Panera Suing Former IT Exec And His New Employer Papa John’s Over Trade Secrets

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It’s tough out there for food chains who are trying to attract customers with the newest, the freshest, the healthiest, and the tastiest menu items. That intense rivalry is why many companies require non-compete clauses in employees’ contracts, to keep trade secrets, well, secret.

Panera Bread Co. says in a new lawsuit filed in federal court in St. Louis that one of its former IT executives and his new employer Papa John’s didn’t play by the rules. Panera claims Papa John’s knowingly interfered with the employee contract in order to gain trade secrets involving the bakery-chain’s technology, reports the St. Louis Business Journal.

The employee named in the suit, Michael Nettles, was Panera’s vice president of architecture in the company’s information technology department from 2012 to July 1, 2016. He just started working at Papa John’s this week, which is worrisome to Panera: the chain says during his time with Panera, Nettles had “privileged access” to the company’s tech-based initiatives and was involved in every aspect of development.

“Given the important role Nettles played in implementing these programs, he was also privy to all of Panera’s high-level discussions concerning its vision for how to continue to use technology to its advantage in the future. In other words, Nettles intimately knows Panera’s strategic technology plan for the next few years,” the suit said.

Nettles voluntarily signed a non-competition agreement that comes with a list of companies where employees can’t work for a certain amount of time after their employment at Panera. But despite that, the suit alleges that Papa John’s pursued Nettles, successfully.

He then sent Panera CEO Ron Shaich an email, Panera’s suit said, informing him that he’d accepted a job with Papa John’s, and asked if he could be released from his non-compete contract.

Shaich wasn’t cool with that, and instead offered to help Nettles secure a spot at another, non-competing company. Panera claims in its lawsuit that Papa John’s knew Nettles was still tied to the agreement, and yet it encouraged him to start working for the pizza chain immediately after he left Panera.

Panera alleges in the suit that Nettles made a backup of all Panera-related documents, with plans to give them to Papa John’s, and then deleted them from his personal laptop and other devices. He has the knowledge to help Papa John’s copy and benefit from trade secrets with that information, Panera claims.
The lawsuit claims Papa John’s has had its eyes on Panera’s IT team “for some time now” with the aim of getting its hands on its rival’s technology strategy.

Nettles and Papa John’s have caused, and will continue to cause, irreparable harm, Panera claims in its lawsuit, adding that it’s worried other executives will follow suit and ignore their own non-compete clauses.

Panera is seeking injunctive relief, damages, attorneys’ fees and a jury trial, according to the suit.

“At Papa John’s we take great pride in our culture and the talent we attract, and Mike Nettles is no exception,” the pizza chain said in a statement. “He is a 27-year veteran of the hospitality and retail industries and has worked at numerous concepts and companies. We are disappointed by Panera’s actions, as we do not consider them a competitive business. We have no need or desire to access Panera’s confidential or proprietary information.”

Panera sues Papa John’s, former executive over trade secrets [St. Louis Business Journal]