Trade Secret Documents Protected — With Strings
December 4, 2001
Van Etten v. Bridgestone/Firestone, Inc. and Ford Motor Company was a
product liability action arising out of a vehicle accident involving a fatality
and brought in federal court in Brunswick, Georgia. According to plaintiffs'
allegations, the alleged failure of a Firestone ATX tire mounted on the
decedent's vehicle caused the decedent to lose control of the vehicle. The
vehicle rolled several times, and the decedent was ejected and killed.
During discovery, the parties stipulated to a "blanket" or
"umbrella" protective order in accordance with Federal Rule of Civil
Procedure 26(c)(7) to facilitate the free exchange of commercially privileged
documents. In particular, the plaintiffs requested, and Firestone produced,
numerous documents that constituted Firestone's trade secrets for the design and
production of tires. According to the terms of the protective order, Firestone
was required to designate documents for which it sought protection prior to
production. The protective order then allowed plaintiffs time in which to
challenge Firestone's "protected" designation and, if necessary, made
provision for court intervention to resolve disputes through a review of the
documents in camera. Protected documents would only be filed under seal. In
reliance upon the terms of the protective order, Firestone produced numerous
trade secret documents during discovery. Plaintiffs did not challenge any of
Firestone's "protected" designations, but plaintiffs did file
protected trade secret documents under seal in connection with a discovery
motion and Firestone's motion for summary judgment.
After Firestone was denied summary judgment, the case settled. Firestone's
trade secret documents remained under seal in the court files. They were never
utilized in open court. Firestone never submitted any protected documents to the
court.
Almost one year after the case settled, Firestone announced the voluntary
recall of 6.5 million ATX and Wilderness AT tires. Immediately thereafter,
several different media groups representing newspapers and a television network
moved to intervene in the Van Etten lawsuit as non-parties for the sole purpose
of unsealing the court record and publishing Firestone's trade secret documents.
The district court granted the media intervenors' motion to unseal the record
without ever reviewing the documents. The district court held that Firestone had
failed to show a "compelling interest" to keep the documents under
seal and had failed to show that the closure was "narrowly tailored"
to that compelling interest.
In Chicago Tribune Co., et al. v. Bridgestone/Firestone, Inc., 263
F.3d 1304 (11th Cir. 2001), the Eleventh Circuit reversed and remanded the
district court's order, holding that the district court applied the wrong
standard-strict scrutiny-when it should have applied a simple "good
cause" standard under FRCP Rule 26(c) to determine both the media's
constitutional right of access and its common law right of access to the
disputed documents. In particular, the Eleventh Circuit held that, on remand,
the district court should follow a two-step process to determine whether good
cause exists to keep Firestone's documents under seal. First, the court must
determine whether Firestone's documents are, in fact, trade secret documents, a
determination never made.
The Eleventh Circuit then set forth the four commonly accepted criteria for
making that determination1 and instructed the district court to
conduct an in camera review of the documents and prepare detailed findings of
fact. Second, if the district court determined that the documents are trade
secrets, then the court must conduct a Rule 26 "good cause" balancing
test, weighing Firestone's interest in keeping the information confidential
against the media's interest in publishing the information to serve the public's
interest in health and safety.
In conducting the balancing test, the Eleventh Circuit instructed the
district court to weigh in Firestone's favor the "fact" that Firestone
relied upon the protective order in producing the trade secret documents to the
plaintiffs.
In addition, the Eleventh Circuit drew a bright line distinction between
documents filed with the court pursuant to discovery motions and documents filed
with the court pursuant to more substantive pretrial motions. Specifically, the
court noted that Firestone's protected documents filed by the plaintiffs in
support of plaintiffs' motion to compel were not subject to the media's common
law right of access. Therefore, no balancing test needed to be conducted. Only
those Firestone documents filed by the plaintiffs in response to Firestone's
motion for summary judgment-a pretrial motion requiring judicial resolution of
the merits-were still at issue on remand and required application of the good
cause balancing test.
Van Etten illustrates that parties who produce trade secret documents
pursuant to a blanket protective order must understand that those documents are
not guaranteed absolute protection from a subsequent challenge by parties or
non-parties. If the producing party cannot demonstrate that the documents
contain trade secrets, then any protective order can be bypassed. Similarly, if
the producing party cannot demonstrate that there is "good cause" for
the continued protection of the documents, which overrides certain
countervailing interests, then any protective order can be bypassed.
Second, a party seeking protection for trade secret documents must be careful
when filing those documents with the court in support of or in response to
pretrial motions. As clarified in Van Etten, even documents filed under seal
subject to a protective order can be unsealed if they are filed in conjunction
with a substantive motion requiring judicial resolution of the merits (i.e.,
motion for summary judgment). If filing the documents is a strategic necessity,
the party offering them must be prepared to demonstrate, if challenged, that the
good faith balancing test of Rule 26(c) weighs in their favor.
1The four criteria set forth by the Eleventh Circuit for determining
whether information is a trade secret are: (1) the party must have
consistently treated the information as a closely guarded secret, (2) the
information represents substantial value to the party, (3) the information
would be valuable to the party's competitors, and (4) the information
derives its value by virtue of the effort of its creation and its lack of
dissemination. 263 F.3d 1304, 1313-14.
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