Judge says Crumbl challenger downloaded 66 recipes before leaving cookie company

Dirty Dough doesn’t have to stop opening franchises while the case continues, but Crumbl has ‘likelihood of success,’ judge writes

(Crumbl Cookies) The Logan-based Crumbl bakery chain has a "likelihood of success" in proving that a rival company took "trade secrets," a federal judge ruled on August 11, 2023.

In the latest salvo in Utah’s “cookie wars,” a federal judge has denied Crumbl, the Logan-based cookie-bakery chain, an injunction against one of its rivals.

However, in his ruling, Utah U.S. District Judge Howard C. Nielson Jr. wrote Crumbl “probably has shown a likelihood of success” in proving its claims that Dirty Dough LLC had taken “trade secrets” from Crumbl. Dirty Dough maintained the injunction would have destroyed its business.

The lawsuit started in May 2022, when Crumbl filed a complaint that claimed Dirty Dough took recipes and other proprietary information. Crumbl accused brothers Bennett and Bradley Maxwell of taking that information when each was involved with Crumbl — Bennett had been turned down as a franchise operator, while Bradley worked as a process engineer at the company.

Nielson’s ruling, issued Friday, details the facts of the case. It notes the Maxwells invested in Arizona-based Dirty Dough in 2019, each amassing a 15% equity stake in the company by May 19 of that year. On June 1, 2019, the judge wrote, Crumbl terminated Bradley Maxwell — but during his final week with the company, he downloaded 66 Crumbl recipes and other company information.

In September 2021, the ruling continued, Bradley Maxwell uploaded Crumbl’s documents to Dirty Dough’s Google Drive. Crumbl only found out about this after it filed its lawsuit, when a former Dirty Dough employee heard about the case and contacted the company.

After an evidentiary hearing in the case, detailed in Nielson’s ruling, both sides agreed that Dirty Dough and Bradley Maxwell would return Crumbl’s information and any documents derived from it, and that Maxwell would verify under oath that everything had been returned.

The injunction Crumbl sought against Dirty Dough would have ordered the smaller company to open no additional stores while the lawsuit remained active — and ordered Bennett Maxwell to “issue a corrective public statement conceding improper acquisition” of Crumbl’s information. Bennett Maxwell testified that Dirty Dough would “go out of business” without income from new franchise stores, according to Nielson’s ruling.

Nielson denied that injunction, writing that “Crumbl has not come close to showing that it still faces irreparable injury that could justify an economic death sentence for its nascent rival.” Nielson also wrote that forcing Bennett Maxwell to make “corrective public statement” violated his First Amendment rights through compelled speech.

The fact that Dirty Dough agreed to return the downloaded information to Crumbl made the injunction a moot point, Nielson wrote.

In a statement released Tuesday, Crumbl said the order to get Dirty Dough to return Crumbl’s information was “a significant legal victory,” and the company was “pleased and strengthened by the recent court order reinforcing our effort to safeguard our intellectual property.” The statement also said the company was “thrilled” with the judge’s comments about the “likelihood of success” that Crumbl would prove its claims.

Bennett Maxwell, in a statement released Tuesday, said he was “very happy” that Nielson denied Crumbl’s motion for an injunction.

“This lawsuit has always been about a greedy billion-dollar company suing multiple start ups for making cookies in attempt to stifle competition,” Maxwell said in his statement. “After 2 days in court, even more evidence has came to light proving the anticompetitive attempts Crumbl made by filing this lawsuit. I am looking forward to winning this lawsuit to hopefully stop Crumbl from suing even more cookie companies due to the shape of their box or use of sprinkles on cookies”

When Crumbl filed its lawsuit against Dirty Dough, it also sued another rival company, Utah-based Crave Cookies, and Crave counter-sued. Crumbl and Crave agreed in July to drop their legal actions against each other.

Dirty Dough fought back against Crumbl’s claims aggressively on social media, launching an Instagram campaign in July 2022 that introduced the hashtag #UtahCookieWars and declared “We’re not backing down!” Crave, on the other hand, kept a low profile.

Crumbl’s website now lists 883 locations nationwide, in all 50 states and Puerto Rico. It has 29 locations in Utah, where the chain started in 2017 while one of its co-founders, Sawyer Hemsley, was attending Utah State University.

Dirty Dough boasts on its website 32 locations in nine states — 14 of them in Utah — and plans for 62 more nationwide. Crave’s website lists eight locations in Utah, plus four more in Louisiana, Tennessee, Florida and Washington, with plans to open one in Salt Lake City’s Foothill Village and another in Arizona.