Auge v. Stryker Corporation et al
Filing
165
MEMORANDUM OPINION AND ORDER by District Judge Kenneth J. Gonzales overruling 138 Defendants' Objections to Magistrate Judge's Memorandum Opinion and Order Granting Plaintiff's Motion to De-Designate Discovery Material Marked "Attorneys' Eyes Only"; and affirming 132 Memorandum Opinion and Order Granting Plaintiff's Motion to De-Designate Discovery Material Marked "Attorneys' Eyes Only." (tah)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
CLARKE COLL,
Plaintiff,1
v.
No. 14-cv-1089 KG/SMV
STRYKER CORPORATION and
HOWMEDICA OSTEONICS CORPORATION,
Defendants.
MEMORANDUM OPINION AND ORDER OVERRULING OBJECTIONS
AND AFFIRMING ORDER TO DE-DESIGNATE
DISCOVERY MATERIAL MARKED “ATTORNEYS’ EYES ONLY”
THIS MATTER is before the Court on Defendants’ Objections to Magistrate Judge’s
Memorandum Opinion and Order Granting Plaintiff’s Motion to De-Designate Discovery
Material Marked “Attorneys’ Eyes Only” [Doc. 138], filed on March 29, 2017. The Honorable
Stephan M. Vidmar, United States Magistrate Judge, issued his Memorandum Opinion and
Order (“MOO”) granting Plaintiff’s motion to de-designate discovery material marked
“Attorneys’ Eyes Only” on March 15, 2017. [Doc. 132]. Plaintiff responded in opposition to the
objections, [Doc. 146], and Defendants replied, [Doc. 157]. Being fully advised in the premises,
the Court finds that Defendants fail to show that the MOO is “clearly erroneous or contrary to
law.” Fed. R. Civ. P. 72(a). Accordingly, the Court will overrule the objections, affirm the
Magistrate Judge’s MOO, and order Defendants, within 30 days and at their own cost, to
1
Mr. Coll was substituted as Plaintiff in this matter when the original Plaintiff, Wayne Augé, II, M.D., filed for
bankruptcy. Mr. Coll is the trustee of the bankruptcy estate. [Doc. 30].
provide one additional copy of the discovery materials to Plaintiff with a lesser or no designation
under the Agreed Protective Order, [Doc. 59].
Background
In the 1990’s, Wayne Augé, II, M.D., (the originally named Plaintiff in this action) made
innovative developments in orthopedic medicine and surgery. Defendants were interested in his
inventions, and they entered into a series of confidentiality agreements with him for their
common benefit. Defendants utilized Dr. Augé’s inventions in several products that went to
market. Over the years, however, as Defendants marketed new products with his inventions,
Dr. Augé came to believe that Defendants were not fulfilling their agreements to honor his
ownership rights or to pay him what they owed. So, Dr. Augé filed this lawsuit in 2014.
The parties anticipated that some materials disclosed in discovery would be sensitive, and
they entered into an Agreed Protective Order (“APO”) early on. [Doc. 59]. The APO provided
for two tiers of protection: “Confidential” and “Attorneys’ Eyes Only.” Id. at 1, 4. Confidential
information may be accessed by the parties, including Dr. Augé, but cannot be used for any
purpose outside this litigation. Id. at 1, 3. Material designated “Attorneys’ Eyes Only” (“AEO”)
may not be accessed by the parties, including Dr. Augé, and is intended to protect “trade secrets
or highly confidential, non-public, personal or proprietary business information, disclosure of
which could be especially detrimental or harmful to the designating party if disclosed to
opposing parties.” Id. at 4.
On August 26, 2016, Defendants produced 86,802 pages of initial disclosures. [Doc. 88]
at 8. Of those, approximately 63,335 pages (or 3,809 documents) were designated AEO. Id.
2
Plaintiff first objected to the designations in writing on September 30, 2016. [Doc. 89-12] at 4.
