orange bakery answer and counterclaims

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION CIVIL ACTION NO. 3:16-cv-550

CHRIS HERR AND LISA SOLER, Plaintiffs, v. ORANGE BAKERY, INC., and RHEON AUTOMATIC MACHINERY, CO., Defendants.

) ) ) ) ) ) ) ) ) ) ) )

DEFENDANT ORANGE BAKERY, INC.’S VERIFIED ANSWER AND

COUNTERCLAIMS

JURY TRIAL DEMANDED

COMES NOW Defendant Orange Bakery, Inc., by and through undersigned counsel, and

hereby responds to and answers the Plaintiffs’ Complaint as follows:

FIRST DEFENSE – MOTION TO DISMISS

Defendant Orange Bakery, Inc. moves the Court to dismiss the Plaintiffs’ lawsuit with

prejudice pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), 12(b)(3), 12(b)(4),

12(b)(5), and 12(b)(6) based on lack of personal jurisdiction, improper venue as a result of a

binding arbitration agreement between Defendant Orange Bakery, Inc. and Plaintiff Chris Herr,

insufficient process and service of process, the Plaintiffs’ failure to allege adequate facts to

support the elements of a claim on which relief can be granted, and the Plaintiffs’ lack of

standing to assert their claims and requested relief.

SECOND DEFENSE

Responding to the individually numbered paragraphs as follows:

Case 3:16-cv-00550-FDW-DSC Document 14 Filed 08/15/16 of 48

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INTRODUCTION

1. This Defendant admits it is in the business of manufacturing and distributing food

products. Except as expressly admitted, denied.

2. Denied.

3. Denied.

4. This Defendant admits that Plaintiff Chris Herr is a current salesperson and

Plaintiff Lisa Soler formerly worked in quality control for Orange Bakery, Inc. Except as

expressly admitted, denied.

5. This Defendant admits that the email correspondence referenced in Paragraph 5

speaks for itself and is the best evidence of its contents. Except as expressly admitted, denied.

6. Denied.

PARTIES, JURISDICTION, AND VENUE

7. This Defendant admits on information and belief that Plaintiff Chris Herr is an

adult individual residing in Mecklenburg County, North Carolina, that he is a resident and citizen

of the state of North Carolina, and that he is a current salesperson for Orange Bakery, Inc. To

the extent further response is required, denied. Except as expressly admitted, denied.

8. This Defendant admits on information and belief that Plaintiff Lisa Soler is an

adult individual residing in Gaston County, North Carolina, that she is a resident and citizen of

the state of North Carolina, and that she formerly worked in quality control for Orange Bakery,

Inc. until she resigned. To the extent further response is required, denied. Except as expressly

admitted, denied.

9. Admitted.


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10. This Defendant admits that Defendant Rheon Automatic Machinery Co. is a

Japanese company. To the extent further response is required, denied. Except as expressly

admitted, denied.

11. Denied.

12. This Defendant admits that Yoshiaki Okazaki is an adult individual. To the extent

further response is required, denied. Except as expressly admitted, denied.

13. Denied.

14. Denied.

15. Admitted.

16. Denied.

FACTUAL ALLEGATIONS

17. Admitted.

18. This Defendant admits that Orange Bakery, Inc. sells its products to distributors

and retailers. The remaining allegations in Paragraph 18 do not require or call for a response

from this Defendant and therefore the same are denied. To the extent further response is

required, denied. Except as expressly admitted, denied.

19. Denied as stated. By way of further response, this Defendant admits that Orange

Bakery, Inc. operates four manufacturing locations, including three in California and one in

North Carolina. This Defendant further admits that its gross annual sales have exceeded one

million dollars. To the extent further response is required, denied. Except as expressly admitted,

denied.

20. This Defendant admits that distributors and retailers buy products from Orange

Bakery, Inc. This Defendant further admits that the websites and other publications concerning


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Rich Products, Sam’s Club, Whole Foods, US Foods Service, and Sysco speak for themselves

and are the best evidence of their contents. The remaining allegations in Paragraph 20 do not

require or call for a response from this Defendant and therefore the same are denied. To the

extent further response is required, denied. Except as expressly admitted, denied.

21. Denied.

22. The allegations in Paragraph 22 do not require or call for a response from this

Defendant and therefore the same are denied. To the extent further response is required, denied.

Except as expressly admitted, denied.

23. This Defendant admits that federal and state laws and regulations speak for

themselves and are the best evidence of their contents. To the extent further response is required,

denied. Except as expressly admitted, denied.

24. This Defendant admits that the Food Safety Modernization Act and the Center for

Disease Control and Prevention’s report on food-borne illnesses and diseases speak for

themselves and are the best evidence of their contents. To the extent further response is required,


25. This Defendant admits that the Food Safety Modernization Act speaks for itself

and is the best evidence of its contents. To the extent further response is required, denied.



Defendant and therefore the same are denied. The Center for Disease Control and Prevention’s

report on E. Coli also speaks for itself and is the best evidence of its contents. To the extent



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28. This Defendant lacks sufficient information to admit or deny the allegations in

Paragraph 28 and therefore the same are denied. To the extent further response is required,


29. Denied.

30. This Defendant admits on information and belief that Silliker is an affiliate or

division of Merleux NutriSciences Company, and that it provides food manufacturers with

testing services. This Defendant further admits that the Silliker website speaks for itself and is

the best evidence of its contents. To the extent further response is required, denied. Except as


31. This Defendant admits that Silliker tested samples that were provided by Orange

Bakery, Inc. for bacteria, and that documentation returned by Silliker to Orange Bakery, Inc. was

entitled as a Certificate of Analysis. This Defendant further admits that the forms entitled

Certificate of Analysis speak for themselves and are the best evidence of their contents. To the

extent further response is required, denied. Except as expressly admitted, denied.

32. Denied.

33. Denied.

34. Denied.

35. Denied.

36. Denied.

37. Admitted.


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38. Denied as stated. By way of further response, this Defendant admits that Food

and Drug Administration and the Safe Quality Food Institute employees have conducted on-site

visits of its facilities. To the extent further response is required, denied. Except as expressly

admitted, denied.

39. Denied.

40. Denied.

41. Denied.

42. Denied.

43. This Defendant admits that Orange Bakery, Inc. holds a current SQF

Certification. This Defendant further admits that the publications of the Safe Quality Food

Institute regarding the requirements and standards for SQF Certification speak for themselves

and are the best evidence of their contents. To the extent further response is required, denied.


44. Denied as stated.

45. Denied.







48. This Defendant admits that Plaintiff Chris Herr has been a salesperson for Orange

Bakery, Inc. since the year 2007, and that he had the opportunity to become familiar with the


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buying practices and requirements for some of Orange Bakery, Inc.’s customers. To the extent


49. Denied.

50. This Defendant admits on information and belief that Orange Bakery, Inc.’s

customers sold products that they purchased from Orange Bakery, Inc. To the extent further

response is required, denied. Except as expressly admitted, denied.

51. Denied.

52. Denied.

53. This Defendant admits on information and belief that people have consumed

Orange Bakery, Inc.’s products. The remaining allegations in Paragraph 53 do not require or call

for a response from this Defendant and therefore the same are denied. To the extent further

response is required, denied. Except as expressly admitted, denied.

54. Denied on information and belief. The allegations contained in Paragraph 54

further call for speculation, and therefore the same are denied. To the extent further response is

required, denied. Except as expressly admitted, denied.

55. Denied.

56. Denied.

57. Denied.

58. Denied.

59. Denied.

60. Denied.

61. Denied.

62. Denied.


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63. Denied.

