DEMTECH SERVICES, INC. VS. DM SOLUTIONS, INC. ET AL

July 24, 2026 Dept. 9 Civil Tentative Rulings

1. 24CV2404 DEMTECH SERVICES, INC. VS. DM SOLUTIONS, INC. ET AL PRELIMINARY INJUNCTION

Plaintiff, DemTech Services, Inc. (“Plaintiff”), filed a Motion for Preliminary Injunction against Defendants, DM Solutions Inc., David McLaury, and Owen Mackendrick (collectively “Defendants”) on May 21, 2026. No opposition has been filed. The basis for Plaintiff’s Preliminary Injunction is alleged as follows. Defendant, David McLaury (“Defendant McLaury”) is the former CEO of DemTech, former member of DemTech’s Board of Directors, and currently a shareholder of DemTech. Defendant McLaury had access to DemTech’s highly confidential propriety, and trade secret information.

As a condition of employment, Defendant McLaury signed a Confidentiality Agreement. On February 12, 2024, Defendant McLaury’s employment with DemTech terminated. A forensic analysis of Defendant McLaury’s work-issued laptop confirmed that in the days following his termination, he used six USB devices to download hundreds of files from the laptop. On March 13, 2026, the Court granted Plaintiff’s request for issue sanctions regarding the USB devices and took the following claims as established: 1.

Defendant McLaury used USB devices to download Plaintiff’s confidential and proprietary information from his work-issued laptop following termination of his employment; 2. The confidential and proprietary information included, but was not limited to, Plaintiff’s customer information, financial records, sales orders, and technical specifications for Plaintiff’s products; and 3. Defendant McLaury misappropriated the information contained in the USBs for his competing business, DM Solutions, Inc. Upon receipt of five of the six USB devices in April 2026, Plaintiff’s forensic analysis confirmed that Defendant McLaury used the USB devices to misappropriate Plaintiff’s customer information, financial records, sales orders, and technical specifications for Plaintiff’s products, including the schematics and related proprietary information for Plaintiff’s “Pro-Wedge” wedge welder, which is Plaintiff’s flagship product.

Defendant, Owen Mackendrick (“Defendant Mackendrick”) worked as DemTech’s lead engineer. Defendant Mackendrick had access and use of DemTech’s highly confidential, proprietary and trade secret information. As part of his employment, Defendant Mackendrick signed a Confidentiality Agreement. Defendant Mackendrick abruptly resigned on May 16, 2026. By April 25, 2024, Defendants McLaury and Mackendrick established DM Solutions, Inc. During this time period, Defendant Mackendrick was still employed with DemTech, serving as the lead engineer with live access to DemTech’s current schematics, product development files,

July 24, 2026 Dept. 9 Civil Tentative Rulings

and research and development meetings. Evidence indicates that Defendant Mackendrick accessed DemTech’s stolen files on the USB devices shortly after his resignation from DemTech, and thereafter began working to reproduce DemTech’s products and parts for sale by DM Solutions, Inc. Defendants currently sell a single product, the “Badass 300” wedge welder, which is a near duplicate of DemTech’s “Pro-Wedge” wedge welder. Defendants continue to manufacture spare parts for DemTech’s products while undercutting DemTech’s pricing.

Defendant DM Solutions currently sells spare parts for DemTech’s “Pro-Wedge,” “Pro X,” “3XL Wedge Wedler” and “XL Wedge Welder” models. Plaintiff does not advertise spare parts for any other specific products, aside from DemTech’s products. Plaintiff requests the Court order Defendants to return the stolen information and documents, and enjoining Defendants from: 1) making use of Plaintiff’s confidential, proprietary, or trade secret information; 2) producing or selling the “Badass 300 Wedge Welder” or replacement and spare parts for any device manufactured by Plaintiff; and 3) soliciting or attempting to solicit business from any customers that Defendants learned of as a result of employment with Plaintiff.

Legal Principles “As its name suggests, a preliminary injunction is an order that is sought by a plaintiff prior to a full adjudication of the merits of its claim. [Citation.]” (White v. Davis (2003) 30 Cal.3d 528, 554.) The purpose of such an order is to preserve the status quo pending a determination on the merits of the action. (Id., at p. 553; Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) Code of Civil Procedure section 526 provides for an injunction in the following cases: “(1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and such relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually. [¶] (2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action. [¶] (3) When it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual. [¶] (4) When pecuniary compensation would not afford adequate relief. [¶] (5) Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief. [¶] (6) Where the restraint is necessary to prevent a multiplicity of judicial proceedings. [¶] (7) Where the obligation arises from a trust.” (Id., subd. (a).)

A ruling on an application for a preliminary injunction is not an adjudication of the ultimate rights in the controversy. It merely represents the trial court’s discretionary decision

July 24, 2026 Dept. 9 Civil Tentative Rulings

whether the defendant should be restrained from exercising a claimed right pending trial. (Cohen v. Bd. of Supervisors (1985) 40 Cal.3d 277, 286.) “In deciding whether to issue a preliminary injunction, a trial court must evaluate two interrelated factors: (i) the likelihood that the party seeking the injunction will ultimately prevail on the merits of [their] claim, and (ii) the balance of the harm presented, i.e., the comparative consequences of the issuance and nonissuance of the injunction.” (Common Cause v.