That same day, defense counsel explained that the designations were necessary because the
materials constituted “internal [research and development] and product development files.” Id.;
[Doc. 88] at 9. Counsel conferred at least twice more. See [Doc. 88] at 8–9, 9 n.12; [Doc. 68]
at 5; [Doc. 102] at 2. Although the APO instructs the producing party (i.e., Defendants) to
submit the dispute by formal motion within ten calendar days of the parties’ “conference” on the
dispute, Plaintiff actually filed the motion on November 8, 2016. [Doc. 68]. Plaintiff asked the
Court to de-designate the materials and to award attorney fees. Id. at 11. Judge Vidmar granted
the motion on March 15, 2017. [Doc. 132]. Defendants timely objected pursuant to Fed. R. Civ.
P. 72. [Doc. 138].
Standard
“There is no absolute privilege for trade secrets and similar confidential information.”
Centurion Indus., Inc. v. Warren Steurer & Assocs., 665 F.2d 323, 325 (10th Cir. 1981)
(alterations omitted) (quoting Fed. Open Mkt. Comm. v. Merrill, 443 U.S. 340, 362 (1979)).
Under Fed. R. Civ. P. 26(c)(1)(G), a court may, for good cause, issue a protective order (or
permit a party to avail itself of an already issued protective order) to require that “a trade secret
or other confidential research, development, or commercial information not be revealed or be
revealed only in a specified way.” In re Cooper Tire & Rubber, Co., 568 F.3d 1180, 1188 (10th
Cir. 2009). A party seeking that its information only be revealed in a certain way, such as
limiting who can view or access the materials, under this Rule “must first establish that the
information sought is a trade secret [or other confidential research, development, or commercial
3
information].” Id. at 1190; Fed. R. Civ. P. 26(c)(1)(G). Further, that party must additionally
“demonstrate that its disclosure might be harmful.” In re Cooper Tire, 568 F.3d at 1190 (quoting
Centurion, 665 F.2d at 325). To establish the requisite harm, the party seeking protection must
make a “particular and specific demonstration of fact, as distinguished from stereotyped and
conclusory statements.” E.g., Layne Christensen Co. v. Purolite Co., 271 F.R.D. 240, 245 (D.
Kan. 2010) (quoting Gulf Oil Co. v. Bernard, 452 U.S. 89, 102 n.16 (1981)); accord JENNER &
BLOCK, MOORE’S ANSWERGUIDE FEDERAL DISCOVERY PRACTICE § 16.29(b) (2017 ed.) (a
showing of “specific prejudice or harm” is required to limit the disclosure of trade secrets).
For example, in McKellips v. Kumho Tire Co., a products liability case, the parties had
entered into a protective order that prohibited the plaintiffs and their counsel from sharing certain
discovery material (e.g., “confidential research, development, or proprietary business
information”) outside the litigation. 305 F.R.D. 655, 661 (D. Kan. 2015). The protective order
notwithstanding, the defendant Kumho opposed producing certain discovery materials, such as
the number of tires produced; the specifications and blueprints for the subject tire; skim stock
compounds and formulas; manufacturing processes; manufacturing or design defects found;
tread separation studies and testing; speed rating; and driver response, effects, risk, and causes of
tread separation. Id. at 661, 664. Kumho considered these materials to be trade secrets. The
Court agreed, but only in part.
Kumho had submitted an affidavit in support of its position that the skim stock
compounds and formulas for its tires constituted trade secrets. Id. at 663. The court was
persuaded that the skim stock materials constituted trade secrets. Id. However, the court found
4
that Kumho had not met its burden to establish that the other material constituted trade secrets.
Id. at 664. For example, the court found that Kumho’s vague characterization of the disputed
material as “manufacturing processes” was not enough. Id. Kumho had not identified any
particular aspect of its manufacturing processes that was unique to it, closely guarded, and if
disclosed, would be valuable to competitors. Id. Further, the court found that the protective
order already in place provided sufficient protection for Kumho’s information. Other than the
skim stock materials, therefore, the court ordered Kumho to produce the discovery materials.
In Northern Natural Gas Co. v. L.D. Drilling, Inc., the District of Kansas similarly
addressed whether materials sought in discovery constituted trade secrets. 2010 U.S. Dist.
