Plaintiffs Beverage Marketing USA, Inc. ("Beverage Marketing") and Hornell Brewing Co., Inc. ("Hornell") move for summary judgment dismissing Defendants' counterclaims. Defendants South Beach Beverage Company, Inc. ("South Beach") and John Bello ("Bello") move for summary judgment dismissing the amended complaint. [*2]

Beverage Marketing and Hornell are involved in the development, production and sales of AriZona beverages. Beverage Marketing holds the AriZona products trademarks and licenses those rights to Hornell. Hornell distributes and markets AriZona products.

AriZona products were introduced on the market in 1992. Plaintiffs allege that they have numerous valuable trade secrets and confidential information relating to the products they market under the AriZona brand name and that they took appropriate measures to protect this information.

In August 1994, Beverage Marketing hired Bello as its Vice President of Marketing and Sales. In December 2004, Bello was fired.

Approximately 3 months after Bello was fired, Thomas Schwalm ("Schwalm") and he formed South Beach Beverage Company, L.L.C. South Beach is a limited liability company organized and existing pursuant to the laws of the State of Connecticut.

Schwalm had worked in the beverage and beer industry for 25 years prior to South Beach's formation.

Beverage commenced an action in the United States District Court for the Southern District of New York against South Beach and Bello in 1997. The complaint alleges causes of action sounding in copyright infringement, trade dress infringement, trademark infringement, dilution under federal and New York law, product disparagement, misappropriation of trade secrets, breach of confidence, conversion and tortious interference with contractual relations.

By order dated November 17, 2000, Hon. Lawrence M. McKenna. U.S.D.J. dismissed Beverage Marketing's federal claims and declined to exercise pendant jurisdiction over Beverage Marketing's remaining state law claims. See, Beverage Marketing USA v. South Beach Beverage Corp., 2000 WL 1708214 (S.D.NY 2000). Judge McKenna's decision was affirmed by the United States Circuit Court of Appeals for the Second Circuit by order dated June 3, 2002. See, Beverage Marketing USA v. South Beach Beverage Corp., 36 Fed.Appx. 12 (2nd Cir. 2002).

In January 2002, Beverage Marketing and Hornell commenced this action asserting the state law claims that had been dismissed in the federal action. The complaint alleged causes of action for misappropriation of trade secrets, breach of fiduciary duty, conversion, tortious interference with contract, trade dress infringement and unfair competition. By order dated August 26, 2003 this Court dismissed the breach of fiduciary duty, conversion, tortious interference with contract, trade dress infringement and unfair competition causes of action.

Plaintiff moved for reargument from so much of this Court's August 26, 2003 order as dismissed the breach of fiduciary duty and unfair competition causes of action and for leave to serve an amended complaint asserting causes of action for breach of fiduciary duty and unfair competition. By order dated April 5, 2004, this Court granted reargument and reinstated the breach of fiduciary duty cause of action. The Court, however, denied Plaintiffs leave to serve an amended complaint alleging a cause of action for unfair competition. See, Beverage Marketing USA, Inc. v. South Beach Beverage Co., 2 Misc 3d 1009(A) (Sup.Ct. Nassau Co. 2004).

Plaintiffs appealed from so much of this Court's April 5, 2004 order as denied [*3]Plaintiff leave to serve an amended complaint alleging a cause of action for unfair competition. By order dated July 11, 2005, the Appellate Division reversed and granted Plaintiffs leave to serve an amended complaint alleging a cause of action for unfair competition. See, Beverage Marketing USA, Inc. v. South Beach Beverage Co., 20 AD2d 439 (2nd Dept. 2005).

As a result of the motion practice and appeal, the amended complaint pleads three causes of action; to wit: misappropriation of trade secrets, breach of confidence/fiduciary duty and unfair competition.

