hibu Inc. v. Peck
ORDER. Following the Court's in camera inspection of documents designated by Dex as Attorney's Eyes Only, the Court orders only those Bates numbered documents which consist of text message transcripts shall be de-designated. Signed by Magistrate Judge Teresa J. James on 3/13/2017. (ts)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
Case No. 16-cv-1055-JTM-TJJ
MEMORANDUM AND ORDER
During a February 6, 2017 in-person discovery conference, one of the issues the Court
discussed with counsel was the “Attorney Eyes Only” (“AEO”) designation Dex One Service, Inc.
placed on many of the documents it produced to Plaintiff pursuant to Plaintiff’s Rule 45 subpoena
(ECF No. 74). This was not the first discussion about the issue, but as it became clear that the
parties were at an impasse, the Court ruled as follows:
Defendant continues to designate approximately 3,700 documents as AEO.1
Because discovery is rapidly drawing to a close and counsel have exhausted their
ability to narrow this number, the Court direct[s] each party to choose 8 documents
and provide copies of those documents to Judge James, and further direct[s]
Defendant to provide Judge James with a list of the document numbers of the
documents it continues to designate as AEO. From that list, the Court will
randomly choose 25 to 30 documents. After reviewing the documents just
described, the Court will rule on whether the documents should retain their AEO
The parties have made their submissions and the Court has reviewed the documents, some
of which are quite lengthy. For the reasons that follow, the Court will not require the AEO
Although these are documents produced by Dex and not by Defendant (who is now employed by
Dex), Defendant’s counsel is also representing Dex in all matters related to the Rule 45 subpoena.
The Court’s reference to “Defendant” in this minute sheet is a shorthand reference to Defendant’s
Minute Sheet from 2/6/2017 conference (ECF No. 132 at 3).
designation to be removed from all but one subset of documents.
The Court has considered a number of factors in reaching its decision, beginning with the
agreed protective order entered in this case. In a paragraph entitled “Definition of Confidential
Information and Confidential—Attorney’s Eyes Only Information,” the order states as follows:
As used in this Order, "Confidential Information” is defined as information
that the producing party designates in good faith has been previously maintained in
a confidential manner and should be protected from disclosure and use outside the
litigation because its disclosure and use is restricted by statute or could potentially
cause harm to the interests of disclosing party or nonparties. “Confidential –
Attorney’s Eyes Only” information is a subset of “Confidential Information” and
shall be treated as “Confidential Information” subject to any specific provisions of
this order addressing “Confidential – Attorney’s Eyes Only” information.3
While the documents in question have not been produced by a party, the protective order
contains an agreement that its provisions extend to confidential information produced in the case
by third parties upon timely request from the third party.4 The parties’ conduct indicates Dex
made such a request. And to be clear, Dex has produced to Plaintiff all 3,700 documents in
question, limiting the issue at hand to whether Dex has properly designated the documents AEO.
As Plaintiff has made no challenge to a confidential designation for the Dex documents, any such
document stripped of its AEO designation will continue to be treated as confidential.
Plaintiff has challenged the AEO designation, and Dex has the burden to prove the
designation is warranted. In reviewing a challenge, the Court 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.
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 or gain an unfair competitive advantage.’5
ECF No. 16 at 2.
Id. at 8.
Suture Express, Inc. v. Cardinal Health 200, LLC, No. 12-2760, 2013 WL 6909158, at *7 (D.
Kan. Dec. 31, 2013) (internal citation omitted).
The Court notes that Plaintiff brought this action against Chad Peck only. While the Court
intends no criticism of Plaintiff’s decision and none should be inferred, the Court finds relevant the
fact that hibu and Dex are strong business competitors who fiercely resist providing access to each
other’s confidential information. Dex argues the documents at issue deserve AEO protection
because they fall into one of the following categories:
Pricing information (including prices of particular ads, “proposal approval
requests,” how much a client paid, discounts, “marketing service agreements,”
The sales representatives’ sales numbers (sold lists with payment information, lead
lists, accounts solicited lists, etc.);
The sale representatives’ compensation structure (offer letters including
compensation, strategy re: percentage of commissions, etc.);
Distribution numbers (including the amount of books distributed to each market,
and strategy discussions about same);
Any references to User Friendly, or any other entity Dex discussed acquiring; or
Strategy discussions regarding Peck managed markets (see attached as “Market
Strategy” and “Market Strategy 2”).6
The Court finds that with this articulation, Dex has met its burden to show the risk of
competitive harm it could suffer if hibu personnel had access to the documents.7 As the Court
noted in an earlier Memorandum and Order ruling on a motion to compel in this case, Defendant
has provided interrogatory answers which identify the businesses he had personally contacted
since joining Dex Media; to the extent he knew of them, the businesses solicited or attempted to be
solicited by the sales representatives who left hibu and joined Dex Media; and the hibu employees
Defendant communicated with after he left hibu including text messages with the identified
January 25, 2017 Braun email to Kenney.
Another relevant factor is that hibu’s in-house counsel is permitted to view these documents,
which provides litigation counsel the opportunity to discuss them with his client. While litigation
counsel argues he should be allowed to show the documents to hibu sales personnel, the Court
does not presume in-house counsel has no knowledge of hibu’s sales activities.
Based on the Court’s review of the documents and considering the quantity and nature of
Dex information Defendant has produced in discovery, along with the lack of a compelling counter
argument by Plaintiff, the Court finds with one exception the documents may retain their AEO
The exception is transcripts of text message exchanges. In the transcripts the Court
reviewed, some do contain names of contacts and possible leads for sales. As noted above,
however, Defendant already has provided much of this information in his interrogatory answers.
The transcripts otherwise primarily contain very limited pricing information, wholly irrelevant
social pleasantries and personal conversations, and comments about Plaintiff that Defendant may
prefer Plaintiff’s employees not see but that do not constitute information from which Plaintiff
could gain a competitive advantage. Accordingly, Dex shall de-designate documents containing
text message exchanges.
The Court makes one additional note. Not surprisingly, the exemplars the parties
hand-picked for the Court to review represent the ends of the spectrum of confidentiality. The
documents Defendant submitted contain pricing, distribution, and confidential product
information. On the other hand, Plaintiff submitted documents containing a text exchange about
baseball results and general questions. It is difficult to discern a reason for a document such as
Bates number DEX000059 to be worthy of confidential designation, let alone the extra protection
of AEO. In addition, during the February 6, 2017 discovery conference, the Court ordered
defense counsel (who also represents Dex) to supplement its production as to certain subpoena
requests, which may affect the claim of confidentiality or AEO to some of the documents at issue.
November 17, 2016 Memorandum and Order (ECF No. 103).
The Court reminds Dex’s counsel of the continuing application of the protective order in this case
and that by marking a designated document as confidential or AEO, counsel certifies the document
contains confidential information as defined in the protective order.9
IT IS THEREFORE ORDERED that within five business days of the date of this order,
counsel for Dex shall remove the AEO designation from documents which consist of transcripts of
text message exchanges.
IT IS SO ORDERED.
Dated this 13th day of March, 2017, at Kansas City, Kansas.
s/ Teresa J. James
Teresa J. James
U.S. Magistrate Judge
See Protective Order (ECF No. 16) at 3.
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