64. This Defendant admits that Plaintiff Chris Herr has worked as a salesperson for

Orange Bakery, Inc. since the year 2007. This Defendant lacks sufficient information to admit or

deny the remaining allegations in Paragraph 64 and therefore the same are denied. To the extent


65. This Defendant admits that Plaintiff Lisa Soler formerly worked in quality control

for Orange Bakery, Inc. Except as expressly admitted, denied.

66. This Defendant admits that Plaintiff Lisa Soler began working for Orange Bakery,

Inc. in or around January 2015. To the extent further response is required, denied. Except as


67. Denied.

68. Denied.

69. Denied.

70. Denied.

71. Denied.

72. Denied, as stated. To the extent further response is required, denied. Except as


73. This Defendant admits that employees of Orange Bakery, Inc. have been required

to sign confidentiality and non-disclosure agreements. To the extent further response is required,


74. This Defendant admits that Plaintiff Lisa Soler resigned from her employment by

Orange Bakery, Inc. To the extent further response is required, denied. Except as expressly

admitted, denied.


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75. The allegations in Paragraph 75 call for speculation about what Plaintiff Chris

Herr observed, and therefore the same are denied. To the extent further response is required,


76. Denied, as stated. To the extent further response is required, denied. Except as


77. Denied.

78. Denied.

79. Denied.

80. Denied.

81. Denied.

82. Denied.

83. Denied.

84. Denied.

85. Denied.

COUNT I: NORTH CAROLINA UNFAIR AND DECEPTIVE TRADE PRACTICES ACT

(All Defendants)

86. Denied.

87. Denied.

88. Denied.

89. Denied.

COUNT II: NEGLIGENT HIRING AND SUPERVISION (All Defendants)

90. Denied.

91. Denied.


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92. Denied.

93. Denied.

94. The allegations in Paragraph 94 constitute a legal conclusion to which no

response is required. To the extent further response is required, denied. Except as expressly

admitted, denied.

95. Denied.

96. Denied.

COUNT III: ASSAULT AND BATTERY (All Defendants)

97. Denied.

98. Denied.

99. Denied.

100. Denied.

101. Denied.

102. Denied.

103. Denied.

104. Denied.

COUNT IV: INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS (All Defendants)

105. Denied.

106. Denied.

107. Denied.

108. Denied.

109. Denied.


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110. Denied.

COUNT V: CIVIL CONSPIRACY (All Defendants)

111. Denied.

112. Denied.

113. Denied.

114. Denied.

115. Denied.

116. EXCEPT WHERE EXPRESSLY ADMITTED, DEFENDANT ORANGE

BAKERY, INC. DENIES EACH AND EVERY ALLEGATION IN THE COMPLAINT,

INCLUDING THE PRAYER FOR RELIEF. DEFENDANT ORANGE BAKERY, INC.

EXPRESSLY RESERVES THE RIGHT TO INTERPOSE ADDITIONAL RESPONSES,

ANSWERS, DEFENSES, AFFIRMATIVE DEFENSES, COUNTERCLAIMS, AND CROSS

CLAIMS TO THE MAXIMUM EXTENT PERMITTED BY THE FEDERAL RULES OF

CIVIL PROCEDURE AND THE CASE MANAGEMENT ORDERS ENTERED BY THE

COURT IN THIS ACTION.

Having responded to the Plaintiffs’ allegations, this Defendant pleads the following

defenses and affirmative defenses in bar or limitation of the Plaintiffs’ claims:

FIRST AFFIRMATIVE DEFENSE (Failure to State a Claim)

The Plaintiffs fail to state a claim on which relief may be granted in their Complaint, and

therefore the same should be dismissed with prejudice.


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SECOND AFFIRMATIVE DEFENSE (Lack of Subject Matter Jurisdiction)

This Defendant pleads a lack of subject matter jurisdiction in bar or limitation of the

Plaintiffs’ claims and damages to the maximum extent permitted by applicable law.

THIRD AFFIRMATIVE DEFENSE (Lack of Personal Jurisdiction)

This Defendant pleads a lack of personal jurisdiction in bar or limitation of the Plaintiffs’

claims and damages to the maximum extent permitted by applicable law.

FOURTH AFFIRMATIVE DEFENSE (Improper Venue)

This Defendant pleads that this Court is the improper venue in bar or limitation of the

Plaintiffs’ claims and damages to the maximum extent permitted by applicable law.

FIFTH AFFIRMATIVE DEFENSE (Insufficient Process and Insufficient Service of Process)

This Defendant pleads the defenses of insufficiency of process and insufficiency of

service of process in bar or limitation of the Plaintiffs’ claims and damages to the maximum

extent permitted by applicable law.

SIXTH AFFIRMATIVE DEFENSE (Plaintiffs’ Lack of Standing)

This Defendant pleads that the Plaintiffs lack standing in this matter in bar or limitation

of the Plaintiffs’ claims and damages to the maximum extent permitted by applicable law.

SEVENTH AFFIRMATIVE DEFENSE (No Respondeat Superior Liability)

If this Defendant’s employees or agents, or any of them, committed the acts alleged in the

Complaint, although that is expressly denied, those acts were committed outside the scope of


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employment and not by or as agents of this Defendant and, thus, this Defendant is not liable for

those acts.

EIGHTH AFFIRMATIVE DEFENSE (Statutes of Limitations and Repose)

This Defendant pleads all applicable statutes of limitations and statutes of repose in bar or

limitation of the Plaintiffs’ claims and damages to the maximum extent permitted by applicable

law.

NINTH AFFIRMATIVE DEFENSE (Equitable Defenses)

This Defendant pleads all equitable defenses, including but not limited to doctrines of

laches, waiver, estoppel, unclean hands, fraud, and set-off in bar or limitation of the Plaintiffs’

claims and damages to the maximum extent permitted by applicable law.

TENTH AFFIRMATIVE DEFENSE (Failure to Mitigate Damages)

This Defendant pleads the doctrine of failure to mitigate damages and the doctrine of

avoidable consequences in bar or limitation of the Plaintiffs’ claims and damages to the

maximum extent permitted by law. Further, this Defendant pleads, without admitting any

wrongful conduct, that the Plaintiffs’ damages, if any, should be offset by any subsequent

earnings obtained by the Plaintiff.

ELEVENTH AFFIRMATIVE DEFENSE (Absence of Damages)

This Defendant denies that the Plaintiffs have incurred any damages as a result of the

allegations set forth in his Complaint. However, to the extent the Plaintiffs have incurred

damages, this Defendant pleads that such damages were not directly or proximately caused by


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them in bar or limitation of the Plaintiffs’ claims and damages to the maximum extent permitted

by applicable law.

TWELFTH AFFIRMATIVE DEFENSE (Limitation of Damages)

This Defendant pleads that the Plaintiffs are limited to the types of relief provided for by

the statutory and/or common law related to his claims and damages.

THIRTEENTH AFFIRMATIVE DEFENSE (Bar to Punitive Damages)

This Defendant pleads all defenses contained under the provision of N.C. GEN. STAT. §

1D-1, et seq., in bar of the Plaintiffs’ claim for punitive damages.

FOURTEENTH AFFIRMATIVE DEFENSE (Unconstitutionality of Punitive Damages)

This Defendant pleads the bar and affirmative defense to the Plaintiffs’ claim for punitive

damages on the basis that punitive damages are unconstitutional under both the Constitutions of

the United States of America and the State of North Carolina. First, an award of punitive

damages would contravene the Due Process Clause of the Fifth and Fourteenth Amendments to

the United States Constitution, as well as Article 1, Section 19 of the North Carolina

Constitution. Any award of punitive damages based upon the wealth of the Defendant violates

due process guarantees. Second, any standards that may be considered to exist governing the

imposition of punitive damages are vague and violate the Equal Protection Clause of the

Fourteenth Amendment of the United States Constitution and Article 1 Section 23 of the North

Carolina Constitution. Finally, the assessment of punitive damages in conjunction with an award

of compensatory damages against this Defendant is contrary to justice and reason and should be

prohibited by the Court.


