Ecoark Holdings and Zest Labs File $2 Billion Complaint Against Walmart

Complainant alleges violation of the Arkansas Trade Secrets Act, violation of the federal Defend Trade Secrets Act, unfair competition, unjust enrichment, breach of contract, breach of the covenant of good faith and fair dealing, conversion and fraud

Zest Labs™, an AgTech company modernizing the post-harvest fresh food supply chain, along with Ecoark Holdings, Inc., its parent company, have filed a complaint against Walmart in the United States District Court for the Eastern District of Arkansas, Western Division. The complaint is for violation of the Arkansas Trade Secrets Act, violation of the federal Defend Trade Secrets Act, unfair competition, unjust enrichment, breach of contract, breach of the covenant of good faith and fair dealing, conversion and fraud. The damages at issue exceed $2 billion.

Zest Labs developed Zest Fresh, which is proven to significantly reduce field to shelf food waste while improving delivered freshness to consumers. The data and insights provided by Zest Fresh also help growers, food distributors and retailers reduce the $85 billion problem of fresh food waste.

Zest Labs describes its solution for fresh produce as follows:

Zest Fresh is an autonomous, cloud-based post-harvest freshness management solution unlike anything else on the market today. It improves delivered quality and reduces losses due to temperature handling and processing by 50% or more by intelligently matching customer freshness requirements with actual product freshness.

Zest Fresh provides growers with the ability to proactively manage for fresh food supply chain variability. With Zest Fresh, time, temperature, location and other data is autonomously monitored for each pallet of produce from harvest to pack house to DC, providing complete visibility to the pallet’s adherence to the grower’s process. Zest Fresh dynamically calculates the remaining shelf life for each pallet of produce and immediately provides alerts when out of process activities impact shelf life so growers can proactively respond to maximize value and freshness.

Many factors contribute to product quality such as color, firmness, size/count and/or brix measurements. ZEST Fresh combines this data with scoring process adherence for steps such as cut-to-cool time and temperature, pre-cooling product temperature, storage and shipping to create a Zest Intelligent Pallet Routing Code (ZIPR Code) for each pallet. This ZIPR Code is then matched to pending orders to ensure each pallet has sufficient remaining freshness to meet the retailer’s needs. The ZIPR Code ensures that customer shipments are loaded correctly, and that quality is tracked through actual delivery – providing the grower with visibility of delivered quality.

Starting in 2015, Zest Labs engaged with Walmart to demonstrate the value of Zest Fresh to reduce waste and improve delivered shelf life consistency. During this time, Zest Labs’ proprietary information and trade secrets were shared with Walmart, including members of Walmart’s executive leadership team.

In March 2018, Walmart publicly announced that, after six months, it had developed Eden to “keep track of food freshness all the way from the farms to our stores” and to, “eliminate $2 billion in waste over the next five years.”

“We were surprised and concerned by how similar Walmart’s Eden description was to Zest Fresh,” said Peter Mehring, CEO of Zest Labs. “Like most innovative companies, we believe strongly in the need to protect our intellectual property, recognizing the importance of preserving the value for our shareholders and customers. Zest Labs challenged long held beliefs at most retailers by properly identifying the primary contributing factor to pre-consumer waste. We then defined and implemented a breakthrough, proactive approach to managing fresh food from the farm to the shelf, significantly reducing that waste.”

The case is Zest Labs, Inc. et. al. v Walmart, Inc. case number 4:18-cv-500-JM, in the United States District Court for the Eastern District of Arkansas, Western Division.

Now Working with Costco

On July 26, Zest Fresh also announced that it is working with Costco Wholesale. Costco is utilizing the Zest Fresh™ solution to further define and verify best practices that ensure delivered freshness for their produce and provide end-to-end fresh food supply chain visibility.

Costco Wholesale is currently working with Zest Labs to optimize delivered freshness of produce from suppliers in California to warehouses on the west and east coasts. Initial work is underway to provide analytic insights about their supply chain to help better manage freshness.

“Costco Wholesale is a pioneer in the retail industry and we’re thrilled to be working with them to help improve the delivered freshness of produce for their members,” said Mehring. “Zest Fresh helps to proactively manage the fresh food supply chain to maximize delivered shelf life, reduce store waste by 50% or more and deliver value that drives customer satisfaction.”