ACT, Inc. v. Worldwide Interactive Network

Filing 224

MEMORANDUM AND ORDER granting in part 113 MOTION for Discovery Plaintiff and Counter-Defendant ACT, Inc.'s Documents for Consideration at July 8, 2019 Discovery Hearing Pursuant to Court's May 17, 2019 Order; granting i n part 135 MOTION to Compel Discovery; granting 157 MOTION to Compel De-Designation of Plaintiff's Improperly Designated Expert Report of David Nolte and Amended Expert Report of David Nolte. Signed by Magistrate Judge H Bruce Guyton on 11/8/2019. (JDH)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
ACT, INC.,

)
)
Plaintiff,
)
)
v.
)
)
)
WORLDWIDE INTERACTIVE NETWORK, )
INC.,
)
)
Defendant.
)

No. 3:18-CV-186-TRM-HBG

MEMORANDUM AND ORDER
This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court,
and Standing Order 13-02.
Now before the Court are the following Motions: (1) Plaintiff’s Motion to Compel [Doc.
113],1 (2) Defendant’s Motion to Compel Discovery [Doc. 135], and (3) Defendant’s Motion to
Compel De-Designation [Doc. 157]. The parties appeared for a hearing on July 8, 2019, with
respect to Plaintiff’s Motion to Compel. Attorneys Yasamin Parsafar and Thomas Scott, Jr.,
appeared on behalf of Plaintiff. Attorneys Jacob Horton, Raymond Stephens, Robert Pitts, Kyle
Carpenter, and Chadwick Hatmaker appeared on behalf of Defendant. Following the hearing,
Defendant filed the above Motions, and the Court finds oral argument unnecessary as to these
Motions.

1

Plaintiff’s Motion is titled, “Documents for Consideration at July 8, 2019, Discovery
Hearing Pursuant to Court’s May 17, 2019 Order.” [Doc. 113]. The Motion, however, was filed
as a result of unresolved discovery disputes stemming from Plaintiff’s original motion to compel.
Thus, the Court will refer to Plaintiff’s filing as a “Motion to Compel.”

The Court has considered the filings in this case, and for the reasons further explained
below, the Court hereby GRANTS IN PART Plaintiff’s Motion [Doc. 113] and Defendant’s
Motion [Docs. 135], and GRANTS Defendant’s Motion [Doc. 157].
I.

ANALYSIS
The Court will address the Motions in the order in which they were filed.
A.

Plaintiff’s Motion to Compel

By way of background, on May 17, 2019, the Court entered a Memorandum and Order
[Doc. 89] (“May Order”), resolving a number of discovery disputes but allowing the parties to
contact the Court if certain issues were not resolved. The instant disputes originate from Plaintiff’s
motion to compel and the May Order. Specifically, in the instant Motion, Plaintiff raises three
issues: (1) Defendant’s responses to Plaintiff’s First Set of Interrogatories; (2) Defendant’s
damages-related information, and (3) Defendant’s Supplemental Responses to Plaintiff’s
Additional Request for Production and Interrogatories.
During the July hearing on these issues, the parties disagreed as to whether they had
conducted a meet and confer. This disagreement is not new. See [Doc. 89 at 10] (explaining that
counsel cannot agree as to whether they actually met and conferred). The parties also filed
supplemental briefs detailing their respective positions on whether a meet and confer occurred.
The Court has reviewed the emails, and for the most part, they simply contain one party’s request
for a meet and confer with a proposed date (the proposed date usually being the following day)
and the other party’s response that he/she is not available on the proposed date. It does not appear
to the Court that either party is refusing to participate in a meet and confer. In any event, given
that the issues were the subject of Plaintiff’s previous motion and the Court directed Plaintiff to

2

contact Chambers if the issues were not resolved, the Court finds it appropriate to consider the
merits of Plaintiff’s requests.
1.