LEXIS 145522; 2010 WL 9519354 (D. Kan. Mar. 26, 2010) (unpublished). The plaintiff
Northern wanted entry onto L.D. Drilling’s land in order to collect natural gas samples from
certain gas wells. U.S. Dist. LEXIS 145522 at *12. L.D. Drilling submitted an affidavit
supporting its claim that allowing such sampling would expose its trade secrets. Id. at 27. The
affiant, Mr. Davis, explained that information about the physical and chemical composition of
material produced from the wells was economically valuable, especially because the information
was not generally known or readily ascertainable to those who might otherwise make use of it.
Id. The court did not indicate whether the affidavit was convincing. Instead, the court assumed
without finding that the gas samples were trade secrets and went on to hold that LD Drilling
failed to show that it would be harmed by disclosure of the samples. Id. at 30–31.
Once the party seeking protection for its trade secrets has met its initial burden—to show
that the materials constitute trade secrets and disclosure of them might cause harm—the burden
5
then shifts to the party seeking disclosure to establish that such disclosure is “relevant and
necessary to the action.” Centurion, 665 F.2d at 325.
The need for the trade secrets should be balanced against
the claim of harm resulting from the disclosure. “It is within the
sound discretion of the trial court to decide whether trade secrets
are relevant and whether the need outweighs the harm of
disclosure.” If the party seeking discovery cannot prove that the
information is relevant and necessary, then discovery should be
denied. However, if the party meets its burden, “the trade secrets
should be disclosed, unless they are privileged or the subpoenas
are unreasonable, oppressive, annoying, or embarrassing.”
In re Cooper Tire, 568 F.3d at 1190 (internal citations omitted) (quoting Centurion, 665 F.2d
at 325, 326).
Where the protection sought is only to prevent certain identified
individuals from viewing the materials, such as in-house counsel or
the patent inventor, the court must balance the risk of inadvertent
disclosure of trade secrets to competitors against the risk to the
other party that protection of these trade secrets will prejudice its
ability to prosecute or defend the present action.
Layne Christensen, 271 F.R.D. at 249.
Judge Vidmar found that these standards were consistent with the APO.
Judge Vidmar found that the APO in this case set forth the following.
The party
designating materials AEO must provide (1) a description of the documents so marked, and (2) a
description of how such documents relate to the issues in this action. [Doc. 132] at 6 (citing
[Doc. 59] at 4, ¶ 10). If the receiving party objects to the AEO designation, he must notify the
producing party in writing. The parties must use their best efforts to resolve the objections
between themselves. If they cannot resolve the objections, the producing party has ten calendar
days (from the date “of the conference”) to file a formal motion with the Court. “The Producing
6
Party shall bear the burden of proof on the issue.” If no motion is filed within ten days, the AEO
designation will be re-designated or removed. The Producing Party shall, at its expense, provide
to the other parties to this action one additional copy thereof from which the AEO designation
has been adjusted appropriately. Id. (citing [Doc. 59] at 7, ¶ 16).
Judge Vidmar found that Defendants failed to meet their initial burden.
Judge Vidmar found that Defendants failed to meet their burden to show that the
discovery material (more than 63,000 pages) constituted “trade secrets . . . or proprietary
business information, disclosure of which could be especially detrimental or harmful to the
designating party if disclosed to opposing parties.” [Doc. 132] at 7 (quoting [Doc. 59] at 4, ¶ 10;
citing Layne Christensen, 271 F.R.D. at 248 (describing a very similar standard under Rule 26)).
Judge Vidmar found that Defendants failed
to show that the AEO material constituted trade secrets.
Defendants represented that the AEO material comprised “internal [research and
development] and product development files.” [Doc. 88] at 9. Plaintiff countered that much of
the material (at least 2,000 pages) was publicly available, unintelligible, or otherwise patently not
trade secrets. [Doc. 68] at 9; [Doc. 73]. Defendants responded that the “isolated pages”
identified by Plaintiff were produced as part of Defendants’ “much larger” files, and those files
contained other pages that did constitute trade secrets. [Doc. 88] at 11–12. For example,
Defendants indicated that other portions of the discovery contained “product development
proposals, including market analyses, product strategies, competitor analyses, pricing strategies, .
. . product timelines[,] design concept evaluations[, and] internal risk assessments.” Id. at 11.
