FEDERAL TRADE COMMISSION v. INNOVATIVE DESIGNS, INC.

Filing 93

MEMORANDUM OPINION indicating that, for reasons more fully stated within, IDI's motion to disqualify the FTC's expert 65 was appropriately denied by the Court on 2/21/18 87 . IDI's sealed motion for protective order to designate information as confidential material 86 is likewise denied. An appropriate Order regarding the latter motion follows, the Court having already entered an Order denying the former. Signed by Judge Nora Barry Fischer on 3/15/18. (jg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
FEDERAL TRADE COMMISSION,
Plaintiff,
v.
INNOVATIVE DESIGNS, INC.,
Defendant.

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Civil Action No. 16-1669
Judge Nora Barry Fischer

MEMORANDUM OPINION
I.

INTRODUCTION
On February 6, 2018, the Court convened oral argument on Defendant Innovative Designs,

Inc.’s (“IDI”) motion to disqualify Plaintiff Federal Trade Commission’s (“FTC”) expert. (Docket
Nos. 65, 79, 92).1 A week later, IDI submitted supplemental deposition excerpts. (Docket No.
84). After considering the parties’ written submissions and oral arguments, (Docket Nos. 66, 75),
the Court entered an Order on February 21, 2018 denying IDI’s motion to disqualify. (Docket No.
87). In the meantime, IDI filed its pending redacted and sealed motion for protective order to
designate information as confidential material on February 12, 2018, (Docket Nos. 85, 86), and
the FTC filed its redacted and sealed objection to same on February 23, 2018, (Docket Nos. 91,
92).
The Court now enters the instant Memorandum Opinion setting forth the basis for its Order
denying IDI’s motion to disqualify. (Docket No. [87]). This Memorandum Opinion will also
address IDI’s related motion for protective order. (Docket No. 86). For the reasons that follow,
IDI’s motion for protective order [86] is also DENIED.

1

The FTC ordered preparation of the transcript, (Docket No. 79), which was subsequently filed on
March 2, 2018, (Docket No. 92).

II.

BACKGROUND
The FTC filed a three-count complaint against IDI on November 3, 2016 under Section

5(a) of the FTC Act, 15 U.S.C. § 45(c), claiming that since November 2011, IDI has made false
and/or unsubstantiated claims in marketing the “R-value” of its Insultex House Wrap (“Insultex”).2
(Docket No. 1). As set forth in the pertinent FTC regulation:
R-value measures resistance to heat flow. R-values given in labels,
fact sheets, ads, or other promotional materials must be based on
tests done under the methods listed below. They were designed by
the American Society of Testing and Materials (ASTM).
16 C.F.R. § 460.5. The relevant test for purposes of this litigation is ASTM C518: “Standard Test
Method for Steady-State Thermal Transmission Properties by Means of the Heat Flow Meter
Apparatus.” (Id.).
In its marketing materials, IDI described its Insultex product as “THE ONLY HOUSE
WRAP WITH AN R VALUE.” (Docket Nos. 1 and 7 at ¶ 11). It also advertised that, based upon
valid testing conducted in certified laboratories under strict controls, Insultex has an R-value of
either “R-3” or “R-6,” depending on the thickness of the material, meaning that consumers would
enjoy reduced home energy costs if they chose Insultex over other house wraps. (Id. at ¶¶ 13, 1718, 20).
The FTC brought this lawsuit asserting that the above-described marketing claims are
unsubstantiated and not established by testing. (Docket No. 1 at ¶¶ 22, 23). In its answer, however,
IDI stands by the statements made in its marketing materials:
Insultex House Wrap is a unique and state of the art product. IDI has
devoted substantial time, effort and expense to fully vet Insultex
House Wrap, both prior to marketing the product with the R-value
performance claims and subsequent to the initiation of the instant
2

According to the pleadings, house wrap is a weather-resistant barrier designed to prevent rain from
penetrating, but to allow water vapor from inside the house to escape, so that moisture does not accumulate
inside the wall. (Docket Nos. 1 and 7 at ¶ 10).

2

Complaint, and to obtain R-value testing results from an ISO
accredited laboratory (hereinafter sometimes referred to as the
“Laboratory”). Insultex House Wrap has undergone rigorous testing
and hundreds of tests by the Laboratory employing differing
variables under various conditions. Those certified test results verify
that Insultex House Wrap does, in fact, possess an R-3 or R-6 rating.
IDI has received numerous unsolicited testimonials from very
satisfied customers relating to Insultex House Wrap. These specific
testimonials substantiate IDI’s assertions that Insultex House Wrap
does, in fact, deliver superior energy efficiency over products
marketed by competitors. IDI’s promotional materials and
marketing statements are the product of, and were at all times
material hereto made in reliance upon, competent and reliable
scientific testing. IDI reasonably relied on those testing results of the
Laboratory in marketing Insultex House Wrap as possessing Rvalues of R-3 or R-6 and providing energy savings for consumers…
(Docket No. 7 at ¶ 2). The laboratory to which IDI refers in its answer is BRC Laboratory
(“BRC”). (Docket No. 66 at 2). IDI has spent more than $300,000 to build a testing unit in order
for BRC to become accredited. (Docket No. 75-24 at 6-7).
Fact discovery is complete and the parties are now in the expert discovery phase of the
case. (Docket No. 60, 87). The FTC has designated David W. Yarbrough, PhD, PE, as its expert
in the field of thermal insulation and building materials. (Docket No. 75 at 2). Yarbrough holds
a PhD in Chemical Engineering from the Georgia Institute of Technology. (Docket No. 75-4). In
1994, Yarbrough co-founded R&D Services, Inc. (“R&D”), a leading independent insulation
testing laboratory. (Id.). R&D conducts thousands of tests per year, including hundreds of ASTM
C518 tests to determine a product’s R-value, for a broad array of clients throughout the entire
insulation industry. (Docket No. 75-22 at 5-6). In 2011, Yarbrough sold his interest in R&D and
became its employee. (Id.). As R&D’s employee, Yarbrough’s role involves testing products, as
well as consulting and acting as an expert. (Id.).
Although Yarbrough is currently listed as the FTC’s expert in this case, he previously
conducted testing on IDI’s Insultex product as an employee of R&D. (Docket No. 66-7 at 1-5, 753

