Theodore Hartsock, Jr. v. Goodyear Dunlop Tire

Filing

OPINION/ORDER CERTIFYING QUESTION to state court in South Carolina. Originating case number: 2:13-cv-00419-PMD. Copies to all parties and district court. [999976803] [16-1172]

Appeal: 16-1172

Doc: 76-2

Filed: 11/29/2016

Pg: 1 of 14

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 16-1172

THEODORE G. HARTSOCK, JR., as Personal Representative of the
Estate of Sarah Mills Hartsock (Estate of Sarah Mills
Hartsock),
Plaintiff – Appellee,
v.
GOODYEAR
DUNLOP
TIRES
NORTH
AMERICA
LTD,
a
corporation; GOODYEAR TIRE & RUBBER COMPANY, a
corporation,

foreign
foreign

Defendants – Appellants.
-------------------------------------RUBBER MANUFACTURERS ASSOCIATION;
ADVISORY COUNCIL, INC.,

THE

PRODUCT

LIABILITY

Amici Supporting Appellants,
THE SAFETY INSTITUTE; SOUTH CAROLINA ASSOCIATION FOR JUSTICE,
Amici Supporting Appellee.

Appeal from the United States District Court for the District of
South Carolina, at Charleston.
Patrick Michael Duffy, Senior
District Judge. (2:13-cv-00419-PMD)

Argued:

October 27, 2016

Before SHEDD and
Circuit Judge.

KEENAN,

Decided:

Circuit

Judges,

November 29, 2016

and

DAVIS,

Senior

Appeal: 16-1172

Doc: 76-2

Filed: 11/29/2016

Pg: 2 of 14

Unpublished Order of Certification of a question of law to the
Supreme Court of South Carolina.

ARGUED: Earle Duncan Getchell, Jr., MCGUIREWOODS LLP, Richmond,
Virginia, for Appellants.
Mark Charles Tanenbaum, MARK C.
TANENBAUM, P.A., Charleston, South Carolina, for Appellee.
ON
BRIEF: Michael H. Brady, MCGUIREWOODS LLP, Richmond, Virginia;
M. Gary Toole, Bianca G. Liston, MCDONALD TOOLE & WIGGINS, P.A.,
Orlando, Florida, for Appellants.
Mia Lauren Maness, MARK C.
TANENBAUM, P.A., Charleston, South Carolina, for Appellee.
Debora B. Alsup, THOMPSON & KNIGHT LLP, Austin, Texas, for
Amicus Rubber Manufacturers Association. Timothy L. Mullin,
Donna P. Sturtz, MILES & STOCKBRIDGE, P.C., Baltimore, Maryland;
Hugh F. Young, Jr., PRODUCT LIABILITY ADVISORY COUNCIL, INC.,
Reston, Virginia, for Amicus The Product Liability Advisory
Council, Incorporated. Courtney L. Davenport, THE DAVENPORT LAW
FIRM LLC, Germantown, Maryland, for Amicus The Safety Institute.
John S. Nichols, BLUESTEIN NICHOLS THOMPSON & DELGADO, LLC,
Columbia, South Carolina, for Amicus South Carolina Association
for Justice.

Unpublished opinions are not binding precedent in this circuit.

2

Appeal: 16-1172

Doc: 76-2

Filed: 11/29/2016

Pg: 3 of 14

PER CURIAM:
Pursuant to Rule 244 of the South Carolina Appellate Court
Rules, we respectfully certify the following question of law to
the Supreme Court of South Carolina:
Does South Carolina recognize an evidentiary privilege
for trade secrets?
As we explain, we believe that no directly controlling South
Carolina authority answers this question. Moreover, the answer
will

determine

discovery

of

whether
trade

federal

secrets

or

in

state

this

law

applies

diversity

to

action

the
and,

consequently, will be determinative of this appeal.
I
In

July

automobile
Carolina.