Apparently, Defendants argued that because the discovery material did contain some trade
7
secrets, they were entitled to an AEO designation on all of it because they should not be required
to do a page-by-page review of the materials. Id. at 8–10.
Judge Vidmar was not persuaded. First, he found the level of review undertaken by
Defendants was a “red herring.” [Doc. 132] at 7–8. He found that the standard here did not
necessarily require any certain level of review (e.g., file-by-file, document-by-document,
page-by-page).
Rather, the standard required Defendants—as the proponents of the AEO
designation—to establish that that the materials constituted trade secrets and that Defendants
might be harmed if Dr. Augé saw them. Id.
Second, Defendants emphasized that they were entitled to designate the material “AEO”
as long as they “reasonably believe[d]” that the material contained “trade secrets or highly
confidential, non-public, personal or proprietary business information.” [Doc. 88] at 7 (quoting
[Doc. 59] at 4, ¶ 10). Judge Vidmar agreed. [Doc. 132] at 8. However, he found that once
Plaintiff challenged the designation, Defendants then bore the burden of proving, not just that
they reasonably believed the designation was warranted, but that the materials actually did
warrant the designation. Id. (citing [Doc. 59] at 7, ¶ 16).
He found that Defendants failed to meet that burden. Id. Defendants attempted to
establish that the discovery material constituted trade secrets by submitting excerpts of the
discovery material itself.2 [Docs. 119-1, 119-2, 119-3]; see [Doc. 88] at 10–12. Defendants’
position at bottom was that they maintained these materials in their research and design files, and
ipso facto, they were trade secrets. Judge Vidmar did not agree. [Doc. 132] at 8–9.
2
They also submit an affidavit from defense counsel averring that the excerpts submitted are, indeed, accurate
copies of the material produced in discovery, and defense counsel offers nothing more. [Doc. 89] at 3.
8
He found that Defendants had submitted no affidavit or other evidence showing that the
materials were trade secrets. Id. They had not, for example, provided any evidence (or even
explicit allegation) that the materials were not generally known or readily ascertainable. This
was noteworthy to Judge Vidmar because some of the materials were undisputedly public (such
as published scientific literature). Id. Defendants identified no particular aspect of its designs
that was unique to them, closely guarded, or if disclosed, would be valuable to competitors.
Instead, counsel for Defendants described some of the disputed materials as “relating to the
creation, marketing, pricing, and launch of [the] TwinLoops FLEX product[; containing] market
analyses, product strategies, competitor analyses, pricing strategies, and product timelines[;]
design concept evaluations[;] internal risk assessments[; in other words,] competitive product
development and marketing.” [Doc. 88] at 1. Judge Vidmar found that this jargon failed to
establish that the disputed material was not generally known, not readily ascertainable by others,
or that it was unique to or closely guarded by Defendants. [Doc. 132] at 8–9. He explained that
he could not infer from these descriptions that the AEO material had qualities that could qualify
it as trade secrets. Judge Vidmar found that these conclusory descriptions by counsel did not
satisfy Defendants’ burden. Id.
Judge Vidmar clarified that he did not hold that representations of counsel can never
establish that discovery materials constitute trade secrets or that an affidavit was necessarily
required. Id. at 9. Nor did he prescribe any specific quantum of evidence or argument that was
necessarily required. Id. Rather, he held that, in this case, when comparing the thousands of
pages of materials that undisputedly did not contain trade secrets against the conclusory
9
representation of counsel (that some other pages contained “product timelines” or “pricing
strategies” and nothing more specific than that), the mere representations of the attorney did not
meet the burden. Id.
Lastly, Judge Vidmar declined to adopt Defendants’ position that Plaintiff had failed to
identify any authority allowing him to “root around” in their design files and had failed to
establish that the materials were not trade secrets. Id. To find these positions persuasive, he
found, would require placing the burden on Plaintiff to show that the materials were not trade
secrets; such was not his burden. Id.
Judge Vidmar found that Defendants
failed to show they might be harmed by disclosure.
