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Purac America Inc. v. Birko Corp.

United States District Court, District of Colorado

April 8, 2015

PURAC AMERCIA INCORPORATED, a Delaware corporation, Plaintiff/Counter-Defendant,
BIRKO CORPORATION, a Colorado corporation, Defendant/Counter-Claimant.


R. Brooke Jackson United States District Judge

Before the Court is counter-defendant Purac America Incorporated’s Motion for Partial Dismissal [ECF No. 33] of counter-claimant Birko Corporation’s Amended Counterclaims [ECF No. 28]. For the reasons laid out below, the motion is granted in part and denied in part.

I. Facts

The present dispute originated with a May 2008 Purchase and Supply Agreement between the parties (“the Agreement”).[1] Under the Agreement, Purac supplied Birko with a blend of citric and lactic acid, known as “CL21/80.” ECF No. 33-1 at 1. Birko had conceived of the idea of selling such an acid blend for use as an antimicrobial agent in poultry, beef, and other meat processing. ECF No. 33-1 at 1. Indeed, Birko alleges, it invested time and money in developing the application of a citric and lactic acid blend for this use, testing it, and obtaining approval from the U.S. and Canadian governments. ECF No. 28 at 12 ¶¶ 4–6. It also applied for related patents. Id. at ¶ 7. Purac terminated the Agreement on February 26, 2014. ECF No. 28 at 14 ¶ 17.

Most relevant here are the provisions of the Agreement dealing with the time period following its termination. The Agreement states that “[u]pon termination of this Agreement for any reason, Supplier [Purac] shall cease all use of Purchaser’s [Birko’s] intellectual property. Supplier shall not take any action that would negate, void or diminish Purchaser’s intellectual property or its rights therein.” ECF No. 33-1 at 4. Furthermore, Birko is the “sole and exclusive owner of the intellectual property relating to the Technology including, without limitation, patents, patent applications, trade secrets and confidential information, and trademarks, e.g., CHICXIDE, BEEFXIDE, LAMBXIDE, BEGGIEXIDE, etc.” ECF No. 33-1 at 4. “Technology” is defined to mean “the use of a blend of citric and lactic acids as an antimicrobial agent in the processing of poultry, beef, lamb and other meat products both in slaughter facilities and in subsequent wholesale and retail and food service processing of those meat products.” Id. at 1.

The Agreement also provides that Purac “shall keep the Confidential Information in strict confidence and shall not disclose it to any person, firm or corporation, nor use the Confidential Information for any purpose . . . other than for the specific purposes of this Agreement . . . .” Id. at 4–5. Furthermore, “[u]pon termination or expiration of [the] Agreement, [Purac] . . . shall cease all use of the Confidential information [sic].” Id. at 5. Although the Agreement does not provide a definition of “Confidential Information, ” it does state that “the Technology constitutes valuable trade secrets and confidential property of [Birko] and are [sic] considered ‘Confidential Information’ of [Birko]. ‘Confidential Information’ includes all such information . . . .” ECF No. 33-1 at 4. However, information is not confidential if it “(a) is now or later becomes generally available to the public through means not involving the breach of a duty or obligation to [Birko] or (b) is disclosed to the public by [Birko].” ECF No. 33-1 at 4.

Birko alleges that Purac violated the provisions of the Agreement dealing with its post-termination use of Birko’s intellectual property and confidential information. Specifically, the Counterclaims allege that Purac breached the Agreement by (1) marketing and selling a citric and lactic acid blend to the U.S. antimicrobial market “when the Agreement specifically prohibits it from doing so because it is Confidential Information as defined under the Agreement and because the Agreement provides that Birko owns the intellectual property, including pending patents, associated with the use of a citric and lactic acid blend as an antimicrobial agent for carcass decontamination” and (2) using Birko’s “confidential customer and costing information to compete with Birko.” ECF No. 28 at 15–16 ¶ 26(c)–(d).

According to Birko, Purac also improperly interfered with Birko’s customer relationships. ECF No. 28 at 16–18. When Purac entered the antimicrobial market after it terminated the Agreement, it allegedly told Birko’s customers that “it was legally entitled to sell CL21/80 despite the fact that Purac’s contract with Birko prevents it from doing so, and . . . that Birko has no intellectual property rights in the application of a citric/lactic acid blend as an antimicrobial agent when it knew or should have known that statement was false.” ECF No. 28 at 16–17 ¶ 34. Furthermore, Purac “intentionally represented to Birko’s customers that certain large players in the anti-microbial market ha[d] switched to Purac when in fact they ha[d] not.” Id.

Purac now moves to dismiss Birko’s counterclaims to the extent they are based on Purac’s post-Agreement conduct.

II. Discussion

In reviewing a motion to dismiss, the Court must accept the well-pleaded allegations of the complaint as true and construe them in the plaintiff’s favor. However, the facts alleged must be enough to state a claim for relief that is plausible, not merely speculative. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). A plausible claim is a claim that “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Allegations that are purely conclusory are not entitled to an assumption of truth. Id. at 681. However, so long as the plaintiff offers sufficient factual allegations such that the right to relief is raised above the speculative level, he has met the threshold pleading standard. See Twombly, 550 U.S. at 556; Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).

Purac moves to dismiss a portion of Birko’s breach of contract claim, as well as its claims for intentional interference with a contract, tortious interference with a prospective business advantage, and unfair competition. The Court will address each in turn.

A. Breach of Contract

Purac argues that Birko’s breach of contract claim should be dismissed in part. Under well-established Colorado law, “a party attempting to recover on a claim for breach of contract must prove the following elements: (1) the existence of a contract; (2) performance by the plaintiff or some justification for nonperformance; (3) failure to perform the contract by the defendant; and (4) resulting damages to the plaintiff.” Saturn Sys., Inc. v. Militare, 252 P.3d 516, 529 (Colo.App. 2011). In the present case, the parties entered into a Purchase and Supply Agreement in January 2008, see ECF No. 33-1, and Birko alleges that it performed under the contract, Purac materially breached the Agreement, and it suffered damages from this breach, see ...

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