24 at 7). To this end, IDI executed two contracts with R&D, one in July 2012 and another in April
2013, in which IDI retained R&D to conduct ASTM C518 tests on Insultex to verify BRC’s test
results. (Id.).
The first testing contract concerned two thermal resistance measurements, for which IDI
paid R&D $750. (Docket No. 66-7 at 2). The second testing contract focused on a single thermal
resistance measurement, for which IDI paid R&D $400. (Id. at 4). IDI’s CEO, Joseph Riccelli
(“Riccelli”), signed both contracts. (Id. at 3, 5). Each contract contained a confidentiality
provision precluding R&D “from voluntarily disclosing to third parties information about [IDI’s]
products or test results which are not already known to [R&D], already available to the public, or
unless by judicial or court proceedings.” (Id.). According to the FTC, this is a standard contract
which R&D requires all clients, including long-term clients, to execute before it will conduct
testing for a client. (Docket No. 74-22 at 7). It is undisputed that said nondisclosure provisions
apply to all conversations that Yarbrough had with IDI about the results from the three thermal
resistance measurement tests he conducted for IDI. (Docket Nos. 66-2 at 5; 66-10 at 103-04).
Before executing each contract, IDI’s consultant, Randy Loew (“Loew”), had discussions
about conducting the described thermal resistance measurement tests with R&D’s President, Stuart
Ruis (“Ruis”), and Yarbrough. On July 19, 2012, Loew sent Ruis the following message:
Subject: testing
Dear Stuart [Ruis],
Please send Joe Riccelli [IDI’s CEO] and myself the following:
1. a copy of the contract
2. quantity of test material you need
3. date the testing will be completed
ALSO, please phone the test results to us before committing it to
writing.
4

***
PLEASE test only one layer of our material for ASTM C518 as
discussed with Dave [Yarbrough] and another single layer of our
Insultex with air gaps on one side of 1/16” and the other side of 1/4".
We do not want multiple layers tested. If you have any questions,
please call me.
Regards,
Randy
(Docket No. 66-3). Later that day, Ruis replied to Loew, as follows:
Subject: revised quote
Randy
I have attached a revised quote to perform the thermal resistance
tests we have discussed. Please sign and return to me at your
convenience. The price increased from $50 from the last quote due
to the extra preparation that will be needed to build test frames to
create air spaces around your sample. Please feel free to contact me
if you have any questions. We will get started as soon as we receive
materials, documentation and payment. Any future work can be
done by PO. Thank you.
Stuart
(Docket No. 66-4).
On July 23, 2012, Loew e-mailed Ruis certain specifications for conducting the testing,
(Docket No. 66-5), and Riccelli signed the first testing contract, (Docket No. 66-7). Riccelli later
stated during his deposition: “I hear about R&D Services being this lab that is the lab that knows
what they’re doing and I’m figuring, you know what, I spent all this money, what’s another $750
to have them see what they get, you know, and it was the same as everyone else using the standard
C518 method.” (75-24 at 7).

5

On April 23, 2013, Ruis sent Loew and Riccelli the following e-mail regarding the results
from the second testing contract:
All
I have attached [the] report … containing the R value and emittance
test results for the product you submitted. Please review and we can
discuss the results and how to improve on the R value. Dave
[Yarbrough] should be back in the office tomorrow, and we will
discuss the project then. Thank you for your business!
Stuart
(Docket No. 66-9).
Apart from his conversations with Ruis, Loew asserts in an affidavit that he had
conversations with Yarbrough, wherein he disclosed confidential information about Insultex,
including information about how it was made and its unique composition. (Docket No. 66-1 at ¶¶
10-15). Yarbrough, on the other hand, submitted a counter-declaration in which he denies that
Loew provided him with a detailed description of Insultex’s design, composition, or chemical mix
before he performed the testing on Insultex. (Docket No. 75-20 at ¶¶ 3-5). When questioned
during his deposition about the conversation that he had with Loew prior to execution of the second
testing contract, Yarbrough responded:
My recollection is that Mr. Loew described very briefly that he had
a product that he had helped develop, or maybe he had developed,
that he wanted to use or market as a house wrap. It was fairly thin
and he wanted to achieve an R3, and he wanted to know if we could
-- I think he wanted to know if we could test this material.
I said yes, we can test it, but achieving an R3 with one-millimeter
thick piece of material is problematic.
So he asked what does that mean. I said, you can’t do it. He said,
well, how can I do it? And I -- judging from the letter, it looks like
I suggested to him that we could -- he could conceive of an assembly
that could achieve an R value, much like reflective insulation