2010,

crash
Her

on

Sarah

Mills

Interstate

personal

Hartsock
26

in

representative,

was

Calhoun
Theodore

killed
County,
G.

in

an

South

Hartsock,

Jr., brings this survival and wrongful death action asserting
claims

under

South

Carolina

law

for

negligence,

strict

liability, and breach of warranty. Mr. Hartsock alleges that the
vehicle in which Mrs. Hartsock was riding was struck head-on by
another

vehicle.

That

vehicle

had

crossed

the

median

after

suffering a blowout of an allegedly defective tire that Goodyear
Dunlop

Tires

North

America

Ltd.

3

and

Goodyear

Tire

&

Rubber

Appeal: 16-1172

Doc: 76-2

Filed: 11/29/2016

Pg: 4 of 14

Company designed, manufactured, and marketed. 1 Federal subjectmatter jurisdiction exists under 28 U.S.C. § 1332 based upon
complete

diversity

of

citizenship

between

the

parties

and

arose

between

the

damages alleged to be greater than $75,000.
During

pretrial

discovery

a

dispute

parties over certain Goodyear material relating to the design
and

chemical

composition

of

the

allegedly

defective

tire.

Goodyear objected to producing this material, asserting that it
constitutes trade secrets. The district court eventually found,
and Mr. Hartsock does not dispute, that the material does, in
fact,

constitute

trade

secrets.

However,

the

court

ordered

Goodyear to produce the material subject to a confidentiality
order.

In

doing

so,

the

court

applied

federal

discovery

standards, rejecting Goodyear’s contention that South Carolina
trade secret law applies.
Goodyear thereafter moved for reconsideration, reiterating
its argument that South Carolina law applies. The district court
denied

the

motion

but

certified

its

order

for

interlocutory

review pursuant to 28 U.S.C. § 1292(b). 2 The court also stayed

1

Goodyear Dunlop is now known as Sumitomo Rubber USA, LLC.
For ease of reference, we will refer to the defendants
collectively as “Goodyear.”
2

Section 1292(b) provides that when a district judge
believes that an order that is otherwise not appealable
“involves a controlling question of law as to which there is
(Continued)
4

Appeal: 16-1172

the

Doc: 76-2

proceedings

Filed: 11/29/2016

pending

Pg: 5 of 14

Goodyear’s

anticipated

appeal.

After

Goodyear appealed, a panel of this Court agreed to permit the
appeal. The parties filed briefs, and we heard oral arguments in
October 2016.
II
Goodyear contends that “the district court erred when it
applied Rule 26 [of the Federal Rules of Civil Procedure] and
federal case law, rather than the South Carolina Trade Secrets
Act (“SCTSA”), S.C. Code Ann. §§ 39-8-10 through 39-8-130, and
South

Carolina

precedent,

in

determining

the

burden

of

production and persuasion that Hartsock must bear to overcome
the

trade

secret

privileges

asserted

by

Defendants.”

Opening

Brief of Appellants, at 2. In Goodyear’s view, the SCTSA – as
interpreted in Laffitte v. Bridgestone Corp., 674 S.E.2d 154
(S.C. 2009) – provides “greater protections from discovery of
trade secrets for civil litigants than [currently] recognized by
federal common law,” Opening Brief of Appellants, at 19, and
Goodyear asserts, as it did below, that Mr. Hartsock has not met
his

burden

under

the

state

standard.

Goodyear’s

appeal

is

substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the
ultimate termination of the litigation, he shall so state in
writing in such order.” In that instance, the court of appeals,
“in its discretion, [may] permit an appeal to be taken from such
order.”