Plaintiff’s First Set of Interrogatories

As mentioned above, Plaintiff raised this issue in its first motion to compel. After the
hearing on this issue and prior to the Court issuing an order, Plaintiff served additional discovery,
along with an “emergency motion,” stating that it served additional discovery as an attempt to
narrow discovery. Thus, it was not clear to the Court at the time whether Plaintiff’s First Set of
Interrogatories were still in dispute. The Court directed Plaintiff to contact Chambers if this issue
was still in dispute, and Plaintiff did so.
Here, Plaintiff argues that Defendant’s responses to its First Set of Interrogatories are still
deficient for the same reasons. Specifically, Plaintiff states that Defendant’s responses contain
legal positions and no factual information. At the July hearing, Defendant argued that the Court’s
May Order already determined the issue and that Plaintiff should have filed a new motion.
The Court finds that Plaintiff was not required to file another motion. The Court explicitly
directed Plaintiff to contact Chambers to set a hearing if the issue was still in dispute. Plaintiff did
so, and therefore, the Court finds another motion reasserting the same arguments unnecessary.
Turning to the merits of the dispute, the Court notes that Plaintiff’s Interrogatories 1-19
request Defendant to state all facts in support of its defenses.

Defendant utilized general

objections, which this Court disfavors, and then objected to each Interrogatory on the basis that it
is a contention interrogatory. Defendant also responded to the Interrogatories, in large part, by
setting forth arguments and legal conclusions. In its response [Doc. 41] to Plaintiff’s motion to
compel, Defendant argued that it provided facts with respect to Interrogatory Nos. 4 and 5 and that
while it responded to Interrogatory No. 4, the discovery request was premature. Defendant
3

continued that it did set forth facts, but additional facts would potentially be discovered and that it
would supplement accordingly. Defendant argued that it set forth facts in response to Interrogatory
No. 10 and its responses to Interrogatory Nos. 12-14 incorporated the response to Interrogatory
No. 10. Further, with respect to Interrogatory Nos. 8 and 14, Defendant states that the facts are
equally available to Plaintiff.
Federal Rule of Civil Procedure 33 governs interrogatories and the responses thereto. Rule
33(a)(2) states, “An interrogatory is not objectionable merely because it asks for an opinion or
contention that relates to fact or the application of law to fact . . .” The Sixth Circuit has recognized
the “general view . . . that contention interrogatories are a perfectly permissible form of discovery.”
Starcher v. Correctional Med. Sys., 144 F.3d 418, 421 n. 2 (6th Cir. 1998). The Court notes the
Rule 33 authorizes the Court to defer answers to contention interrogatories “because they may
create disputes between the parties which are best resolved after much or all of the discovery has
been completed . . .” Wood for use & benefit of Johnson v. Nw. Airlines, Inc., No.
209CV02317BBDDKV, 2010 WL 11598163, at *4 (W.D. Tenn. Mar. 16, 2010) (citing Fed. R.
Civ. P. 33(b) Advisory Committee Note (1970)).
In the present matter, the original discovery deadline expired on July 30, 2019, and
therefore, the Court finds it unnecessary to defer responses any longer. The Court has reviewed
Defendant’s responses to the Interrogatories, and for the reasons set forth below, the Court finds
that Defendant has not provided sufficient factual answers to several Interrogatories.
Specifically, the Court ORDERS Defendant to supplement its responses to Interrogatory
Nos. 1-7, 11-17 because the responses contain little, if any, facts. For instance, Defendant points
to Interrogatory Nos. 4 and 5 in support of its argument that it set forth facts in its responses. In
response to these interrogatories, Defendant states that Plaintiff’s work lacks sufficient creativity
4

