SALT LAKE CITY — A federal judge will decide whether to block a cookie company from continuing to expand as it faces a lawsuit from a competitor accusing it of stealing trade secrets and copying its business model.
It's the latest salvo in an escalating legal war over gourmet cookies that are incredibly popular in Utah and surrounding states, with cookie shops popping up all over and fans picking sides.
Crumbl is suing Dirty Dough, accusing the cookie company of obtaining proprietary information, including recipes. Dirty Dough has denied wrongdoing and says the case is "about a billion dollar company trying to stifle competition." Crumbl is asking for the judge to order a pause on Dirty Dough's franchising and a public apology for what it says have been misstatements throughout the legal dispute.
"The relief they’re asking for in the injunction would put Dirty Dough out of business, which I think is the objective," Doug Farr, the attorney for Dirty Dough, told FOX 13 News outside court.
On Thursday, U.S. District Court Judge Howard Nielson Jr. heard testimony from the leaders of both companies. Crumbl CEO Jason McGowan testified that his gourmet cookie company had many competitors.
"I do believe these companies are copying many aspects of our business," he told the judge.
McGowan testified that Crumbl takes many steps to protect its business information, including internal apps, PIN codes to unlock recipes, and special packets with ingredients to add to their cookies. In court on Thursday, he delicately tried to testify about how Crumbl makes its famed chocolate chip cookie without revealing too much.
"I think it’s very possible Dirty Dough is using lots of our processes and learning from our recipes," McGowan told the court.
The company has accused an ex-employee, Brad Maxwell, of taking recipes and other internal documents and giving them to Dirty Dough. Maxwell's brother, Bennett Maxwell, is a founder of Dirty Dough.
Brad Maxwell's attorney argues that his client had proper access to the documents during his time as a Crumbl employee. He insists they are not trade secrets, nor was his client under a confidentiality agreement from Crumbl.
"It’s our view Mr. Maxwell didn’t do anything improper or incorrect," said his attorney, Sean Egan. "We don’t believe they documents they are claiming created confidentiality obligations apply to Mr. Maxwell, that’s certainly not how he understood the documents."
But Crumbl has also alleged that during the litigation, Brad Maxwell installed malware onto his computer in an attempt to sabotage things. Egan told the judge in his opening statements that while his client acted impulsively out of frustration, no files were corrupted.
"Dirty Dough did not make any use of the documents that were there," Farr said outside court.
On the witness stand, Bennett Maxwell walked through the processes of how Dirty Dough makes cookies and what makes them different, pointing out the fillings and layers their treats have. He also believed the stores and their operations are different.
Questioned about the documents, Bennett Mawell disputed that what was provided was any kind of trade secret, bound to a confidentiality agreement or even a recipe, as it was not complete.
"I also dispute that they were stolen," he said.
At times, the Dirty Dough executive's testimony got tense and Judge Nielson had to tell him to directly answer the lawyer for Crumbl's questions. But Bennett Maxwell told the court that if Crumbl got its way and blocked franchise payments, it would put Dirty Dough out of business.
Judge Nielson did manage to get all sides to agree to one of Crumbl's demands, at least in principle. He brokered an agreement with the lawyers for Dirty Dough and Brad Maxwell to return the disputed documents to Crumbl and verify to the court it had been taken care of.
"We've always been willing to return those items. That’s never been an issue from our standpoint," Egan told FOX 13 News outside court.
Judge Nielson said he would wait to rule on Crumbl's remaining request for an injunction. Crumbl's attorney, Case Collard, declined to comment to FOX 13 News as he left court with McGowan.
Crumbl has another lawsuit pending in federal court against Crave, accusing that cookie business of copying some of its business model.
