In this May 2002 file photo, former Panera Bread Co. CEO Ron Shaich stands behind a counter at a location in St. Louis. - Tom Gannam / AP Photo In this May 2002 file photo, former Panera Bread Co. CEO Ron Shaich stands behind a counter at a location in St. Louis. - Tom Gannam / AP Photo

Panera’s Ex-Owner in Legal Tussle Over Talent With New Owners

Tensions between Panera Bread Co. and its former owner are rising faster than the dough stuffed into the restaurant chain’s ovens as the two sides bicker over attempts to poach some top information-technology workers.

St. Louis-based Panera and founder Ronald Shaich, who ran the fast-casual chain for more than three decades before selling it in 2017 for $7.5 billion to investment firm JAB Holding Co., have filed dueling lawsuits in Delaware and Missouri.

Shaich wants to hire three tech experts from Panera to work for his new restaurant-management company, Act III Management LLC, which holds stakes in chains such as Tatte Bakery and Cafe, Cava Mezze Grill, Zoe’s Kitchen and Life Alive Organic Cafe. Panera is trying to block the offers, saying the workers are covered by non-compete agreements.

Shaich said he was disappointed his former colleagues decided to ignore agreements allowing him to make offers to Panera employees.

“I would never do anything to hurt Panera or violate its trade secrets,” Shaich said in an interview. “But I think people should have the right to work where they want to work. We are asking the court to step in and allow that.”

Panera said Act III’s suit is unfounded.

“The talent, work and dedication of Panera’s valued employees have created a unique restaurant experience for our guests, who have responded by establishing Panera among the country’s leading online businesses and most trusted restaurant brands,” the company said in an emailed statement.

Direct Competitor

Panera sued the three employees in federal court in St. Louis Thursday, asking a judge to bar them from jumping to Shaich’s operation because Act III is a direct competitor. They also said the employees should be banned from sharing Panera’s trade secrets.

That lawsuit came about a week after Act III sued in Delaware Chancery Court, accusing Panera of ignoring agreements it signed when Shaich left the board last year.

The company “categorically rejected” Act III’s request to free the workers from their non-compete obligations and summarily fired them, Shaich said in his lawsuit. By violating Shaich’s agreements, Panera “intentionally and maliciously interfered with Act III’s contract rights with” the workers, he said.

Panera said in its lawsuit that the three workers — Jim Dobson, James Phillips and Krish Gopalakrishnan — have valuable knowledge that has helped the company succeed. The chain has 2,300 locations across the country.

“Panera earned and maintained its position atop the ‘fast-casual’ market for decades through technological innovation,” the company said in its lawsuit. “Panera’s technology became the company’s competitive advantage in the industry and the company’s most important asset.’’

Shaich is seeking to recreate Panera’s computer systems for his new venture and engaging in “tortious interference” with the chain’s employment agreements, according to the suit.

The cases are Panera LLC v. James Dobson, 19-cv-00272, U.S. District Court for the Eastern District of Missouri (St. Louis), and Act III Management LLC v. Panera Bread Company, 2019-0111, Delaware Chancery Court (Wilmington).

©2019 Bloomberg L.P.

This article was written by Jef Feeley from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected].

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