5

Appeal: 16-1172

Doc: 76-2

Filed: 11/29/2016

Pg: 6 of 14

premised on its assertion that South Carolina law recognizes an
evidentiary privilege for trade secrets.
Mr. Hartsock agrees that the issue presented “is the legal
standard

to

be

applied

in

determining

when

and

under

what

conditions . . . trade secrets [must be] disclosed in products
liability litigation based on diversity jurisdiction.” Brief of
Appellee, at 2. Not surprisingly, however, he disagrees with
Goodyear’s assertion that state law applies. Instead, he argues
that the “only law applicable to the issue before the Court
derives from the Federal Rules of Civil Procedure and federal
common law.” Id. at 11. Further, despite his insistence that
only

federal

law

applies,

he

contends

that

“the

SCTSA

and

federal rule are not, in fact, contradictory.” Id. Taking this
argument

a

step

standard

further,

applies,

“it

is

he

asserts

improbable

that

even

that

the

if

the

state

District

Court

would have reached a different conclusion.” Id. at 33. 3
III
“The

federal

courts

have

long

recognized

a

qualified

evidentiary privilege for trade secrets and other confidential
commercial information.” Federal Open Mkt. Comm. of Fed. Res.
Sys. v. Merrill, 443 U.S. 340, 356 (1979). Being a qualified
3

This assertion seems debatable in light of the district
court’s certification of the issue under § 1292(b). We express
no opinion in that regard.

6

Appeal: 16-1172

Doc: 76-2

privilege,
complete

Filed: 11/29/2016

federal

immunity

courts
against

Pg: 7 of 14

have

not

afforded

disclosure,

but

“automatic

have

in

each

and
case

weighed [the] claim to privacy against the need for disclosure.”
Id. at 362 (citation omitted). Thus, as a general matter of
federal litigation, “trade secrets have widely been held to be
discoverable upon appropriate findings and with an appropriate
protective order.” MDK, Inc. v. Mike’s Train House, Inc., 27
F.3d 116, 120 (4th Cir. 1994).
From a procedural standpoint, the district court acted in
accordance

with

this

discovery

issue.

general

Goodyear

proposition

does

not

in

take

resolving

issue

with

the
the

proposition itself. Instead, as noted, Goodyear contends that
the

proposition

is

inapplicable

because

South

Carolina

law,

rather than federal law, applies.
Because this is a diversity case, we are obliged to apply
state substantive law and federal procedural law. Gasperini v.
Center for Humanities, Inc., 518 U.S. 415, 427 (1996). The issue
presented

involves

both

a

matter

of

pretrial

discovery

and

evidence. Ordinarily, “the Federal Rules of Civil Procedure and
Federal
discovery

Rules

of

and

the

Evidence
admission

govern
of

the

disputes

evidence.”

concerning

Bradshaw

v.

FFE

Transp. Servs., Inc., 715 F.3d 1104, 1107 (8th Cir. 2013).
Because the district court applied federal law to resolve
the parties’ discovery dispute, the preceding statement appears
7

Appeal: 16-1172

Doc: 76-2

Filed: 11/29/2016

Pg: 8 of 14

at first blush to be dispositive. The twist, however, arises
from Goodyear’s contentions that South Carolina recognizes an
evidentiary privilege for trade secrets and the standard for
disclosure

of

such

information

is

more

stringent

than

the

federal standard. Goodyear’s argument implicates Rule 501 of the
Federal Rules of Evidence, which provides that “in a civil case,
state law governs privilege regarding a claim or defense for
which state law supplies the rule of decision.” Under this rule,
when, as here, “the substantive decision . . . is governed by
state law, the state law also determines the privilege of a
witness.” Seidman v. Fishburne-Hudgins Educ. Found., Inc., 724
F.2d 413, 415 n.1 (4th Cir. 1984).
This
Carolina

brings

us

recognize

to

the

such

a

heart

of

the

privilege?

The

matter:

does

parties

South

vigorously

dispute this point. Compare Brief of Appellee, at 11 (“South
Carolina’s

Trade

Secrets

Act

does

not

include

creation

of

a

trade secrets privilege.”) with Reply Brief of Appellants, at 12 (“Rule 501 . . . requires application of South Carolina’s
trade

secrets

production

of

privilege

to

Defendants’

Hartsock’s

Trade

effort

Secrets”).

If

to

compel

Goodyear

is

correct that South Carolina recognizes an evidentiary privilege
for

trade

secrets,

determination

of

then

whether

South

Mr.