All of these causes of action are premised upon claims that Bello knew and used Beverage Marketing's confidential, secret or proprietary information in the operation of South Beach. Beverage Marketing asserts Bello misappropriated (1) flavor formulation; (2) tunnel pasteurization and the hot-fill process; (3) specialized knowledge on consumer preferences; (4) customer lists; (5) glass packaging technology; (6) labeling technology; (7) cost information; (8) supplier/co-packer information; (9) production methods; (10) distribution plans and strategies; (11) marketing techniques, plan and strategies; (12) order handling and billing process; and (13) business plans. Beverage Marketing asserts that all of these items were confidential, secret and/or proprietary.

South Beach, in its counterclaims, asserts claims for tortious interference with contract and tortious interference with prospective business relations.

South Beach alleges Beverage Marketing and Hornell used their market position to intimidate distributors and bottlers. The tortious interference with contract claim is premised upon allegations that Beverage Marketing threatened at least one distributor that it would no longer supply it with AriZona products if it continued to distribute South

Beach products. South Beach alleges that Plaintiffs forced this distributor to remove all of South Beach's products from retail outlets.

The tortious interference with prospective business relationship counterclaim is based upon similar allegations. South Beach alleges that Plaintiffs advised distributors that if they began to distribute South Beach products, they would no longer be permitted to distribute AriZona products. As a result, these distributors refused to enter into agreements to distribute South Beach products.

A.Summary Judgment - Standard

Summary judgment is a drastic remedy which will be granted only when the movant establishes that there are no triable issues of fact. Andre v. Pomeroy, 35 NY2d 361 (1974); and Moseyed v. Pilevsky, 283 AD2d 469 (2nd Dept. 2001).

The party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986); and Zuckerman v. City of New York, 49 NY2d 557 (1980).

Once the party moving for summary judgment has established a prima facie entitlement to judgment as a matter of law, the party opposing the motion must come [*4]forward with proof in evidentiary form establishing the existence of triable issues of fact or must establish an acceptable excuse for its failure to do so. Id; Davenport v. County

of Nassau, 279 AD2d 497 (2nd Dept. 2001); and Bras v. Atlas Construction Corp., 166 AD2d 401 (2nd Dept. 1991).

When deciding a motion for summary judgment, the court must determine if trial issues of fact exist. Matter of Suffolk County Dept. of Social Services v. James M., 83 NY2d 178 (1994); and Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957). The motion must be denied if the court has any doubt as to the existence of triable issues of fact. Freese V. Schwartz, 203 AD2d 513 (2nd Dept. 1994); and Groger v. Morrison-Knudson Co., Inc., 184 AD2d 620 (2nd Dept. 1992).

When deciding a motion for summary judgment, the court must view the evidence in a light most favorable to the party opposing the motion and must give that party all of the favorable inferences which can be drawn from the evidence. Negri v. Stop & Shop, Inc., 65 NY2d 625 (1985); and Louniakov v. M.R.O.D. Realty Corp., 282 AD2d 657 (2nd Dept. 2001).

B.Misappropriation of Trade Secrets

A trade secret is a formula, pattern, device or compilation of information which gives the possessor of the information an advantage over a competitor who does not possess the information. Ashland Management Inc. v. Janien, 82 NY2d 395 (1993); Beverage Marketing USA, Inc. v. South Beach Beverage Co., Inc., 20 AD3d 439 (2nd Dept. 2005); and Eagle Comtronics, Inc. v. Pico, Inc., 89 AD2d 803, (4th Dept. 1982).

Beverage Marketing has the burden of establishing that the 13 enumerated items are, in fact, trade secrets. Olde Kraft Co., Ltd. v. Davidian, 128 AD2d 689 (2nd Dept.), lv. den., 70 NY2d 605 (1987).

1.Flavor Formulation

Beverage Marketing alleges its formulas for Lemon Tea, Raspberry Tea, Diet Lemon Tea, Mucho Mango, Strawberry Punch, Kiwi-Strawberry, Kiwi-Grape, Peach Tea, Ginseng Tea, Lemonade, Tropical Chocolate drink and Pink Lemonade are trade secrets. South Beach produced drinks similar to Mucho Mango and Strawberry Punch.