Judge Vidmar further found that Defendants did not meet their burden to show that they
might be harmed if Dr. Augé accessed the materials. [Doc. 132] at 10–12. They did not explain
what “competitive harm . . . would befall [them] by virtue of the disclosure of the trade secrets or
other highly[ ]confidential proprietary information.” Layne Christensen, 271 F.R.D. at 249. The
most specific allegation of harm was that Dr. Augé was a “competitive decision maker” and
allowing him access “present[ed] an unacceptable risk of or opportunity for inadvertent
disclosure of information.” [Doc. 132] at 10 (quoting [Doc. 88] at 4). Judge Vidmar found that
such allegation of harm was conclusory. [Doc. 132] at 10. He further found that if the harm that
Defendants feared was disclosure in and of itself, which is all they had argued in their brief, the
confidentiality agreements signed by the parties early in their relationship, and the “confidential”
designation pursuant to the APO in this case, would sufficiently protect Defendants. Id.
10
Ultimately, Judge Vidmar determined that Defendants failed to show that the material at
issue “contain[ed] trade secrets or highly confidential, non-public, personal or proprietary
business information, disclosure of which could be especially detrimental or harmful to the
designating party if disclosed to opposing parties.” Id. (quoting [Doc. 59] at 4, ¶ 10).
Judge Vidmar found that Dr. Augé’s need to access
the AEO materials outweighed the potential harm alleged by Defendants.
Because Judge Vidmar found that Defendants had failed to meet their initial burden, he
consequently found that the burden did not shift to Plaintiff to show that the material was
relevant and necessary for the action. Id. (citing Centurion, 665 F.2d at 325). Nevertheless,
Judge Vidmar weighed Dr. Augé’s need to access the material against the potential harm that
Defendants claimed could result from disclosure. Id. at 10–12.
Judge Vidmar found that the
material at issue was indisputably relevant because it was produced as part of Defendants’ initial
disclosures, on which they intend to rely for their defenses. Id. at 10 (citing [Doc. 88] at 7–8).
Considering that disclosure itself was the only harm identified by Defendants, Judge Vidmar
found that Plaintiff’s need to see the materials trumped this potential harm. Id. at 10–11. He
acknowledged that Plaintiff’s expert had access to the materials and, thus, could form an opinion
as to whether Defendants had met their obligations to honor Dr. Augé’s ownership rights and to
pay him what they owed. Nevertheless, it seemed obvious to Judge Vidmar that, as the inventor,
Dr. Augé’s own review of the material would be useful in identifying where and to what extent
his inventions had been utilized in Defendants’ products, i.e., in prosecuting his claims. Id.
Thus, Judge Vidmar concluded that Dr. Augé’s need to access the materials outweighed the
11
potential harm identified by Defendants, which was particularly true given the existing
confidentiality agreements and APO. Id.
Moreover, Judge Vidmar found that the Defendants’ citations to Davis v. AT&T Corp.
and Layne Christensen did not alter the result because neither of those cases was helpful in
determining whether Defendants here had met their burden to show that the materials were trade
secrets or that Defendants might be harmed by their disclosure. Id. at 11–12.
In Davis, the parties agreed that the disputed discovery constituted trade secrets. 1998
WL 912012 at *1, 1998 U.S. Dist. LEXIS 20417 (W.D.N.Y. Dec. 23, 1998) (unpublished). The
issue for the court was balancing one side’s need for the discovery with the potential harm in
disclosing the other side’s trade secrets. Here, in contrast, the dispute was whether the material
constituted trade secrets in the first place.
Similarly, in Layne Christensen, the court was not tasked with determining whether any
specific discovery actually constituted trade secrets. Rather, there, the court was resolving a
dispute over the language and provisions of a protective order that would govern the case. There
was no dispute that discovery in that case would “probably involve disclosure of trade secrets.”
271 F.R.D. at 247.
But the parties disagreed on whether the co-plaintiff and inventor,
Dr. SenGupta, should be allowed to access such trade secrets. Id. at 243. After narrowing the
scope of materials that could constitute trade secrets, the court determined that Dr. SenGupta
should not have access, presuming that their designation was proper. Id. at 247–50.
