Bay Area company sued over trade secrets behind Trader Joe’s bread

A Bay Area bakery has been accused in a new lawsuit of illicitly collecting trade secrets from a rival company in order to try to secure a sought-after contract with Trader Joe’s. The suit, first reported by The Seattle Times, centers around the grocery chain’s popular frozen Brazilian Style Cheese Bread.

Washington-based bakery Partners, A Tasteful Choice Co. — which produces pão de queijo, otherwise known as Brazilian cheese bread, for Trader Joe’s — filed a lawsuit on Dec. 12 alleging that a consultant connected to South San Francisco company Shaw Bakers “surreptitiously videotaped Partners’ production process for Brazilian Cheese Bread.” Shaw Bakers is perhaps best recognized for its retail brand La Boulangerie, which has multiple locations across San Francisco and one in Irvine.

The video, Partners alleges, was taken by Greg Arend, an employee at Shaw’s sister company, Isernios, while doing consulting work for Partners. Arend was working with Partners as part of a joint contract between the two entities. During his stint at the facility, Arend secretly filmed Brazilian Cheese Bread production and shared the footage with Shaw president Nicolas Bernardi, according to the lawsuit filed in the United States District Court, Western District of Washington.  

“[Arend] said he made the videotape to help him understand the ‘cost accounting’ associated with production of the Brazilian Cheese Bread, and it showed him ‘how many people are on the line,’” the lawsuit reads.

“Mr. Arend … lied when he said that Partners knew he was making the video and sending it to Shaw,” the suit continues. “In fact, he had repeatedly been told that Partners had a strict policy against videotaping in its facility because it could reveal proprietary processes. More generally, he had been repeatedly warned about sharing confidential information outside the company.”

Shaw, the South San Francisco company, “repeatedly expressed a desire and intent to be the supplier of Brazilian Cheese Bread to Trader Joe’s,” the suit alleges, noting that “Partners has sold millions of dollars of this product” to the popular grocery chain. The lawsuit further states that Bernardi says he “maybe” asked Arend, during his stint at Partners, for a video “to see how the product was going.”

“The video was part of a broader pattern of surreptitious communications between Arend and Bernardi,” the lawsuit states. “In fact, hoping to avoid detection, they discussed and agreed that they should not use Arend’s Partners’ email account for their communications.”

Partners is asking for an injunction that bars Shaw from using any information provided by Arend, as well as cost and attorney’s fees. SFGATE reached out to Partners and Shaw Bakers for comment but did not hear back by publication.