and originality to constitute copyrightable material. This response does not set forth any facts as
to why such work lacks creativity or originality. Defendant continues in its response that Plaintiff
consented to the uncontrolled use of such works by others, but Defendant does not provide any
facts as to the identity of “others.” Similarly, with regard to the unfair competition and false
designation claims in Plaintiff’s Complaint, Defendant responds that ten states use Plaintiff’s terms
but Defendant only lists Georgia and South Carolina.2 These are a few examples of the missing
facts from Defendant’s response.
With respect to Interrogatory Nos. 12 and 13, Defendant incorporates “specifically
including, but not limited to,” facts set forth in specific paragraphs of its Answer and Counterclaim,
and in response to Interrogatory Nos. 14, 15, and 17, Defendant incorporates the facts alleged in
its Answer and Counterclaim. [Doc. 38-2] (Emphasis added). This practice is impermissible. See
Atlanta Coca-Cola Bottling Co. v. Transamerica Ins. Co., 61 F.R.D. 115, 120 (N.D. Ga. 1972)
(“Defendant is correct in stating that incorporation by reference of the allegations of a pleading is
not a responsive and sufficient answer to an interrogatory.”); see also Ntakirutimana v. CHS/Cmty.
Health Sys., Inc., No. CV L-09-114, 2011 WL 13135608, at *3 (S.D. Tex. June 28, 2011) (stating
that “qualifiers, such as the ‘include, but are not limited to’ used by Plaintiffs, render interrogatory
answers vague, evasive and incomplete” and noting that “other district courts addressing the issue
have specifically held that answers to interrogatories should not refer to pleadings or other
documents”).
With respect to Interrogatory Nos. 8-10, and 18-19, Defendant does provide some facts in
response to these Interrogatories. Because the Court is not aware of “all the facts” in this case,

2

Defendant lists ten states and Washington, D.C., in response to Interrogatory No. 18, but
Rule 33 requires that each interrogatory be answered separately. [Doc. 38-2].
5

however, Defendant SHALL supplement these interrogatories if there are additional facts it has
uncovered throughout discovery in this case. See Fed. R. Civ. P. 26(e)(1) (explaining a parties’
duty to supplement). Accordingly, Plaintiff’s request is well taken in part, and the Court ORDERS
Defendant to supplement its responses to the above Interrogatories on or before November 25,
2019.
2.

Defendant’s Damages Information

In the Court’s May Order, the undersigned declined to order Defendant to provide its
QuickBooks in “.QBW” format because Defendant represented that such a production would
include active links to its financial institution accounts. [Doc. 89 at 20]. Further, Defendant stated
that it produced detailed summaries of its assessment revenues from its business dealings in
multiple states and that it would produce summaries of cost information once such summaries had
been created. [Id.]. The Court directed Plaintiff to review such discovery upon receipt, and if it
was unsatisfied, to contact the Court for a hearing. [Doc. 89 at 20].
In the instant matter, Plaintiff states that it is unsatisfied for a multiple of reasons.
Specifically, Plaintiff argues that Defendant did not produce cost summaries and that Defendant’s
revenue summaries are incomplete. Plaintiff states that there are discrepancies between the
invoices produced and the revenue summaries that Defendant prepared and that multiple invoices
were not included. Plaintiff proposed that Defendant provide a copy of its QuickBooks with
passwords and account information redacted. At the hearing, Defendant argued that the Court did
not order it to produce such summaries, although its intention was to create such summaries.
Defendant stated that it ran into personnel issues, but it was working on producing the cost
summaries.

6

As an initial matter, the reason that the Court did not order Defendant to produce cost
summaries is because Defendant represented to the Court that it intended to do so. See [Doc. 84]
(Defendant’s response to Plaintiff’s emergency motion, stating that defense counsel indicated in
an email to Plaintiff “that it would produce summaries of cost information once those summaries
had been created” and arguing that Plaintiff “has received, or will receive shortly,” from Defendant
“all information regarding [Defendant’s] finances that is relevant to this case.”). Thus, based on
this representation, the Court did not find an order was necessary. Plaintiff has shown that it needs
completed financial information from Defendant. Accordingly, the Court ORDERS Defendant to
provide Plaintiff with its QuickBooks on or before November 25, 2019, in a format that allows
for appropriate redactions. Defendant may redact any passwords and account information and
make appropriate designations pursuant to the Protective Order in this case.
3.

