Sixth Circuit Vacates Trade Secret Injunction That Barred Competitor’s Customer Contract and Ordered Unrestricted Forensic Imaging

The injunction had also directed independent forensic examiners to image and search the defendants’ electronic devices for “responsive items.” The court gave two reasons. First, the plaintiffs did not show irreparable harm from the competitor’s contract, because that contract covered work the plaintiffs could not perform and the record showed no lost business. Second, the forensic-examination provisions were not narrowly tailored, because they set no limits on custodians, devices, or information and did nothing to protect the defendants’ own confidential information. The decision is a useful reminder that relief sought in preliminary injunctions need to be narrowly tailored even when there is a strong showing of misappropriation and likelihood of success.

Background 

United Electric Company, Inc. is a Kentucky-based union contractor that provides electrical construction and utility services. UEC Holdings, Inc. is its parent and sole owner and was formed in 2019 after United Electric converted to an employee stock ownership plan structure. 

Steven Mark Hatcher started at United Electric in 1998 and became vice president of its utility division in 2019. In that role, he had access to sensitive information, including confidential pricing, bid templates, rate sheets, labor and equipment burdens, customer strategies, and performance data. In January 2019, Hatcher signed an employment agreement that contained a noncompete, customer and employee non-solicitation provisions, and a non-disclosure covenant.

United Electric terminated Hatcher in August 2025. A forensic review of his company-issued devices turned up communications from July and August 2025 with Troy Kent, the owner of Kent Power, Inc., a Michigan-based utility contractor. In those messages, Hatcher allegedly sent Kent confidential pricing and rate materials. UEC sued Hatcher, Kent, and Kent Power and brought claims under the Defend Trade Secrets Act (DTSA) and the Kentucky Uniform Trade Secrets Act (KUTSA), along with several state-law contract claims. 

UEC moved for a preliminary injunction. At the evidentiary hearing, Hatcher testified that about a month before his termination, he texted Kent about the bid process for Louisville Gas & Electric (LG&E). The texts concerned Kent Power possibly winning an LG&E contract for transmission work, which United Electric cannot perform because it lacks the necessary equipment. Hatcher’s texts also suggested that Kent Power wanted LG&E distribution work. LG&E distribution work accounts for 95% of United Electric’s utility-division business. During these exchanges, Hatcher sent Kent some of United Electric’s proprietary information, including pricing and union hiring rates. LG&E awarded the transmission contract to Kent Power. 

The district court found that the plaintiffs were likely to succeed on their DTSA and KUTSA claims. It found irreparable harm because the relationship between Kent Power and LG&E presented “a potentially significant competitive injury” to the plaintiffs, “particularly if Kent Power later begins providing distribution services in the Louisville area.”

Among other things, the injunction:

• Required the defendants to allow an independent forensic examiner to “image, preserve, and search all relevant data sources (including computers, external drives, mobile phones, and cloud accounts)” and to “produce responsive items to UEC.”

• Required the defendants to return UEC materials and to certify that UEC information had been removed from their devices.

• Required the defendants to withdraw proposals to, and stop working for, United Electric customers that Hatcher had dealt with.

Following the preliminary injunction order, the defendants filed an interlocutory appeal. After the defendants noticed their appeal, the parties met with independent forensic examiners and orally agreed to forensic safeguards, clawback procedures, and custodians. However, in subsequent email exchanges, the plaintiffs refused to put these oral agreements in writing. The defendants then moved to limit the scope of the forensic examination, which the court denied. 

Case Information

• Citation: UEC Holdings, Inc. v. Hatcher, No. 25-6123, 2026 WL 2755021 (6th Cir. Sept. 17, 2026)

• Plaintiffs: UEC Holdings, Inc.; United Electric Company, Inc. 

• Defendants: Steven Mark Hatcher; Kent Power, Inc.; Troy Kent 

• Judges: Senior Judge Eugene E. Siler, writing for the panel (Siler, Davis, and Ritz, Circuit Judges) 

Analysis

No Irreparable Harm From the Competitor’s Contract

The Sixth Circuit stressed that although the four preliminary injunction factors are usually balanced, irreparable harm is “indispensable.” That harm must be “actual and imminent” rather than “speculative or unsubstantiated.” Witnesses confirmed that United Electric cannot perform transmission work, so the Kent Power–LG&E transmission contract posed “no direct threat” to its business. The district court had relied on possible downstream effects instead. The Sixth Circuit found nothing in the record showing “with any certainty” that Kent Power threatened United Electric’s relationship with LG&E. No lost business had been identified, and Kent Power’s attempts to win distribution work had failed. Because the record lacked evidence that the plaintiffs would suffer irreparable harm if the Kent Power–LG&E contract were not enjoined, the Sixth Circuit held that the district court abused its discretion in finding otherwise.

Forensic Examination Must Be Narrowly Tailored

The Sixth Circuit then turned to the forensic-examination provisions. It noted that the DTSA requires even seizure orders to “provide for the narrowest seizure of property necessary.” The district court had chosen injunctive relief over a seizure order, but the Sixth Circuit held that the injunction still had to be “closely devised” to protect the defendants’ confidential information. The Sixth Circuit observed that mirror imaging of devices raises privacy and confidentiality concerns and risks exposing information “wholly unrelated to the litigation.”

The Sixth Circuit found the injunction over broad as the order did not specify which custodians, devices, or information the examination covered, and it did not define what was “relevant” or “responsive.” Consequently, the examiners could reach Kent Power’s own trade secrets, which the DTSA’s confidentiality-preservation provision is meant to prevent. The Sixth Circuit also rejected the argument that no protective order was needed because the examiners would look only for plaintiff-specific information. Without a protective order, the defendants would have “no recourse” if their information were exposed. Because the district court failed to protect the defendants’ confidential, privileged, and private information, it abused its discretion. 

Why It Matters

UEC Holdings illustrates that evidence of misappropriation does not automatically justify broad relief. Here, the district court found a likelihood of success on the merits. The injunction was still vacated because the requested relief as to the contract was not tied to proven, irreparable harm and the forensic examination was not tailored in scope and lacked protections.

Key Takeaways

• Tie the relief to actual competitive harm. Plaintiffs seeking to block a competitor’s customer contract should be prepared to show actual or imminent loss of business from that contract, or ongoing use of the trade secrets in that work. Speculation about future market entry is not enough. 

• Build a record of ongoing use. Courts are more receptive to preliminary injunctions where the misappropriated information is “baked into” the defendant’s continuing operations. 

• Put specifics of the forensic protocols in writing. Orders requiring device imaging should define the custodians, devices, search parameters, and what counts as “responsive.” They should also be paired with a protective order and clawback procedures. Oral agreements with examiners will not save an overbroad order.