There is no evidence to support the claim that South Beach misappropriated Beverage Marketing's formula for these drinks.

Beverage Marketing's formula for these flavors was developed by Allen Flavoring and provided to Wild Flavors, Inc. ("Wild"). Wild prepares flavors for competitors. Wild considers its customers' flavor formulas to be confidential and will not provide one customer with the flavor formula of another. Wild has specifically denied providing South Beach with any information regarding Beverage Marketing's flavor formulas.

Beverage Marketing has not done a chemical analysis of South Beach mango or strawberry drinks to establish its claim.

Bello denies having the formulas for any of Beverage Marketing's products.

Beverage Marketing was not the first bottler to produce a mango or strawberry flavored iced tea. Snapple and Snake River produced and marketed mango and [*5]strawberry-kiwi flavored drinks before Beverage Marketing did under the AriZona brand.

Beverage Marketing's argument can be summarized as AriZona and South Beach both market mango and strawberry drinks. Both use Wild as their flavor house to prepare the flavoring for their competing beverages. Wild must, therefore, use the same formula for both products. This logic fails.

There is simply no evidence in the record from which the Court can conclude that Defendants misappropriated the formula of any Beverage Marketing drink. Beverage Marketing's argument is supposition, not fact. Kane v. Estia Greek Restaurant, Inc. 4 AD3d 189 (1st Dept. 2004); and Tucker v. Elimelech, 184 AD2d 636 (2nd Dept. 1992).

2.Tunnel Pasteurization and Hot-fill Bottling Process

The first issue which must be determined is whether the tunnel pasteurization and hot-fill bottling are trade secrets. See, Ashland Management Inc. v. Janien, supra; and Starlight Limousine Service, Inc. v. Cucinella, 275 AD2d 704 (2nd Dept. 2000).

The tunnel pasteurization and hot-fill bottling process are not trade secrets or confidential information.

The hot-fill is a process used to eliminate bacteria, the need for preservatives and extend shelf life. This process had been used by food and beverage companies since the mid-1970's. The "1996 Beverage Contract Packing in the U.S." report

published by Beverage Marketing Corporation indicates that 61 co-packers had hot-fill capabilities.^[FN1]

The same is true regarding tunnel pasteurization. Tunnel pasteurization had been developed in the 1980's in response to consumer demand for food and beverages without preservatives. The 1996 Contract Packing in the U.S. report list at least five co-packers with tunnel pasteurization capabilities prior to 1995.

These processes had been used in bottling of non-carbonated fruit juices or drinks since the early 1990's.

A process that is widely used in an industry cannot be a trade secret or confidential. Ashland Management, Inc. v. Janien, supra.

3.Glass Packaging and Labeling Technology

The same is true with AriZona's bottles and labels. The process used to make AriZona bottles has been in use in the soft drink industry since 1967. Even if the shape or type of the bottle used by AriZona was proprietary, Beverage Marketing did nothing to protect it. The Beverage Marketing bottles are manufactured by Anchor Glass. Beverage Marketing does not have a confidentiality agreement with Anchor Glass. Anyone could have taken an AriZona bottle off the shelf and requested Anchor or one of its competitors to make copies for them.

The shape of the bottle used by South Beach was a result of its discussions with Anchor Glass and its co-packing agreement with Strohs Brewery ("Strohs"). South [*6]Beach's prototype bottle was square, similar to a Bombay Gin bottle. However, South Beach was advised by Anchor Glass that manufacturing such a bottle would be difficult and expensive. South Beach was also advised by Strohs that using such a bottle would create problem. As a result, South Beach adopted a bottle similar to the one Strohs was using for its Old Milwaukee Beer and St. Ides products. This size and shape bottle was adopted by South Beach because it would require a minimum change in the Strohs assembly line process.