Defendant’s Supplemental Responses to Plaintiff’s Additional Request for
Production and Interrogatories

By way of background, the instant disputes were the subject of Plaintiff’s emergency
motion, which was filed after the March hearing but prior to the Court entering an order. Plaintiff’s
emergency motion requested that the Court order Defendant to supplement its responses to
Plaintiff’s second set of interrogatories and second and third requests for production of documents.
The Court ordered Defendant to supplement its responses to the second set of document requests
and if responsive documents had already been produced, to provide the bates-stamped number of
the document. The Court also directed Defendant to comply with Rule 34(b)(2)(C) by stating
whether any documents were withheld based on objections. The Court issued a similar direction
with respect to the third requests for production of documents but declined to order Defendant to
provide its Quickbooks in a certain format, which contained active links to its financial institution.
7

Finally, with respect to the Interrogatories, the Court ordered Defendant to specify the records to
be reviewed but limited such discovery to South Carolina.
At the July hearing, Plaintiff specifically raised issues with Defendant’s response to
Interrogatory No. 20, which provides: “State separately, by year and entity, the amount of money
[Defendant] has invoiced to each entity to which [Defendant] has sold its assessments since 2012.”
Plaintiff argued that it reviewed 250 documents that Defendant produced in response to this request
and that such a review was a waste of its time and that Defendant included documents that were
created before 2012. In response, Defendant stated that it limited its response to South Carolina,
to which it had sold assessments since 2012. Defendant states that the interrogatory does not seek
documents only after 2012 and that the “2012” limitation refers to entities and not to invoices.
With respect to the instant dispute, Plaintiff states that in response to the discovery requests,
Defendant attached spreadsheets of over forty thousand bates numbers resulting from Defendant’s
proposed search parameters that Defendant described as “most likely” to include responsive
information. Plaintiff states that Defendant did not review the documents for responsiveness prior
to producing the spreadsheets. Plaintiff also requests that the Court amend its previous order to
include additional states because, after the Court’s May Order was filed, it filed an Amended
Complaint. At the hearing, Defendant argued that it is permitted to produce business records in
response to interrogatories under Rule 33 and that it chose to do. Defendant stated it provided
Plaintiff a spreadsheet with the search terms that were utilized for the documents.
As an initial matter, the Court notes that because Plaintiff’s motion to amend was granted,
information related to Florida, West Virginia, Arizona, and Kentucky is now relevant, and
therefore, the Court GRANTS Plaintiff’s request for discovery as it relates to these states.

8

As explained in the Court’s May Order, parties have the option to produce business records
in response to interrogatories: Specifically, Rule 33(d) provides as follows:
(d) Option to Produce Business Records. If the answer to an
interrogatory may be determined by examining, auditing, compiling,
abstracting, or summarizing a party's business records (including
electronically stored information), and if the burden of deriving or
ascertaining the answer will be substantially the same for either
party, the responding party may answer by:
(1) specifying the records that must be reviewed, in sufficient detail
to enable the interrogating party to locate and identify them as
readily as the responding party could; and
(2) giving the interrogating party a reasonable opportunity to
examine and audit the records and to make copies, compilations,
abstracts, or summaries.
Fed. R. Civ. P. 33. Defendant responded by specifying records by bates number. This is
permissible under the Rule. The issue with Defendant’s responses is that they state, “In order to
identify the business records previously produced to ACT that are most likely to contain
information responsive to this interrogatory, the documents produced by Defendant were searched
using the following search terms . . .” [Doc. 113-3]. The documents are either responsive or not.
Stating that the documents “most likely” contain responsive information is not acceptable, and the
Court ORDERS Defendant to supplement and/or amend its responses.
Further, with respect to Interrogatory No. 20, there appears to be some misunderstanding
as to what Plaintiff requested. Given Plaintiff’s clarification, the Court ORDERS Defendant to
respond in accordance with Plaintiff’s clarification. Defendant SHALL produce its supplemental
responses on or before November 25, 2019.