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FIFTEENTH AFFIRMATIVE DEFENSE (Recovery of Attorneys’ Fees)

This Defendant pleads that it is entitled to recover its attorneys’ fees in light of any

frivolous or malicious request by the Plaintiffs for punitive damages. N.C. GEN. STAT. § 1D-45.

SIXTEENTH AFFIRMATIVE DEFENSE (Election of Remedies)

This Defendant pleads the doctrine of election of remedies in complete bar or limitation

of the Plaintiffs’ claims and damages to the maximum extent permitted by applicable law.

SEVENTEENTH AFFIRMATIVE DEFENSE (Excessive and Impermissible Fines, Penalties, and Punishments)

This Defendant pleads the provisions and constraints imposed by the United States and

North Carolina Constitutions relating to excessive and impermissible fines, penalties, and

punishments in bar or limitation of Plaintiffs’ claims and damages, including claims for punitive

or exemplary damages, to the maximum extent permitted by applicable law.

EIGHTEENTH AFFIRMATIVE DEFENSE (Failure to Exhaust Administrative Remedies)

This Defendant pleads the doctrine of failure to exhaust administrative remedies, to the

extent the Plaintiffs failed to assert their claims based on causes of action that require the filing

of administrative charges or complaints within the time limits set forth in the applicable statutes.

NINETEENTH AFFIRMATIVE DEFENSE (Doctrine of After-Acquired Evidence)

This Defendant pleads the doctrine of after-acquired evidence in bar or limitation of the

Plaintiffs’ claims and damages to the maximum extent permitted by law.


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TWENTIETH AFFIRMATIVE DEFENSE (Defendants’ Good Faith Business Conduct)

This Defendant pleads that the Defendant’s conduct was undertaken in good faith and/or

in a manner consistent with business necessity and judgment in bar or limitation of the Plaintiffs’

claims and damages to the maximum extent permitted by applicable law. This Defendant had

reasonable grounds for believing that any of its acts or omissions did not violate of any

applicable law. As a result, the Plaintiffs are not entitled to damages, in particular, liquidated

damages.

TWENTY-FIRST AFFIRMATIVE DEFENSE (Failure to Satisfy Conditions Precedent to Liability)

This Defendant pleads that, to the extent the Plaintiffs claim liability against it in any

manner, all conditions precedent to such liability have no been met.

TWENTY-SECOND AFFIRMATIVE DEFENSE (Lack of Causation)

This Defendant pleads that, if the Plaintiffs have suffered any loss, damage, or injury,

which is expressly denied, such loss, damage, or injury was not caused, either legally or

proximately, by any act or omission of this Defendant.

TWENTY-THIRD AFFIRMATIVE DEFENSE (Absence of Negligence)

This Defendant pleads that it is not guilty of any negligence proximately causing or

contributing to the damages allegedly sustained by the Plaintiffs.

TWENTY-FOURTH AFFIRMATIVE DEFENSE (No Duty and/or Breach of that Duty)

This Defendant pleads that it owed no legal duty or obligation of any kind whether

arising from common law, statute, contract, tort, or otherwise to the Plaintiffs, now or at the time


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of the events of which the Plaintiffs complain. In the alternative, if any duty was owed, there

was no breach of that duty by this Defendant.

TWENTY-FIFTH AFFIRMATIVE DEFENSE (No Violation of North Carolina or Federal Law)

This Defendant pleads that it has not violated North Carolina or federal law, including

but not limited to the Food, Drug, and Cosmetic Act and the Food Safety Modernization Act, or

any other statutory or regulatory provision cited in the Complaint.

TWENTY-SIXTH AFFIRMATIVE DEFENSE (Self-Imposed Harm by the Plaintiffs)

This Defendant pleads that the Plaintiffs are barred from the relief sought in the

Complaint because any harm suffered by the Plaintiffs resulted from their own actions or

inactions.

TWENTY-SEVENTH AFFIRMATIVE DEFENSE (No Outrageous, Willful, or Wanton Conduct)

This Defendant pleads that at no time did it engage in outrageous, willful, or wanton

conduct, nor were any of its decisions motivated by malice or made with reckless disregard for

any protected rights.

TWENTY-EIGHTH AFFIRMATIVE DEFENSE (Actions Undertaken Without Authority)

This Defendant denies any liability for any acts or omissions of others acting without its

express or other legal authority.

TWENTY-NINTH AFFIRMATIVE DEFENSE (Insufficiency of Underlying Torts)

This Defendant pleads that, with regard to the Plaintiffs’ civil conspiracy claim, the

Plaintiffs have failed to sufficiently plead and allege facts to support a claim of any tort that

could serve as an underlying tort to enable a claim for civil conspiracy to succeed.


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THIRTIETH AFFIRMATIVE DEFENSE (Failure to Plead Additional Facts in Furtherance of Civil Conspiracy)


Plaintiffs have merely re-alleged prior acts contained in other causes of action, and the failure to

plead additional acts in furtherance of the alleged conspiracy precludes the Plaintiffs’ cause of

action for civil conspiracy.

THIRTY-FIRST AFFIRMATIVE DEFENSE (Failure to Allege Special Damages)


Plaintiffs have failed to alleged special damages that are separate and distinct from damages

alleged for other causes of action and, as a result, this cause of action must fail.

THIRTY-SECOND AFFIRMATIVE DEFENSE (Contractual Defenses)

This Defendant pleads all contractual defenses, including, but not limited the Plaintiffs’

breach of his obligations, and no proximate or foreseeable cause in bar or limitation of the

Plaintiffs’ claims to the maximum extent permitted by applicable law.

THIRTY-THIRD AFFIRMATIVE DEFENSE (Accord and Satisfaction)

This Defendant pleads that Plaintiff Lisa Soler’s claims are barred by the doctrine of

accord and satisfaction. Plaintiff Lisa Soler has agreed to execute, and has executed, a binding

Confidential Settlement and Agreement and Release, releasing and discharging Orange Bakery

from any and all claims asserted in the Complaint.

THIRTY-FOURTH AFFIRMATIVE DEFENSE (Statutory Defenses)

This Defendant pleads all statutory defenses, including, but not limited to, all of the

provisions and limitations of the North Carolina Unfair and Deceptive Trade Practices Act, N.C.


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Gen. Stat. § 75, et seq., in bar or limitation of the Plaintiffs’ claims to the maximum extent

permitted by applicable law.

THIRTY-FIFTH AFFIRMATIVE DEFENSE (Immunity to Extent Damages Exceed Insurance Coverage)

This Defendant pleads that it has immunity from liability for all damages sought by the

Plaintiffs to the extent such damages exceed the insurance coverage extended to this Defendant.

THIRTY-SIXTH AFFIRMATIVE DEFENSE (Reservation of Additional and Further Defenses)

This Defendant reserves any additional and further defenses as may be revealed by

additional information during the course of discovery and investigation, and as is consistent with

the Federal Rules of Civil Procedure.

WHEREFORE, having fully answered the Complaint, Defendant Orange Bakery, Inc.

respectfully prays for the following relief:

1. For a jury trial of all issues so triable;

2. That the Plaintiffs’ claims against it be dismissed in their entirety with prejudice;

3. That all costs of this action, including attorneys’ fees incurred in connection with the

defense of this matter, be taxed against the Plaintiffs;

4. That the Plaintiffs have a recover nothing from the Defendant; and

5. For such other relief as the Court deems just and proper.

****

DEFENDANT ORANGE BAKERY, INC.’S COUNTERCLAIMS

As Counterclaims and in further Answer to the Complaint, Defendant/Counter-Plaintiff

Orange Bakery, Inc. (“Orange Bakery”), complaining of the Plaintiff Chris Herr (“Herr”), says

and avers as follows:


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THE PARTIES

1. Orange Bakery is a corporation organized and existing under the laws of

California, with its principal place of business in Irvine, California.