Beverage Marketing used clear plastic glue-on labels which could be used in the tunnel pasteurization process. Beverage Marketing claims the process used to affix the labels to its bottles is confidential or proprietary. Beverage Marketing did not develop the process. The process was in the bottling of shampoo and cosmetics before the process was used by AriZona.

Don Vultaggio ("Vultaggio"), Beverage Marketing's president, conceded that AriZona did not develop this labeling process. He further acknowledged that AriZona did not have an exclusive right to use this labeling process. AriZona may not have been the first beverage manufacturer to use this process. In fact, anyone could have used the process. One cannot claim that a labeling process that was available to any

bottler is confidential or proprietary information. See, Cosmos Forms, Ltd. v. American Computer Forms, Inc., 193 AD2d 577 (2nd Dept. 1993).

4.Cost Information

Plaintiffs claim that their cost information is confidential. This includes the cost of the components of the beverage, manufacturing costs, distribution costs, advertising and promotional costs.

Defendants assert costs are well know throughout the industry. They rely upon Vultaggio's testimony in which he testified that he knew how Snapple, a competitor, structured its business.

Defendants did not produce evidence that Plaintiffs' costs were generally known information. Nothing in the record establishes that anyone outside of Beverage Marketing knew its various costs for the components of its beverages, the costs incurred to bottle and label its products, its distribution costs and/or advertising and promotional costs.

Defendants' expert, J. Ross Colbert ("Colbert"), asserts that people outside of Beverage Marketing knew the cost of its operations. Yet, Colbert's report does not indicate that he was aware of or able to extrapolate Beverage Marketing's costs. While multiple suppliers may have permitted each beverage company to shop around to get the lowest cost, nothing establishes that anyone outside of Beverage Marketing knew what its suppliers were charging Beverage Marketing. Nothing in the record establishes that anyone outside Beverage Marketing knew its production costs or its distribution, promotion or advertising costs. Defendants have failed to establish that this information was available to anyone other than the management of Beverage Marketing. Thus, there are questions of fact as to whether Beverage Marketing's cost information is confidential.

5.Distribution Plans and Strategies

Beverage Marketing's distribution plans and strategies may also be confidential [*7]information. Vultaggio testified that Beverage Marketing used a point of marketing sales approach as opposed to mass media marketing. However, he did not provide any details regarding the method Beverage Marketing used to get their products distributed or placed in retail outlets or restaurants. Colbert asserts one could ascertain Beverage Marketing's distribution and marketing strategy by interviewing co-packers, consultants, retailers and other brand owners and their distributors. He also asserts by analyzing information in the 1994 Beverage Directory, which lists every beverage distributor in the United States by name with the key contracts, brands, revenues, total employees and fleet size, one could identify a manufacturer's marketing strategy.

Although Defendants' expert asserts Beverage Marketing's distribution and marketing plan could be ascertained through this information, he never performed this analysis. Nothing in the record establishes precisely what method Beverage Marketing

used for the distribution and/or marketing of its products or whether that plan could be adduced from the foregoing information.

Defendants have failed to establish that anyone outside of Beverage Marketing was aware of the specifics of its distribution and marketing plans. Thus, questions of fact exist regarding whether these items are confidential or proprietary.

6.Customer Lists

Plaintiffs assert their customer lists are confidential. Their claim is premised upon an assertion that Bello had access to AriZona's customer list. Defendants assert that even though Bello had access to the customer list, there is no evidence that he actually took the list or utilized it in connection with his operation of South Beach.

A customer list will be treated as a trade secret when the names and addresses of the customers are not known in the trade or can be obtained only through extraordinary effort. Stanley Tulchin Assoc., Inc. v. Vignola, 186 AD2d 183 (2nd Dept. 1992); and Greenwich Mills Co. Inc. v. Barrie House Coffee Co., 91 AD2d 398 (2nd Dept. 1983). This is especially true where the customer's patronage has been secured through years of effort and advertising involving a substantial expenditure of time and money. Leo Silfen, Inc. v. Cream, 29 NY2d 387 (1972); and WMW Machinery Co. Inc. v. Koerber AG, 240 AD2d 400 (2nd Dept. 1997).

