2:19-cv-01224-PLD (W.D. Pa. Oct. 30, 2024)).

Plaintiff Christopher M. Warman and his family trust sued defendants Local Yokels Fudge and other individuals for various federal and state law claims arising out of their alleged misappropriating of the plaintiff Warman’s trade secret recipe for making fudge. A jury found for Warman and awarded $145,777 as a reasonable royalty for using the trade secret.

After the trial, contending that the defendants were continuing to wrongfully use the trade secret recipe, the plaintiff filed a motion for a permanent injunction against the defendants. The court denied the injunction, concluding that Warman’s declaration in support of his motion for the injunction materially contradicted his trial testimony. Based on the court’s conclusion, the defendants moved to vacate the jury award on the ground that Warman testified fraudulently at trial.

Federal Rule 60(b)(3) relief. Under Federal Rule 60(b)(3), a jury verdict may be set aside where it was obtained by the prevailing party’s fraud or other misconduct. The court noted that such a motion carries a heavy burden of proof, which includes the proof that the fraud or misconduct prevented the moving party from fully and fairly presenting its case, and that this fraud or misconduct was material to the outcome of the case.

Analyzing the seemingly contradictory statements of Warman at trial and in support of his motion for the injunction, the court stated that the defendants failed to disprove Warman’s argument that his statements could in fact be harmonized. But even if these statements could not be reconciled, the court explained that a simple disagreement with a witness’ testimony or inconsistencies in his or her testimony does not in itself justify vacating a jury verdict.

Finally, even if the evidence unequivocally demonstrated that Warman had lied, it did not prove that he was lying at trial, which was the only issue here. The court concluded that it was equally plausible that Warman was telling the truth at trial and then post-trial he changed course and contradicted his prior testimony to support his motion for injunctive relief. The defendants offered no evidence that the opposite was true: that Warman lied at trial and told the truth in his post-trial declarations.

Additionally, the defendants also failed to demonstrate that Warman’s alleged misconduct prevented them from fully and fairly representing their case. In reaching this conclusion the court noted that Warman had been extensively cross-examined by the defendants’ counsel at trial, including questioning about Warman’s discrepancies between his testimony and his prior testimony at other proceedings involving the trade secret recipe.

Court action. The court denied the defendants’ motion to vacate the jury award.

The Case is No. 2:19-cv-01224-PLD.

Judge: Dodge, P.

Attorneys: Gwendolyn R. Acker Wood (Acker Wood Intellectual Property Law, LLC) for Christopher M. Warman. Stanley M. Stein (Stanley M. Stein, P.C.) for Local Yokels Fudge, LLC.

Companies: Local Yokels Fudge, LLC

Cases: TradeSecrets PennsylvaniaNews