9

B.

Defendant’s Motion to Compel [Doc. 135]

In Defendant’s Motion, it seeks an order compelling Plaintiff to provide full and complete
responses to its First Set of Requests for Production. Defendant states that certain responses,
including, but not limited the responses to Requests No. 13, 67, 87, and 185, indicate that Plaintiff
would produce responsive, non-privileged documents located after a reasonable search. Defendant
argues that Plaintiff has not produced communications responsive to these requests. Defendant
states that Plaintiff has taken the position that it is not obligated to produce responsive emails
absent an agreement between the parties as to the parameters such as the custodians, dates ranges,
and search terms for the emails sought. Defendant states that Plaintiff also improperly suggests
that the parties should be limited to twenty search terms per custodian. Defendant states that on
July 8, 2019, three weeks prior to the close of discovery, it provided Plaintiff with a list of search
terms, but Plaintiff refused to produce any information, stating that Defendant’s request was
untimely.
In Response [Doc. 159], Plaintiff states that Defendant’s Motion should be denied for four
reasons. First, Plaintiff states that Defendant’s motion has already been adjudicated, and it was
denied. Second, Plaintiff argues that Defendant did not conduct a meet and confer. Third, Plaintiff
states that the motion is untimely. Finally, Plaintiff argues that the Motion violates Local Rule
37.2 because it does not provide a verbatim recitation of each document request that is subject of
the dispute. Despite Plaintiff’s arguments, it states that it “is in the process of running the search
terms.” [Doc. 159 at 6].
In its Reply [Doc. 162], Defendant argues that the Court denied its previous motion as moot
based on Plaintiff’s representation that it was producing documents. Defendant states that Plaintiff
never produced that responsive communications/emails that are the subject of the present motion.
10

Defendant disputes Plaintiff’s statement that Defendant did not meet and confer. Defendant argues
that Plaintiff claims that it is in the process of running the search terms, yet Defendant has not
received responsive communications and emails. Defendant argues that Plaintiff’s reliance on
Local Rule 37.2 is inequitable. Defendant explains that Plaintiff is “attempting to avoid its
obligation to respond to specific requests by relying upon its stated position in the Discovery Plan
of the Parties for producing communications and emails while simultaneously attempting to thwart
[Defendant’s] attempt to compel production of communications and emails by, in essence, arguing
that [Defendant’s] motion fails to give [Plaintiff] and the Court notice as to which Requests for
Production are at issue.” [Doc. 162 at 2-3].
By way of background, in the May Order, the Court noted as follows:
In Plaintiff’s Second Status Report, it asserts that since the hearing
“it produced 800 additional documents-the vast majority of which
relate to the ‘creation, development, and ownership’ of Plaintiff’s
works of authorship.” [Doc. 66 at 1]. In addition, in response to
Defendant’s Motion to Strike, Plaintiff again asserted, “The issues
in [Defendant’s] motion are resolved and [Defendant] makes no
argument to the contrary in its response to the Status Reports. The
Court should deny [Defendant’s] motion to compel as moot.
Defendant did not file a reply brief. Accordingly, it appears to the
Court that Plaintiff has produced the information that Defendant
sought, and therefore, the Motion to Compel [Doc. 39] is DENIED
AS MOOT.
[Doc. 89 at 23].
As mentioned above, Plaintiff argues that Defendant did not meet and confer. It appears
that the parties have discussed this discovery issue via email communications. Although the Court
encouraged the parties to conduct telephone and video conferences, the undersigned did not order
it. See [Doc. 89] (observing that the back-and-forth letters and emails do not seem to be helpful

