Miyoko’s Lawsuit Says Founder & Ex-CEO Stole Company Property, Trade Secrets

Vegan cheese company Miyoko’s filed a lawsuit against its founder and former CEO Miyoko Schinner alleging she stole trade secrets and confidential information from the company after being dismissed last year. The suit, which was filed last Friday, documents a tense, and sometimes hostile, relationship between the company’s board of directors and Schinner, with the former trying to move Schinner into a non-executive role for years.

The lawsuit comes after several days of back and forth between Schinner and the alt-cheese company, including a press release by the company announcing Schninner’s departure as CEO as well as a LinkedIn post by Schinner accusing the board of ousting her over her objections. As justification for the executive changes, Miyoko’s stated that the company, which has raised $78.6 million from investors, needed new leadership in order to scale further.

“After discovering the extent of Schinner’s theft and her efforts to cover her tracks, the company exhausted all reasonable efforts to get Schinner to return all copies of the company’s confidential and proprietary information and to provide credible assurances of the same,” the complaint stated. “Schinner refused, and the company was forced to bring this action to protect its trade secrets and confidential information.”

In a complaint filed with the Northern District of California Federal Court on February 17, attorneys for Miyoko’s claim that Schinner stole thousands of documents, proprietary research and company property after being dismissed as CEO in June 2022. Schinner is also accused of owing roughly $112,500 in a promissory note to the company.

Based on data obtained from a forensic examination of Schinner’s laptop, the lawsuit alleges that Schinner, after the Miyoko’s board of directors voted unanimously to remove her as CEO, proceeded to download over 24,000 documents from the company’s cloud storage to an external hard drive before she was ultimately removed as an employee of the company in July 2022. The complaint goes on to state that the following month Schinner was recorded on security cameras working with another former employee to move several items, including cheese cultures, a refrigerator and “unreleased product prototypes,” into a moving van, and then directed the employee to download more documents from office computers (photos from lawsuit complaint are visible below).

“​​One of the folders Schinner took — titled “AA Archive” — contains imaging of the computers of every former employee of the company, including those in R&D. A sample review of that folder alone contains many proprietary culture configurations used to create the company’’s plant-based products,” the filing reads. “These culture configurations took years and substantial resources to develop. The folder also contains many proprietary company recipes.”

On September 8, 2022, the lawsuit states, the board discovered Schninner’s alleged actions, and sent multiple notices to the former CEO’s lawyers demanding their client stop utilizing her company laptops. Rather than comply, Schinner is accused of backing up her computer to online cloud storage service Dropbox in a folder named “Miyoko’s Creamery Files.” The complaint alleges that subsequent internet search history from her computer showed queries for “how to remove dropbox from my computer” and “will deleting dropbox folders from my computer remove it from the cloud.” Close to 3,000 documents were later deleted from Schinner’s company laptop.

In late September, Schninner turned over some of the company’s property, the lawsuit notes, including her laptops.

The documents also shed light on simmering tension between Schinner and the company’s board of directors that dates back to 2018 with the complaint alleging that Schinner was unable to manage the company as it expanded from a small local business to a nationally distributed brand. Despite repeated warnings and offers of coaching, attorneys for Miyoko’s argued in the filing, Schinner repeatedly failed to meet performance and financial targets in 2020 and 2021.

Schinner reportedly blamed that failure on company president Louis Kanganis, who was fired in February 2022. Lawyers suggested it represents a consistent pattern of behavior from Schinner’s time in charge.

“Under her leadership, Schinner fired seven executives. Instead of developing and maintaining a strong executive team as the Board requested, she made it difficult for her direct reports to succeed,” the complaint stated. “Schinnner would initially rave about new executives and promote them, but would later turn on a dime, villainize them, and fire them.”

Commercializing and expanding product offerings was also a struggle for Schinner, the complaint states. In 2020, Schinner allegedly “championed” a new shredded and sliced cheese product, but in September 2021 she “unilaterally discontinued” these products, which the board only became aware of after key retail customers had already been informed.

Though the board preferred Schinner move into a different leadership role, the lawsuit claims, she was given an opportunity to continue as CEO under the condition that the company achieved specific objectives and key results (OKRs) in the following quarter, which she failed to do.

Meanwhile, Schinner also signed a promissory note in September 2020, borrowing $112,500 from the company. Repayment for the principal amount and interest accrued on the outstanding principal was due following the 60th day after Schinners termination of employment. Having not made such a payment, the company said in the suit, Schinner is now in default.

Though much of Miyoko’s technology and recipes have their roots in Schinner’s original work, according to the suit, Schinner agreed to turn over such discoveries to the company as part of her employment. The filing also cites a July 2021 confidentiality agreement signed by Schinner that prevents her from disclosing “any confidential information of the company which I obtain or create.”.

Miyoko’s leadership also voiced concern that Schninner may open a competing business, citing an email she allegedly sent to the company three days after she was removed as CEO promising that she would “start my own retail shop or another company.”

Miyoko’s is seeking financial compensation and restitution including expenses, punitive damages and attorney fees. The company is also seeking an injunction to force Schinner to return all stolen property and enjoin her from using the reportedly stolen data. An initial case management conference is currently scheduled for May 17.

Miyoko’s declined to comment on this story.

Two of Miyoko’s newly appointed board members – Michele Simon, founder of the Plant-Based Food Association, and MALK founder and former CEO August Vega – have both posted on LinkedIn in support of Schinner, who also responded to news of the suit in a LinkedIn post. “I am shocked that certain board members have decided to file a lawsuit against me. There are wild untruths about me that are designed to destroy me and get me out of the way. I have been cooperative with the company since my termination,” she wrote early Sunday morning. “I fail to see how this is adding value to the brand that I — and other values-driven, passionate vegan former employees — worked so hard to build.”

“While I am eager to bring the truth to light, I am going to move with the care necessary to ensure that I am operating in accordance with my fiduciary duties as a Director and with applicable legal rules and guidelines (while I remain a Director, I am uncertain of how much sway or say I actually have),” the post continued. “As always, I thank you for your trust, your patience, and your support.”

This is a developing story that will be updated.