2. On information and belief, Herr is an adult individual residing in Mecklenburg

County, North Carolina, and is a resident and citizen of the state of North Carolina.

JURISDICTION AND VENUE

3. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1332,

and 1367, 18 U.S.C. § 1836(c), 28 U.S.C. §§ 2201(a) and 2202, and Rule 13(a) of the Federal

Rules of Civil Procedure.

4. The matter in controversy exceeds the sum or value of $75,000.00, exclusive of

interest and costs, and is between citizens of different states.

5. This matter is brought pursuant to the Defend Trade Secrets Act of 2016, 18

U.S.C. § 1836.

6. This matter is brought pursuant to the Declaratory Judgment Act, 28 U.S.C. §§

2201(a) and 2202.

7. A logical relationship exists between Orange Bakery’s counterclaims and the

underlying Complaint because the Counterclaims arise from the same aggregative set of

operative facts as the Complaint, namely Herr’s employment with Orange Bakery and his

conduct while employed by Orange Bakery.

8. This Court has personal jurisdiction over Herr because he is a resident and citizen

of this District and North Carolina generally.

9. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) and (c) because

Herr is subject to personal jurisdiction in this District, and a substantial part of the events or


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omissions giving rise to this case or controversy (as well as the underlying lawsuit) occurred in

this District.

10. An actual case or controversy exists among the parties to this action concerning

Herr’s inappropriate and unlawful acquisition, dissemination, and use of Orange Bakery’s

confidential customer information and trade secrets. Herr has acquired Orange Bakery’s

confidential customer information and trade secrets, and he has repeatedly threatened to use his

access to and knowledge of Orange Bakery’s confidential customer information and trade

secrets, including the identities and contact information for Orange Bakery’s customers, in order

to defame Orange Bakery and to blackmail Orange Bakery into settling his lawsuit. In so doing,

Herr has violated both North Carolina and federal law, and Orange Bakery has suffered and will

suffer damages, as well as irreparable, incalculable harm, from Herr’s actions and threatened

actions.

FACTUAL BACKGROUND

Employment Relationship Between Orange Bakery and Chris Herr.

11. Orange Bakery supplies wholesale, unbaked frozen pastry products in the United

States. Orange Bakery produces these pastry products at four plants, including three in

California and one in North Carolina.

12. Herr entered into an at–will employment relationship with Orange Bakery as a

salesperson on or around September 19, 2007.

13. Herr remains employed as an at–will employee of Orange Bakery at the time of

filing.

14. Herr is employed by Orange Bakery in a position of trust and responsibility.


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15. In his position as a salesperson for Orange Bakery, Herr owes a duty of loyalty to

Orange Bakery to act in the company’s best interests at all times and to not engage in activities

harmful or detrimental to Orange Bakery.

Expectation of Confidence Regarding Orange Bakery’s Proprietary Information. 16. Orange Bakery maintains and has maintained a policy that the company’s

proprietary business information, including customer information, are trade secrets.

17. Orange Bakery’s employees are required to use Orange Bakery’s proprietary

business information, including customer information, only to benefit the company’s interests.

18. Orange Bakery’s supervisors and managers instruct employees of the company to

safeguard Orange Bakery’s confidential information and trade secrets, and to not disclose such

confidential business information to parties outside of the company.

19. Employees’ compliance with Orange Bakery’s policies regarding the

safeguarding of confidential information, including customer information, and trade secrets is

strictly enforced by Orange Bakery.

20. Orange Bakery’s Employee Handbook expresses the company’s policy with

respect to maintaining the confidentiality of confidential business information, including

customer information, and trade secrets:

“Proprietary Information is a special, valuable and unique asset of Company, and employees are at all times during the period of his or her employment and thereafter to keep in confidence and trust all Proprietary Information. Employees, during the period of employment and thereafter are not to directly or indirectly use the Proprietary Information other than in the course of performing duties as an employee of Company, nor will Employee directly or indirectly disclose any Proprietary Information or anything relating thereto to any person or entity, except in the ordinary course of performing his or her duties as an employee of Company and with the consent of Company. Employee must abide by Company policies and regulations, as established from time to time, for the protection of its Proprietary Information.


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As used herein, the term ‘Proprietary Information’ refers to any and all information of a confidential, proprietary or secret nature which is or may be either applicable to, or related in any way to (1) the business, present or future, of the Company, (2) the research and development or investigations of Company, or (3) the business of any customer of Company. Proprietary information includes, by way of example and without limitation, trade secrets, business and marketing plans of company, information regarding the financial condition and/or business affairs of the company, the names and locations or proposed projects, sources, key contacts (and the details of any business relationship) advertising and operating procedures, identities of customers, customer lists, information regarding customers’ needs and the financial condition of customers, and information regarding arrangements between company and its clients and/or between company clients and third parties . . . Employees who disclose legal protected proprietary information, trade secrets and/or confidential information to third parties without the express witness permission of Orange Bakery are subject to discipline, up to and including termination and a legal action or a claim in arbitration for actual, consequential and punitive damages, for injunctive relief and for attorneys’ fees and costs.”

21. Orange Bakery also emphasizes the importance of its employees maintaining the

confidentiality of proprietary business information, including customer information, and trade

secrets in its Confidentiality and Non-Disclosure Agreements, which it enters into with its

employees.

22. In relevant part, the Confidentiality and Non-Disclosure Agreement states:

C. During the course of Employee’s employment, Employee may have access to confidential information and trade secrets relating to Orange Bakery’s business. ‘Trade secrets’ and ‘confidential information’ shall include, but are not limited to the following information: customer list and pricing, customer contact information . . . machinery and information regarding contracts between Orange Bakery and third parties that are maintained electronically and/or in hard copy form, financial and tax information obtained during Employee’s employment with Orange Bakery, and/or any other information that is not generally known by the public or third parties, that Orange Bakery has not publicly disclosed to the public or third parties, and/or that Orange Bakery has taken measures to keep confidential.


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23. Orange Bakery’s policies and procedures regarding maintaining the

confidentiality of its proprietary business information and trade secrets are reasonable measures

to protect such information’s confidentiality.

24. Herr agreed to the policies in the Orange Bakery Employee Handbook, including

the policy of maintaining the confidentiality of Orange Bakery’s proprietary business

information and trade secrets, as evidenced by his signature on the document attached hereto as

Exhibit 1.

25. Herr knew or should have known at all times relevant to this lawsuit that the

identities of, and information pertaining to, Orange Bakery’s customers were confidential

information and trade secrets owned by Orange Bakery.

26. Herr knew or should have known that he was only permitted to acquire and use

the identities of, and information pertaining to, Orange Bakery’s customers for official business

purposes to benefit Orange Bakery.

27. Herr knew or should have known that maintaining the confidentiality of Orange

Bakery’s proprietary business information, including customer information, and trade secrets

was a condition of his employment with Orange Bakery.

Orange Bakery’s Confidential and Proprietary Customer Information.

28. Since its founding in 1978, Orange Bakery has invested substantial time, effort,

and money into developing its book of customers.

29. Orange Bakery’s customers are found throughout the United States, and Orange

Bakery’s business occurs through the channels of interstate commerce.

30. An extensive compilation of Orange Bakery’s customers, including the names of

the corporate customers, the names of the contacts for the customers, contact information for


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each customer, and information regarding the customers’ preferences (hereinafter, “Confidential

Customer Information”), are maintained and electronically stored on Orange Bakery’s computers

in a database, and are in computer readable form.

31. The Confidential Customer Information is only accessible to Orange Bakery

employees on a need-to-know basis.

