Henry Schein v. Cook: Trade Secrets

Weeks after the Defend Trade Secrets Act became law, a California court granted one of its first restraining orders against a departing employee, and nobody reached for the statute's dramatic ex parte seizure remedy.

When the Defend Trade Secrets Act was signed into law in May 2016, two features drew the most attention: a new federal civil cause of action for trade-secret theft, and a startling new power letting courts order the ex parte seizure of property to stop a secret from escaping. Within weeks, a Northern District of California judge had to apply the new statute for the first time, and the seizure power never came up. Henry Schein, Inc. v. Cook, 191 F. Supp. 3d 1072 (N.D. Cal. 2016), decided by Judge Jon S. Tigar, granted in part one of the first temporary restraining orders under the DTSA against a departing sales employee. The plaintiff did not invoke civil seizure at all, and the one intrusive request it did make, forensic mirror images of the employee’s personal devices, was refused. It set an early, durable tone: courts would lean on familiar injunctive remedies, treating seizure as the exception, not the headline.

At a glance

Case: Henry Schein, Inc. v. Cook, No. 16-cv-03166-JST, 191 F. Supp. 3d 1072 (N.D. Cal. June 10, 2016).
Court: U.S. District Court for the Northern District of California; Judge Jon S. Tigar.
Posture: Plaintiff’s motion for a temporary restraining order and expedited discovery, shortly after the DTSA took effect.
Holding: The court granted the application in part, restraining the former employee from using or disclosing the company’s confidential information and from soliciting its customers, and ordering evidence preservation, on findings of likely success and irreparable harm. It denied the request that a forensics expert be allowed to mirror her personal devices, and denied expedited discovery without prejudice. No bond was required.
Significance: One of the first decisions applying the DTSA, and widely described as the first. The plaintiff sought ordinary injunctive relief rather than the statute’s ex parte civil-seizure remedy, and the court refused even the forensic-imaging request as too intrusive to grant without hearing from the defendant.

The facts: a departing sales consultant and a trail of forwarded files

Jennifer Cook was a sales consultant for Henry Schein, Inc., a major distributor of medical, dental, and veterinary supplies. As a condition of employment she had signed agreements requiring her to keep confidential the company’s information about its products, processes, services, business, suppliers, and customers. According to Henry Schein, Cook did the opposite as she prepared to leave. The company alleged she forwarded from her work email to her personal email “several comprehensive, confidential HSI customer practice reports” generated with the company’s proprietary software, each containing a wide array of confidential and trade-secret information.

The allegations did not stop there. Henry Schein claimed Cook failed to return her company laptop for two weeks after resigning and unlawfully accessed the company’s computer system after her departure. Faced with what it characterized as an ongoing threat to its customer relationships, the company sued and immediately sought emergency relief, a textbook scenario for the brand-new federal statute.

The claims and the DTSA’s new federal hook

Henry Schein pleaded eight causes of action, anchored by two parallel trade-secret theories: misappropriation under the federal Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq., and misappropriation under the California Uniform Trade Secrets Act, Cal. Civ. Code § 3426 et seq. The rest ran to breach of fiduciary duty and duty of loyalty, breach of written contract, breach of the implied covenant of good faith and fair dealing, tortious interference with prospective economic advantage, violation of California’s Unfair Competition Law, and violation of California Penal Code § 502. The pairing of the federal and state trade-secret counts was typical of early DTSA litigation, in which plaintiffs layered the new federal claim atop the established state statute to secure a federal forum without abandoning settled state doctrine.

For the TRO, the court applied the familiar standard: likelihood of success on the merits, likelihood of irreparable harm, the balance of equities, and the public interest. Judge Tigar found Henry Schein had shown enough. Cook’s alleged forwarding of confidential customer reports and post-resignation access supported a likelihood that misappropriation had occurred, and the prospect that she would use that information to divert established customers supported irreparable harm: the loss of customer goodwill and relationships that money damages struggle to measure. The court granted the restraining order barring Cook from using or disclosing the confidential information and from soliciting the customers whose accounts had been assigned to her, and ordered her to preserve evidence. It required no bond, and set the TRO to expire on June 21, 2016, the date of the preliminary-injunction hearing. It declined to authorize expedited discovery at that early stage.