Ultimately, Judge Vidmar found that Defendants “fail[ed] to show that the material at
issue constitute[d] ‘trade secrets . . . or proprietary business information.’” [Doc. 132] at 12
12
(quoting [Doc. 59] at 4, ¶ 10). He also found that Defendants “fail[ed] to show that disclosure of
the material to Dr. Augé might be ‘especially detrimental or harmful,’ especially in light of the
confidentiality agreements and the APO.” Id. (quoting [Doc. 59] at 4, ¶ 10). Therefore, he
granted Plaintiff’s motion and ordered Defendants, at their own cost, to provide one additional
copy of the discovery materials to Plaintiff with a lesser or no designation under the Agreed
Protective Order [Doc. 59]. Id. at 12–13. Defendants timely objected under Fed. R. Civ. P. 72.
[Doc. 138].
Standard of Review for Objections to
Magistrate Judge’s Non-Dispositive Order
The district judge reviews a magistrate judge’s ruling when a party timely files written
objections. Objections to non-dispositive rulings are reviewed under 28 U.S.C. § 636(b)(1)(A)
and Fed. R. Civ. P. 72(a). In reviewing the objections, the district court must defer to the
magistrate judge’s ruling unless it is “clearly erroneous or contrary to law.”
Fed. R. Civ.
P. 72(a). The clearly erroneous standard “requires that the reviewing court affirm unless [the
court,] on the entire evidence[,] is left with the definite and firm conviction that a mistake has
been committed.” Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1464 (10th Cir. 1998)
(internal quotation marks omitted).3
Under the “contrary to law” standard, the district judge conducts a plenary review of the
magistrate judge’s legal determinations, setting aside the magistrate judge’s order only if it
applied an incorrect legal standard. 12 CHARLES ALAN WRIGHT,
3
ET. AL.,
FED. PRACTICE &
The United States Court of Appeals for the Seventh Circuit has stated that, to be clearly erroneous, “a decision
must strike [the court] as more than just maybe or probably wrong; it must . . . strike [the court] as wrong with the
force of a five-week-old, unrefrigerated dead fish.” Parts & Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228,
233 (7th Cir. 1988).
13
PROCEDURE CIV. § 3069 (2d ed. 1997). “In sum, it is extremely difficult to justify alteration of
the magistrate judge’s non-dispositive actions by the district judge.” Id. On the other hand, just
“as the district judge should defer to the magistrate judge’s decision . . . he or she should not be
hamstrung by the clearly erroneous standard. At i[t]s broadest, it is limited to factual findings.”
Id. Finally, “theories raised for the first time in objections to a magistrate judge’s [order] are
deemed waived.” United States v. Garfinkle, 261 F.3d 1030, 1031 (10th Cir. 2001).
Analysis
Defendants argue that Judge Vidmar’s order is clearly erroneous and contrary to law
because they should have been required to show only that they reasonably believed the AEO
designation was warranted, not that it actually was warranted.
[Doc. 138] at 6.
Next,
Defendants argue that Plaintiff should have had the burden to show that his need to access the
material outweighed their need to protect it. Id. at 7–10. Finally, they argue that Judge Vidmar
erred in declining to require Plaintiff to specifically identify—document by document—his
objections to the AEO designation. Id. at 11–12. None of Defendants’ objections is meritorious.
Judge Vidmar applied the correct legal standards, and his ruling is not clearly erroneous.
Defendants fail to show that Judge Vidmar erred in interpreting the APO.
Defendants argue that Judge Vidmar erred in holding that they were required to prove
that the disputed material actually does constitute trade secrets because the APO only requires
them to show that they reasonably believed that the material constituted trade secrets.
[Doc. 138] at 5–7. The APO reads, in pertinent part:
10.
A party in this action shall have the right to
designate and label Discovery Material revealed or produced by
14
that party in this action as “Attorneys’ Eyes Only” if it reasonably
believes that such information, documents or tangible things
contain trade secrets or highly confidential, non-public, personal
or proprietary business information, disclosure of which could be
especially detrimental or harmful to the designating party if
disclosed to opposing parties. Parties designating and labeling
Discovery Material “Attorneys’ Eyes Only” shall provide a
description of the documents so marked and how such documents
relate to the issues in this action.
....
16.
