Unreported / Non-Citable
Background
Sharon and Odelya Hoffman, along with affiliated entities including Vitamin Friends LLC and RGL Holdings LLC, sued the founders and investors behind Goli Nutrition — the popular apple cider vinegar gummy maker — alleging that Goli stole their gummy formulation, supplier contacts, and customer relationships. After three rounds of pleadings and earlier dismissal orders that pared down the case, only a Defend Trade Secrets Act (DTSA) claim against Goli’s private equity investors (the VMG defendants) and several smaller claims remained.
The VMG parties — venture capital funds that invested in Goli — moved for summary judgment on Vitamin Friends’ DTSA claim, arguing that Vitamin Friends did not actually own the supplier-related trade secrets at issue. Vitamin Friends had never manufactured the gummies commercially; instead, a related entity called Better Nutritionals had been the actual manufacturer and the one buying ingredients from suppliers. The VMG parties also moved to dismiss several previously-dismissed state-law claims that the plaintiffs had again asserted in their third amended complaint.
The Court’s Holding
Judge Christina Snyder granted summary judgment for the VMG investors on the DTSA claim, finding that Vitamin Friends could not demonstrate ownership of the supplier-related trade secrets it accused VMG of misappropriating. The undisputed evidence — including plaintiff Sharon Hoffman’s own deposition testimony — showed that Better Nutritionals (not Vitamin Friends) had identified, dealt with, and paid the gummy-ingredient suppliers. Hoffman’s after-the-fact declaration claiming Vitamin Friends owned the supplier information was self-serving and uncorroborated, and could not raise a triable issue of fact under Ninth Circuit summary judgment standards.
The court also held that arguments raised for the first time in interrogatory responses — about additional alleged trade secrets not pleaded in the operative complaint — could not be considered, because a party cannot effectively amend a pleading through discovery responses. The court further dismissed the plaintiffs’ repeated fraud, breach-of-fiduciary-duty, RICO, and intentional infliction claims with prejudice, because they were essentially identical to claims previously dismissed and the plaintiffs had already had ample opportunity to plead them properly.
Key Takeaways
- To prevail on a DTSA claim, the plaintiff must own the alleged trade secret. A related corporate entity using or developing information for the plaintiff’s business does not create ownership.
- A self-serving declaration that contradicts a party’s prior deposition testimony, without corroborating evidence, is generally insufficient to defeat summary judgment.
- A plaintiff cannot expand the scope of trade-secret claims through interrogatory responses; only trade secrets identified in the operative pleading are at issue.
- When a court dismisses claims with leave to amend and the plaintiff re-pleads essentially the same allegations, those claims may be dismissed with prejudice.
- Investors and private-equity sponsors can defeat trade-secret claims at summary judgment by attacking the foundational element of plaintiff ownership — even where extensive discovery has occurred.
Why It Matters
The order is a useful reminder for trade-secret plaintiffs and the lawyers who structure related-entity ownership: the formal corporate identity that owns the trade secret matters. A holding company, an operating company, and a manufacturing affiliate are not interchangeable for DTSA purposes. Plaintiffs who sue investors based on alleged misappropriation of supplier or formula information must be able to point to clear documentary or testimonial evidence that the suing entity — not a sister or parent company — actually owned the secret information.
The decision also reinforces the federal courts’ willingness to dismiss with prejudice when plaintiffs replead the same theory across multiple amended complaints. After two rounds of dismissal, the court was unwilling to give the plaintiffs another chance on the same facts.