Polaris Engineering, Inc. v. Texas International Terminals, Ltd.
Filing
348
OPINION AND ORDER denying 288 MOTION to Exclude Motion for Exclusion of Jereme Crouthamel (rltd dkt 304 ). (Signed by Magistrate Judge Andrew M Edison) Parties notified.(rcastro, 3)
Case 3:21-cv-00094 Document 348 Filed on 02/22/23 in TXSD Page 1 of 5
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
POLARIS ENGINEERING, INC.,
Plaintiff.
V.
TEXAS INTERNATIONAL
TERMINALS, LTD., et al.,
Defendants.
February 22, 2023
Nathan Ochsner, Clerk
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§ CIVIL ACTION NO. 3:21-cv-00094
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OPINION AND ORDER
Texas International Terminals, Ltd. (“TXIT”) has filed a Motion for
Exclusion of Jereme Crouthamel (“Motion for Exclusion”), as well as a supplement
in support of that motion. See Dkts. 288, 304. In the those papers, TXIT asks this
Court to enter a protective order that would (1) prohibit Jereme Crouthamel
(“Crouthamel”), a former TXIT employee, from testifying at trial in this case;
(2) bar Crouthamel from communicating with his current employer, Polaris
Engineering, Inc. (“Polaris”), about this lawsuit without TXIT counsel present;
(3) require that all communications between Crouthamel and Polaris be produced,
even though they might contain privileged information; and (4) force Crouthamel
and Polaris to provide for forensic examination of all computers Crouthamel has
used during his tenure with Polaris. Polaris and Crouthamel have each filed briefs
opposing the entry of a protective order. See Dkts. 337, 339. TXIT has submitted a
reply in support its Motion for Exclusion. See Dkt. 341. For the reasons set forth
below, the Motion for Exclusion is DENIED.
LEGAL STANDARD
Federal Rule of Civil Procedure 26(c) authorizes district courts to issue “an
order to protect a party or person from annoyance, embarrassment, oppression, or
undue burden or expense” upon a showing of good cause. FED. R. CIV. P. 26(c).
Protective orders may forbid inquiry into certain matters, limit the scope of
Case 3:21-cv-00094 Document 348 Filed on 02/22/23 in TXSD Page 2 of 5
disclosure to certain matters, and require a trade secret or other confidential
information not be revealed or be revealed only in a specified way. See id.
The “decision whether to grant or deny a request for a protective order is
entrusted to the district court’s sound discretion.” Nguyen v. Excel Corp., 197 F.3d
200, 209 n.27 (5th Cir. 1999). This is because “[t]he trial court is in the best
position to weigh fairly the competing needs and interests of parties affected by
discovery.” Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). “The unique
character of the discovery process requires that the trial court have substantial
latitude to fashion protective orders.” Id. “The burden is upon the movant to show
the necessity of [a protective order], which contemplates a particular and specific
demonstration of fact as distinguished from stereotyped and conclusory
statements.” United States v. Garrett, 571 F.2d 1323, 1326 n.3 (5th Cir. 1978).
DISCUSSION
This litigation arises out of a series of contractual agreements between TXIT
and Polaris. Under the relevant contracts, Polaris agreed to engineer, design, and
construct a crude processing facility (“Facility”) for TXIT. Polaris has sued TXIT
for nonpayment. TXIT refuses to pay Polaris because it contends that the Facility
is defective.
Crouthamel worked as TXIT’s Terminal Operations Manager during the
construction of the Facility. At the time he was hired, Crouthamel agreed “not to
use any confidential information acquired during [his] employment for [his] own
personal benefit or the benefit of persons other than” TXIT. Dkt. 288-2 at 3. After
this lawsuit was filed in 2020, Crouthamel met with TXIT’s counsel on numerous
occasions and assisted TXIT’s counsel in preparing documents related to this
lawsuit.
TXIT fired Crouthamel in May 2021. A few weeks later, Crouthamel went to
work for Polaris. He was eventually hired by a Polaris affiliate as Vice President of
Operations. He holds that position today.
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In recent months, Crouthamel has attended several depositions in this case
as a Polaris corporate representative. He was also recently deposed as a fact
witness. At that deposition, Crouthamel acknowledged that he downloaded and
placed a copy of the entire contents of his TXIT laptop on an external hard drive.
Not surprisingly, TXIT’s counsel cries foul. TXIT complains that Crouthamel stole
“approximately four years’ worth of confidential commercial documents about
TXIT’s business, privileged communications with TXIT’s outside counsel relating
to this suit, and privileged work product developed by Mr. Crouthamel and TXIT’s
counsel.” Dkt. 288 at 5. When I learned that Crouthamel possessed the external
drive, I instructed Crouthamel, through counsel, to immediately return it to TXIT.
I believe that has occurred.
I can certainly understand why TXIT is furious that Crouthamel downloaded
the entire contents of his TXIT laptop on an external drive, took that drive home
with him when he left TXIT’s employment, and then concealed for several years
the fact that he possessed such information.1 It also appears, based on a forensic
review of the external drive, that Crouthamel accessed roughly 100 documents
from the external drive between October 14, 2022 and November 8, 2022. See Dkt.
341-2 at 4. Although I certainly do not condone Crouthamel’s actions, I am
unwilling to issue the draconian protective order that TXIT requests. There are
several reasons why.
To begin, there is no evidence before me that suggests Polaris has done
anything improper. Before hiring Crouthamel, Polaris had Crouthamel sign a
nondisclosure agreement, pledging that he would not disclose TXIT information
to Polaris or transfer such information onto Polaris’s computer network:
Whether Crouthamel’s conduct constitutes a breach of any contractual obligation or the
common law is a question for another day in a different forum.
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Dkt. 344 at 4. Although Crouthamel has met with Polaris’s counsel to discuss this
case, Crouthamel testified under oath that Polaris’s lawyers specifically
“instruct[ed him] not to disclose any information about [his] work for TXIT’s legal
team.” Dkt. 304-1 at 72. Crouthamel says that no such confidential information has
been shared with Polaris. See id. at 71.
As noted, I think it is safe to say that Crouthamel should not have taken a
copy of his TXIT laptop with him after he left TXIT’s employment. Even so, there
is nothing in the record that indicates that Crouthamel has disclosed any
information on that laptop—sensitive or otherwise—to anyone at Polaris. To the
contrary, the evidence before me indicates that Crouthamel has not shared any
TXIT information with Polaris or its attorneys. Crouthamel testified as follows at
his deposition:
Q.
Did you provide any of the information on that jump drive or
any other information from TXIT to Polaris?
A.
No, sir.
Q.
Did you provide any information on the jump drive or from
TXIT to Polaris’s attorneys?
A.
No, sir.
Id. at 256.
I recognize that Rule 26(c) confers broad authority and discretion on the
trial court to determine when and the degree to which a protective order is
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warranted. I am also sensitive to TXIT’s legitimate concerns that Crouthamel
might divulge privileged information to Polaris or its counsel. But to do what TXIT
requests—bar Crouthamel from testifying at trial and prohibit Crouthamel from
speaking to Polaris’s counsel about this matter without TXIT’s counsel present—is
wildly excessive. Accordingly, TXIT’s Motion for Exclusion is DENIED. At the
same time, I do think it is appropriate to order that Crouthamel be prohibited from
discussing TXIT’s privileged information with Polaris or its counsel. I view this as
maintaining the status quo, and I am confident that Polaris and Crouthamel will
ensure that my order is followed.
SIGNED this 22nd day of February 2023.
______________________________
ANDREW M. EDISON
UNITED STATES MAGISTRATE JUDGE
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