Walmart Inc. reached a settlement with Zest Labs and won’t appeal a federal jury award of $222.7 million the California technology company received in May in a trade secrets case.
U.S. District Judge James M. Moody Jr. said in an order filed Monday that he had been notified that the case has settled. An order of dismissal will be filed within 15 days, and both sides have until then to file any remaining motions, he wrote.
Walmart said in a statement to Arkansas Business on Monday that Zest Labs Holdings LLP, Zest Labs Inc. and Walmart “have agreed to a confidential settlement that resolves all issues between them.” The lead trial counsel for Zest Labs, Patrick M. Ryan of Bartko Pavia LLP of San Francisco, issued a similar statement.
Zest first sued the Bentonville retailer back in 2018 over allegations that Walmart stole Zest’s revolutionary technology and incorporated it into a patent that was later published, destroying Zest’s trade secret.
Zest received a $110 million judgment after the trial in 2021, but Moody 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. That would include trying to stop the U.S. Patent & Trademark Office from making them public.
Walmart said if Zest had done that, there might have been no case. Instead, Walmart said, Zest did nothing to prevent the applications going public, then accused Walmart of using the patent information and disclosing it.
After Moody ordered a new trial, Zest hired the law firm of Bartko Pavia LLP of San Francisco.
The jury awarded Zest $72.7 million in compensatory damages and $150 million in punitive damages, making it one of the largest jury verdicts ever awarded in federal court in Arkansas. The $150 million punitive ruling will be reduced by $4.6 million, however, because under the federal Defend Trade Secrets Act, the most Zest could receive is twice the amount of compensatory damages.
Bartko Pavia’s Ryan told Arkansas Business in June that Zest’s product was “truly a really important revolutionary piece of technology which could have reduced global food waste by billions a year and that technology was destroyed here.
“So the jury got this. The jury really got this.”
Zest isn’t operating these days.
“The hope is that when Zest gets this money, they can find a way to re-inject themselves into this area of technology,” Ryan said.
“But it’s challenging because their core technology was made public by Walmart, so it’s very challenging for them to re-engage.”
Sign up for Daily E-news
