Compass Minerals America, Inc. v. Gaia Enterprises, Inc.
Filing
43
MEMORANDUM AND ORDER regarding 36 Gaia's Motion to Enter Its Proposed Protective Order and 38 Plaintiff's Motion for Entry of Confidentiality and Protective Order. The Court will enter the Protective Order as stipulated with the exception of part of section 7(b)(iv) and all of section 7(b)(v), adopting Defendant's proposed language and adding language to clarify the parties' burdens. Signed by Magistrate Judge Teresa J. James on 8/16/2017. (ts)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
COMPASS MINERALS AMERICA INC., )
)
Plaintiff,
)
)
v.
)
)
GAIA ENTERPRISES, INC.,
)
)
Defendant.
)
Case No. 16-cv-2175-JAR-TJJ
MEMORANDUM AND ORDER
This matter is before the Court on Gaia’s Motion to Enter Its Proposed Protective Order
(ECF No. 36) and Plaintiff’s Motion for Entry of Confidentiality and Protective Order (ECF No.
38). The parties agree on virtually all provisions of a proposed Protective Order. Each has filed
a motion to advocate its position regarding a single paragraph on which they disagree. After
balancing the relevant factors and applying the appropriate legal standards, the Court finds that
Defendant’s is the more well-reasoned and appropriate approach.
I.
Background
This is a case in which competitors in the pet-friendly deicing products market bring claims
including alleged trademark and trade dress infringement against each other. The parties agree
that the Court should enter a protective order in the case, and that such order should classify
protected information into two tiers: “confidential” and “highly confidential—attorneys’ eyes
only” (AEO). While the parties have agreed on every other provision in the proposed order, they
have competing proposals for the circumstances in which one party’s in-house counsel may obtain
and review documents designated as AEO by the producing party.
II.
Discussion
Both parties agree that any counsel involved in competitive decision-making should not be
permitted to review AEO documents. In ruling on these motions, the Court accepts the definition
of “competitive decision-making” as “shorthand for a counsel’s activities, association, and
relationship with a client that are such as to involve counsel’s advice and participation in any or all
of the client’s decisions (pricing, product design, etc.) made in light of similar or corresponding
information about a competitor.”1 The parties have arrived at a mutually acceptable procedure for
allowing one designated in-house attorney for each party to gain access to AEO documents, as
follows:
7.
Who May Review Documents Designated HIGHLY
CONFIDENTIAL - ATTORNEYS’ EYES ONLY. Documents
designated as HIGHLY CONFIDENTIAL-ATTORNEYS’ EYES ONLY by
a producing party in this action shall not be given, shown, made available,
or communicated in any way to any person other than the following:
a. Counsel. Outside counsel of record for the parties, and
employees and agents of counsel who have responsibility for the preparation
and trial of the action;
b. Parties. One in-house attorney for each of the parties to whom
disclosure is reasonably necessary for this litigation, in accordance with the
following procedures:
i.
If and when a receiving party elects to disclose to the
receiving party’s in-house attorney documents that have been
designated by a producing party as HIGHLY CONFIDENTIAL ATTORNEYS’ EYES ONLY, the receiving party shall first identify
to the producing party its designated in-house attorney.
1
U.S. Steel Corp. v. U.S., 730 F.2d 1465,1468-69 (Fed. Cir. 1984).
2
ii.
Prior to the disclosure of any HIGHLY CONFIDENTIAL
- ATTORNEYS’ EYES ONLY, the receiving party’s designated
in-house attorney shall: (a) certify that he or she is not involved in any
competitive decision-making for the receiving party with respect to the
issues involved in the above-captioned matter, (b) be provided with a
copy of this Order and be required to read it and agree to all of its terms
in writing, and (c) execute the accompanying Acknowledgement and
Agreement to Be Bound.
iii.
