Sun Nong Dan Foods, Inc. v. Kangnam1957, Inc., 2024 WL 5440252, No. 2:23-cv-09779-WLH-RAO (C.D. Cal. Nov. 19, 2024)
Not a surprise, but fills a gap in the caselaw: employment
ads aren’t “commercial advertising and promotion” for the business trying to
hire.
SND alleged that defendants stole SND’s recipe for its
“flagship” dish “galbi jjim” and opened a “counterfeit” restaurant offering the
same dish.
SND alleged that “two job posts and the employee training in
2019 which involves the dissemination of false statements, constitute false
commercial adverting.” A customer allegedly posted the following in a review on
Yelp: “We asked a few questions [of employees] since this a new spot, and we
learned the head Chef of [defendant] Daeho was from KTown in LA.” Daeho also
allegedly published job posts to SF Korean and go20.com:
We are looking for servers and
kitchen staff to join our upcoming Korean food restaurant opening in early
February in San Francisco’s Japantown neighborhood.
Former head chef of Sun Nong Dan in
Los Angeles is preparing to open a new restaurant in San Francisco’s Japantown.
The main menu will be tang (hot
pot), and we’ll be serving up some of the best hot pot and other dishes you’ve
never had in San Francisco, like BBQ, galbi jjim, and galbi tang.
Open 7 days a week, starting at
7am, part-time and full-time positions available.
If you’re interested in food, want
to make money, or want to learn the restaurant business, we want to hear from
you….
SF Korean was allegedly the “most well-known media platform
within the Korean community in the San Francisco Bay Area.” Allegedly, “[f]or
the Korean restaurants, recognition within the Korean Community is crucial for
success.” And the representation about having the former head chef was allegedly
false.
Instead, defendant C. Park allegedly sought employment at
SND with the intent of stealing trade secrets which he then misappropriated,
specifically recipes, such that defendants’ “galbi jjim and three side dishes
have identical or nearly identical tastes and flavors to those of Sun Nong Dan,
as noted by numerous Yelp reviewers.” Daeho allegedly “misappropriated Sun Nong
Dan’s confidential galbi preparation method, which has the benefit of the meat
easily falling off the bone.” And it allegedly misappropriated SND’s “confidential
culinary processes and business operations designed to efficiently handle a
large volume of orders for galbi jjim, including order-taking, cooking, the use
of specialized cooking equipment, and serving methods tailored for quick
handling of large-scale orders which preserving the deep flavors of galbi jjim.”
The court granted defendants’ motion to dismiss the state
and federal false advertising claims, though other claims remain.
SND alleged that the employee training in 2019, where one
defendant allegedly instructed Daeho employees to make false statements about
Daheo Kalbijjim’s relationship with SND, constituted false commercial
advertising. But the Yelp review didn’t reflect that any employee made a false
statement as part of a “commercial advertisement about [defendant’s] own or
another’s product.” “Instead, the allegation indicates that an employee
answered a customer’s questions with an undisputed fact—that the chef had
worked in Koreatown in Los Angeles.”
As for the job postings, which can be commercial speech, they still weren’t plausibly published with “the purpose of influencing consumers to buy defendant’s goods or services.” It didn’t even include the restaurant’s name. (Note that California law doesn't have the same "commercial advertising or promotion" language--but when competitor-plaintiffs sue, courts usually interpret the relevant state false advertising laws as covering the same conduct.)
However, the complaint sufficiently alleged misappropriation
of SND’s galbi jjim recipe and cooking method. But SND’s order-taking method,
“which involves accepting pre-orders before seating customers,” was not
plausibly a trade secret. By virtue of visiting the restaurant, any patron
could see the method.
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