However, trade secret protection will not be accorded to customer lists where the names of customers and potential the customers are readily ascertainable. Leo Silfen, Inc. v. Cream, supra; and Atmospherics Ltd. v. Hansen, 269 AD2d 497 (2nd Dept., 2000).

Beverage Marketing has failed to establish what information was contained on its customer list, how the information on the list was obtained or compiled and/or what steps were taken to safeguard this information. For the purposes of this action, the term "customer" refers to distributors of AriZona products. There is a trade publication which lists the names of beverage distributors. Trade secret protection will not attach to customer lists where the information can be readily ascertained outside of the former employer's business unless the customer list was stolen or memorized. Amana Express International, Inc. v. Pier-Air International, Ltd., 211 AD2d 606 (2nd Dept. 1995). Since the names of beverage distributors is information which is readily available from trade publications, which were known to Bello and Schwalm based upon their collective [*8]experience in this industry, the names of Beverage Marketing's distributors, its customer list, cannot be considered a trade secret.

7.Supplier/Co-Packer Information

Co-packers are the bottlers retained by a beverage company to bottle its product. There are several hundred co-packers in the United States. Beverage Marketing alleges that only a select few co-packers have the ability to bottle products with the unique AriZona shape. Beverage Marketing asserts the names of the co-packers capable of bottling beverages in such bottles is a trade secret.

Beverage Marketing used Heilman Brewing Co, Inc. ("Heilman"), Premium Beverage Packers ("Premium"), Pokka Beverages, Inc. ("Pokka") and New Wave Beverage Inc. ("New Wave") as its co-packers. Bello admits that while he was employed by Beverage Marketing he learned that it used these co-packers.

South Beach initially used Stroh's Brewing Co. as its co-packer. South Beach attempted to retain Heilman as a co-packer but was unable to reach an agreement.

At some point, South Beach began to use New Wave and Pokka as co-packers.

Beverage Marketing did not have an exclusive agreement with any of its co-packers. Co-packers will bottle beverages for as many beverage companies as their plant facilities permit.

South Beach also asserts that the names of the co-packers that bottle Beverage Marketing products is public knowledge. The Beverage Marketing Directory is published annually by the beverage industry. This publication contains information about the bottlers and brands they bottle. The 1994 edition of the Beverage Marketing Directory indicated that High Grade Beverage Co., North Brunswick, New Jersey was a co-packer of AriZona products.

South Beach has failed to place before the Court any evidence establishing that the Beverage Marketing Directory ever indicated that Heilman, Premium, Pokka or New Age were co-packers of AriZona beverages.

Bello's unchallenged deposition testimony establishes that New Age is the only co-packer he learned about while at Beverage Marketing. New Age also co-packed South Beach and AriZona products.

South Beach and AriZona both used Premium as a co-packer. However, Bello did not learn that Premium was a co-packer of AriZona products until South Beach began to use Premium as a co-packager. Bello testified that Vultaggio unsuccessfully attempted to prevent Premium from co-packaging South Beach products.

Vultaggio's unsuccessful attempt to prevent Premium from co-packaging South Beach products establishes that co-packers can do business with any beverage producer even competitors.

The identity of Beverage Marketing's co-packers is not a trade secret or propriety information. None of the co-packers that bottled AriZona products had agreements preventing them from bottling competitors products. The Beverage Marketing Directory, which is published annually, provides all beverage companies with the names of co-packers. South Beach could determine if a co-packer was capable of bottling its produces by simply calling the co-packers listed in the directory. [*9]

8.Order Handling/Billing Process

Beverage Marketing has failed to demonstrate what makes its order handling or billing process confidential or proprietary. Even if it was, nothing in the record

establishes that South Beach adopted the same method for handling orders or billing that was used by Beverage Marketing.

