ATI Titanium v. US Magnesium

Filing 165

MEMORANDUM DECISION and ORDER denying 114 Motion to Compel. Signed by Magistrate Judge Paul M. Warner on 1/29/2019. (mas)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

US MAGNESIUM, LLC, a Delaware
limited liability company,
Plaintiff / Counterclaim
Defendant,
v.

MEMORANDUM DECISION
AND ORDER
Case No. 2:17-cv-00923-DB-PMW

District Judge Dee Benson

ATI TITANIUM LLC, a Delaware limited
liability company,

Chief Magistrate Judge Paul M. Warner

Defendant /
Counterclaimant.

District Judge Dee Benson referred this case to Chief Magistrate Judge Paul M. Warner
pursuant to 28 U.S.C. § 636(b)(1)(A). 1 Before the court is Plaintiff and Counterclaim Defendant
US Magnesium’s (“US Mag”) motion to compel (the “Motion”). 2 The court has carefully
reviewed the written memoranda submitted by the parties. Pursuant to Civil Rule 7-1(f) of the
Rules of Practice for the United States District Court for the District of Utah, the court has
concluded that oral argument is not necessary and will decide the motion on the basis of the
written memoranda. See DUCivR 7-1(f).

1

See docket no. 63.

2

See docket no. 114.

BACKGROUND
This case is a commercial dispute arising out of a Supply and Operating Agreement (the
“Agreement”) for the sale of magnesium. US Mag’s complaint alleges that Defendant and
Counterclamant ATI Titanium, LLC (“ATI”) breached the Agreement by “wrongfully declaring
an Economic Force Majeure” (the “EFM”) and by failing to “negotiate[] revised pricing for the
magnesium that would have averted the [EFM].” 3 US Mag seeks damages “exceeding the
amount of $92,000,000.00.” 4 ATI denies US Mag’s allegations and counterclaimed, alleging that
US Mag breached the Agreement by, among other things, refusing to negotiate the price of
magnesium in good faith and refusing to sell ATI magnesium through 2017. 5
On March 2, 2018, District Judge Benson entered a Stipulated Protective Order that, in
addition to other terms, allowed the parties to designate materials produced in discovery as
“Confidential Information – Attorneys Eyes Only” (“AEO”). 6 AEO-designated production may
be accessed only by certain people identified in the Stipulated Protective Order as “Qualified
Recipients.” 7 Qualified Recipients include “litigation managers,” defined as “individuals who are
licensed attorneys, within the legal department of a party named in the original Complaint in this
action, and whose responsibilities specifically include overseeing this litigation.” 8

3

Complaint, docket no. 21-1 at ¶¶ 31, 34.

4

Id. at ¶ 40.

5

See Amended Counterclaim, docket no. 52-1 at ¶¶ 28, 76.

6

See docket no. 50 at 3.

7

See docket no. 51 at 8.

8

Id. at 4.
2

On April 16, 2018, US Mag first moved the court for an order re-designating all of ATI’s
AEO-designated production as Confidential. 9 In an order granting in part and denying in part
that motion (the “August Order”), the court ordered ATI to “produce re-designated or dedesignated versions of documents previously designated as AEO.” 10 The August Order also
directed ATI to “produce a log listing any documents previously designated as AEO that ATI has
not re-designated.” 11 The log was to be “in the form of a privilege log” and was to “describe each
document individually and the specific basis for asserting AEO status.” 12 The August Order
permitted US Mag to file a new motion if, after review of ATI’s log and documents, US Mag
“continue[d] to believe in good faith that ATI [was] significantly over-designating documents as
AEO.” 13
On October 19, 2018, US Mag filed the instant motion, alleging that ATI was still overdesignating documents as AEO and renewing its request that the court enter an order redesignating all of ATI’s AEO designations as Confidential. 14 In support of the Motion, US Mag
included samples of ATI’s production that retained the AEO designation. ATI opposed the
Motion. 15 Once the Motion was fully briefed, and accordance with the August Order, the court

9

See docket no. 62.

10

Docket no. 92 at 5.

11

Id.

12

Id.

13

Id.

14

See docket no. 114.