6

manufacturers use enclosed reflective air spaces to achieve R values.
It’s a well-established industry.
He said, well, can you test it? I said, yes. I have a way of rotating
C518 so that you can make a horizontal heat flow measurement,
which would be appropriate for walls.
If you’re going to have a reflective air space, you’ve got to measure
in the direction of heat flow of your application. So you can’t get a
reliable value heat flow up and down if the actual heat flow direction
is going to be horizontal. So years and years and years ago, I built
a device to rotate the 518 apparatus to get horizontal heat flow. And
I was trying help him. He said, okay.
And then in this letter I see that he wanted to talk about relatively
small spaces, 1.25 inches. And I see that I drew a diagram up here
to remind me of what that discussion was about of an air space of
1.25 inches with material on one side.
So this would be an assembly conceivably that used his membrane
with spacers to produced [sic] a 1.25-inch enclosed air space to be
measured horizontally. And I guess I showed this to Stuart [Ruis]
and I said, you know, can you do this? And, of course, we can do
it.
So it was a discussion on the telephone followed by this letter in
which I had attempted to do what I do, that is how can I change this
product into something that has a chance to work.
(Docket No. 66-2 at 3-4).
The letter to which Yarbrough refers in the above excerpt is dated April 8, 2013. (Docket
No. 66-8 at 2). Loew sent this letter to Yarbrough to reiterate some testing instructions, provide
the contact information of IDI’s CEO, Riccelli, and to apprise Yarbrough that additional testing
may be necessary, “[i]f the results are not good.” (Id.). Yarbrough maintains that his brief
communications with Loew in advance of testing were “routine” and no different than the usual
conversations he has with all prospective R&D clients. (Docket No. 75-20 at ¶ 2).
R&D delivered its completed thermal resistance test reports to IDI on July 25, 2012 and
April 23, 2013, respectively. (Docket No. 66-6 at 2-7). The FTC’s investigation into IDI’s
7

marketing of Insultex’s purported R-values did not begin until December 2014. (Docket No. 75
at 4).
Notwithstanding Yarbrough’s prior testing of Insultex, the FTC retained him as its expert
in September 2016 as part of the investigation (and ultimate prosecution of this lawsuit). (Docket
No. 75-2 at § 1.2). At that time, no individual from R&D considered whether the FTC’s retention
of Yarbrough would create a conflict, and R&D did not disclose this fact to the FTC. (Docket No.
92 at 9-10, 47-48).
The FTC provided portions of Yarbrough’s draft expert report, which was on R&D
letterhead, to IDI during confidential prelitigation settlement negotiations in October 2016.
(Docket No. 75-25 at 3). The FTC initiated this action in November 2016, (Docket No. 1), and
this Court convened a Rule 16 case management conference on December 21, 2016. (Docket No.
14). Together with counsel, IDI’s CEO, Riccelli, and one of its board members, Robert Monsour,
attended in person. (Id.). As set forth in the Court’s minute entry, Yarbrough was identified as
the FTC’s expert during the proceeding. (Id.). No objection to Yarbrough being the FTC’s expert
was made at that time, notwithstanding that Riccelli certainly would have known of his July 2012
and April 2013 testing of Insultex, in light of the above correspondence. (Id.). Thereafter, on
March 20, 2017, the Court entered the parties’ stipulated protective order pursuant to Rule 26(c)
of the Federal Rules of Civil Procedure. (Docket No. 16).
IDI also did not object to Yarbrough attending the entirety of a two-day deposition and
inspection of BRC in Taunton, Massachusetts in mid-April 2017. (Docket No. 75 at 7). During a
telephone conversation a few weeks prior to said inspection and deposition, IDI’s counsel told the
FTC’s counsel that Yarbrough may be subject to a confidentiality agreement. (Docket Nos. 66 at
13, 75 at 7). The FTC’s counsel sent a follow-up email on April 3, 2017, attaching the agreement

8

and asking “is this the NDA between R&D and IDI that you referred to last week?”; but, IDI’s
counsel did not respond. (Docket Nos. 66-11 at 2, 75 at 7 n. 10).
Then, during the deposition and inspection on April 18, 2017, counsel for the parties
contacted the Court by telephone to resolve a dispute. (Docket Nos. 17-19). The FTC sought to
have BRC test an unidentified product sample which Yarbrough brought with him; however, IDI’s
counsel objected. (Id.). After hearing from the parties, the Court denied the FTC’s request to
compel BRC to test the product, without prejudice, and instructed counsel for the FTC to file an
appropriate motion, with the notice of the deposition/investigation, as well as the identity and
specifications of the sample material, attached thereto. (Docket No. 18).3
Relevant here, IDI’s counsel confirmed during the April 18 telephonic proceeding that IDI
knew of Yarbrough’s prior testing of its Insultex product:
We don't take their expert's word on it because, quite frankly, we
have a confidentiality agreement with their expert who tested our
material back in 2012 and came up with the same results that we did.
After that happened, after we do this and enter into this
confidentiality [agreement], he turns out to be the FTC expert. So
we're not taking their expert's word for anything.
(Docket No. 19 at 6). Based on same, the Court remarked that “it sounds … like [IDI] is also
throwing down the conflict challenge to Dr. Yarbrough.” (Id. at 11).
Nonetheless, IDI did not inform the FTC that it was actually contemplating moving to
disqualify Yarbrough until June 22, 2017. (Docket Nos. 66 at 13; 75 at 7, 75-22 at 2-4). In an
eleven-paragraph email dated July 5, 2017, the FTC’s counsel set forth why he believed that there
is no legal or factual basis for disqualification. (Docket No. 75-22 at 2-4). IDI’s counsel, again,
did not respond. (Docket No. 75 at 7).