9.Consumer Preferences

Beverage Marketing asserts that, through its experience in the beverage industry, it was able to determine which flavors customers preferred. It further asserts that, in 1994, it determined consumers wanted products with ginseng and herbs or ice teas with green tea. Thus, it began to develop these products. Certainly, any internal studies performed by Beverage Marketing regarding these products would be confidential. However, Beverage Marketing has failed to establish it conducted such studies or, if they did, that Bello was aware of them or any other information regarding new product development.

Anyone could determine the flavors Beverage Marketing was selling simply by going into a retail outlet that sold such products and see what was on the shelf.

South Beach's original product line sold poorly. South Beach was a struggling business. In late 1996, nearly two years after Bello had been fired by Beverage Marketing, South Beach began to develop and market products containing herbs, minerals and anti-oxidants. The largest selling product in this line was a Black Tea which combined ginseng, ginko and guarana. This is a flavor that AriZona never marketed.

The other beverages marketed by South Beach at that time were Oolong Tea with bee pollen, Red Tea with selenium, Green Tea with echinacea, SoBe energy, SoBe Cranberry Grapefruit elixer and SoBe Orange Carrot elixer.

To signal the change in product line, the South Beach name was dropped. The new products were marketed under the name SoBe.

There is absolutely no evidence which indicates that any of the new flavors South Beach marketed in late 1996 are knock-offs or copies of the products Beverage Marketing was developing in 1994 or which it marketed thereafter. There is no evidence that AriZona, either prior to late 1996 or subsequent to 1997, ever marketed the same or similar products.

Thus, the claim by Beverage Marketing that it had confidential information regarding consumer preferences is without merit.

10.Marketing Techniques, Plan and Strategy/Business Plan

AriZona was a model for a new company in this business. Its sales had gone from 700,000 cases in 1992 to a projected 22 million cases in 1994.

There are similarities between a 1995 Business Plan for AriZona and the South Beach Business Plan. If fact, at least one page in the South Beach Business Plan was copied in both form and format directly from the AriZona business plan. Vultaggio claims the AriZona business plan was a group effort in which Bello had significant input.

South Beach's Business Plan challenging AriZona in the super premium end of [*10]the cold bottle/single serve beverage market as its goal. The plan indicates that South Beach intended to avoid the mistakes made by AriZona and identifies those errors and internal problems existing at AriZona. The South Beach Business Plan indicates that it will attempt to use many of AriZona's marketing techniques.

The South Beach plan suggests that AriZona was faltering. It states that AriZona has structural and operational inadequacies causing inconsistent service, marketing difficulties, product quality problems, mixed results on new products, distributor dissatisfaction and lack of marketing support.

Much of South Beach initial marketing and business plan is designed to avoid problems alleged to exist in the production, marketing and distribution of AriZona products. Bello, as a high ranking officer of Beverage Marketing, as Vice President of Marketing and Sales, would have been aware of its marketing strategy and any problems existing in Beverage Marketing's production, distribution and/or marketing operation.

If Beverage Marketing's problems were not known to the anyone outside of its management, the marketing plan for South Beach, which Bello helped developed, could well be viewed as an attempt to exploit confidential information.

In view of this, questions of fact exist regarding whether South Beach misappropriated any of Beverage Marketing's business plan or is using inside information to unfairly compete.

11.Summary

Based upon the foregoing, Defendants' motion for summary judgment should be granted to the extent that the cause of action for misappropriation of trade secrets is premised upon Defendants misappropriating Beverage Marketing's flavor formulation, tunnel pasteurization, glass packaging and labeling technology, customer lists supplier and co-packer information, order handling and billing process and customer preference information. The motion should be denied as to Beverage Marketing's costs, distribution plan and strategy and marketing techniques, plan and strategy/business plan.

C.Breach of Fiduciary Duty

This cause of action is premised upon the allegation that Bello, while in the employ of Beverage Marketing, was secretly organizing South Beach.

An employee owes one's employer a duty of good faith and loyalty in the performance of one's duties. Wallack Freight Line, Inc. v. Next Day Express, Inc., 273 AD2d 462 (2nd Dept. 2000); and Maritime Fish Prods. v. World-Wide Fish Prods., 100 AD2d 81 (1st Dept. 1984).

