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Nutritional Biomimetics, LLC v. Empirical Labs Inc.

United States District Court, D. Colorado

June 27, 2017

NUTRITIONAL BIOMIMETICS, LLC, Plaintiff/Counterclaim Defendant and Counterclaim Plaintiff,
v.
EMPIRICAL LABS INCORPORATED, Defendant/Counterclaim Plaintiff,
v.
CHARLES BARKER Counterclaim Defendant, and EMEK BLAIR, CLVM, LLC, Counterclaim Defendants/ Counterclaim Plaintiffs,
v.
KELLY GOYEN and ASA WALDSTEIN, Counterclaim Defendants.

          ORDER

          Kathleen M Tafoya United States Magistrate Judge

         Empirical Labs produces and sells nutritional supplements. Counterclaim Defendant Charles Barker (“Barker”) is primary owner of the company, MitoSynergy, which became a customer of Empirical Labs starting in 2012 purchasing liposomal products from Empirical Labs to use in its own products. Counterclaim Defendant Emek Blair (“Blair”) was an employee of Empirical Labs from 2010 through early 2015. Barker and Blair met through MitoSynergy's business relationship with Empirical Labs, and at some point Blair's wife became a MitoSynergy employee. Blair and Barker began to work together on side projects prior to Blair's termination from Empirical Labs, as well as starting talks about the formation of a new company and Blair's disassociation with Empirical Labs. In this lawsuit, Empirical Labs asserts civil conspiracy and fraudulent nondisclosure claims against Barker alleging Barker illegally participated in a conspiracy with various entities and individuals to assist Blair in starting and operating a competing business using Empirical Labs' pilfered customers, trade secrets and intellectual property.

         This matter is before the court on Counterclaim Defendant “Charles Barker's Motion for Summary Judgment [Doc. No. 104](“Mot.”). Defendant/Counterclaim Plaintiff Empirical Labs, Inc. (“Empirical Labs”) filed a Response [Doc. No. 117](“Resp.”), to which Counterclaim Defendant Barker replied. [Doc. No. 122](“Reply”).

         UNDISPUTED FACTS

         1. Blair began working for Empirical Labs in January 2010 as the Director of R&D & Quality Assurance. His employment responsibilities included “developing a saleable liposomal glutathione product.” (Empirical Labs's Second Amended Counterclaim [Doc. No. 81] (2d Am. CC”), Ex. 6, Blair's Profit Sharing Agreement signed 2/22/2010 [Doc. No. 81-6] (“2/22/10 P.S.Agree.”) at 2.[1] Empirical Labs paid Blair a base salary of $1, 000/week beginning in January 2010 and that salary was increased incrementally to $2, 000/week by January 2015. The Blair and Empirical Labs' agreements also included provisions providing Blair with a percentage of profits related to certain products with a provision that Blair's profit sharing would be relinquished if he voluntarily left the employment with Empirical Labs within the first two years of his employment. (2/22/10 P.S.Agree and 8/26 P.S.Agree, generally.)

         2. Both agreements provided that Blair was an employee of Empirical Labs and was not responsible for any actions or products released by Empirical Labs. (Id. at 2 on both agreements.) Further, both agreements also included a provision prohibiting the communication of Empirical Labs' trade secrets, as well as a non-compete agreement prohibiting Blair's competition with Empirical Labs “in the nutraceutical liposomal field for a period no less than 18 months.” (2/22/10 P.S.Agree at 3). That agreement was modified to some extent in the second agreement, stating “Emek Blair may not work as a wet chemistry researcher in the nutraceutical liposomal field for a period no less than 18 months[;] i. Emek Blair may work in an R&D capacity in any other field including but not limited to competing nutraceutical companies[.]” (8/26/10 P.S.Agree at 4.)

         3. Barker holds majority interest in and is the CEO of MitoSynergy, a nutritional supplement company that had a customer-supplier relationship with Empirical Labs beginning in approximately 2012. Empirical Labs manufactured liposomal products for MitoSynergy. (Redacted Deposition Testimony of Charles Barker [Doc. No. 116-1] at 3:23[2]; Excerpts of Deposition Testimony of Kelly Goyen [Doc. No. 104-3] at 1-2; Article by Elizabeth Maxim dated 2/26/14 regarding MitoSynergy (“Maxim Article”) [Doc. No. 116] at 2.)