32. The Confidential Customer Information is not widely disseminated throughout

Orange Bakery.

33. Orange Bakery derives independent actual or potential commercial value from the

Confidential Customer Information, in that it is not generally known or readily ascertainable

through independent development by outsiders.

34. The Confidential Customer Information is not known by others outside of Orange

Bakery.

35. The Confidential Customer Information is of immense value to Orange Bakery’s

competitors in that it contains particularized information about companies that purchase Orange

Bakery’s products and their preferences, which could be used to compete with Orange Bakery.

36. Orange Bakery has in place numerous measures to safeguard the secrecy of the

Confidential Customer Information, including but not limited to the enactment and enforcement

of confidentiality policies and procedures in the Orange Bakery Employee Handbook and the use

of Confidentiality and Non-Disclosure Agreements.

37. If Orange Bakery were to lose its customers as a result of the misappropriation or

improper utilization of the Confidential Customer Information, Orange Bakery would suffer

irreparable harm, and it would be impossible to ascertain with any accuracy the extent of Orange

Bakery’s immediate and future loss.


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Herr’s Conversion and Misappropriation of the Confidential Customer Information.

38. On May 19, 2016, Herr filed this action in Mecklenburg County, North Carolina,

Superior Court, and has asserted claims under North Carolina statutory and common law for

unfair and deceptive trade practices, negligent hiring and supervision, intentional infliction of

emotional distress, assault and battery, and civil conspiracy.

39. The Complaint contends that the Defendants, including Orange Bakery, retaliated

against him for complaining about bacteriological testing procedures at Orange Bakery’s facility

in Huntersville, North Carolina.

40. Since the filing of this lawsuit, Herr and his attorneys have, on numerous

occasions, stated that they have in their possession Confidential Customer Information belonging

to Orange Bakery.

41. Herr had and continues to have the opportunity to access the Confidential

Customer Information in his role as a salesperson with Orange Bakery.

42. Herr has accessed the Confidential Customer Information, including information

that he has no need to access in the course and scope of his employment, during his employment

with Orange Bakery.

43. Herr maliciously and willfully acquired the Confidential Customer Information in

quantity and scope that he is not authorized to possess for fulfillment of his job duties.

44. Orange Bakery did not grant Herr permission to access or utilize the Confidential

Customer Information for any purpose related to this litigation.

45. Herr used improper means to convert to tangible form and acquire the

Confidential Customer Information.


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46. Herr knew or had reason to know that the Confidential Customer Information was

converted and acquired by improper means.

47. Herr has also, directly and through counsel, and on more than once occasion,

maliciously and willfully threatened to use the Confidential Customer Information to

communicate with Orange Bakery’s customers for the purpose of defaming and harming the

company.

48. Herr’s malicious and willful threats were made for an improper, immoral, and

illegal purpose, specifically to blackmail the company into settling his lawsuit and to defame

Orange Bakery.

49. Herr’s malicious and willful acquisition of the Confidential Customer Information

and his and his attorneys’ threats to communicate with Orange Bakery’s customers are immoral,

unethical, and deceptive to consumers in that they involve the dissemination of false information

to consumers regarding Orange Bakery’s safety practices.

50. Herr’s conduct offends established public policy.

51. Herr has willfully and maliciously violated the terms and conditions of his

employment, including his duty of loyalty owed to Orange Bakery, by acquiring, using, and

threatening to use the Confidential Customer Information to blackmail Orange Bakery and to

communicate with Orange Bakery’s customers for the purpose of defaming Orange Bakery.

52. Orange Bakery has suffered irreparable harm and economic damage as a direct

and proximate result of Herr’s illegal conduct, from defamation of Orange Bakery and

corresponding detriment to its customer relationships.


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53. Orange Bakery is suffering and will suffer substantial and irreparable harm as a

direct and proximate result of the Plaintiffs’ calculated efforts to communicate with Orange

Bakery’s customers and to defame Orange Bakery’s reputation.

54. Orange Bakery does not have an adequate remedy at law to address Herr’s actual

and threatened conversion and misappropriation of its confidential information and trade secrets

for the illegal, immoral, and improper purpose of blackmail, and to defame Orange Bakery

among its customers.

55. Herr’s malicious and willful acquisition, use, and threats to use Orange Bakery’s

Confidential Customer Information violate the terms of the Orange Bakery Employee Handbook

and other terms and conditions of his employment with Orange Bakery.

56. Herr’s malicious and willful acquisition, use, and threats to use Orange Bakery’s

Confidential Customer Information constitutes a failure on his part to use due and ordinary care.

57. Neither Herr’s filing of this lawsuit, nor his malicious, willful, and unlawful

acquisition, use, and threats to use Orange Bakery’s Confidential Customer Information are

protected activities under any state or federal law, or any state or federal public policy.

FIRST COUNTERCLAIM

(Misappropriation of Trade Secrets – The Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836, et seq.)

58. Orange Bakery incorporates by reference and recites every preceding paragraph

as if fully set forth herein.

59. Orange Bakery owned and possessed certain confidential, proprietary and trade

secret information, as alleged above and defined as Confidential Customer Information.

60. Orange Bakery’s confidential, proprietary, and trade secret information (the

Confidential Customer Information), relates to products and services used, sold, shipped and


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ordered in, or intended to be used, sold, shipped and/or ordered in, interstate or foreign

commerce.

61. Orange Bakery has made reasonable efforts to keep secret the Confidential

Customer Information, by, among others, limiting access to the Confidential Customer

Information, requiring employees to sign confidentiality agreements, implementing employment

policies that required confidentiality, and limiting computerized access.

62. Orange Bakery’s Confidential Customer Information derives independent

economic value from not being generally known to, and not being readily ascertainable through

proper means by another person who could obtain economic value from the disclosure or use of

the information.

63. In violation of Orange Bakery’s rights and 18 U.S.C. § 1832, Herr

misappropriated the Confidential Customer Information in the improper and unlawful manner as

alleged herein.

64. Herr’s misappropriation of the Confidential Customer Information was

intentional, knowing, willful, malicious, fraudulent, and oppressive.

65. Herr has failed to return Orange Bakery’s Confidential Customer Information,

and attempted to conceal his theft of such information.

66. On information and belief, if Herr’s conduct is not remedied, and if Herr is not

enjoined, Herr will continue to misappropriate, disclose, and use for his own benefit and to

Orange Bakery’s detriment Orange Bakery’s Confidential Customer Information.

67. As the direct and proximate result of Herr’s conduct, Orange Bakery has suffered,

and if Herr’s conduct is not stopped, will continue to suffer, irreparable injury and significant

damages, in an amount to be proven at trial.


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68. Because Orange Bakery’s remedy at law is inadequate, Orange Bakery seeks, in

addition to damages, temporary, preliminary, and permanent injunctive relief to recover and

protect its confidential, proprietary, and trade secret information and other legitimate business

interests, pursuant to 18 U.S.C. § 1836(b)(3)(A). Orange Bakery’s business is reliant on its

business reputation and its ability to maintain and grow its client base in a competitive market

and will continue suffering irreparable harm absent injunctive relief.

69. Orange Bakery has a substantial likelihood of success on the merits because of

Herr’s blatant, willful, and malicious misappropriation of trade secrets through his improper and

unlawful conduct, as alleged herein.

70. Orange Bakery has been damaged by all of the foregoing, and is entitled to its

damages, in an amount to be determined at trial, as well as an award of exemplary damages and

attorneys’ fees, pursuant to 18 U.S.C. § 1836(b)(3).

SECOND COUNTERCLAIM

(Misappropriation of Trade Secrets – North Carolina Trade Secrets Protection Act, N.C. Gen. Stat. § 66-153, et seq.)



72. Orange Bakery owned and possessed certain confidential, proprietary and trade

secret information, as alleged above and defined as the Confidential Customer Information.

