Specified Testing Labs, LLC v. Dunn

Background

Plaintiffs Specified Testing Labs, LLC and Hydro Technologies, LLC asked for a preliminary injunction, meaning a temporary court order issued before the case is resolved. They sought restrictions against Defendants Elizabeth Dunn and York Analytical Laboratories, Inc. The opinion identifies the plaintiffs collectively as Specified/Hydro and the defendants collectively as Dunn and York.

The court stated that it had reviewed the proposed order to show cause, the plaintiffs’ supporting materials, the defendants’ opposition materials, and the plaintiffs’ reply materials. A hearing on the preliminary-injunction request was scheduled for April 20, 2022.

Questions About Harm and Trade Secrets

The court asked the plaintiffs to clarify when they allegedly suffered economic or irreparable harm and why they waited to seek relief after learning that Dunn was leaving and that York had acquired Aqua. It also asked what harm the plaintiffs claimed would occur without an injunction.

The court requested specific information about the alleged confidential information and trade secrets, including:

- Where the information and trade secrets were identified in the complaint; - Whether the plaintiffs’ list was complete; - What the customers’ “unique testing requirements” meant and whether they were public, customer-owned, confidential, or protected by the plaintiffs; - What the sample-collection calendar program was, whether it was publicly known, and whether it used proprietary software; - What procedures employees followed in scheduling, sampling, analyzing, reporting, and managing the laboratory business; - How many employees had access to the information and procedures; and - How the information and procedures were protected and why they were unique or proprietary.

The court also asked whether the plaintiffs’ claim depended on the information being protectable only when considered as a whole rather than as individual items, and what legal support existed for that position.

Questions About the Restrictive Agreements

The court asked where the plaintiffs discussed the reasonableness of a 300-mile regional restriction and whether courts had upheld similar restrictions. It asked whether Specified/Hydro served customers throughout that area, whether its licenses or certifications were limited to Connecticut and New York, and whether the restriction would prevent Dunn from working in her field of expertise across parts of multiple states.

The court also asked about the plaintiffs’ position that the court could narrow an overbroad restrictive covenant. It requested case law addressing both whether a court may narrow such a restriction and whether doing so is impermissible.

The court asked whether Dunn admitted lying to Einwohner about where she planned to work and, if so, whether that conduct affected the preliminary-injunction analysis.

Questions About Evidence and Customer Losses

The court asked whether Specified/Hydro had an internal computer network and email system, and whether the record showed that Dunn took confidential information or trade secrets when she left.

The court also sought details supporting the plaintiffs’ statement that they lost approximately 10 percent of their long-time customers between February 1 and March 11, 2022. The requested details included the number of customers before the losses, the customers’ names, how many moved to York, what evidence showed where they went, whether Dunn contacted them, and whether additional customers later left for York or other testing companies.

The court separately asked what evidence showed that York was using the plaintiffs’ confidential information or trade secrets.

Questions About Dunn, Employees, and the Aqua Acquisition

The court asked about the systems and protocols Dunn allegedly developed during her 27 years at Hydro and its predecessor, how many employees knew about them, whether those employees had confidentiality restrictions, whether the systems and protocols were written down, and whether there was evidence Dunn copied or took them.

It asked similar questions about customer information Dunn allegedly developed, including whether that information was recorded and whether Dunn copied or removed it. The court also requested information about the number of Specified/Hydro employees, how many had worked there longer than Dunn, and how many earned more than Dunn.

The court asked about alleged solicitation of customers and employees, including Jeff Hoyt, Sierra Mayerson, and Rebecca Warren. It asked whether those individuals had employment or non-compete agreements, whether they said Dunn solicited them, how long Dunn had worked with them, and whether giving a positive opinion about a former coworker could qualify as solicitation under the agreements.

The court also asked whether Dunn participated in York’s acquisition of Aqua, whether she had hiring authority at York, whether any prospective clients she identified had been Specified/Hydro customers, and whether York could provide the same services as Specified/Hydro before the acquisition.

Finally, the court asked about the significance of Dunn’s former position as Hydro’s president, the meaning of “major stockholder” in the cited sale-of-business cases, and whether the restrictive agreements created a combined period of five to ten years.

Disposition

Judge Vernon S. Broderick ordered the parties to be prepared to answer the listed questions, among others, at the April 20 hearing. The opinion does not state that the court granted or denied the preliminary-injunction request.