3

The FTC did not subsequently file such motion.

9

The FTC’s counsel provided IDI with Yarbrough’s expert reports along with the related
Rule 26(a)(2) expert disclosures on August 11, 2017, (Docket No. 75-2-19), and IDI deposed him
on September 12, 2017, (Docket Nos. 66-2; 75-21). In Yarbrough’s “Expert Report on the
Thermal Performance of Thermal Insulation Products from Innovative Designs, Inc,” he ultimately
concludes that “[t]he R-values advertised and placed on product labels by Innovative Designs, Inc.
were not determined in accordance with ASTM C518” and that BRC’s testing was replete with
deficiencies. (Docket No. 75-2 at 1, 16-21, 25).
Having set forth the relevant background and procedural history, the Court turns to IDI’s
motion to disqualify and motion for protective order. (Docket Nos. 65, 86).
III.

DISCUSSION
A.

MOTION TO DISQUALIFY EXPERT

IDI argues that the Court should disqualify Yarbrough from “serving as the FTC’s
testifying expert in this case because he was a consultant for IDI pursuant to the terms of a
confidentiality agreement during the research and development phase of Insultex House Wrap and
IDI disclosed confidential information to him.” (Docket No. 66 at 2). According to IDI,
Yarbrough has a “clear and fundamental conflict from serving as the FTC’s expert” because “the
very same issues on which Yarbrough was hired to advise IDI are the very same issues that the
FTC has hired him to testify [about] in the instant case.” (Id.) (emphasis removed). The FTC
counters that the Court should deny IDI’s motion for disqualification because Yarbrough and R&D
had limited dealings with IDI, which only related to testing IDI’s product, not consultation, long
before the FTC’s investigation began, and that all information that IDI disclosed was either
publically-available or discoverable, i.e., not confidential. (Docket No. 75 at 1-2).

10

This Court has the inherent power to disqualify an expert who has a conflict of interest.
McClellan v. Ready Mixed Concrete Co. of Erie, Inc., 2014 WL 4060254, at *4 (W.D. Pa. 2014).
This power derives from the Court’s “duty to preserve confidence in the fairness and integrity of
judicial proceedings, and to protect privileges which may be breached if an expert is permitted to
switch sides in pending litigation.” U.S. ex rel. Cherry Hill Convalescent, Inc. v. Healthcare Rehab
Sys., Inc., 994 F.Supp. 244, 248 (D.N.J. 1997). That said, “[d]isqualification of an expert witness
is a drastic measure that is imposed reluctantly.” Weaver v. Mobile Diagnostech, Inc., 2009 WL
1230297, at *9 (W.D. Pa. 2009).
“Because experts and attorneys perform different functions in litigation, the standards and
presumptions applicable to the attorney-client relationship have little bearing on an expert’s
disqualification.” Cordy v. Sherwin-Williams Co., 156 F.R.D. 575, 580 (D.N.J. 1994). District
courts in the Third Circuit apply the following two-step inquiry to determine whether expert
disqualification is appropriate: (1) was it objectively reasonable for the party seeking
disqualification to have concluded that a confidential relationship existed with the expert? and, (2)
did that party disclose any confidential information to the expert? Cherry Hill, 994 F.Supp. at 249;
Weaver, 2009 WL 1230297, at *9. “If only one of these two factors is present, disqualification
likely is inappropriate.” Syngenta Seeds, Inc. v. Monsanto, 2004 WL 2223252, *1 (D.N.J. 2004).
“The party moving for disqualification bears the burden of proof with respect to each of these
factors.” Id. In this regard, a party seeking disqualification must present more than conclusory
assertions to carry its burden. Rodriguez v. Pataki, 293 F.Supp.2d 305, 312 (S.D.N.Y. 2003).
Beyond the above two-step inquiry, district courts balance competing policy objectives and
concerns of fundamental fairness. Butamax Adv. Biofuels LLC v. Gevo, Inc., 2012 WL 4815593,
*2 (D. Del. 2012). Preventing conflicts of interest and maintaining judicial integrity are factors