73. Orange Bakery has made reasonable efforts to keep secret the Confidential

Customer Information, by, among others, limiting access to the Confidential Customer

Information, requiring employees to sign confidentiality agreements, implementing employment

policies that required confidentiality, and limiting computerized access.


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74. Orange Bakery’s trade secrets contained in the Confidential Customer

Information derive independent economic value, both actual and potential, from not being

generally known to other persons, businesses, or the public, who could obtain economic value

from their disclosure or use.

75. In violation of Orange Bakery’s rights at law and under contracts, Herr

misappropriated the trade secret data – the Confidential Customer Information – by maliciously,

willfully, and unlawfully acquiring the Confidential Customer Information for unapproved uses,

namely for use in this litigation, sharing the Confidential Customer Information with his

attorneys, and threatening to use the Confidential Customer Information to communicate with

Orange Bakery’s customers in order to defame and blackmail Orange Bakery.

76. As a direct and proximate result of Herr’s misappropriation as aforesaid, Orange

Bakery has suffered and, if Herr’s conduct is not enjoined, will continue to suffer irreparable

injury, as well as damages in an amount to be determined at trial.


addition to its damages, temporary, preliminary and permanent injunctive relief pursuant to N.C.

Gen. Stat. § 66-154, to recover and protect its trade secrets and other legitimate business

interests.

78. Orange Bakery has a substantial likelihood of success on the merits because of

Herr’s misappropriation of trade secrets as set forth herein.

79. Herr’s misappropriation was malicious and willful, and was done with conscious

disregard of Orange Bakery’s rights in that Herr misappropriated Orange Bakery’s trade secret

information intentionally and knowingly and with a deliberate intent to benefit himself and injure

Orange Bakery’s business. Orange Bakery is entitled to its damages, in an amount to be


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determined at trial, as well as injunctive relief, and an award of punitive damages and attorneys’

fees in accordance with N.C. Gen. Stat. § 66-154(c) and (d).

THIRD COUNTERCLAIM (Unfair and Deceptive Trade Practices, N.C. Gen. Stat. § 75-1.1 et seq.)



81. Pursuant to N.C. Gen. Stat. § 75.1-1 et seq., Herr’s conduct constitutes unfair and

deceptive trade acts and practices.

82. Specifically, Herr’s intentional and willful misappropriation of Orange Bakery’s

Confidential Customer Information, which is a protected trade secret owned by Orange Bakery,

his dissemination of the Confidential Customer Information, and his threats to use the

Confidential Customer Information to defame Orange Bakery constitute unfair and deceptive

trade acts and practices.

83. Herr has engaged in a continuing course of conduct of unfair and deceptive trade

practices.

84. Orange Bakery has, and continues to be, directly and proximately injured and

damaged as a result of Herr’s violation of N.C. Gen. Stat. § 75-16, and Orange Bakery has

suffered financial loss in an amount to be determined at trial.

85. Orange Bakery is entitled to its damages, in an amount to be determined at trial,

and an award of treble damages and attorneys’ fees in accordance with N.C. Gen. Stat. § 75-16

and § 75-16.1.


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FOURTH COUNTERCLAIM (Breach of Fiduciary Duty and Duty of Loyalty)



87. As an employee of Orange Bakery, Herr owed and owes Orange Bakery his

undivided loyalty and is obligated to act with the utmost good faith, and in the best interests of

Orange Bakery.

88. Orange Bakery was entitled to place its trust and confidence in Herr and to expect

Herr to act with the utmost good faith toward it in carrying out the business of Orange Bakery.

89. Orange Bakery relied on Herr’s loyalty and integrity and his faithful performance

of his duties and responsibilities.

90. Herr took advantage of Orange Bakery’s faith in him by not performing his duties

to Orange Bakery, by acting in conflict of interest, by engaging in conduct for his own benefit,

and by deceiving Orange Bakery and concealing his improper conduct.

91. Herr knowingly and willingly breached his duty of loyalty to Orange Bakery by

scheming to deceive and defraud Orange Bakery, misappropriating and stealing Orange Bakery’s

Confidential Customer Information, and threatening to defame Orange Bakery.

92. Herr acted in a manner inconsistent with his agency and trust by obtaining

confidential information to which he had not right to obtain and sharing such information with

third parties, including his attorneys, for the purpose of blackmailing Orange Bakery.

93. Herr acted on his own against Orange Bakery’s interests while employed by

Orange Bakery.

94. As a direct and proximate result of Orange Bakery’s disloyalty to Orange Bakery

and a breach of his duties, Orange Bakery has been and is being harmed.


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95. Orange Bakery is entitled to its damages, in an amount to be determined at trial,

as well as disgorgement from Herr, and the forfeiture and return of all monies and compensation

paid to him during his period of disloyalty, the exact amount to be determined at trial.

96. Orange Bakery is further entitled to injunctive relief against Herr and and all

those acting in concert or participation with him, remedying their past improper conduct, and

preventing such conduct in the future.

97. Herr is, on information and belief, still in possession of the Confidential Customer

Information and, on information and belief, is able to access and use this information for his own

personal gain. Further, on information belief, Herr shared this confidential information with outs

who may use or are using the information to Orange Bakery’s detriment.

98. As a direct and proximate result of Herr’s disloyalty, Orange Bakery has been

irreparably injured, and has suffered damages in an amount to be determined at trial.


addition to its damages, preliminary and permanent injunctive relief enjoining Herr and all those

acting in concert or participation with Herr from further improper conduct, and from dealing

with and communicating with the customers whose confidential information Herr

misappropriated, and further remedying Herr’s improper conduct.

FIFTH COUNTERCLAIM (Conversion)



101. Herr is in wrongful and unauthorized possession of Orange Bakery’s Confidential

Customer Information.


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102. Orange Bakery’s Confidential Customer Information is tangible property, in that

customer information maintained on a computer is readily convertible to tangible form.

103. Orange Bakery owns the Confidential Customer Information.

104. Herr has wrongfully asserted dominion or control over Orange Bakery’s

Confidential Customer Information in a manner inconsistent with Orange Bakery’s ownership

and entitlement to such information, and to the exclusion of Orange Bakery’s rights.

105. Herr wrongfully converted Orange Bakery’s Confidential Customer Information

when he retained, used, and threatened to use Orange Bakery’s Confidential Customer

Information without the knowledge and consent of Orange Bakery.

106. Herr has converted the Confidential Customer Information for his own use and

benefit and to exclude Orange Bakery from any interest or benefit therein.

107. Orange Bakery has demanded the return of the Confidential Customer

Information. Herr has refused such a demand.

108. Herr’s conduct was willful, wanton, and intentionally calculated to harm Orange

Bakery.

109. As a direct and proximate result of Herr’s conversion of Orange Bakery’s

confidential and proprietary information, Orange Bakery has sustained substantial damages in an

amount to be determined at trial.

110. Herr’s conversion of Orange Bakery’s Confidential Customer Information

constituted outrageous and aggravated conduct.

111. The value of Orange Bakery’s Confidential Customer Information is in its

exclusive use by Orange Bakery and its customers. By wrongfully asserting dominion or control


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over this information, Herr has greatly diminished the monetary value of the information that

Orange Bakery has sought to protect.

112. Orange Bakery seeks judgment against Herr for compensatory damages, punitive

damages, prejudgment interest, attorneys’ fees, and such other relief as the Court deems just and

proper.

SIXTH COUNTERCLAIM (Negligence and Gross Negligence)



114. In performing his duties as a salesperson for Orange Bakery, Herr neglected his

duties and failed to exercise such due and ordinary care as a person similarly situated would have

exercised under the same or similar circumstances.