11

and “encourage[ing] the parities to call one another or utilize video conferencing”).3 Plaintiff also
argues that Defendant violated Local Rule 37.2, which provides that discovery motions shall
include verbatim recitation of each discovery request and response subject of the motion or a copy
of the actual discovery document that is the subject of the motion. E.D. Tenn. L.R. 37.2.
Defendant filed the discovery at issue and Plaintiff’s responses thereto. [Doc. 135-1 and Doc. 1352]. In its Motion, Defendant listed the discovery requests that seek communications. [Doc. 135
at 2]. Accordingly, the Court finds Plaintiff’s arguments not well taken.
The Court has considered the parties’ remaining arguments, and the Court ORDERS
Plaintiff to produce only the discovery that it has agreed to produce as shown in the parties’ chart
in [Doc. 159-10 at 4]. See also [Doc. 159 at 6] (“ACT is in the process of running the search
terms.”). First, in response to a number of discovery requests, Plaintiff stated that it will produce
documents. [Doc. 135-2]. In addition, the parties have been working on search parameters and
have come to some agreements. [Doc. 159-10 at 4]. Given Plaintiff’s original response that it will
produce documents, the Court finds it appropriate for Plaintiff to produce such documents.
The Court will not, however, require Plaintiff to run any additional searches. As mentioned
above, the Court denied Defendant’s motion to compel this discovery because Plaintiff represented
to the Court, and Defendant did not respond, that Defendant’s motion was moot. Defendant did
not bring this issue to the Court’s attention until July 30, 2019, the deadline for discovery. The
parties’ chart shows a number of disagreements (i.e., relevancy and overbroad) regarding the

3

The Court notes that Defendant’s email highlights the problems the parties create with
respect to the telephonic meet and confers. See supra page 2. For instance, Defendant’s email,
dated July 30, 2019, at 10:00 a.m., requests a meet and confer that same day at 1:30 and 3:30 p.m.
[Doc. 135-5 at 2]. Defendant’s Motion was filed at 4:38 p.m. on July 30, 2019, claiming that
Plaintiff “did not respond to Defendant’s request to meet and confer prior to the filing of this
motion.” [Doc. 135 at 4].
12

proposed search terms. The Court does not have sufficient information to rule on such objections
and declines to do so without any briefing. See Hendricks v. Hazzard, No. 2:11–cv–399, 2013
WL

4052873,

at

*3

(S.D.

Ohio

Aug.

12,

2013)

(“The

proponent

of

a motion to compel discovery bears the initial burden of proving that the information sought is
relevant.”)

(quoting O'Malley v. NaphCare Inc., 311 F.R.D. 461, 463 (S.D. Ohio 2015).

Accordingly, Defendant’s Motion to Compel [Doc. 135] is GRANTED IN PART. Plaintiff
SHALL produce the above discovery on or before November 25, 2019.
C.

Defendant’s Motion to Compel De-Designation [Doc. 158]

Defendant requests that Plaintiff de-designate the Expert Report of David Nolte and the
Amended Expert Report of David Nolte (collectively, “Expert Reports”). Defendant states that
Plaintiff designated the Expert Reports as “Highly Confidential/Attorneys’ Eyes Only” (“AEO”),
meaning that defense counsel cannot discuss the findings of the Expert Reports or the information
relied upon in the Expert Reports with Defendant. Defendant states that it is entitled to review the
Expert Reports to determine whether the information relied upon by Nolte is true and accurate,
particularly because Plaintiff expressed in open court that Nolte believes that Defendant’s financial
information is faulty and incomplete. Defendant asserts that Plaintiff’s AEO designation has
created an unfair contest where Defendant is forced to blindly defend against Plaintiff’s alleged
claims and is prohibited from consulting with its attorney on the fundamental issue of damages.
Defendant states that as a practical matter, it is impossible to imagine how Nolte’s testimony can
be received at trial if the Expert Reports are AEO.
Further, Defendant states that the majority of the information relied upon by Nolte in
reaching his damages calculation is Defendant’s own financial information—information that
Plaintiff has no privacy interest in. The remaining information relied upon by Nolte in his Expert
13