11

that weigh in favor of disqualification, while maintaining accessibility to experts with specialized
knowledge and encouraging experts to pursue their professions are factors that weigh against
disqualification. Id.
In determining the reasonableness of a party’s conclusion that a confidential relationship
existed for purposes of the first step of this inquiry, “courts consider several factors, including: (1)
the length of the relationship and the frequency of contact; (2) whether the moving party funded
or directed the formation of the opinion to be offered at trial; (3) whether the parties entered into
a formal confidentiality agreement; (4) whether the expert was retained to assist in the litigation;
(5) whether the expert was paid a fee; and (6) whether the expert was asked to agree not to discuss
with opposing parties or counsel.” Syngenta, 2004 WL 2223252, at *2. Here, there is no dispute
that Yarbrough was subject to the confidentiality provision set forth in the July 2012 and April
2013 testing contracts. (Docket No. 66-7 at 3, 5).4 Despite same, the FTC contends that no
confidential relationship existed between IDI and Yarbrough in light of the other facts in the
record, including the nature of the testing contracts, the limited dealings between Yarbrough and
IDI, the small amount that IDI paid to R&D for testing, and the fact that IDI did not fund
Yarbrough’s expert opinion herein. (Docket No. 75 at 11-15).
“The objectively reasonable belief of a confidential relationship is not a ‘high hurdle’ for
the moving party to clear.” Novartis AG v. Apotex, Inc., 2011 WL 691594, *2 (D.N.J. 2011),
Report & Recommendation adopted, 2011 WL 611706 (D.N.J. 2011). This is particularly true
where, as here, there is a confidentiality agreement between the expert and the party seeking
disqualification. See Butamax, 2012 WL 4815593, at *3 (“For purposes of this analysis, I will

Both Yarbrough and R&D’s President, Ruis, acknowledged this fact during their depositions.
(Docket Nos. 66-2 at 5; 66-10 at 103-04).
4

12

assume that a confidential relationship existed … based upon the executed confidentiality
agreement.”). Accordingly, while there are some factors in the record that may weigh against the
finding of a confidential relationship, the Court will assume that, in light of the confidentiality
provisions in the testing contracts, it was objectively reasonable for IDI to have concluded that
such a relationship existed with Yarbrough. Id. However, “[t]he existence of a confidential
relationship does not end the inquiry,” Cherry Hill, 994 F.Supp. at 250, because expert
disqualification is inappropriate if the second step of this inquiry is not answered in the affirmative.
Syngenta, 2004 WL 2223252, at *2.
The second step of the inquiry asks whether IDI disclosed confidential information to the
expert. Weaver, 2009 WL 1230297, at *9. In this context, confidential information includes a
discussion of the retaining party’s strategies in the litigation, the kinds of experts the party is
expected to retain, the party’s views of the strengths and weaknesses of each side, the role of each
of the party’s witnesses to be hired, and anticipated defenses. Cherry Hill, 994 F.Supp. at 250
(quoting Koch Refining Co. v. Bourdeaux MV, 85 F.3d 1178, 1181 (5th Cir. 1996)). Merely
disclosing confidential business or financial records to an expert is not a valid basis for
disqualification. Id. at 251; see also Weaver, 2009 WL 1230297, at *10. Instead, the confidential
communications or disclosures must pertain to the present litigation. Novartis, 2011 WL 691594,
at *3-4; Weaver, 2009 WL 1230297, at *10; Syngenta, 2004 WL 2223252, at *2.
IDI concedes that it cannot satisfy this definition of “confidential information” because its
communications with R&D and Yarbrough do not pertain to the present litigation. (Docket No.
66 at 10); (Docket No. 92 at 4-5). While the relevant communications in this case occurred in July
2012 and April 2013, the FTC subsequently began its investigation in December 2014, retained
Yarbrough in September 2016, and filed this action in November 2016. (Docket Nos. 1, 66-3-5,

13

66-8-9, 75-23 at 3). As such, because the relevant communications did not occur during the
pendency of this litigation or relate to same, IDI plainly cannot satisfy the second step of this
inquiry. Cherry Hill, 994 F.Supp. at 250. In light of said failure, the Court finds that IDI’s motion
to disqualify must be denied. See, e.g., Weaver, 2009 WL 1230297, at *10 (refusing to disqualify
the expert when the disclosures occurred years before the litigation).
After all, expert disqualification constitutes a drastic sanction which courts impose
reluctantly. Butamax, 2012 WL 4815593, at *3; Weaver, 2009 WL 1230297, at *9. This Court
cannot disregard and/or modify the applicable definition of confidential information in this context
merely because IDI feels that its application is too narrow under the circumstances. (Docket No.
66 at 10). Besides, even if the Court were to adopt IDI’s expanded definition of confidential
information, the Court would nevertheless conclude that IDI has failed to satisfy same on the
record before the Court. To this end, IDI proposes, without citing any authority, that confidential
information in this context should not only include information that was disclosed to an expert
during the pending litigation, but also “disclosures made to a consultant that was retained to assist
compliance with government regulations when that consultant is later hired by the regulating body
enforcing those very same regulations.” (Docket No. 66 at 10).
As the movant, IDI bears the “burden of pointing to specific and unambiguous confidential
disclosures” that it made to Yarbrough or R&D which, if revealed, would prejudice IDI. Syngenta,
2004 WL 2223252, at *3; Eastman Kodak Co. v. Kyocera Corp., 2012 WL 4103811, at *8
(W.D.N.Y. 2012).