In the event that a party receiving Discovery
Material marked “Confidential” or “Attorneys’ Eyes Only”
(“Receiving Party”) objects to the designation, counsel for the
Receiving Party shall notify the Producing Party of its objections
in writing. The parties will use their best efforts to resolve the
objections between themselves. Should the parties be unable to
resolve the objections, the Producing Party shall, within ten (10)
calendar days of the conference submit the dispute by formal
motion and the Producing Party shall bear the burden of proof
on the issue. If no motion is filed within the stated time period,
the “Confidential” or “Attorneys’ Eyes Only” designation will be
re-designated or removed as appropriate. Information subject to
the dispute shall, until further order of the Court, be treated
consistently with its designation. With respect to any material
which is re-designated or ceases to be subject to the protection of
this Protective Order, the Producing Party shall, at its expense,
provide to the other parties to this action one additional copy
thereof from which all confidentiality legends have been adjusted
to reflect the re-designation.
[Doc. 59] at 4, 7 (emphases added). Defendants argue that these portions of the APO make clear
that their burden under paragraph 16 is to prove merely that they reasonably believed that “the
AEO materials contained ‘trade secrets or highly confidential, non-public, personal or
proprietary business information,’ and disclosure of the materials ‘could be especially
detrimental or harmful to the designating party if disclosed to opposing parties.’” [Doc. 138] at 6
15
(quoting [Doc. 59] at 7). Judge Vidmar read the APO differently. He agreed that Defendants
were entitled to designate the material “AEO” as long as they “reasonably believe[d]” that the
material contained “trade secrets or highly confidential, non-public, personal or proprietary
business information.” [Doc. 132] at 7. However, once Plaintiff challenged the designation,
Judge Vidmar found that Defendants then bore the burden of proving that the materials actually
did warrant the designation. Id. (citing [Doc. 59] at 7, ¶ 16).
Defendants object. They argue that their interpretation of the APO is so obviously
correct, and that Judge Vidmar’s interpretation is so clearly erroneous, that his order should be
overturned. [Doc. 138] at 5–7. The Court does not agree. The APO dictates that the “Producing
Party shall bear the burden of proof on the issue.” [Doc. 59] at 7. Defendants fail to show that it
was clearly erroneous for Judge Vidmar to interpret “the issue” as whether the AEO designation
was actually warranted, rather than whether Defendants reasonably believed it was warranted.
In a similar vein, Defendants argue that Judge Vidmar erred in requiring them to show
that disclosure of the materials would harm them because the APO only required them to show
that disclosure could harm them. [Doc. 138] at 7. The Court does not agree that Judge Vidmar
applied the wrong standard. He required Defendants to show only that disclosure could harm
them. [Doc. 132] at 1. 3, 5, 7, 10–12 (consistently utilizing “might” and “could”). He did not
require more.4
4
Defendants also present a new argument for the first time in their Objections. They argue that Judge Vidmar
“disregarded” paragraph 11 of the APO, which seemed to imply that documents related to “product development or
marketing activities” could be “the type of discovery that warrant[s] the AEO designation.” [Doc. 138] at 6.
However, Defendants did not raise any argument about paragraph 11 in their briefing before Judge Vidmar, and
therefore, it is waived. See Garfinkle, 261 F.3d 1031.
16
Defendants fail to show that Judge Vidmar applied an incorrect legal standard.
Defendants argue that Judge Vidmar’s MOO is contrary to law because he did not require
Dr. Augé to “prove[]” that his need to access the AEO documents outweighed Defendants’ need
to protect them from the potential harm of disclosure, [Doc. 138] at 7. This matters because they
believe Judge Vidmar “completely ignore[d] the crux of [their] position,” which was that
Dr. Augé was “directly involved in competitive decision making or scientific research squarely
adverse to [Defendants’] competitive and legal interests.” Id. at 8 (internal quotation marks
omitted). The Court is not persuaded that Judge Vidmar erred.
To be clear, Defendants object because, they argue, “whether [they have] prove[n] the
AEO materials contain[ed] trade secrets is irrelevant to the balancing test established by the
courts.” [Doc. 138] at 10. This objection is overruled because it misstates the law. As explained
above, Defendants had the initial burden to show that the disputed material “contain[ed] trade
secrets or highly confidential, non-public, personal or proprietary business information,
disclosure of which could be especially detrimental or harmful to the designating party if
disclosed to opposing parties.” [Doc. 59] at 4, ¶ 10; see Layne Christensen, 271 F.R.D. at 248
(describing a very similar standard under Rule 26)). Upon that showing, the burden would have
shifted to Dr. Augé to show that disclosure was reasonable and necessary for the action.
