‘It’s been a very dark week…’ Miyoko Schinner hits back as company accuses her of ‘hatching plot’ to steal IP

Miyoko’s Creamery founder Miyoko Schinner tells AFN she did “not steal any trade secrets” and has “no desire to get back into CPG,” after the firm accused her in a lawsuit of “hatching a plot to steal company property and trade secrets” after being removed as CEO last summer.

Schinner—who was removed as CEO in June 2022, and terminated as an employee on August 12, 2022—claims she was “blindsided” by the lawsuit,* filed the same day Miyoko’s issued a press release announcing an ‘executive transition’ (February 16).

Schinner claims she’d had disagreements with the board over strategy, while a key investor and board member told AFN last week that she lacked the skillset to take the firm to the next level. The lawsuit also alleges that in Q1, 2022, the “senior leadership team brought multiple concerns about Schinner to the board and threatened to quit due Schinner’s mismanagement.”

Speaking to AFN on Sunday night, Schinner said: “We’d been having talks as recently as Tuesday (February 14) and there was no indication this [lawsuit] was going to happen.

“I don’t know what it is they’re trying to do, but I don’t think it’s helping the brand. Destroying me isn’t going to make the company more valuable for an acquisition if that’s what they [key investors] want.”

Digital trail, video surveillance

According to the complaint, Schinner allegedly “raided the company’s internal cloud storage and downloaded vast amounts of data, including research & development (R&D) materials containing the company’s most valuable intellectual property: its proprietary recipes and plant-based culture configurations.”

The lawsuit further alleges Schinner copied company data including 24,000 documents “to her personal cloud storage and tried to cover her tracks by deleting the cloud-sync folder and documents from company laptops.”

It also includes video surveillance evidence it claims shows Schinner and a former employee (who is not a named defendant) removing cheese cultures and product prototypes from a warehouse “illegally and without the company’s authorization” after her employment had been terminated.

After Miyoko’s counsel notified Schinner of her preservation duties, alleges the lawsuit, “she accessed her company-issued computers, copied the company’s trade secrets to her personal cloud-based platforms and deleted thousands of documents from the computers before eventually returning the computers to the company.”

‘I just want to save animals and promote the vegan lifestyle’

Schinner said she couldn’t get into details about specific allegations in the lawsuit but said she “did not steal trade secrets” and has no plans to start a new CPG company.

“It’s been a very dark week. I’m 65 years old and I am trying to reinvent myself again. I just want to save animals and promote the vegan lifestyle.”

Her focus is now on nonprofit work, getting back into cooking and teaching, and starting a YouTube channel, claimed Schinner, who remains a major shareholder and controls three of the company’s seven board seats (one she occupies herself, the other two are held by Michele Simon and August Vega). The other seats are held by investors including PowerPlant Partners, Obvious Ventures and Cult Capital.

She added: “There are wild accusations in there, but I think the truth is going to come out. All I can say is that I have cooperated every step along the way. I have not sued the company because I don’t want to impact the brand. I have early shareholders, friends and family, people that believed in me that put their hard-earned money into the company, and I don’t want to destroy its potential for them.”

Attorney: ‘It undermines a claim of trade secret misappropriation if you’re letting her keep her company computer after you’ve terminated her’

Dale Giali, partner at law firm King & Spalding, told AFN he was surprised Miyoko’s had not sought a preliminary injunction or temporary restraining order to stop the defendant from using or disposing the trade secrets, which “might suggest it’s more for show than them being really concerned.”

Giali said he was also surprised Schinner retained access to company laptops after her employment was terminated, although the case was unusual in that as the founder, she retained a board seat.

“Miyoko is an icon in this space, and it looks like they were trying to find an accommodation with her [about her ongoing role in the company],” said Giali, who is not representing either party.

“But it undermines a claim of trade secret misappropriation if you’re letting her keep her company computer after you’ve terminated her, and after she’s told you she’s starting a new company.”

According to the complaint, details of Schinner’s alleged attempts alone and with colleagues to obtain the information were only discovered following an investigation in September.

‘She would not be allowed to take specific recipes or prototypes’

Giali added: “Miyoko absolutely has the right to start a competing business using her know-how and any and all information from the company that is not a trade secret or confidential. So she would not be allowed to take specific recipes or prototypes, for example.”

It’s unusual that two other employees referenced in the lawsuit who allegedly assisted Schinner in securing documents or physical items are not named as defendants, he added. “If you name them, they are subject to the rules of discovery and have to accept notices of deposition and document requests.”

‘This could get very expensive’

So how might this play out?

According to Giali: “This could get very expensive. If Miyoko has confidential trade secret information in her possession, she needs to give it back, destroy all copies, and then the conventional path is the company would want her to swear under oath that she did not provide it to anybody else.

“That is probably about 90% of the way to resolve the dispute.”

William Cole, partner at law firm Amin Talati, added: “The complaint is just an allegation, but it is rarely a good look to download large amounts of a former employer’s files at or near the time of termination. Obviously, timing alone can be a huge red flag for a jury.

Michele Simon: ‘I can only conclude that this is part of an ongoing, deliberately planned smear campaign to disparage Miyoko’s stellar reputation’

Michele Simon—founder of the Plant Based Foods Association—who joined the board at Miyoko’s earlier this month, told AFN the lawsuit “does not further any of the company’s goals.”

“I was informed on Friday morning that the lawsuit had been filed. It came as an absolute shock to me and makes no sense. Based on this and last week’s media, I can only conclude that this is part of an ongoing, deliberately-planned smear campaign to disparage Miyoko’s stellar reputation,” she said.

She added: “I am mystified as to the purpose here. It certainly does not further any of the company’s goals. Instead, we should all be working towards resolution of this matter.”

Company: Schinner ‘proved time and time again she could not manage a rapidly expanding business’

According to the lawsuit:

• Schinner ‘proved time and time again she could not manage a rapidly expanding business.’
• “After learning she did not meet 2021 performance targets, Schinner declined to take responsibility and propose a plan to meet performance objectives in the future. Instead, she shirked responsibility, blamed the then-president of the company, and fired him.”
• “Schinner would initially rave about new executives and promote them, but would later turn on a dime, villainize them, and fire them.”
• “On July 12, 2022, the company informed its workforce that Schinner was stepping down as CEO. From that point forward, Schinner intentionally disrupted company operations and signaled her intent to start her own company to compete with the company.”
• “On July 15, 2022, she wrote to the company’s president: ‘I will start my own retail shop or another company.'”
• On Sept 8, 2022, the company issued notices to Schinner’s counsel “advising her of her legal obligations to preserve everything relating to its investigation of her company-issued laptops. Schinner did neither.”
• “Forensics… revealed Schinner backed up nearly the entire contents of the company’s documents from her company-issued laptops to her personal Dropbox and Google Drive.”
• “The company exhausted all reasonable efforts to get Schinner to return all copies of its confidential and proprietary information…Schinner refused, and the company was forced to bring this action to protect its trade secrets and confidential information.”

AFN has reached out Miyoko’s acting president Jon Blair, investors PowerPlant Partners and Obvious Ventures, and new board member August Vega for additional comment on this breaking story.

*The case is: Miyoko’s, PBC, v Miyoko Schinner. Case 4:23-cv-00711, filed in the Northern District of California February 16. Schinner is accused of breaching a confidential information and invention assignment agreement she signed in July 2021; violating the Defend Trade Secrets Act; and violating the Uniform Trade Secrets Act.