Conclusory assertions, unproven statements, or generalized and vague

allegations do not satisfy this burden. Greene, Tweed of Del., Inc. v. DuPont Dow Elastomers,
LLC, 202 F.R.D. 426, 429 (E.D. Pa. 2001); Novartis, 2011 WL 691594, at *4; Rodriguez, 293
F.Supp.2d at 312. In the same vein, courts refuse to disqualify an expert if the disclosures involved

14

publicly-available information, Greene, 202 F.R.D. at 430, or information that is otherwise
discoverable, Cherry Hill, 994 F.Supp. at 250-51.
IDI supports its motion with a declaration from its consultant, Randy Loew, wherein he
maintains that IDI retained Yarbrough for consultation on “methods and/or ways to improve upon
the R-value of Insultex House Wrap” during the “research and development and/or vetting phase
to determine how to test and market Insultex House Wrap” and that he disclosed confidential
information to Yarbrough about Insultex’s composition, chemical mix, and insulating properties.
(Docket No. 66-1 at ¶¶ 9, 11-13, 21). Such conclusory assertions, without more, are insufficient
for IDI to satisfy its burden of pointing to specific and unambiguous confidential disclosures that
it made to Yarbrough. Syngenta, 2004 WL 2223252, at *3; Greene, 202 F.R.D. at 429. Even if
IDI supported its motion with more detailed assertions here, it cannot establish that it will suffer
prejudice if such communications are revealed because both Loew and IDI’s CEO, Riccelli,
discussed these very same issues during their depositions on July 13, 2017 and September 7, 2017,
respectively. (Docket No. 75-23 at 6-8; 75-24 at 3-4, 8-9); Eastman Kodak, 2012 WL 4103811, at
*8. Indeed, IDI does not dispute that such information is discoverable in this case, nor does it
contest that the FTC’s replacement expert (if the Court were to disqualify Yarbrough) would be
able to rely on the information discussed by Loew and Riccelli during their depositions, as well as
the other publicly available information considered in Yarbrough’s report, including the patent
application and the Insultex product, which is available at numerous national retailers. (Docket
Nos. 75 at 10-11; 92 at 22-23, 31); Cherry Hill, 994 F.Supp. at 250-51; Greene, 202 F.R.D. at 430.
IDI’s position herein also presupposes that it retained Yarbrough as a consultant in July
2012 and April 2013, without evidence of same. (Docket No. 66 at 10). Other than Loew’s
conclusory declaration which identifies Yarbrough as a consultant, IDI supports this premise with

15

the above-described e-mail from Ruis on April 23, 2013 and an excerpt from Yarbrough’s
deposition. (Docket No. 66 at 5). In the e-mail, Ruis sent Loew and Riccelli the second set of test
results, stating “we can discuss the results and how to improve on the R value,” which he also
described as a “project.” (Docket No. 66-9). Similarly, Yarbrough testified that because obtaining
a value of R3 is “problematic” with a thin material like Insultex: “I had attempted to do what I do,
that is how can I change this product into something that has a chance to work.” (Docket No. 662 at 3-4). While statements like these, when viewed in isolation, may suggest that IDI retained
Yarbrough as a consultant, the surrounding circumstances support the opposite conclusion.
The portions of the July 2012 and April 2013 contracts identifying the “Scope of Project”
and “Cost” do not reference consulting. (Docket No. 66-7) (emphasis added). Rather, they simply
list the ASTM C518 tests that IDI hired R&D to perform, for which IDI paid R&D a total of
$1,150. (Docket Nos. 66-7). The FTC, in contrast, has allegedly paid R&D over $20,000 for
Yarbrough’s expert services in this case, to date. (Docket No. 75 at 17). IDI’s position that it
retained Yarbrough as a consultant is also refuted by all of the other documentary evidence in the
record, including the July 2012 e-mails, the April 2013 letter from Loew to Yarbrough, and the
deposition excerpts of Yarbrough and IDI’s CEO, Riccelli. (Docket Nos. 66-2 at 3-4; 66-3; 66-4;
66-5; 66-8; 75-24 at 7). To be sure, Riccelli specifically stated during his deposition that he
retained R&D and Yarbrough to confirm BRC’s test results: “I hear about R&D Services being
this lab that is the lab that knows what they’re doing and I’m figuring, you know what, I spent all
this money, what’s another $750 to have them see what they get, you know, and it was the same
as everyone else using the standard C518 method.” (75-24 at 7). Thus, IDI’s argument that
Yarbrough should be disqualified for being its prelitigation consultant is not only legally