However, Defendants did not make the initial showing. Judge Vidmar was correct; the burden
never shifted to Dr. Augé. See, e.g., Centurion, 665 F.2d at 325.
Even though the burden did not shift to Dr. Augé to show that disclosure was reasonable
and necessary to the action, Judge Vidmar nevertheless weighed Dr. Augé’s need to access the
17
material against the potential harm that Defendants claimed could result from disclosure.
[Doc. 132] at 10–12. On the one hand, he found that the material at issue was indisputably
relevant because it was produced as part of Defendants’ initial disclosures, on which they intend
to rely for their defenses. Id. at 10 (citing [Doc. 88] at 7–8). On the other hand, he looked at the
potential harm alleged by Defendants.
Defendants alleged nothing more than that Dr. Augé might inadvertently disclose the
information. [Doc 88] at 4. That was the entirety of their alleged potential harm. They did not
explain how they might be harmed if Dr. Augé inadvertently disclosed the information. They
did not allege, for example, that Dr. Augé might disclose the information to a competitor who
might use it to make money that should belong to Defendants.
They did not make that
allegation—or anything like it. See [Doc. 88]. Considering that disclosure itself was the only
harm identified by Defendants, Judge Vidmar found that Plaintiff’s need to see the materials
trumped this potential harm. [Doc. 132] at 10–12.
Additionally, he found that Defendants’ interests were adequately protected considering
the confidentiality agreements that were already in place and considering that Defendants were
still free to label the materials as “Confidential” under the APO. Id. at 10–11. Defendants’
assertion that Judge Vidmar failed to weigh Dr. Augé’s need against their interests, [Doc. 138]
at 10, is not an accurate reflection of the MOO, because Judge Vidmar, in fact, did weigh the
parties’ comparative interests, [Doc. 132] at 10–11. More importantly, however, such analysis
was not required because Defendants had failed their burden in the first place. In other words,
because Defendants had failed to show that the material constituted “trade secrets or highly
18
confidential, non-public, personal or proprietary business information” and, thus, needed extra
protection, there was no requirement for Judge Vidmar to analyze whether Dr. Augé’s need
outweighed Defendants’.
Finally, Defendants argue that Plaintiff should have been required to make “specific
document challenges” to the disputed material rather than simply disputing the AEO designation
of more than 60,000 pages. [Doc. 138] at 11. In support, they cite unpublished cases from the
Southern District of Florida and the District of Colorado. Id. Neither of these cases suggests
that Judge Vidmar erred. Judge Vidmar found that the “level of review (e.g., file-by-file,
document-by-document, page-by-page)” was not the issue.
[Doc. 132] at 7–8.
Instead,
Defendants—as the proponents of the AEO designation—were required to establish that that the
disputed materials constituted “trade secrets or highly confidential, non-public, personal or
proprietary business information,” and that Defendants might be harmed if Dr. Augé saw them.
[Doc. 59] at 4; [Doc. 132] at 7–8. Defendants failed to meet their burden.
IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that Defendants’
Objections to Magistrate Judge’s Memorandum Opinion and Order Granting Plaintiff’s Motion
to De-Designate Discovery Material Marked “Attorneys’ Eyes Only” [Doc. 138] are
OVERRULED.
IT IS FURTHER ORDERED that Judge Vidmar’s Memorandum Opinion and Order
Granting Plaintiff’s Motion to De-Designate Discovery Material Marked “Attorneys’ Eyes Only”
[Doc. 132] is AFFIRMED.
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IT IS FURTHER ORDERED that no later than 30 days after entry of this Order,
Defendants must, at their own cost, provide one additional copy of the discovery materials to
Plaintiff with a lesser or no designation under the Agreed Protective Order [Doc. 59].
IT IS SO ORDERED.
__________________________________
UNITED STATES DISTRICT JUDGE
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