In the absence of a covenant not to compete, an employee may form a business that competes with the former employer's business unless the former employee uses the former employer's trade secrets or employs fraudulent methods to compete. NCN Company, Inc. v. Cavanagh, 215 AD2d 737 (2nd Dept. 1995); and Walter Karl, Inc. v. Wood, 137 AD2d 22 (1st Dept., 1988).

There are several areas in which questions of fact exist with regard to Bello [*11]

and South Beach's use of material which may have been Beverage Marketing trade secrets.

Stephen Graeme ("Graeme"), a Vice President of Wild Flavors, testified that he spoke with Bello about Bello's desire to form his own beverage company in late 1994 or 1995. This might constitute a breach of fiduciary duty.

The court may not determine issues of credibility when determining a motion for summary judgment. Ferrante v. American Lung Assn., 90 NY2d 623 (1997); and Venetal v. City of New York, 21 AD3d 1087 (2nd Dept. 2005). Graeme's testimony, in this regard, raises questions of fact.

Beverage Marketing's assertion that Bello's meetings with Schwalm in October and November 1994 is not, however, a basis for a claim for breach of fiduciary duty. All of the parties to that meeting have submitted evidentiary proof that the organization of South Beach was not discussed at those meetings. Plaintiff's speculation with regard to what took place at those meetings is not a substitute for evidence establishing that Bello and Schwalm discussed the formation to South Beach at those meetings. See, Kane v. Estia Greek Restaurant, supra; and Tucker v. Elimelcech, supra.

Thus, the motion for summary judgment dismissing the cause of action for breach of fiduciary duty must be denied.

D.Unfair Competition

New York recognizes seven bases for a claim of unfair competition. They are: (1) monopoly; (2) restraint of trade; (3) trade secrets; (4) trademark or trade name infringement, (5) palming off; (6) misappropriation; and (7) false labeling or advertising. See, 2 NY PJI3d 3:58, at 525 (2007).

From the submissions on these motions, questions exist as to whether Bello was aware of and used some of Beverage Marketing's trade secret or confidential information in connection with South Beach.

South Beach may have misappropriated Beverage Marketing's skill, expenditures or labors. See, Electrolux Corp. v. Val-Worth Inc., 6 NY2d 556 (1959). Beverage Marketing asserts it developed the concept of "guerilla marketing." South Beach appears to have adopted the same or a similar marketing scheme as was used by Beverage Marketing.

Summary judgment dismissing the cause of action for unfair competition must denied.

E.Hornell

Bello never worked for Hornell. Furthermore, the information which Bello may have misappropriated was secret, confidential information belonging to Beverage Marketing.

In the absence of any showing that Hornell was in privity with Defendants or was damaged by them, the motion for summary judgment dismissing Hornell's claims must be granted.

F.Counterclaims

1.Tortious Interference with Contract

South Beach alleges it had an agreement with Burt's Beverages ("Burt's") in Bethel. Connecticut whereby Burt's agreed to distribute South Beach products in [*12]Fairfield and Litchfield Counties. Burt's also distributed AriZona products.

Vultaggio allegedly threatened to terminate Burt's as a distributor of AriZona products if it continued to distribute South Beach products. As a result, Burt's ceased distributing South Beach products. It also pulled all of the unsold South Beach products from the shelves of retailers to whom Burt's had distributed the product and returned them to South Beach.

Vultaggio also made a similar threat to B. Vetrano Distributors, Inc. of Hartford, Connecticut. As a result, Vetrano cancelled its agreement to distribute South Beach products on the eve of its first delivery.

Finally, South Beach alleges that Vultaggio advised Premium Beverage Packers of Reading, Pennsylvania that he would stop doing business with them if they did not bottle all of Beverage Marketing's product before they bottled any of South Beach's product. This is alleged to have caused Premium ignore orders placed by South Beach or shortening South Beach's production runs. As a result, South Beach had insufficient inventory to meet demand.

