US InterLoc Matting, Inc. v. Macro Plastics, Inc.

Filing 27

ORDERs igned by Magistrate Judge Deborah Barnes on 11/13/17 ORDERING that Defendant's 8/29/17 MOTION for Protective Order 13 is GRANTED in part and DENIED in part. Plaintiff's Request for Production of Documents Nos. 1, 4, 5, 6, 10, 11, and 12 shall be subject to a 11/30/16 cut-off date; and All documents created after 11/17/16, shall be designated as "CONFIDENTIAL- ATTORNEYS EYES ONLY." (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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U.S. INTERLOC MATTING, INC.,

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Plaintiff,
v.

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ORDER

MACRO PLASTICS, INC.,

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No. 2:17-cv-0733 JAM DB

Defendant.
AND RELATED CROSS-ACTIONS
This action came before the court on November 13, 2017, for hearing of defendant’s

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motion for a protective order. (ECF No. 13.) Attorney David Diepenbrock appeared on behalf of

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the plaintiff US InterLoc Matting, Inc., (“USI”). Attorney John Knowlton appeared on behalf of

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the defendant Macro Plastics, Inc., (“MPI”).

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Defendant MPI seeks an order limiting the responses to USI’s request for production of

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documents served on non-party Quality Mat Company, (“Quality Matt”), to documents

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“generated on or before USI terminated its contract with MPI on November 7, 2016.” (ECF No.

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24 at 2) (emphasis in original). Defendant asserts that materials created after November 7, 2016,

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are “irrelevant, and consist of highly confidential trade secrets and business information . . . .”

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(Id. at 2.)

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“A party cannot object to a subpoena duces tecum served on a nonparty, but rather, must
seek a protective order or make a motion to quash.” Moon v. SCP Pool Corp., 232 F.R.D. 633,
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636 (C.D. Cal. 2005). “The general rule is that a party has no standing to quash a subpoena

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served upon a third party, except as to claims of privilege relating to the documents being

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sought.” U.S. Bank Nat. Ass’n v. James, 264 F.R.D. 17, 18-19 (D. Me. 2010) (quoting Windsor

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v. Martindale, 175 F.R.D. 665, 668 (D. Colo. 1997)); see also Langford v. Chrysler Motors Corp.,

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513 F.2d 1121, 1126 (2nd Cir. 1975) (“In the absence of a claim of privilege a party usually does

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not have standing to object to a subpoena directed to a non-party witness.”); Thomas v. Marina

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Assocs., 202 F.R.D. 433, 434 (E.D. Pa. 2001) (“An exception is made, however, where, as here,

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the party seeks to quash based on claims of privilege relating to the documents being sought.”).

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“This principle is well-settled . . . .” In re C.R. Bard, Inc. Pelvic Repair Systems Products

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Liability Litigation, 287 F.R.D. 377, 382 (S.D. W.Va. 2012).
Rule 45(d)(3)(B)(i) provides that “[t]o protect a person . . . affected by a subpoena, the

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court . . . may, on motion, quash or modify the subpoena if it requires: (i) disclosing a trade secret

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or other confidential research, development, or commercial information.” “The party who moves

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to quash a subpoena bears the ‘burden of persuasion’ under Rule 45(c)(3). ATS Products, Inc v.

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Champion Fiberglass, Inc., 309 F.R.D. 527, 531 (N.D. Cal. 2015); see also Moon, 232 F.R.D. at

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637 (“the party who moves to quash a subpoena has the ‘burden of persuasion’”). In this regard,

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“[t]he party asserting the privilege bears the burden of establishing all necessary elements.”

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Apple Inc. v. Samsung Elecs. Co., 306 F.R.D. 234, 237 (N.D. Cal. 2015).

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“There is no absolute privilege for trade secrets and similar confidential information.”

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DIRECTV, Inc. v. Trone, 209 F.R.D. 455, 459 (C.D. Cal. 2002) (citing Federal Open Market

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Committee v. Merrill, 443 U.S. 340, 362 (1979)); see also MDK, Inc. v. Mike’s Train House,

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Inc., 27 F.3d 116, 120 (4th Cir. 1994) (“trade secrets have widely been held to be discoverable

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upon appropriate findings and with an appropriate protective order”).

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Nonetheless,
. . . courts have attempted to reconcile the competing interests in
trade secret discovery disputes. First, the party opposing discovery
must show that the information is a “trade secret or other
confidential research, development, or commercial information,”
under Rule 26(c)(7) and that its disclosure would be harmful to the
party’s interest in the property. The burden then shifts to the party
seeking discovery to show that the information is relevant to the
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subject matter of the lawsuit and is necessary to prepare the case for
trial.

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If the party seeking discovery shows both relevance and need, the
court must weigh the injury that disclosure might cause to the
property against the moving party’s need for the information. If the
party seeking discovery fails to show both the relevance of the
requested information and the need for the material in developing
its case, there is no reason for the discovery request to be granted,
and the trade secrets are not to be revealed.