115. In performing his duties as a salesperson for Orange Bakery, Herr took Orange

Bakery’s Confidential Customer Information to which he was not entitled to use or possess from

Orange Bakery with the intended purpose of using such information not in furtherance of Orange

Bakery but, instead, for his own personal benefit and to defame and blackmail Orange Bakery.

116. Herr breached the duties he owed to Orange Bakery by misappropriating Orange

Bakery’s Confidential Customer Information and threatening to use such information to defame

Orange Bakery’s reputation and blackmail Orange Bakery.

117. Herr’s negligence has resulted in the undermining of Orange Bakery’s integrity

and reputation with its customers, and has resulted in Orange Bakery incurring expenses,

including incurring legal and public relations expenses that would not have been necessary but

for Herr’s misappropriation of the Confidential Customer Information.

118. Herr’s conduct was negligent, willful, wanton, and grossly negligent.


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119. As a proximate result of Herr’s negligence and gross negligence, Orange Bakery

has suffered damages and is entitled to actual, consequential, and punitive damages.

SEVENTH COUNTERCLAIM (Temporary, Preliminary, and Permanent Injunctive Relief)



121. Temporary, preliminary, and permanent injunctive relief is necessary to protect

Orange Bakery’s Confidential Customer Information, which Herr has misappropriated, and

which Herr is using to unfairly strong arm Orange Bakery into settling this lawsuit and to slander

Orange Bakery’s reputation in the industry.

122. Injunctive relief is authorized under the Defend Trade Secrets Act, 18 U.S.C. §

1836(b)(3)(A), to prevent any actual or threatened misappropriation of trade secrets.

123. Injunctive relief is authorized under the North Carolina Trade Secrets Protection

Act, N.C. Gen. Stat. § 66-154(a), to prevent any actual or threatened misappropriation of trade

secrets.

124. Rule 65 of the Federal Rules of Civil Procedure provides a basis for the Court to

issue injunctive relief.

125. Herr has misappropriated Orange Bakery’s Confidential Customer Information.

Herr has converted and acquired Orange Bakery’s Confidential Customer Information, to which

he did not have authority to access or use for any purpose in this litigation, for his own personal

benefit.

126. Herr and his attorneys have, on numerous occasions, threatened to use Orange

Bakery’s Confidential Customer Information to communicate with Orange Bakery’s customers,


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about whom Herr would not know during the course and scope of his employment, with the

stated purpose to defame and blackmail Orange Bakery.

127. As Herr is a current employee of Orange Bakery, he has continuing access to

Orange Bakery’s confidential and proprietary business information and trade secrets.

128. Orange Bakery has suffered irreparable harm as a result of Herr’s

misappropriation of the Confidential Customer Information, including detriment to its reputation

and goodwill with its customers and the public.

129. Orange Bakery will suffer irreparable harm if Herr remains in possession of the

Confidential Customer Information is not prevented from utilizing Orange Bakery’s Confidential

Customer Information. Herr’s threats, and the threats of his attorneys, to use the Confidential

Customer Information are genuine, and will only further harm Orange Bakery’s reputation with

its customers.

130. Orange Bakery is substantially likely to succeed on the merits of its

Misappropriation of Trade Secrets claims brought pursuant to 18 U.S.C. § 1831 et seq. and N.C.

Gen. Stat. § 66-152 et seq. Orange Bakery’s Confidential Customer Information is a recognized

trade secret subject to protection because it is compiled from non-public information that

required considerable effort and expense to develop. Orange Bakery maintains the

confidentiality of its customer information, and Herr knew or had reason to know that the

customer information was confidential due to the provisions to which he agreed in the Orange

Bakery Employee Handbook stating that customer information is confidential and proprietary

business information, and a trade secret.

131. Orange Bakery is likely to succeed on the merits of its unfair and deceptive trade

practices claim. Herr used his status as an employee of Orange Bakery steal the Confidential


39

Customer Information, which derived value from it secret status, for his own personal benefit

and to harm Orange Bakery’s reputation among its customers, who are engaged in commerce.

132. Orange Bakery is likely to succeed on the merits of its conversion claim against

Herr. Herr has wrongfully asserted dominion or control over Orange Bakery’s Confidential

Customer Information in a manner inconsistent with Orange Bakery’s ownership and entitlement

to such information, and to the exclusion of Orange Bakery’s rights.

133. Orange Bakery is likely to succeed on the merits of its negligence and gross

negligence claim against Herr. In performing his duties as a salesperson for Orange Bakery,

Herr neglected his duties and failed to exercise such due and ordinary care as a person similarly

situated, when he misappropriated the Confidential Customer Information for his own personal

benefit and to the detriment of Orange Bakery. Such conduct was a breach of the duties he owed

to Orange Bakery, and has directly and proximately caused Orange Bakery to suffer harm to

Orange Bakery’s integrity and reputation.

134. Money damages alone cannot and could not repair Orange Bakery’s relationship

with its customers as a result of Herr’s conduct and threatened conduct.

135. The relative hardships to the parties favors the granting of injunctive relief. Herr

cannot be harmed by an order requiring him to comply with the terms of the Orange Bakery

Employee Handbook and preventing him from utilizing the Confidential Customer Information

to communicate with Orange Bakery’s customers except with Orange Bakery’s authorization to

sell Orange Bakery’s goods. In contrast, Orange Bakery is suffering and will suffer substantial

and irreparable harm as a result of Herr’s conduct and threats having a defamatory impact on

Orange Bakery and harming its priceless customer relationships. If the requested injunctive

relief is not granted, Orange Bakery will also face hardships to maintain current customers and


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retain new customers. Finally, the public has an interest in agreements being performed, and also

for the protection of trade secrets and confidential proprietary business information.

136. Orange Bakery seeks an Order from this Court prohibiting Herr and his attorneys

or agents from utilizing all of Orange Bakery’s customer lists, sales data, and other confidential

data for any purpose during the course of this litigation, for the return of any such information

possessed or copied by Herr or his attorneys or agents, and for such further relief as the Court

deems proper.

EIGHTH COUNTERCLAIM (Declaratory Judgment That Chris Herr’s Conduct Is Not Protected By Law)



138. In 2007, Orange Bakery hired Herr as an at–will employee.

139. Herr remains an at–will employee of Orange Bakery at the time of filing these

Counterclaims.

140. Herr agreed to the policies in the Orange Bakery Employee Handbook, including

the policy of maintaining the confidentiality of Orange Bakery’s proprietary business

information and trade secrets, as evidenced by his signature on the document attached hereto as

Exhibit 1.

141. Herr’s signature on the document attached hereto as Exhibit 1 constitutes a clear

and unambiguous certification of his willingness to comply with the terms contained in the

Orange Bakery Employee Handbook and his understanding that compliance with the terms

contained the Orange Bakery Employee Handbook is and was at all times a condition of his

employment with Orange Bakery.


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142. Herr knew or should have known at all times relevant to this lawsuit that the

identities of, and information pertaining to, Orange Bakery’s customers were confidential

information and trade secrets owned by Orange Bakery.

143. Herr knew or should have known that maintaining the confidentiality of Orange

Bakery’s proprietary business information, including customer information, and trade secrets

was a condition of his employment with Orange Bakery.

144. In agreeing to the policies outlined in the Orange Bakery Employee Handbook

and accepting employment with Orange Bakery, Herr acquired and owes an ongoing duty of

loyalty to Orange Bakery.

145. On May 19, 2016, Herr filed this defamatory lawsuit against Orange Bakery. In

his Complaint, Herr contends he is a protected whistleblower under section 402 of the Food

Safety Modernization Act, codified as section 1012 of the Federal Rood, Drug and Cosmetic

Act. 21 U.S.C. § 399d.

