Stella Loses in Trade Secret Lawsuit

Stella Foods Inc., a unit of Canadian cheesemaking giant Saputo Group Inc., has been socked with a $24 million penalty after being found guilty of misappropriating trade secrets.

Cacique Inc., a small Industry, CA-based concern that manufactures Mexican-style cheese, won the multi-million award against Stella, Cacique officals announced July 12. The dollar figure includes $12.4 million in punitive damages.

The announcement follows a Los Angeles Superior Court jury ruling in favor of Cacique last August after a 2 ½ month trial, Bloomberg News reported. However, post-trial motions prevented a final resolution to the case, according to Cacique attorney George Salmas.

In addition to the monetary award, Los Angeles Superior Court Judge Frank Gafkowski Jr. forbade Stella from revealing the trade secrets, Salmas said, adding that when Stella formed a Mexican-style cheese division, it hired several former Cacique employees.

"(The court decision) shows that if someone works hard and does the right thing by developing their own technologies, then the courts will protect the trade secrets they've developed," Salmas said, indicating that Cacique chose to remain hush-hush on last year's decision until the post-trial motions have been resolved.

Saputo, which is Canada's second-biggest cheese manufacturer, bought Stella in 1997. The corporation reported in June that it suffered a C$55 million revenue drop for FY 2000, while at the same time realizing a 27% net earnings boost. (See related article).

Edited by Gerry Clark