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erroneous, Cherry Hill, 994 F.Supp. at 250; Weaver, 2009 WL 1230297, at *10, but is also
factually erroneous, on the record before the Court.
The Court acknowledges that, in light of Yarbrough’s role within R&D as both a product
tester and a testifying expert, much of this dispute could have been avoided if R&D had a system
in place to vet potential conflicts of interest. See Wang Laboratories, Inc. v. Toshiba Corp., 762
F.Supp. 1246, 1250 (E.D. Va. 1991). Contrary to the position taken by the FTC during the oral
argument, the fact that R&D is a small company, in this Court’s estimation, is no excuse for it not
having a conflicts system in place. (Docket No. 92 at 9-10, 47-48). That said, the Court cannot
overlook that IDI unjustifiably dragged its feet in bringing this motion, nor can it disregard that no
“confidential information” was disclosed to Yarbrough.5 Cherry Hill, 994 F.Supp. at 250.
The policy considerations also weigh against disqualifying Yarbrough as the FTC’s expert.
This inquiry necessarily overlaps with the above two-step inquiry. Stencel v. Fairchild Corp., 174
Where no “confidential information” is disclosed to the expert, it is unnecessary to analyze
the issue of waiver. Weaver, 2009 WL 1230297, at *10 n. 4. In any event, the Court notes that
IDI has failed to carry its burden of non-waiver. Greene, 202 F.R.D. at 430. Waiver is defined as
the “intentional relinquishment or abandonment of a known right.” Barna v. Bd. of Sch. Dir. Of
Panther Valley Sch. Dist., 877 F.3d 136, 147 (3d Cir. 2017); see also English Feedlot, Inc. v.
Norden Lab., Inc., 833 F.Supp. 1498, 1504 (D. Col. 1993) (applying a similar definition of waiver
in this context). The FTC provided IDI with portions of Yarbrough’s draft expert report (which
was on R&D letterhead) in October 2016 during prelitigation settlement discussions. (Docket No.
75-23 at 3). At the December 21, 2016 case management conference, IDI did not complain of a
conflict when Yarbrough was identified as the FTC’s expert, notwithstanding that Riccelli and an
IDI board member were in attendance. (Docket No. 12). Although IDI objected to Yarbrough
testing unidentified material, it did not otherwise object to him attending the entirety of a two-day
deposition and inspection at BRC in Taunton, Massachusetts in mid-April 2017. (Docket Nos. 1719). It waited until June 2017 to inform the FTC that it was contemplating moving to disqualify
Yarbrough, and it did not inform this Court of same until a telephone status conference on
November 21, 2017. (Docket Nos. 60, 66 at 13; 75 at 7, 75-22 at 2-4). All of these facts
demonstrate that IDI has failed to satisfy its burden of non-waiver. See English Feedlot, 833
F.Supp. at 1504. But, even absent wavier, these same facts counsel against disqualification at this
stage of the case because it would result in undue delay, as well as prejudice to the FTC by
requiring it obtain a replacement expert after already having borne significant time and expense
for Yarbrough’s services. Id.
5

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F.Supp.2d 1080, 1083 (C.D. Cal. 2001).

But, briefly, the Court does not believe that

disqualification is necessary to prevent conflicts of interest or preserve judicial integrity since IDI
did not disclose any confidential information to him during this case and his report is based entirely
on discoverable and publicly-available information. See Novartis, 2011 WL 691594, at *4. The
Court is also mindful that IDI only paid R&D a total of $1,150 for Yarbrough to conduct three
tests of its product before the FTC instituted its investigation and that there is no other evidence in
the record to suggest that IDI retained Yarbrough as a consultant. See Stencel, 174 F.Supp.2d at
1083 (“If experts are too easily disqualified, unscrupulous attorneys may attempt to create
relationships with numerous potential experts at a nominal fee hoping to preempt the availability
of their adversaries to obtain expert assistance.”). Under the circumstances, the Court finds that
Yarbrough’s prior testing of Insultex and his relationship with IDI is not a basis for disqualification
and instead is a credibility factor that the Court will consider when assessing the veracity of his
testimony during the eventual bench trial in this matter. See Butamax, 2012 WL 4815593, at *3
(finding that the policy considerations weighed against impeachment when the expert was “one of
a limited number of individuals with expertise” in the field).
B.

MOTION FOR PROTECTIVE ORDER

The Court next turns to the parties’ dispute regarding IDI’s sealed motion for protective
order to designate information as confidential material. (Docket No. 86). On January 24, 2018,
the Court entered an Order which provisionally permitted the FTC to file under seal its opposition
and other documents related to IDI’s disqualification motion. (Docket No. 73). Although the FTC
disputed that the documents submitted by IDI in connection with the disqualification motion were
confidential, it moved to file the opposition documents under seal to give IDI “an opportunity to
seek further protection from the Court.” (Docket No. 72). Thereafter, on February 12, 2018, IDI

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filed the pending motion for protective order, seeking a blanket Order from the Court requiring the
FTC to redact several documents that it filed in opposition to IDI’s motion to disqualify Yarbrough.
(Docket Nos. 85, 86).
Pursuant to the parties’ stipulated protective order, “Confidential Material” includes “trade
secret(s) or other confidential research, development, or commercial information.” (Docket No.
16 at ¶ 1). According to IDI, the Court should order the FTC to redact (1) several portions of the
FTC’s brief in opposition to IDI’s motion to disqualify, including any and all references to
“specific test results, specific test data, prices paid for testing, specific terms of the Client
Confirmations, conversations between Yarbrough and Mr. Loew, various test methods that IDI
employed in research and development, Footnote 14 and the portions of the Exhibits listed herein”;
(2) Yarbrough’s entire expert report; (3) paragraph 6 of Yarbrough’s declaration; (4) certain
excerpts from Yarbrough’s deposition; (5) certain excerpts from Loew’s deposition; (6) certain
excerpts from the Riccelli/Domian deposition; and (7) two paragraphs from Attorney Rosenberg’s
email to IDI’s counsel. (Docket No. 86). The FTC objects that none of the described material is
confidential and that IDI has failed to carry its burden in establishing same. (Docket Nos. 90 and
91 at 2).
At the outset, blanket motions to seal like IDI’s motion for protective order directly conflict
with this Court’s Standing Order dated January 27, 2005, which prohibits the “automatic sealing
of documents that are filed with the Court.” In re: Confidentiality and Protective Orders in Civil
Matters, Misc. No. 05-45, Docket No. 1 (W.D. Pa. Jan. 27, 2005); see also Comment to LCvR
5.2.H (explaining that LCvR 5.2.H implements said Standing Order). A party seeking to file
documents under seal must demonstrate that each document is eligible for same. Id. It is axiomatic