Tortious interference with contract involves an existing contract between plaintiff and a third party, defendant's knowledge of the contract, defendant intentionally procuring the breach of that contract and damages. Lama Holding Co. v. Smith Barney Inc., 88 NY2d 413 (1996); Kronos, Inc. v. AVX Corp., 81 NY2d 90 (1993); and Bernberg v. Health Management Systems, Inc., 303 AD2d 348 (2nd Dept., 2003).

If the contracts between South Beach and Burt's, Vetrano and/or Premium were terminable at will, South Beach must also establish that the contracts were cancelled as a result wrongful interference such as threats or fraudulent misrepresentations. Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 NY2d 183 (1980); Koeppel v. Schroder, 122 AD2d 780 (2nd Dept. 1986); and Automotive Electric Service Corp. v. Association of Aftermarket Automotive Distributors, 747 F.Supp. 1483 (E.D.NY 1990).

Beverage Marketing undeniably knew of the contracts existing between South Beach and Burt's, Vetrano and Premium. Even if these were contracts terminable at

will, Vultaggio and Beverage Marketing procured a breach of those contract by using the threat to withhold product or business as leverage.

There are questions of fact which mandate denial of the motion to dismiss this counterclaim.

2.Tortious Interference with Prospective Business Advantage

The elements of a cause of action for intentional interference with prospective business advantage are (1) defendant knew of the proposed contract between the plaintiff and a third party; (2) defendant intentionally interfered with the proposed contract; (3) the proposed contract would have been entered into but for defendant's interference; (4) defendant's interference was done in a wrongful manner; and (5) plaintiff sustained damages. NBT Bancorp. v. Fleet/Norstar Financial Group, Inc., 87 NY2d 614 (1996); and Guard-Life Corp. v. S. Parker Hardware Manufacturing Corp.,supra.

It is not quite clear from the papers whether South Beach had a distribution contract with Vetrano or whether Vetrano chose not to enter into a contract with South Beach based upon the threat by Vultaggio to withhold AriZona products. If Vetrano [*13]failed or refused to enter into a distributorship agreement with South Beach because of Vultaggio's threats, then the cause of action for tortious interference with prospective business relationship is sustainable. Therefore, the motion to dismiss this counterclaim must be denied.

South Beach's assertion that Beverage Marketing bought up most of South Beach's product from retail outlets so that it would not be available to customers so as to subvert South Beach's advertising campaign is not actionable under either tortious interference with contract or tortious interference with prospective business advantage. In order to establish a cause of action for tortious interference with contract, plaintiff must establish the existence of a contract between plaintiff and a third party. Lama Holding Co. v. Smith Barney Inc., supra. In order to establish a cause of action for tortious interference with prospective business advantage, the plaintiff must establish defendant intentionally interfered with a prospective contract between plaintiff and a third party. NBT Bancorp. v. Fleet/Norstar Financial Group, Inc., supra. In buying up most of South Beach's product, Beverage Marketing was not interfering with either an existing or potential contract.

Accordingly, it is,

ORDERED, that Defendants' motion for summary judgment dismissing the complaint is granted to the extent that the causes of action are premised upon misappropriation of flavor formulas, tunnel pasteurization and hot fill bottling process, glass packaging and labeling technology, customer lists, supplier/co-packer information, order handling/bill processing and consumer preference information and is, in all other respects, denied; and it is further,

ORDERED, that Defendants' motion for summary judgment dismissing all claims by Hornell is granted; and it is further,

ORDERED, that Plaintiffs' motion for summary judgment dismissing the counterclaims is denied; and it is further,

ORDERED, that counsel for the parties are directed to appear for a status conference on May 14, 2007 at 9:30 a.m.

This constitutes the decision and Order of the Court.

Dated: Mineola, NY_____________________________

April 11, 2007Hon. LEONARD B. AUSTIN, J.S.C.