Core Laboratories LP et al v. Amspec, LLC et al

Filing 160

Order, Plaintiffs' objections (Doc. 156 ) to the Magistrate Judge's order of July 12, 2017 are OVERRULED, and the Magistrate Judge's Order (Doc. 151 ) is AFFIRMED in its entirety. Signed by Senior Judge Callie V. S. Granade on 8/18/2017. (mab)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
CORE LABORATORIES LP f/k/a/
Core Laboratories, Inc. et al.,
Plaintiff,
vs.
AMSPEC, et al.,
Defendants.

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) CIVIL ACTION NO. 16-0526-CG-N
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ORDER

This matter is before the Court on Plaintiffs’ objection (Doc. 156) in
accordance with Federal Rule of Civil Procedure 72(a) to the Magistrate Judge’s
order of July 12, 2017 (Doc. 151), Defendants’ response thereto (Doc. 158), and
Plaintiffs’ reply (Doc. 159). For the reasons explained below, the Court finds that
Plaintiffs’ objections should be overruled and that the Magistrate Judge’s order
should be affirmed.
BACKGROUND
Plaintiffs object to the Magistrate Judge’s order, dated July 12, 2017, which
addressed Plaintiffs’ motion to clarify the Magistrate’s prior ruling regarding the
confidentiality requirements of Plaintiffs’ expert reports. The prior order, dated
June 16, 2017, granted Defendants’ request to compel Plaintiffs to produce all
documents reviewed by their experts and compelled the Plaintiffs to remove
“Attorneys’ Eyes Only” (AEO) designations from their expert reports. The

Magistrate Judge included the following reasoning:
As required by the Court’s Order Protecting Confidentiality, counsel
for the Defendants have convinced the undersigned that such
designation prejudices their ability to adequately consult with their
clients, especially in the case of the Compton expert report, which has
been entirely designated AEO.
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The Plaintiffs are the parties who have put trade secrets and otherwise
sensitive financial information at issue through the claims in their
complaint (Doc. 1). Having done so, they may not then prejudice the
Defendants’ ability to defend against those claims by insisting that the
Defendants not be able to examine and consult with their counsel
about such key evidence that is being presented against them.
(Doc. 138 pp. 5-6). Plaintiffs moved for clarification of the June 16 order requesting
that they be allowed to produce laptop images and other data its experts relied upon
to Defendants on an AEO basis. (Doc. 144). The Magistrate Judge ruled that the
material, including the “ ‘working copies’ of the forensic images[,]’ must be produced
without an ‘Attorneys’ Eyes Only’ designation.” (Doc. 151, p. 2, emphasis in
original). Plaintiffs object to the clarification order on the basis that the underlying
facts and data that support their expert reports contain proprietary information and
Plaintiffs maintain serious concerns over allowing Defendants to view such
sensitive data.
DISCUSSION
Rule 72(a) of the Federal Rules of Civil Procedure permits a district court to
refer any non-dispositive pretrial matter to a magistrate judge for disposition. A
party may object to a magistrate judge's order on a non-dispositive pre-trial matter
within fourteen days after service of the order. FED. R. CIV. P. 72(a). Upon a party’s