Reports includes Plaintiff’s profits and revenues, which Plaintiff chose to put at issue. Defendant
asserts that when a plaintiff chooses to place its own protected information at issue when pursuing
claims against a defendant, the plaintiff must bear the consequences of its actions, including
disclosing its protected information to the defendant, even where the defendant is a competitor.
Plaintiff responds [Doc. 171] that disclosure of its financial information would create
substantial risk of serious harm that cannot be avoided by less restrictive means. Plaintiff states
that Defendant agreed to work with a redacted version of the Expert Reports, and Plaintiff invited
Defendant to provide a redacted report. Defendant did not do so. Plaintiff states that it will provide
redacted Expert Reports by the first week of September. Plaintiff states that it will be harmed by
downgrading the confidentiality designation because Defendant is a competitor and has admitted
to copying Plaintiff’s work product to obtain a contract with Plaintiff’s former customer. Plaintiff
states that in an effort to vie for the South Carolina contract, Defendant presented false
qualifications to provide the career ready test that South Carolina asked for in a Request for a
Proposal. Plaintiff explains that Defendant Chasteen reported she had a Ph.D., when she in fact
does not.

Plaintiff argues that a party’s cost and profit information is routinely held as AEO,

especially in matters between competitors. Plaintiff states that the information at issue is its
pricing, cost, and profit margins and that the harm in permitting Defendant to see this information
outweighs the importance of disclosure.
Defendant filed a Reply [Doc. 202], arguing that its interest in examining the evidence that
will be used against it to establish damages far outweighs Plaintiff’s desire to keep its financial
information confidential, which is addressed by the Protective Order in place. Defendant states
that Plaintiff cannot claim that it suffered monetary damages as a result of Defendant’s conduct
and simultaneously refuse to show Defendant how it calculated its alleged damages or what
14

evidence it intends to use to support them. Defendant states that it did not agree to redactions but
offered redactions as an option and told Plaintiff that if such proved unsatisfactory, the parties
would need to address the issue.
As the parties already noted, a Protective Order was entered in this matter. The Protective
Order provides, in relevant part:
“Confidential” designation shall mean that the document is
comprised of confidential research, development, financial, or
commercial information which is not publicly known and is of
technical or commercial advantage to its possessor, in accordance
with Fed. R. Civ. P. 26(c)(1)(G) and (b); and
“Highly Confidential/Attorneys’ Eyes Only” designation shall mean
that the document is comprised of trade secrets or other extremely
sensitive and confidential research, development, financial or other
commercial information, the disclosure of which would create a
substantial risk of serious harm that could not be avoided by less
restrictive means.
[Doc. 34 at 2]. Information designated as AEO may be disclosed to attorneys, experts, and the
Court. [Id. at ¶ 12].
“An AEO designation is the most restrictive possible protective order, as it confines
dissemination of discovery materials only to the opposing party's attorneys and other
consultants/experts specified in the agreement.” Penn, LLC v. Prosper Bus. Dev. Corp., No. 2:10CV-0993, 2012 WL 5948363, at *4 (S.D. Ohio Nov. 28, 2012) (other quotations omitted). “In
general,

courts

utilize

“attorneys' eyes only”

protective

orders

when

especially

sensitive information is at issue or the information is to be provided to a competitor.” Westbrook
v. Charlie Sciara & Son Produce Co., No. 07-2657 MA/P, 2008 WL 839745, at *4 (W.D. Tenn.
Mar. 27, 2008), aff'd, No. 07-2657, 2008 WL 11417501 (W.D. Tenn. Dec. 9, 2008). The party