Bd. of Supervisors (1989) 49 Cal.3d 432, 441– 442 [fn. omitted].) “The trial court’s determination must be guided by a ‘mix’ of the potentialmerit and interim-harm factors; the greater the plaintiff’s showing on one, the less must be shown on the other to support an injunction. [Citation.]” (Butt v. State of Cal. (1992) 4 Cal.4th 668, 678.) However, “[a] trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.” (Ibid.)

Discussion

Merits of the Claim Plaintiff argues that it is likely to prevail on the merits for a claim of misappropriation of a trade secret under the California UTSA, which requires a showing of: 1) existence of a trade secret; and 2) improper acquisition, use, or disclosure of that trade secret.

1. Existence of a trade secret A “trade secret” means information including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Code of Civil Procedure § 3426.1(d). Plaintiff asserts that issue sanctions have established Defendants took Plaintiff’s customer and vendor lists, product specifications, and pricing information.

These types of information are valuable because they are unknown to others. Defendants’ own business plans exemplify why the secrecy of this information is valuable. Competitors, such as Defendants, have replicated Plaintiff’s products and services while undercutting Plaintiff’s prices to steal Plaintiff’s market share. Additionally, Plaintiff sought to keep this information secret, as it keeps its electronic files containing its confidential, proprietary, and trade secret information in password-protected computers and restricts access to such employees who are required to use the confidential information in the performance of their jobs on a need- to-know basis.

Confidentiality Agreements are also executed as a condition of employment. // //

July 24, 2026 Dept. 9 Civil Tentative Rulings

2. Improper acquisition, use, or disclosure of that trade secret Plaintiff contends the issue sanctions have established that Defendants misappropriated the information contained in the USBs for DM Solutions, Inc. This has also been confirmed through forensic analysis of the USB devices. Additionally, Defendants’ business plan for DM Solutions, Inc. confirms that Defendants intended to use their knowledge of Plaintiff’s pricing and customer base to undercut Plaintiff through the sale of discounted “spare parts” and equipment.

Defendants’ current products and services virtually mirror Plaintiff’s products and services. Balance of Hardships Plaintiff argues that the harm they would suffer from Defendants’ continued misappropriation is significant. Defendants seek to put them out of business, as identified in their business plan. Plaintiff’s harm is not limited to the loss of customers and sales, but also the uncontrolled dissemination of Plaintiff’s trade secrets and loss of goodwill. Plaintiff has no control over whom Defendants may be providing “spare parts” to and whether other competitors may attempt to reverse engineer products and parts put to market by Defendants.

Plaintiff’s good will is jeopardized by the fact that they have no ability to conduct quality control for components being marketed and sold by Defendants as “spare parts” for Plaintiff’s equipment. Defendants have not filed an opposition to address the harm they may suffer. Plaintiff contends that because Defendants’ misappropriation has already been established, they cannot reasonably argue that the equities require the Court to permit such misappropriation to continue. If the injunction is granted, Defendants will be permitted to operate their business; however, they will need to manufacture original products or obtain consent from manufacturers if they seek to fill the “spare parts” aftermarket.

The Court finds that Plaintiff has a likelihood of prevailing on the merits of their claim. Additionally, the balance of hardships weighs in Plaintiff’s favor. Plaintiff’s request for a preliminary injunction is granted. TENTATIVE RULING #1: PLAINTIFF’S REQUEST FOR A PRELIMINARY INJUNCTION IS GRANTED. NO HEARING ON THIS MATTER WILL BE HELD UNLESS A REQUEST FOR ORAL ARGUMENT IS TRANSMITTED ELECTRONICALLY THROUGH THE COURT’S WEBSITE OR BY TELEPHONE TO THE COURT AT (530) 621-6551 BY 4:00 P.M. ON THE DAY THE TENTATIVE RULING IS ISSUED.

CAL. RULE CT. 3.1308; LOCAL RULE 8.05.07; SEE ALSO LEWIS V. SUPERIOR COURT, 19 CAL.4TH 1232, 1247 (1999). NOTICE TO ALL PARTIES OF A REQUEST FOR ORAL ARGUMENT AND THE GROUNDS UPON WHICH ARGUMENT IS BEING REQUESTED MUST BE MADE BY TELEPHONE OR IN PERSON BY

July 24, 2026 Dept. 9 Civil Tentative Rulings

4:00 P.M. ON THE DAY THE TENTATIVE RULING IS ISSUED. CAL. RULE CT. 3.1308; EL DORADO COUNTY LOCAL RULE 8.05.07. PROOF OF SERVICE OF SAID NOTICE MUST BE FILED PRIOR TO OR AT THE HEARING. LONG CAUSE HEARINGS MUST BE REQUESTED BY 4:00 P.M. ON THE DAY THE TENTATIVE RULING IS ISSUED AND THE PARTIES ARE TO PROVIDE THE COURT WITH THREE MUTUALLY AGREEABLE DATES ON FRIDAY AFTERNOONS AT 2:30 P.M. LONG CAUSE ORAL ARGUMENT REQUESTS WILL BE SET FOR HEARING ON ONE OF THE THREE MUTUALLY AGREEABLE DATES ON FRIDAY AFTERNOONS AT 2:30 P.M. THE COURT WILL ADVISE THE PARTIES OF THE LONG CAUSE HEARING DATE AND TIME BY 5:00 P.M. ON THE DAY THE TENTATIVE RULING IS ISSUED. PARTIES MAY PERSONALLY APPEAR AT THE HEARING.

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