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objection to any non-dispositive matter assigned to the Magistrate Judge, the
district court “must consider timely objections and modify or set aside any portion of
the order that is clearly erroneous or is contrary to law.” FED. R. CIV. P. 72(a);
Accord, San Shiah Enterprise Co., Ltd. v. Pride Shipping Corp., 783 F.Supp. 1334,
1335 (S.D. Ala. 1992); see also 28 U.S.C. § 636(b)(1)(A) ("A judge of the court may
reconsider any pretrial matter under this subparagraph (A) where it has been
shown that the magistrate judge’s order is clearly erroneous or contrary to law.”).
“A finding is ‘clearly erroneous' when although there is evidence to support it, the
reviewing court on the entire evidence is left with the definite and firm conviction
that a mistake has been committed.” United States v. United States Gypsum Co.,
333 U.S. 364, 395 (1948). “An order is contrary to law ‘when it fails to apply or
misapplies relevant statutes, case law or rules of procedure.’ ” S.E.C. v. Kramer, 778
F.Supp.2d 1320, 1326–27 (M.D. Fla. 2011) (quoting Tompkins v. R.J. Reynolds
Tobacco Co., 92 F.Supp.2d 70, 74 (N.D.N.Y.2000)). The “clearly erroneous or
contrary to law” standard of review is “extremely deferential.” Pigott v. Sanibel
Dev., LLC, 2008 WL 2937804, at *5 (S.D. Ala. July 23, 2008) (citations omitted).
This standard is considered a “very difficult one to meet.” Thornton v. Mercantile
Stores, 180 F.R.D. 437, 439 (M.D. Ala. 1998) (citing Tai-Pan Inc. v. Keith Marine,
Inc., 1997 WL 714898, *11 (M.D. Fla. 1997)). The Magistrate Judge’s orders “should
not be disturbed absent a clear abuse of discretion that leaves the reviewing court
with ‘the definite and firm conviction that a mistake has been committed.’” Rowlin
v. Alabama Dept. of Public Safety, 200 F.R.D. 459, 460 (M.D. Ala. 2001)(citations
omitted).
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Plaintiffs contend that they should not be compelled to produce the material
unless it is designated AEO because discovery has revealed that Defendants want
to shut down Plaintiffs by taking their Chevron business. Plaintiffs quote
statements in Defendants’ emails that state they “will take a large amount (if not
all) of Saybolts work at Chevron” and [w]e could basically shut Saybolt down.” (Doc.
156-3, p. 2). Plaintiffs cite an Eleventh Circuit case to show that “in complicated
cases where document-by-document review of discovery materials would be
unfeasible, an ‘umbrella’ protective order, … should be used to protect documents
designated in good faith by the producing party as confidential.” In re Alexander
Grant & Co. Litig., 820 F.2d 352 (11th Cir. 1987) (citation omitted). However, the
Court notes that the protective order in In re Alexander made the material
designated as confidential available to the parties for use in litigation, it was merely
inaccessible to non-parties. Id at 354. A protective order is in place in this case that
would prohibit the disclosure of confidential information (Doc. 132), but Plaintiffs
seek to prohibit even the Defendants from viewing documents Plaintiffs’ experts
relied upon.
Plaintiffs are correct that designating confidential documents as for
“Attorneys’ Eyes Only” has been used in other cases for certain confidential
information. The Second Circuit explained the rational for designating documents
as AEO as follows:
The disclosure of confidential information on an “attorneys' eyes only”
basis is a routine feature of civil litigation involving trade secrets. See
Fed.R.Civ.P. 26(c)(1)(G) (“The court may, for good cause, issue an order
to protect a party or person requiring that a trade secret or other
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confidential research, development, or commercial information not be
revealed or be revealed only in a specified way ....”). The purpose of this
form of limited disclosure is to prevent a party from viewing the
sensitive information while nevertheless allowing the party's lawyers
to litigate on the basis of that information.
In re The City of New York, 607 F.3d 923, 935–36 (2d Cir. 2010) (footnote omitted).1
But the fact that an AEO designation may sometimes be appropriate does not mean
it must be used in all cases involving sensitive or confidential information. “The
burden is on the movant to show the necessity of the protective order, and the
movant must meet this burden with a ‘particular and specific demonstration of fact
as distinguished from stereotyped and conclusory statements.’ ” Ekokotu v. Fed.
Exp. Corp., 408 F. App'x 331, 336 (11th Cir. 2011) (quoting United States v. Garrett,
571 F.2d 1323, 1326 n. 3 (5th Cir.1978)). Thus, it is Plaintiffs’ burden to show by
specific facts that the designation is necessary. The Court must both find there is
“good cause” for requiring the protection and must “balance the interests of those
requesting the order.” Id. (citing McCarthy v. Barnett Bank of Polk Cnty., 876 F.2d
89, 91 (11th Cir. 1989)).
Plaintiff also cites an unreported case from the Eastern District of Louisiana that
stated that “[a]mple precedent exists for limiting disclosure of highly sensitive,
confidential or proprietary information to attorneys and experts, particularly when
there is some risk that a party might use the information or disseminate it to others
who might employ it to gain a competitive advantage over the producing party.”
Westside-Marrero Jeep Eagle, Inc. v. Chrysler Corp., 1998 WL 186728, at *2 (E.D.
La. Apr. 17, 1998)(citing district courts in Louisiana, Massachusetts, New York and
Ohio). The Court notes that in Westside-Marrero, the court found AEO designations
were appropriate, not for information to be disclosed by the plaintiffs related to
their claims, but for a very limited number of documents that the defendants were
to produce. In the Westside-Marrero case, the plaintiffs had “already demonstrated
a propensity to disseminate confidential [ ] information to other persons to further
their own ends,” by disclosing information in public filings and mailing out partially
redacted copies to other dealers. Id. Additionally, the court found plaintiffs had not
shown any prejudice from their inability to see the documents at issue. Id.
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In the instant case, Plaintiffs claim there is a vast amount of information
contained on the computer hard drives in question, some of which is not relevant to
the case. Plaintiffs assert that the hard drives contain financial and other sensitive
information and may contain information protected by attorney-client privilege.
Plaintiffs cite an unreported case from the Western District of Oklahoma for the
proposition that “the majority of courts that have allowed inspection of an
opponent's hard drive only allow such inspections under specific protocols that
would preserve claims of attorney-client privilege and protection of the
confidentiality of personal information located on the hard drives that is not related
to the claims and defenses or the subject matter of the lawsuit.” Musket Corp. v.
Star Fuel of Oklahoma, LLC, 2012 WL 4363752, at *2 (W.D. Okla. Sept. 21, 2012)
(citing two cases, one from the District of Kansas and the second from a Texas state
court). The Court notes that the Western District of Oklahoma only referred to the
protection of personal information that was not related to the claims and defenses
or the subject matter of the lawsuit. Notably, in the instant case, the information
Plaintiffs appear to be most concerned about is information that is directly related
to their claims against Defendants, information that AmSpec could potentially use
to compete against Plaintiffs for business with Chevron. In their complaint,
Plaintiffs allege that Defendants have “accessed, downloaded, and transferred a
large number of confidential files” that included “confidential trade secret
information related to customers, pricing, business strategy, and laboratory testing”
in the months prior to leaving their employ with Plaintiffs. (Doc. 1, ¶ 26). According
to Plaintiffs’ claims, the individual Defendants have already viewed and stolen the
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information at their leisure and then accepted employment with Defendant AmSpec
and made the information available to AmSpec. (Doc. 1, ¶¶ 105, 111, 117, 123).
Plaintiffs essentially accuse Defendants of having taken the information but do not
want Defendants to be able to see the information Plaintiffs claim Defendants stole.
Undoubtedly there is also information on the hard drives that is not directly related
to the claims in this case, but Plaintiffs have less need to keep such extraneous
information secret from the Defendants.
Plaintiffs, citing Paycom Payroll, LLC v. Richison, 758 F.3d 1198 (10th Cir.
2014, argue that designating the information in question as AEO does not deprive
Defendants of a fundamental right of due process. However, what the Richison
Court actually found was that the defendant’s due process right to view the
information at issue was not so fundamental as to be unwaivable. Id. at 1203. In
Richison, the defendant had agreed to submit the only remaining claim to a Special
Master to review, analyze and report to the court. Id. at 1201. The defendant had
also agreed in a consent decree that the Special Master’s report would be designated
as AEO. Id. at 1202. The defendant later moved to lift the AEO designation and the
district court denied his request stating that “no grounds [were] advanced … that
would justify [his] access to the Special Master’s Report.” Id. at 1201. The Tenth
Circuit found that the defendant’s due process right to view the report had been
waived when he agreed to the AEO designation of that report. Id. at 1202-03. This
Court notes that even fundamental rights may sometimes be waived if the decision
to waive was an informed one. See e.g. Arrastia v. United States, 455 F.2d 736, 739