146. 21 U.S.C. § 399d provides, in relevant part,

No entity engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food may discharge an employee or otherwise discriminate against an employee with respect to compensation, terms, conditions, or privileges of employment because the employee . . . –

(1) provided . . . the Federal Government, or the attorney general of a State information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of any provision of this chapter or any order, rule, regulation, standard, or ban under this chapter, or any order, rule, regulation, standard, or ban under this chapter;

(2) testified or is about to testify in a proceeding concerning such violation;

(3) assisted or participated or is about to assist or participate in such a

proceeding; or


42

(4) objected to, or refused to participate in, any activity, policy,

practice, or assigned task that the employee . . . reasonably believed to be in violation of any provision of this chapter, or any order, rule, regulation, standard, or ban under this chapter.

147. An actual, present, and justiciable controversy exists between Orange Bakery and

Herr as to whether Herr’s conduct as described herein is protected activity under 21 U.S.C. §

399d.

148. Filing a lawsuit against an employer is not a protected activity under 21 U.S.C. §

399d.

149. Herr has not engaged in any other protected activities under 21 U.S.C. § 399d.

150. During his employment with Orange Bakery, Herr has misappropriated Orange

Bakery’s Confidential Customer Information, has engaged in the conversion of Orange Bakery’s

Confidential Customer Information, has breached his employment agreement and common law

employment obligations with Orange Bakery, and has directly and through his counsel made

threats to defame Orange Bakery and to make further unauthorized use of Orange Bakery’s

Confidential Customer Information.

151. Herr’s conduct as alleged herein is not a protected activity under 21 U.S.C. §

399d.

152. Herr’s conduct as alleged herein is not protected by any state or federal statute,

public policy, or provision of the common law.

153. Herr’s conduct as alleged herein is contradictory to the terms of his employment

with Orange Bakery, in that it violates policies memorialized in the Orange Bakery Employee

Handbook to which Herr agreed as a condition of his employment.


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154. Pursuant to 28 U.S.C. § 2201, Orange Bakery seeks declaratory judgment from

this Court that:

a. Herr’s filing of this lawsuit is not a protected activity under 21 U.S.C. § 399d;

b. Herr’s filing of this lawsuit is not a protected activity under any state or

federal statute, public policy, or provision of the common law;

c. Herr’s misappropriation of trade secrets is not a protected activity under any

state or federal statute, public policy, or provision of the common law;

d. Herr’s unfair and deceptive trade practices are not a protected activity under

any state or federal statute, public policy, or provision of the common law;

e. Herr’s breach of his fiduciary duties and the duty of loyalty is not a protected

activity under any state or federal statute, public policy, or provision of the

common law;

f. Herr’s conversion is not a protected activity under any state or federal statute,

public policy, or provision of the common law; and

g. Herr’s negligence and gross negligence is not a protected activity under any

state or federal statute, public policy, or provision of the common law.

WHEREFORE, having stated its Counterclaims against Chris Herr, Orange Bakery

prays for the following relief:

a. That Chris Herr be found liable under each Counterclaim hereof, and each claim

for relief, as set forth herein;

b. For a declaratory judgment that:

i. Herr’s filing of this lawsuit is not a protected activity under 21 U.S.C. § 399d;


44

ii. Herr’s filing of this lawsuit is not a protected activity under any state or

federal statute, public policy, or provision of the common law;

iii. Herr’s misappropriation of trade secrets is not a protected activity under any

state or federal statute, public policy, or provision of the common law;

iv. Herr’s unfair and deceptive trade practices are not a protected activity under

any state or federal statute, public policy, or provision of the common law;

v. Herr’s breach of his fiduciary duties and the duty of loyalty is not a protected

activity under any state or federal statute, public policy, or provision of the

common law;

vi. Herr’s conversion is not a protected activity under any state or federal statute,

public policy, or provision of the common law; and

vii. Herr’s negligence and gross negligence is not a protected activity under any

state or federal statute, public policy, or provision of the common law.

c. For a permanent injunction against Chris Herr to prohibit any and all further use

of Orange Bakery’s Confidential Information by him or others on his behalf that he has

converted, misappropriated, and otherwise obtained in breach of his obligations, without

authorization by Orange Bakery;

d. That Chris Herr be ordered to return to Orange Bakery all of Orange Bakery’s

Confidential Information in his possession or control, or in the possession or control of any of his

agents or attorneys;

e. That Chris Herr be ordered to pay Orange Bakery actual or compensatory

damages (and specifically including, without limitation, its actual damages and attorneys’ fees

trebled, under the Defend Trade Secrets Act, North Carolina state statutes, and the common law


45

of the State of North Carolina) and such yet further increased damages and/or punitive damages

and attorneys’ fees, as may be appropriate under each of the several federal and state causes of

action arising under statute and the common law of the State of North Carolina, and in amounts,

both compensatory and punitive, to be determined by this Court and that are adequate to redress

Chris Herr’s unlawful conduct as pleaded herein;

f. That Orange Bakery be awarded its costs of suit, including reasonable attorneys’

fees, under the Defend Trade Secrets Act, North Carolina state statutes, and the common law of

the State of North Carolina;

g. That Orange Bakery be awarded actual damages, trebled, and attorneys’ fees

under 18 U.S.C. § 1836(b), N.C. Gen. Stat. § 66-154, 15 U.S.C. § 15, N.C. Gen. Stat. §§ 75-16

and 75-16.1, and injunctive relief to enjoin Chris Herr’s unlawful conduct under 15 U.S.C. § 26,

18 U.S.C. § 1836 and N.C. Gen. Stat. § 66-154; and

h. For such other and additional relief as the Court deems just and proper.

JURY TRIAL DEMAND

Orange Bakery, in accordance with Rule 38(b) of the Federal Rules of Civil Procedure,

demands trial by jury on all issues so trial.


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Respectfully submitted, August 15, 2016.

/s/ Gregory W. Brown GREGORY W. BROWN NC Bar # 26238 / VA Bar # 36369 MATTHEW R. GAMBALE NC Bar # 43359 ALLISON A. COHAN NC Bar # 45940 BROWN LAW LLP 4130 Parklake Avenue, Suite 130 Raleigh, North Carolina 27612 T: 919.719.0854 F: 919.719.0858 [email protected] [email protected] [email protected] Counsel for Defendant Orange Bakery, Inc.


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CERTIFICATE OF SERVICE

The undersigned hereby certifies that on August 15, 2016, the foregoing DEFENDANT ORANGE BAKERY, INC.’S VERIFIED ANSWER AND COUNTERCLAIMS was filed electronically via the Court’s CM/ECF case management system and served via first class mail on the following counsel of record. Christopher R. Strianese Tamara L. Huckert STRIANESE, PLLC 401 North Tryon Street, 10th Floor Charlotte, North Carolina 28202 [email protected] [email protected] Counsel for the Plaintiffs

/s/ Gregory W. Brown BROWN LAW LLP


VERIFICATION

'L%lYIANdx.'JI," ----'-'CCL1'-"O'--__ of Orange Bakery, Inc., being first duly sworn, deposes and says that

he has read the foregoing VERIFIED ANSWER AND COUNTERCLAIMS and known the

contents thereof; that the statements contained therein are true of his own knowledge, except

matters and things set forth upon information and belief, and as to those such matters and things,

he believes them to be true.

ORANGE BAKERY, INC.

A notary public or other officer completing thiscertificate verifies only the ld~ntity of the individualwho signed the document to which this certificateis attached, and not the truthfulness. accuracy. orvalidity of that document.

SWORN TO and subscribed before me

Thi'1:""'" 2016.Notary PublIc

My commission expires: f.1~1/ 17. 2-02--0

/

~@_... EUNJUNGSHIMYANG~(lJ COMM...2153462 0ti .-.,; NOTARY PUBlIC·CALIFORNIA -iIII .'" ORANGE COUNTY W§ ',' My Term Exp. May 17. 2020 ~

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orange bakery answer and counterclaims

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