15

that designated the documents as AEO has the burden of showing that such designation is proper.
Penn, LLC, 2012 WL 5946363, at *4.
In establishing that the designation is proper, the party “must describe the alleged harm it
will suffer from any disclosure with a particular and specific demonstration of fact, as
distinguished from stereotyped and conclusory statements.” Id. (internal quotation omitted); see
also K & M Int'l, Inc. v. NDY Toy, L.L.C., No. 1:13CV771, 2015 WL 520969, at *4 (N.D. Ohio
Feb. 9, 2015) (“[M]any courts have required a party seeking [the AEO] designation to describe the
alleged harm it will suffer from any disclosure with a “particular and specific demonstration of
fact, as distinguished from stereotyped and conclusory statements.”). “In the business context,
such a showing requires specific demonstrations of fact, supported where possible by affidavits
and concrete examples.” Id. (quotations omitted). Further, “the court must balance the difficulties
imposed upon [a party] against the need to protect information from abuse by competitors.” U.S.
ex rel. Daugherty v. Bostwick Labs., No. 1:08-CV-354, 2013 WL 3270355, at *2 (S.D. Ohio June
26, 2013) (other quotations omitted).
First, Defendant argues that Plaintiff has taken the position that Defendant’s financial
information contained in the Expert Reports is incomplete. Defendant states that it needs to review
such information and that Plaintiff has no privacy interest in Defendant’s own financial
information. The Court agrees that Defendant may review its own financial information. See
[Doc. 34 at ¶ 7] (discussing when AEO information may be disclosed to others).
With respect to Defendant’s request to de-designate Plaintiff’s financial information, the
Court finds this request well taken. Plaintiff has filed the Declaration of Steve Schuring [Doc.
171-6], its Vice President of Finance & Accounting. Schuring states that Defendant is Plaintiff’s

16

competitor and that Plaintiff believes that Defendant stole work product and sold it at cheaper
prices to Plaintiff’s customers. [Id. at ¶ 2]. Schuring states as follows:
3. I reviewed page 9 of Mr. Nolte’s report and the quoted and
referenced document bearing Bates No. ACT000003206,
designated “Highly Confidential Attorneys’ Eyes Only” Under the
Protective Order. This document contains Plaintiff’s highly
confidential and sensitive financial information. It includes
Plaintiff’s confidential pricing information relating to price
proposals submitted by Plaintiff to the State of South Carolina in
response to its Request for Proposal. This information maintained
by Plaintiff as confidential. It is extremely sensitive and
competitive, and if disclosed to Defendant it would put Plaintiff at a
competitive disadvantage and at substantial risk of serious harm that
could not be avoided by less restrictive means, because it would
allow Defendant to use this information to continue to undercut
Plaintiff’s prices.
4. I reviewed pages 10-11 and 20-23 of Mr. Nolte’s report and the
quoted referenced document bearing Bates No. ACT0024654, and
designated “Highly Confidential Attorneys’ Eyes Only” under the
Protective Order. This information by Plaintiff is confidential. It
contains Plaintiff’s highly confidential and sensitive financial
information. It contains Plaintiff’s metrics relating to Plaintiff’s
review, costs and expenses, and operating income for Plaintiff’s
program 40 WorkKeys Assessments. This information is extremely
sensitive and competitive, and if disclosed to Defendant it would put
Plaintiff at a competitive disadvantage and at substantial risk of
serious harm that could not be avoided by less restrictive means
because it would allow Defendant to use this information to unfairly
compete with Plaintiff and continue to undercut Plaintiff’s prices.
Plaintiff has not established that its financial information is appropriately designated per
the terms of the parties’ agreed upon Protective Order. The above Declaration reiterates the
parties’ definition of AEO in the Protective Order and makes the conclusionary statement that
disclosing such information will cause Plaintiff competitive harm. See [Doc. 34 at ¶9] (stating that
such information “shall be used only for purposes of this suit”). Further, the Court has balanced
the difficulties imposed upon Defendant against the need to protect such information and finds that
17

Defendant needs such information to adequately prepare its defense in this case. Accordingly,
Defendant’s request is well taken.
II.

CONCLUSION
Accordingly, for the reasons explained above, the Court GRANTS IN PART Plaintiff’s

Motion to Compel [Doc. 113] and GRANTS IN PART Defendant’s Motion to Compel Discovery
[Doc. 135], and GRANTS Defendant’s Motion to Compel De-Designation [Doc. 157].
IT IS SO ORDERED.
ENTER:

United States Magistrate Judge

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