Carolina

Hartsock

8

has

law
met

governs
his

burden

the
to

Appeal: 16-1172

Doc: 76-2

Filed: 11/29/2016

Pg: 9 of 14

require Goodyear to produce the trade secrets. Conversely, if
Mr. Hartsock is correct, then federal law applies.
The

Supreme

“privileged

Court

matter

in

of

South

South

Carolina

Carolina

is

has

matter

stated
that

that

is

not

intended to be introduced into evidence and/or testified to in
Court.” S.C. State Hwy. Dept. v. Booker, 195 S.E.2d 615, 620
(S.C. 1973). The court has also recognized that not every matter
intended to be “confidential” is necessarily “privileged.” See
S.C. St. Bd. of Med. Examiners v. Hedgepath, 480 S.E.2d 724, 726
(S.C.

1997);

see

generally

Communist

Party

of

the

U.S.

v.

Subversive Activities Control Bd., 254 F.2d 314, 321 (D.C. Cir.
1958) (“Almost any communication . . . may be confidential. . .
. But privileged means that the contents are of such character
that the law as a matter of public policy protects them against
disclosure.”).
We have not found any South Carolina authority that appears
to

definitively

provisions

of

answer

South

the

Carolina

question.
law

tend

to

Indeed,

different

point

different

to

answers. For example, Rule 30(j)(3) of the South Carolina Rules
of Civil Procedure defines the term “privilege” for deposition
purposes as including “trade secret protection.” That definition
supports Goodyear’s argument, but Mr. Hartsock can draw support
for his argument from Ex parte Capital U-Drive-It, Inc., 630
S.E.2d 464, 469 (S.C. 2006), in which the court stated: “Public
9

Appeal: 16-1172

Doc: 76-2

Filed: 11/29/2016

Pg: 10 of 14

access to court records may be restricted in certain situations,
such as matters involving juveniles, legitimate trade secrets,
or

information

covered

by

a

recognized

privilege.”

The

disjunctive nature of this statement suggests that trade secrets
are not covered by a “recognized privilege.”
Of course, we are aware of the SCTSA and the state supreme
court’s interpretation of the act in Laffitte. Unquestionably,
the SCTSA reflects the state legislature’s intent to provide
trade

secrets

a

significant

level

of

protection.

However,

whether that protection amounts to an evidentiary privilege is
not clear from either the SCTSA or Laffitte. On one hand, the
Laffitte standard for handling civil discovery of trade secrets
seems

akin

to

the

qualified

evidentiary

privilege

for

trade

secrets that generally applies in federal courts. On the other
hand, in explaining the three-part balancing test it adopted for
determining whether trade secret information is subject to a
discovery protective order, the Laffitte court observed that “in
jurisdictions where trade secrets are protected by a codified
evidentiary

privilege,

the

courts

apply

a

similar

balancing

test.” 674 S.E.2d at 162 n.11. This observation could reasonably
be read to mean that unlike those other jurisdictions, South

10

Appeal: 16-1172

Doc: 76-2

Carolina

does

Filed: 11/29/2016

not

have

a

Pg: 11 of 14

codified

evidentiary

privilege

for

trade secrets. 4
In light of the foregoing, we believe that the issue of
whether South Carolina recognizes an evidentiary privilege for
trade secrets is both unresolved by any definitive state law and
sufficiently debatable to warrant certification of the question
to the Supreme Court of South Carolina.
IV
One final point needs to be made. As noted, the parties
disagree whether the South Carolina and federal standards for
disclosure of trade secrets actually differ. Given its decision
to certify the issue for appeal, the district court appears to
agree with Goodyear that the South Carolina standard is more
stringent than the federal standard; otherwise, its decision to
certify the question for interlocutory appeal seems pointless.
At least one other district judge in South Carolina has viewed
the standards in this manner. See Griego v. Ford Motor Co., 19
F.Supp.2d

531,

532-33

(D.S.C.

