## Facts

- Southwest Whey, Inc. obtained whey from dairies and sold it primarily to customers west of the Mississippi River.
- Ross Peter owned and operated Nutrition 101, Inc., which sold feed to pork producers and had an established customer base of hog farmers.
- Seeking to expand east of the Mississippi River, Southwest Whey and Nutrition 101 entered a written joint-venture agreement on May 10, 1989.
- Under the joint venture, Southwest Whey would obtain whey from dairies, and Nutrition 101 would market whey to hog farmers east of the Mississippi River (and in other agreed areas).
- The joint-venture agreement did not include a post-dissolution noncompetition covenant.
- Neither company kept a written compilation of alleged trade-secret information during the venture.
- The parties’ contracts with dairies and farmers did not contain confidentiality or non-disclosure terms.
- Southwest Whey did not take other meaningful steps to keep information confidential (for example, it did not ask dairies or farmers to refrain from sharing information about pricing, delivery, storage, or sales practices).
- Southwest Whey dissolved the joint venture on September 16, 1993.
- After dissolution, Nutrition 101 continued efforts to market and distribute whey to hog farmers, and Southwest Whey sued, alleging (among other claims) misappropriation of trade secrets under the Illinois Trade Secrets Act (ITSA) based on Southwest Whey’s methods and practices for selling, marketing, and delivering whey.
- Nutrition 101 and Peter moved for summary judgment on the ITSA misappropriation claim, arguing Southwest Whey failed to take reasonable steps to maintain secrecy, and also sought summary judgment on Southwest Whey’s separate claim for breach of the duty of good faith and fair dealing.

## Issues

1. Whether Southwest Whey’s alleged methods and practices relating to the sale, marketing, and delivery of whey constituted protectable trade secrets under the Illinois Trade Secrets Act where Southwest Whey took no reasonable measures to keep the information secret.
2. Whether Illinois law permits an independent claim for breach of the duty of good faith and fair dealing separate from a breach-of-contract claim on these facts.

## Decision

- The court granted summary judgment for Nutrition 101 and Peter on Southwest Whey’s ITSA misappropriation claim, holding Southwest Whey could not show the existence of a trade secret because it failed to take reasonable steps to maintain secrecy.
- The court granted summary judgment for defendants on Southwest Whey’s standalone claim for breach of the duty of good faith and fair dealing, concluding Illinois does not generally recognize such a separate cause of action apart from breach of contract.

## Legal Principles

- Under the Illinois Trade Secrets Act, information qualifies as a trade secret only if it has independent economic value from not being generally known and is subject to efforts reasonable under the circumstances to maintain its secrecy.
- A trade-secret claim commonly fails where the claimant uses no confidentiality provisions, no non-disclosure agreements, and no practical controls on dissemination of the information to or by third parties (such as suppliers and customers).
- In Illinois, the duty of good faith and fair dealing is generally a rule used to interpret and apply contract terms; it does not usually support a separate, freestanding claim independent of breach of contract.

## Conclusion

The court entered summary judgment for Nutrition 101 and Ross Peter on Southwest Whey’s ITSA misappropriation claim because Southwest Whey did not take reasonable measures to keep its alleged business methods and practices secret, and it also rejected Southwest Whey’s separate good-faith-and-fair-dealing count because Illinois law generally treats good faith as part of contract enforcement rather than an independent cause of action.


Southwest Whey Inc. v. Nutrition 101, Inc., 117 F. Supp. 2d 770 (2000)