Jury Hits Walmart Harder in Trade Secrets Retrial, Awards $222.7M to Zest Labs

A Walmart location in Indianapolis (Shutterstock)

The retrial of a trade secrets case against Walmart Inc. resulted in a worse outcome for the Bentonville retailer as a Little Rock federal jury on Tuesday awarded a California technology company $222.7 million — more than twice the amount a different jury awarded it in 2021. 

The jury awarded Zest Labs Inc. of San Jose, California, $72.7 million in compensatory damages and $150 million for punitive damages, making it one of the largest jury verdicts awarded in federal court in Arkansas. 

The amount was more than Zest requested. 

“The jury heard the evidence and concluded that Walmart stole Zest’s revolutionary technology and incorporated it into a patent that was later published, destroying Zest’s trade secret,” Patrick Ryan of Bartko Pavia LLP of San Francisco, Zest Lab’s lead trial counsel, said in a news release. “The jury found that Walmart’s conduct was willful and malicious; thus, they sent a strong multi-million dollar deterrent message to companies like Walmart who might contemplate stealing the trade secrets of other small companies.”

Zest created the Zest Fresh Solution to use in produce supply chain logistics. The technology could reduce food waste by predicting when food would expire based on a complex process of combining and analyzing data from every stage of the supply chain in order to constantly recalculate the predicted shelf life of produce using machine learning, the news release said.  Zest touted the technology would reduce billions of dollars in produce from being thrown into the trash while at the same time helping the environment, the release said. 

“Zest shared the details of its trade secret Zest Fresh Process with Walmart under a non-disclosure agreement with the expectation that Walmart planned to deploy the Zest Fresh Process across Walmart,” according to the news release. “But Zest presented evidence to the jury that Walmart went from a customer to a competitor when it secretly planned to develop its own competing technology using Zest’s trade secrets and eventually filed a secret patent on Zest’s own technology. The patent eventually published, destroying Zest’s trade secret.”

Zest also was represented by Scott Richardson and Brittany Webb of McDaniel Wolff PLLC of Little Rock, and H. Christopher Bartolomucci of Schaerr | Jaffe LLP of Washington, D.C., and Kate M. Falkenstien of Blue Peak Law Group LLP.

In a statement, Richardson said, “A jury of 11 Arkansans stood up to one of the largest companies in the world and delivered a powerful message: Walmart cannot steal technology from smaller innovators and get away with it. We are proud to have helped Zest Labs achieve justice, and we’re grateful that the jury recognized the value of Zest’s groundbreaking work and the importance of protecting it.”

Zest hired Bartko Pavia after U.S. District Judge James M. Moody Jr. of Little Rock ordered a new trial in December 2023, after new evidence was discovered that he said might have changed the outcome of the 2021 trial. That evidence was tied to the discovery phase of the first trial, when Walmart handed over to Zest’s lawyers thousands of pages of documents, including Walmart’s patent applications.

Walmart said in filings that if Zest believed the applications contained Zest’s trade secrets, Zest had a duty to take reasonable steps to keep them confidential by trying to stop the U.S. Patent & Trademark Office from making them public.

Walmart said if Zest had done that, there might not have been a case. Instead, Walmart said, Zest did nothing to prevent the applications going public. Zest had accused Walmart of using the patent information and disclosing it. 

A Walmart spokeswoman told Arkansas Business Tuesday that the retailer “strongly disagrees” with the verdict and believes it’s not supported by the facts.

“Zest Lab’s unethical behavior has compromised the integrity of this case from the start,” the spokeswoman said via email. “We expect our suppliers to uphold the highest ethical standards and will continue to advocate for fairness and justice, including pursuing an appeal and post-trial motions.”

Bartko Pavia said in the news release that the final judgment will also need to be adjusted to take into account interest and attorneys’ fees.