If the producing party objects to the receiving party’s
designated in-house attorney, the producing party shall, within 48 hours
of notice of the identity of the receiving party’s designated in-house
attorney, provide the receiving party with a written explanation detailing
the reasons why the producing party believes the receiving party’s
designated in-house attorney should not have access to HIGHLY
CONFIDENTIAL - ATTORNEYS’ EYES ONLY documents. During
this 48-hour period, the receiving party shall not show to its designated
in-house attorney documents that have been designated HIGHLY
CONFIDENTIAL - ATTORNEYS’ EYES ONLY by the producing
party.2
Under this procedure, therefore, before the receiving party’s in-house attorney may
view AEO materials, the producing party will have 48 hours to object to that individual
having access to the document. Plaintiff’s proposed language continues and concludes
with the following paragraph:
iv.
Within 48 hours of receiving notice of the producing party’s
objection to the receiving party’s designated in-house attorney, the
receiving party shall have 48 hours to accept or reject the written
explanation provided by the producing party. During this second 48-hour
period, the receiving party shall not show to its designated in-house attorney
documents that have been designated HIGHLY CONFIDENTIAL ATTORNEYS’ EYES ONLY by the producing party. If, upon the expiration
of this second 48 hour period, the receiving party rejects the producing
party’s explanation, the receiving party shall set forth the specific reasons
2
ECF No. 39-1 at 6-8.
3
why the designated person is entitled to see materials pursuant to this Order
and the receiving party is free to disclose to its designated in-house attorney
documents that have been designated HIGHLY CONFIDENTIAL ATTORNEYS’ EYES ONLY by the producing party. Nothing in the
foregoing shall preclude the producing party from seeking relief from the
Court but the burden shall be on the producing party to show why
notwithstanding the signed copy of this Order, disclosure is not appropriate.3
Under this procedure, a second 48-hour period follows during which the receiving
party may reject the reasons for its in-house attorney being unable to see the AEO
materials, and after which it may disclose the AEO materials to its designated in-house
attorney. Defendant agrees to Plaintiff’s proposal for what occurs during this second
48-hour period. The parties’ disagreement begins at the conclusion of the second 48-hour
period, assuming neither side has withdrawn its objection. Defendant proposes a third
48-hour period with the following language:
v.
Within 48 hours of the producing party receiving the receiving
party’s specific reasons why the designated person is entitled to see
materials, the producing party shall notify the receiving party whether it will
seek relief from the Court to preclude review of documents that have been
designated HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY by
the designated person. If the producing party indicates that it will seek such
relief, the designated person shall not review documents that have been
designated HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY
until the Court reaches its decision. If the producing party indicates that it
will not seek such relief, or the producing party fails to notify the receiving
party whether it will seek relief from the Court within the 48 hour window,
then the receiving party is free to disclose to its designated in-house attorney
documents that have been designated HIGHLY CONFIDENTIAL ATTORNEYS’ EYES ONLY by the producing party.4
3
Id. at 8-9.
4
ECF No. 36-1 at 9.
4
Under Defendant’s version, a producing party who objects to any in-house
attorney it believes to be a competitive decision-maker may address the objection
with the Court before the AEO materials are disclosed to that individual.
Plaintiff argues that its proposal for a claw back of AEO documents
adequately protects against the inadvertent disclosure of trade secrets to competitors
and strikes the appropriate balance between that risk and the risk to the other party
that protection of these trade secrets will prejudice its ability to prosecute or defend
this case. Plaintiff contends that in contrast, Defendant’s proposal gives the
producing party unfettered veto power over disclosure to the receiving party’s
designated in-house attorney pending a court ruling. Plaintiff argues the procedure
builds in unnecessary delay.
Defendant asserts that great prejudice would result if an in-house attorney
has improperly been allowed to review AEO documents because there is no
after-the-fact remedy for the harm caused by disclosure of trade secrets and other
confidential information to a competitive decision-maker. Defendant also denies
that its proposal would give a party unfettered veto power, as the ultimate
determination of disclosure would be made by the court, not by a party. And if any
brief delay occurs by virtue of court review, Defendant contends the resulting
prejudice would be slight in comparison to that suffered by a party whose trade
secrets have been revealed to a competitive decision-maker.