15

See docket no. 121.
3

ordered ATI to submit to the court for in camera review a randomized sample of its AEO
designated documents to aid the court in determining whether ATI was unreasonably overusing
the AEO designation. 16 ATI complied with the order, and the court has reviewed the sample set
of documents provided by ATI.
STANDARD OF REVIEW
The court sets forth the following general legal standards governing discovery. Rule
26(b)(1) provides:
Parties may obtain discovery regarding any nonprivileged matter
that is relevant to any party’s claim or defense and proportional to
the needs of the case, considering the importance of the issues at
stake in the action, the amount in controversy, the parties’ relative
access to relevant information, the parties’ resources, the
importance of the discovery in resolving the issues, and whether
the burden or expense of the proposed discovery outweighs its
likely benefit. Information within this scope of discovery need not
be admissible in evidence to be discoverable.
Fed. R. Civ. P. 26(b)(1) (emphasis added). “‘Relevancy is broadly construed at the discovery
stage of the litigation and a request for discovery should be considered relevant if there is any
possibility the information sought may be relevant to the subject matter of the action.’”
Groesbeck v. Bumbo Int’l, No. 1:13-CV-00090, 2015 WL 365922, at *1 (D. Utah Jan. 27, 2015)
(quoting Smith v. MCI Telecomm. Corp., 137 F.R.D. 25, 27 (D. Kan.1991)). “The district court
has broad discretion over the control of discovery, and [the Tenth Circuit] will not set aside
discovery rulings absent an abuse of that discretion.” Sec. & Exch. Comm’n v. Merrill Scott &
Assocs., Ltd., 600 F.3d 1262, 1271 (10th Cir. 2010) (quotations and citations omitted).

16

See docket no. 137.
4

DISCUSSION
US Mag argues that the court should strip ATI’s documents of their AEO designation and
re-designate them as Confidential. US Mag asserts that the documents which retain the AEO
designation are highly relevant to the litigation 17 and “require technical expertise that US Mag’s
counsel does not possess.” 18 Accordingly, they argue that unless US Mag’s CEO and CFO are
permitted to access the documents under the Confidential designation, its prosecution of the case
would be “greatly impaired.” 19
For its part, ATI argues that it has complied with the August Order, acting in good faith in
making its designations. 20 ATI states that “it has marked only 1874 of the 44,180 records
produced in this case as AEO, which represents approximately 4% of ATI’s voluminous
document production.” 21 ATI argues that the documents which retain the AEO designation are
proper under the categories defined by the Stipulated Protective Order. Moreover, ATI argues
that if it de-designates these the documents it risks “a collateral lawsuit” and “jeopardizing longstanding business relationships.” 22 ATI also identifies as possible harm the possibility that US
Mag could use financial data to undercut ATI’s ability to negotiate in the future and would

17

See docket no. 114 at 5, 8, 10.

18

Id. at 6.

19

Id. at 10.

20

See docket no. 121 at 7.

21

Id.

22

Id. at 9.
5

expose ATI to financial attack. 23 The court notes that ATI primarily seeks to prevent US Mag’s
principals from accessing the AEO-designated documents. ATI has offered to permit “any two of
its other 440 employees to serve as litigation managers,” 24 expanding the definition set forth in
the Stipulated Protective Order beyond licensed attorneys and paralegals. US Mag has apparently
refused this offer.
Pursuant to the Stipulated Protective Order, “[a]ny receiving party may challenge a
producing party’s designation at any time.” 25 If the producing party “persists in the
designation . . . any receiving party may then move the court for an order to remove the
designation. The burden of proving the designation is proper shall be on the producing party.” 26
“A party seeking that its information only be revealed in a certain way, such as limiting
who can view or access the materials, . . . ‘must first establish that the information sought is a
trade secret [or other confidential research, development, or commercial information].’” Coll v.
Stryker Corp., 2017 WL 3190658, at *2 (D.N.M. May 24, 2017) (quoting In re Cooper Tire &
Rubber, Co., 568 F.3d 1180, 1190 (10th Cir. 2009)) (alteration in original). “Further, that party
must additionally ‘demonstrate that its disclosure might be harmful.’” Id. (quoting In re Cooper
Tire, 568 F.3d at 1190).

23

See id. at 11–12.

24

Id. at 9 n.8.

25

Docket no. 51 at 13.

26

Id. at 13-14.
6

The parties do not appear to dispute that the documents at issue are confidential
commercial information. Instead, the question before the court is whether ATI has demonstrated
the requisite harm that may result from disclosing the documents to US Mag’s principals.
Having considered the parties’ briefs and accompanying submissions, the court concludes
that ATI’s use of the AEO designation is reasonable. The court finds that ATI complied with the
August Order and has met its burden under the above standard to show that disclosure of its
AEO-designated production to US Mag’s principals might be harmful. Accordingly, the Motion 27
is hereby DENIED.
IT IS SO ORDERED.
DATED this 29th day of January, 2019.
BY THE COURT:

PAUL M. WARNER
Chief United States Magistrate Judge

27

See docket no. 114.
7