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(5th Cir.1972) (citations omitted) (finding the right of a criminal defendant to a
direct appeal is a fundamental due process right and that the “decision to waive the
direct appeal must, therefore, be an informed one.”). There has been no suggestion
here that Defendants waived their right to challenge the AEO designation.
The use of the AEO designation was fully briefed and discussed at length
before the Magistrate Judge during a lengthy hearing and the Court must give
deference to the Magistrate’s findings on this non-dispositive issue. After review of
Plaintiffs’ objection and the parties’ briefs, as well as the case file, the Court finds
that Plaintiffs have not met their burden of demonstrating that the Magistrate’s
order of July 12, 2017 (Doc. 151), is clearly erroneous or contrary to law. Plaintiffs
have not shown that the Magistrate Judge misapplied relevant statutes, case law or
rules of procedure and the Court is not left with the “definite and firm conviction
that a mistake has been committed.” United States Gypsum Co., 333 U.S. at 395;
Rowlin, 200 F.R.D. at 460 (citations omitted).
CONCLUSION
For all of the foregoing reasons, Plaintiffs’ objections (Doc. 156) to the
Magistrate Judge’s order of July 12, 2017 are OVERRULED, and the Magistrate
Judge's Order (Doc. 151), is AFFIRMED in its entirety.
DONE and ORDERED this 18th day of August, 2017.
/s/ Callie V. S. Granade
SENIOR UNITED STATES DISTRICT JUDGE

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