         4. Blair was one of the Empirical Labs employees who would answer any questions or inquiries from customer, MitoSynergy. (Excerpts of Deposition Testimony of Kelly Goyen [Doc. No. 104-2] at 2; [Doc. No. 104-3] at 1-4.)

         5. Blair was never a paid employee of MitoSynergy. [Doc. No. 116-1 at 6:40.]

         6. On September 25, 2013, Barker identified Blair to a third party as being in charge of GreenTeaSynergy and MitoMelt for Barker's company, MitoSynergy. (Email from Charles Barker to Kris Olsen with copy to emekblair@gmail.com dated September 25, 2013 [Doc. No. 116] at 7.)

         7. In 2014, MitoSynergy hosted several events during the Natural Products Expo West. The company's press release referenced Barker as CEO, President, and co-founder, and included the following statement: “Also on the MitoSynergy team is Emek Blair, Ph.D., is [sic] a Biochemist and leading researcher in the development of the Cunermuspir complex, and wife Mallory Blair, Ph.D., also a leading researcher and author of an informational paper for the Cunermuspir complex, to be released at [a MitoSynergy hosted event].” (Maxim Article at 2.)

         8. In November 2014, MitoSynergy placed an order with Empirical Labs. In fulfilling the order, Empirical Labs used white bottles instead of the black bottles previously used for MitoSynergy products. Barker let Empirical Labs know he was upset about the switch. [Doc. No. 116-1 at 4:26-28.]

         9. By approximately October 2014, Barker, Blair, and other individuals were discussing building a company together which would be headed by Blair and which would directly compete with Empirical Labs. [Doc. No. 116-1 at 10-11.]

         10. Barker had dinner with Blair and Blair's wife, who was an employee of Barker's MitoSynergy, and Blair told Barker that Empirical Labs was no longer paying Blair on his intellectual property rights as it had in the past and that Blair was unhappy with the situation. [Doc. No. 116-1 at 7:58-59, 9:87-88.] Barker told Blair that if he decided to start a business on his own Barker might be interested in pursuing that with him. (Id.)

         11. In connection with this discussion, Blair told Barker that he owned the intellectual property rights to the liposomal products manufactured by Empirical Labs. [Doc. No. 116-1 at 11:105.]

         12. By January 2015, Blair had created CLVM, LLC (“CLVM”).[3] (Articles of Organization filed January 15, 2015 [Doc. 81-9] at 11.)

         13. Blair provided Barker with two legal opinions, dated January 12, 2015 and January 22, 2015, from two different attorneys regarding Nutritional Biomimetics' alleged ownership of certain intellectual property. (January 22, 2015 letter from Erik G. Fischer[4] to Blair [Doc. No. 104-6] and January 12, 2015 letter from Kevin William Ward [Doc. No. 104-8].) Barker testified that he may have received the letters but he did not read them. [Doc. No. 116-1 at 9:86.]

         14. On January 19, 2015, while still employed by and receiving salary from Empirical Labs, Blair sent Barker an email from his personal email account, stating that “having the license to manufacture methodology is worth a lot. The ready-made business from Empirical is over a million annual (licenses that we will not renew for Empirical) and there is about the same amount of new business that I'm working on right now. I will not issue a license to Empirical for that either.” [Doc. No. 116-1[5] at 12:109.]

         15. Barker testified that he understood the reference to “ready made business” as Empirical Labs' current customers. [Doc. No. 116-1 at 12:111.]

         16. On January 28, 2015, Empirical Labs terminated Blair's employment via delivery of a termination letter specifying his last day of employment would be February 11, 2015. [Doc. No. 81-27.] The letter advised Blair that he should not come to Empirical Labs' facility after January 28, 2015.

         17. Other than employees, only current or potential clients are permitted to tour Empirical Labs' facility which is not open to the public. No visitor, client or otherwise, is permitted entrance into the liposome manufacturing area of the ...


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