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In re Remington Arms Co., Inc., 952 F.2d 1029, 1032 (8th Cir. 1991) (citations omitted); see also

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Upjohn Co. v. Hygieia Biological Laboratories, 151 F.R.D. 355, 358 (E.D. Cal. 1993) (“In order

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to resist discovery of a trade secret, a party must first demonstrate by competent evidence that the

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information sought through discovery is a trade secret and that disclosure of the secret might be

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harmful. If this showing is made, the burden shifts to the party seeking discovery to establish that

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the disclosure of trade secrets is relevant and necessary to the action.”).

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“Trade secret or commercially sensitive information must be ‘important proprietary

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information’ and the party challenging the subpoena must make ‘a strong showing that it has

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historically sought to maintain the confidentiality of this information.’” Gonzales v. Google, Inc.,

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234 F.R.D. 674, 684 (N.D. Cal. 2006) (quoting Compaq Computer Corp. v. Packard Bell Elec.,

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Inc., 163 F.R.D. 329, 338 (N.D. Cal. 1995)). See generally National Academy of Recording Arts

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& Sciences, Inc. v. On Point Events, LP, 256 F.R.D. 678, 682 n.4 (C.D. Cal. 2009) (“It is clear

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that, as defendant claims, customer lists, vendor lists, and pricing information are often

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determined to be trade secrets.”).

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Here, defendant has not demonstrated that the information sought through discovery is a

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trade secret, that disclosure of the secret might be harmful, or that it has historically sought to

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maintain the confidentiality of this information. In this regard, defendant merely asserts that it

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… seeks protection from disclosure to its competitor of irrelevant
material which explores MPI’s multi-year, long-term and strategic
USA and international marketing and sales relationships with
Quality Mat, exclusive marketing and sales rights throughout
North, Central and South America, distribution of various product
lines, manufacturer information, manufacturing capacity, product
requirements, requisite sales partnerships and volume requirements,
addition of additional distributors, marketing and sales leads,
inventory, pricing, and similar highly sensitive information which
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directly impacts market performance.
(ECF No. 24 at 6.)

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Defendant’s vague and conclusory allegations, however, do not provide any specific

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argument or evidence to allow the court to determine precisely what documents are it issue, if any

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of those documents contain trade secrets, how disclosure would be harmful, or if defendant has

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historically sought to maintain the confidentiality of the information. See Terry v. Register Tapes

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Unlimited, Inc., No. 2:16-cv-0806 WBS AC, 2017 WL 3226867, at *4 (E.D. Cal. July 31, 2017)

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(“it is not enough to simply make the blanket, conclusory assertion that all post-2003

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communications are subject to trade secret protection”); National Academy of Recording Arts &

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Sciences, Inc. v. On Point Events, LP, 256 F.R.D. 678, 683 (C.D. Cal. 2009) (“defendant has not

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presented any declarations from its officers or employees supporting its claim that the information

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sought in the remaining interrogatories and document requests is a ‘trade secret’ or ‘confidential .

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. . commercial information’ and that defendant has taken reasonable steps to assure the

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confidentiality of this information and to prevent its disclosure to third parties”); Davis v. Leal, 43

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F.Supp.2d 1102, 1110 (E.D. Cal. 1999) (“Leal has provided no declaration, and even no

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argument, describing the material withheld, or why it is essential to his business.”).
Moreover, for the reasons articulated in the joint statement and at the November 13, 2017

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hearing, the undersigned finds that the requested documents are relevant and necessary to the

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action. Although defendant has failed to carry its burden, plaintiff’s argument offers two

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important concessions which considerably reduce the risk of any potential injury to the defendant.

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In this regard, plaintiff proposes “[a] November 30, 2016 cut-off date is . . . appropriate for

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Document Request Nos. 1, 4, 5, 6, 10, 11, 12.”1 (Id. at 19.) More importantly, plaintiff “has

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offered on numerous occasions to designate all material created after November 7, 2016 as

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‘CONFIDENTIAL-ATTORNEYS EYES ONLY.’” (Id. at 21.)

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Request Nos. 2, 7, 8, 13, 14, and 16 would not be subject to a cut-off date.
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Accordingly, upon consideration of the arguments on file and those made at the hearing,

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and for the reasons set forth on the record at that hearing and above, IT IS HEREBY ORDERED

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that:
1. Defendant’s August 29, 2017 motion for a protective order (ECF No. 13) is granted in

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part and denied in part;
2. Plaintiff’s Request for Production of Documents Nos. 1, 4, 5, 6, 10, 11, and 12 shall be

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subject to a November 30, 2016 cut-off date; and

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3. All documents created after November 7, 2016, shall be designated as
‘CONFIDENTIAL-ATTORNEYS EYES ONLY.’”2
Dated: November 13, 2017

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DLB:6
DB\orders\orders.civil\usi0733.oah.111317

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If a party wishes to challenge the designation of a document as “CONFIDENTIALATTORNEYS EYES ONLY” the party shall first comply with the terms of the parties’ stipulated
protective order (ECF No. 10) before bringing a discovery dispute pursuant to Local Rule 251.
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