Before Andrea Lupo quit San Antonio’s Sterling Foods to join rival Lone Star Bakery in May, her former employer alleges she conducted some clandestine activities.
The night before leaving Sterling Foods, Lupo allegedly downloaded to a USB drive various files containing a “significant amount” of its trade secrets and other proprietary information, according to a lawsuit the company filed last week in San Antonio federal court.
The files Sterling accuses Lupo of taking contained recipes, ingredients, financial reports, and inventory and raw material costs.
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Sterling is suing Lone Star Bakery and Lupo for misappropriation of trade secrets, among other claims. Sterling seeks unspecified monetary damages and injunctions to protect its trade secrets and proprietary information.
Kay Grimes, Lone Star Bakery’s attorney, said Tuesday the parties were close to settling the dispute.
“We’ve pretty much reached an agreement,” Grimes said. “We haven’t even got served the lawsuit, and it’s going to go away as fast as it got there.”
She added, “Now we’re just trying to agree on one final snag. There’s absolutely no reason for either party to believe it won’t just be settled and dismissed.”
Christopher LaVigne, a Dallas lawyer representing Sterling, confirmed the settlement discussions.
“We obviously take pretty seriously protecting our confidential information,” LaVigne said. “If there’s not a settlement, we’re going to prosecute the claims. I’m optimistic that we can get it worked out, though.”
Sterling Foods supplies gourmet bakery items, including croissants, muffins, scones, bagels, cakes and desserts to the food service industry.
Austin-based private equity firm Cotton Creek Capital acquired Sterling in 2016 for an undisclosed price. The investment was made in partnership with Sterling Chairman and CEO John D. Likovich.
A news release at the time described Sterling as the largest supplier of “shelf-stable” bakery products to the U.S. military and a supplier to national restaurant chains.
Lone Star Bakery opened more than a century ago and today has two locations in China Grove. It provides baked goods for well-known quick-serve restaurants, food-service operators, and in-store bakeries and delis at grocery chains, according to its website.
The business is headed by Mac Morris Jr., whose parents bought the bakery in 1956 when it operated on Commerce Street in San Antonio.
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Lupo, 35, joined Sterling in 2017 as its corporate director of procurement. She had previously worked almost 10 years at H-E-B, including as a store director and most recently as associate business development manager in produce, her LinkedIn page shows.
In her job with Sterling, Lupo was responsible for “driving strategy and making tactical decisions around the sourcing and purchasing of equipment, supplies and services,” the lawsuit says. She also oversaw inventory management, the sales and operations planning process and customer-fulfillment functions.
Lupo resigned from the company April 24. She refused to say where she was going when asked by her superior, Sterling’s lawsuit says. During an exit interview, the complaint adds, Sterling’s human resources director reminded Lupo of her obligations under a confidentiality agreement that she had signed. Among other things, the agreement obligated her not to disclose trade secrets or confidential information.
The agreement also prohibited her from going to work for a Sterling competitor engaged in the business of selling shelf-stable bakery products to the military, for military operational rations or for weight-loss businesses.
Lupo went to work for Lone Star Bakery in May as director of supply chain strategy and optimization — a role similar to the one she previously held, Sterling says.
“They (Sterling) have pretty much acknowledged the non-compete is not applicable to us,” Lone Star Bakery’s Grimes said. “Their non-compete was limited to just three categories, and we don’t do any of that business. For (Lupo) to come to work over here was not in violation of any of those three.”
Sterling has individually sued Lupo for breach of contract by accepting employment at Lone Star Bakery.
As for the allegation that Lupo took Sterling’s trade secrets, Grimes said that’s between her and Sterling.
“That has nothing to do with us,” Grimes said. However, she said the entire lawsuit is being settled.
Sterling says in its suit that it each company has previously employed some of the other’s former employees in the past when they were no longer bound by non-compete agreements.
Sterling accused Lupo of soliciting other Sterling employees to join Lone Star Bakery.
“Tellingly, Lone Star also attempted to recruit Sterling’s Senior Director of Research and Development, who was integral to creating and developing Sterling’s ‘formulas’ or recipes for its products,” the lawsuit states. Lupo “worked closely” with that person.
Sterling says it conducted a forensic investigation after it became concerned with Lupo’s employment at Lone Star Bakery. That led Sterling to discover that Lupo had taken the trade secrets, its lawsuit alleges.
On her last day at Sterling, the complaint adds, Lupo sent three emails with Sterling’s vendor contact information to her personal email.
Patrick Danner Patrick Danner covers banking, insurance, business litigation and bankruptcies. To read more from Patrick, become a subscriber. pdanner@express-news.net | Twitter: @AlamoPD
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