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that a party cannot satisfy this burden by filing a conclusory motion devoid of analysis, as IDI has
done here. Id.
In this Court’s opinion, IDI fails to account for the strong presumption in favor of public
access with respect to all of these documents, Littlejohn v. Bic Corp., 851 F.2d 673, 678 (3d Cir.
1988), since they were “filed with the court, or otherwise somehow incorporated or integrated into
a district court’s adjudicatory proceedings” in opposition to its motion to disqualify Yarbrough.
In re Cendant Corp., 260 F.3d 183, 192 (3d Cir. 2001); Pansy v. Borough of Stroudsburg, 23 F.3d
784, 786 n. 11 (3d Cir. 1994) (“whether the relevant document is in the court file is the critical
inquiry”). IDI’s motion cites no case law and sets forth no reasons, let alone “compelling reasons,”
to justify the non-disclosure of these judicial records. Carnegie Mellon Univ. v. Marvell Tech.
Group, Ltd., 2013 WL 1336204, at *4 (W.D. Pa. 2013); see also In re Cendant Corp., 260 F.3d at
194 (the appropriate test to apply for court proceedings and judicial records is a “compelling
countervailing interests” standard).
To prevail on this motion, IDI not only “bears the burden of showing that the material is
the kind of information that courts will protect,” but also that “disclosure will work a clearly
defined and serious injury to the party seeking disclosure.” Miller v. Indiana Hosp., 16 F.3d 549,
551 (3d Cir. 1994). “In delineating the injury to be prevented, specificity is essential.” In re
Cendant Corp., 260 F.3d at 194. “Broad allegations of harm, bereft of specific examples or
articulated reasoning, are insufficient.” Id. Here, IDI’s motion provides no analysis to support its
vague assertions that the various documents or statements therein are “confidential research,
development, or commercial information” and it does not identify what potential harm it will suffer
if such information is disclosed. See LEAP Sys., Inc. v. MoneyTrax, Inc., 638 F.3d 216, 220 (3d
Cir. 2011) (a party’s vague assertions of “secretive business information” which would cause it to

20

suffer a “tactical disadvantage” were insufficient to establish a strong private interest in
maintaining confidentiality).
IDI’s motion for protective order also ignores that the Court could not issue this judicial
decision on its motion to disqualify Yarbrough without considering much of the information that
it seeks to have designated as confidential material. See Weismantle v. Jali, 2015 WL 1866190,
*2 (W.D. Pa. 2015) (Hornak, J.) (recognizing the “strong presumption in favor of public access to
the records upon which a federal court does its decisional duty”). For this reason, the Court ordered
the FTC on January 11, 2018 to attach “all of the documents that it produced to [IDI] in its Rule
26(a)(2)(B) expert disclosures with respect to Dr. Yarbrough” to its opposition. (Docket No. 67)
(emphasis in original); see also Pansy, 23 F.3d at 784 (“It is well-established that a district court
retains the power to modify or lift confidentiality orders that it has entered.”). Hence, by electing
to place this disqualification issue squarely before the Court for a judicial determination, it should
come as no surprise to IDI that “[t]his Court will document any evidence it feels necessary to
explain its determination, regardless of the parties’ positions on confidentiality.” Carnegie Mellon,
2013 WL 1336204, at *11 n. 29; see also Franzi v. UPMC Presbyterian Shadyside, Civ. Action
No. 12-1432-NBF, Docket Nos. 106 and 110 (W.D. Pa. 2016) (denying the plaintiff’s successive
motions to seal her entire case and/or the Court’s summary judgment opinion after the parties
reached a settlement agreement because judicial opinions are not merely the property of private
litigants, the opinion was independently available on the internet and through numerous legal
service providers, and the information discussed therein was of record and necessary for the Court
to explain its decision) (citations omitted).
Further, “it is well established that the release of information in open court is a publication
of information and, if no effort is made to limit its disclosure, operates as a waiver of any rights a

21

party had to restrict its future use.” Littlejohn, 851 F.2d at 677-78. Notably, much of the same
information that IDI seeks to designate as confidential material was discussed during the February
6, 2018 oral argument and no efforts were made to seal the transcript which has since been filed
on the Court’s docket. (Docket No. 92); see also United States v. Martin, 746 F.2d 964, 968 (3d
Cir. 1984) (transcripts are regarded as judicial records).
In all, IDI’s motion for protective order falls woefully short of satisfying its burden of
demonstrating compelling reasons to overcome the presumption of access to the courts. In re
Cendant Corp., 260 F.3d at 194; Carnegie Mellon Univ., 2013 WL 1336204, at *9. Therefore, it
is denied.
IV.

CONCLUSION
For the reasons stated herein, IDI’s motion to disqualify the FTC’s expert (Docket No.

[65]) was appropriately denied by the Court on February 21, 2018, (Docket No. [87]). IDI’s sealed
motion for protective order to designate information as confidential material (Docket No. [86]) is
likewise denied. An appropriate Order regarding the latter motion follows, the Court having
already entered an Order denying the former.
/s/ Nora Barry Fischer
Nora Barry Fischer
United States District Judge
Date: March 15, 2018.
cc/ecf: All counsel of record.

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