The remedy not taken: civil seizure as a last resort

The most instructive feature of the case is what nobody reached for. The DTSA authorizes courts, in “extraordinary circumstances,” to issue an order for the ex parte seizure of property necessary to prevent the propagation or dissemination of a trade secret, a remedy with no direct analog in prior federal practice and one Congress hedged with stringent requirements at 18 U.S.C. § 1836(b)(2). Henry Schein presented exactly the kind of fact pattern (forwarded files, a withheld laptop, alleged post-departure access, deleted emails) that might tempt a plaintiff to invoke seizure. It did not. It filed a conventional application for a TRO, and the opinion never discusses the seizure provision at all.

What the court did say about intrusive relief is the concrete data point. Henry Schein asked, both in its proposed TRO and by motion, to have a forensics expert immediately obtain a “clone” or “mirror image” of the data on Cook’s personal email accounts, iPad, iPhone, computers, and storage drives. Judge Tigar refused. That argument, he wrote, “does not justify an intrusion into Cook’s personal data and devices without first providing Cook an opportunity to respond to Plaintiff’s contentions,” noting that Cook was already obligated to preserve evidence and that sanctions were available if she did not. The balance of hardships did not tip in the plaintiff’s favor “given the significant intrusion into Cook’s personal data with no opportunity for Cook to respond.”

If a court will not order a mirror image of a hard drive without notice, the far heavier machinery of civil seizure was never a realistic ask on these facts. That instinct has been borne out in the years since: courts use ordinary injunctive relief to address trade-secret threats and reserve civil seizure for the genuinely extraordinary case where a defendant cannot be trusted to comply with a court order. A TRO restrains conduct and preserves the status quo without the intrusiveness, due-process risk, and potential for abuse that accompany law-enforcement-style seizure of a person’s devices. Henry Schein v. Cook thus became an early marker that the DTSA’s most aggressive tool would be used sparingly, with courts defaulting to the equitable remedies they already knew how to administer.

Open questions

When, if ever, is seizure warranted? The decision shows courts prefer a TRO, but it does not map the boundary of the “extraordinary circumstances” that would justify the DTSA’s seizure power.
How much specificity must a plaintiff show? The court credited allegations of forwarded reports and system access, leaving open how detailed a trade-secret identification must be at the TRO stage.
How do parallel DTSA and state claims interact? The case ran federal and California trade-secret theories together without resolving how their elements and remedies might diverge in a contested merits fight.

Implications

A TRO is the workhorse remedy. Even under a statute with a dramatic seizure power, courts default to ordinary restraining orders to stop trade-secret misuse.
Civil seizure is reserved for extremes. Plaintiffs should expect seizure only where no lesser order would prevent dissemination; routine departing-employee disputes will not qualify.
Customer goodwill anchors irreparable harm. The threatened loss of established customer relationships remains a powerful basis for emergency relief in trade-secret cases.
Plead federal and state claims together. Pairing the DTSA with the applicable state uniform act preserves a federal forum while retaining the developed state doctrine.
Conduct at departure matters. Forwarding files to personal email, retaining company devices, and accessing systems after resignation are precisely the facts that move courts to grant emergency orders.

Frequently asked questions

Was Henry Schein v. Cook really one of the first cases under the DTSA? Yes. The Defend Trade Secrets Act took effect in May 2016, and in June 2016 Judge Jon S. Tigar of the Northern District of California granted one of the earliest temporary restraining orders under the new federal statute, making the decision an important early data point on how courts would apply it.

Did the court order a civil seizure under the DTSA? No, and Henry Schein never asked for one. Although the DTSA created a dramatic ex parte civil-seizure remedy, the company applied for an ordinary temporary restraining order, which the court granted in part. The court did refuse the company’s request to have a forensics expert mirror Cook’s personal devices, calling that too great an intrusion to allow before Cook had a chance to respond, which suggests how far courts are from treating seizure as routine.

What did the employee in Henry Schein v. Cook allegedly do? Henry Schein alleged that Jennifer Cook forwarded confidential customer practice reports from her work email to her personal email before resigning, kept her company laptop for two weeks, and accessed the company’s computer system after she had left, threatening established customer relationships.