1998)

(noting

that

the

SCTSA

provides “heightened protection for trade secrets” and “appears
to establish a more stringent standard for the production of
trade secrets” than the federal standard).
4

The observation does leave open, however, the possibility
that the court itself was creating or recognizing an evidentiary
privilege for trade secrets.

11

Appeal: 16-1172

Doc: 76-2

Filed: 11/29/2016

Pg: 12 of 14

To the extent it is relevant, several of the organizations
that filed amicus briefs in this appeal appear to agree as well.
For

example,

the

South

Carolina

Association

for

Justice

–

arguing in Mr. Hartsock’s favor – states: “The Supreme Court of
South Carolina has held the South Carolina General Assembly’s
amendment to the [SCTSA] provides a different test governing
disclosure.

The

issue

currently

before

the

Court

.

.

.

is

whether the [federal standard] should be discarded in favor of a
more restrictive test that results in unfairness to consumers.”
Brief

of

Similarly,

South
the

Carolina

Rubber

Association

Manufacturers

for

Justice,

Association

–

at

arguing

i.
in

Goodyear’s favor – contends that in South Carolina “there is a
heightened

burden

for

discovery

of

trade

secrets.”

Brief

of

Rubber Manufacturers Association, at 15. 5 There is also academic
commentary viewing the South Carolina standard as being more
stringent. See Ranee Saunders, If I Told You Then I’d Have To
Kill You: The Standard For Discovery of Trade Secrets in South
Carolina, 61 S.C. L. Rev. 717, 726 (2010) (noting that the test
expounded

by

the

Laffitte

court

“presents

some

slight,

but

distinct, differences from the balancing test applied in other
5

One amicus organization does not share Goodyear’s view.
See Brief of The Safety Institute (supporting Mr. Hartsock), at
24 (“TSI agrees with Hartsock that Federal Rule of Civil
Procedure 26 is the applicable standard and that the [SCTSA] is
compatible with, not contrary to, the federal standard.”).

12

Appeal: 16-1172

Doc: 76-2

jurisdictions”

Filed: 11/29/2016

that

Pg: 13 of 14

“increase

burden

the

on

South

Carolina

litigants requesting discovery of a trade secret”).
Because

this

appeal

is

primarily

focused

on

the

applicability of state or federal law rather than the purported
difference

between

the

two

bodies

of

law,

and

because

the

district court appears to view the state standard as being more
stringent,

we

have

accepted

that

view

for

purposes

of

this

order. In this posture, if we conclude that South Carolina law
applies, then we will vacate the discovery order and remand for
further

proceedings

in

the

district

court,

which

is

best-

situated to supervise discovery. See Ardrey v. UPS, 798 F.2d
679, 682 (4th Cir. 1986) (explaining that the district court
“has wide latitude in controlling discovery” and that we will
not overturn its decisions “absent a showing of clear abuse of
discretion”). Of course, if the state supreme court agrees to
answer

the

certified

question,

then

our

decision

will

be

dictated by the court’s answer.
V
Based on the foregoing, we respectfully request that the
Supreme Court of South Carolina accept and answer the foregoing
certified question, thereby providing the parties, the courts,

13

Appeal: 16-1172

future

Doc: 76-2

Filed: 11/29/2016

litigants,

and

the

Pg: 14 of 14

public

with

definitive

guidance

regarding trade secrets in South Carolina. 6
We direct the Clerk of Court to forward a copy of this
order

under

official

seal

to

the

Supreme

Court

of

South

Carolina.
QUESTION CERTIFIED

6

See Brief of Rubber Manufacturers Association, at vi
(explaining that the question “is of great importance to trade
secret protections in general, and to tire manufacturers in
particular, whose competitive products are used in South
Carolina and throughout the nation”); Brief of The Safety
Institute, at 3 (noting that “this case appears to involve a
relatively
straightforward
analysis
of
which
standard
is
applicable to trade secret disclosure in a products liability
case based on diversity jurisdiction,” but it “also presents a
quandary from a public policy perspective”).

14