5
While there is no absolute privilege for confidential information, a “court
may, for good cause, issue an order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense, including . . . requiring
that a trade secret or other confidential research, development, or commercial
information not be revealed or be revealed only in a specified way [.]”5 The party
seeking the protective order has the burden to show good cause.6 Based on the
pleadings and the parties’ representations, good cause exists for a two-tiered
protective order in this case.
Where the protection sought is to ascertain whether certain identified
individuals should be permitted to view the materials, as with this AEO provision,
courts must balance the risk of inadvertent disclosure to competitors against the risk
of prejudice to the other party's ability to prosecute or defend the present action.7
When balancing these risks, courts should consider whether the prohibited
individual “would be virtually unable to compartmentalize the information and not
use the information to seek to gain an unfair competitive advantage.”8 A court
must determine whether there is an unacceptable risk of or opportunity for
inadvertent disclosure of confidential information, and should consider whether
5
Fed. R. Civ. P. 26(c)(1)(G).
6
Layne Christensen Co. v. Purolite Co., 271 F.R.D. 240, 244 (D. Kan. 2010).
7
Id. at 249.
8
MGP Ingredients, Inc. v. Mars, Inc., 245 F.R.D. 497, 501 (D. Kan. 2007).
6
prohibiting an individual's access to the information would hamper a party's ability
to effectively proceed with and assess the merits of the litigation.9 “This involves
considering the individual's specific role in the litigation, whether his or her
expertise is specialized and not widely available through the retention of other
experts, and whether this specialized expertise is essential to the proper handling of
the litigation.”10
Defendant avers that Plaintiff has not identified the individual to whom it
would disclose AEO materials, and Plaintiff does not disagree. Under the relevant
legal standards and burdens, this information is essential to the Court’s ability to
weigh the relative harms. Without the information, Plaintiff’s proposal would
deny the producing party the opportunity to fully assess the risk that its confidential
information would be inadvertently disclosed to a competitor. As such, the Court
does not find it acceptable in this case. In contrast, Defendant’s proposal assures
proper balancing and imposes no hardship on the receiving party.
After considering the respective positions of the parties and reviewing the
applicable law, the Court determines that Defendant has shown good cause why its
proposed AEO provision should be included in the parties’ protective order. The
Court will enter the Protective Order as stipulated with the exception of part of
9
Suture Exp., Inc. v. Cardinal Health, 200, LLC, Case No. 12-2760-RDR, 2013 WL
6909158, at *6–7 (D. Kan. Dec. 31, 2013).
10
Layne Christensen Co., 271 F.R.D. at 250.
7
section 7(b)(iv) and all of section 7(b)(v). The Court will adopt Defendant’s
proposed language and will add the language shown below in bold to clarify the
respective parties’ burdens.
v.
Within 48 hours of the producing party receiving the receiving party’s
specific reasons why the designated person is entitled to see materials, the
producing party shall notify the receiving party whether it will seek relief from the
Court to preclude review of documents that have been designated HIGHLY
CONFIDENTIAL – ATTORNEYS’ EYES ONLY by the designated person. In
any instance in which the producing party seeks relief from the Court under
this provision, the producing party shall have the burden to show why the
designated person is not entitled to see the materials. If the producing party
indicates that it will seek such relief, the designated person shall not review
documents that have been designated HIGHLY CONFIDENTIAL –
ATTORNEYS’ EYES ONLY until the Court reaches its decision. If the producing
party indicates that it will not seek such relief, or the producing party fails to notify
the receiving party whether it will seek relief from the Court within the 48 hour
window, then the receiving party is free to disclose to its designated in-house
attorney documents that have been designated HIGHLY CONFIDENTIAL ATTORNEYS’ EYES ONLY by the producing party.
IT IS SO ORDERED.
Dated this 16th day of August, 2017, at Kansas City, Kansas.
s/ Teresa J. James
Teresa J. James
U.S. Magistrate Judge
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