United States District Court, N.D. Iowa, Cedar Rapids Division
CMI ROADBUILDING, INC., and CMI ROADBUILDING, LTD., Plaintiffs,
IOWA PARTS, INC., Defendant.
ORDER GRANTING PLAINTIFFS' MOTION
Williams Chief United States Magistrate Judge
case is before the Court on plaintiffs' resisted Motion
to Lower Designation. (Doc. 88). The motion requested oral
argument. Defendant timely resisted. (Doc. 95). Plaintiffs
filed a timely reply brief (Doc. 102) with both unsealed and
sealed exhibits. (Doc. 105). The Court heard oral argument on
May 24, 2017. Plaintiffs were represented by attorneys
Michael Weston and Randy Baker. Defendant was represented by
attorney Timothy Zarley. All attachments were considered and
the motion is now ripe for decision.
lawsuit concerns allegations of misappropriation of trade
secrets, conversion, and unjust enrichment. A Second Amended
Complaint was filed on April 11, 2017. (Doc. 81). On August
17, 2016, a protective order was entered by the Court. (Doc.
38). Discovery closes on August 9, 2017. (Doc. 62). A jury
trial is scheduled before the Honorable Linda R. Reade on
Monday, January 15, 2018. (Doc. 70).
October 24, 2016, the Court ordered that defendant produce
the roughly 1, 000 pages of “plans, specifications, and
drawings relating to Cedarapids, Inc., Standard Havens, and
Terex . . . electronically in native format, where
available.” (Doc. 50). The Court also permitted
plaintiffs to take a Rule 30(b)(6) deposition of a
“person who is knowledgeable regarding the manner in
which Iowa Parts' designs are stored, in what format, and
how they may be accessed.” (Id.).
to the above production, the dispute here arises. Defendant
electronically produced the documents, approximately 1, 000
pages labeled as 550 CAD, with an Attorney's Eyes Only
(AEO) designation. Plaintiffs seek to compel defendant to
re-designate the 550 CAD documents from an AEO designation to
a “Confidential” designation. Pursuant to their
efforts to negotiate with defendant, plaintiffs offered that
the documents receive a limited confidential designation,
namely that the 550 CAD documents be disclosed only to (1)
Mr. David Emerson, an employee of plaintiffs, and (2) Mr. Joe
Musil, a consultant. Defendant did not agree. (Doc. 88-2).
defendant contends that the AEO designation is proper.
Defendant alleges that the 550 CAD documents contain
confidential propriety information, namely new and improved
designs. Defendant also contends that the 550 CAD documents
are not relevant to the case as plaintiffs have failed to
identify with reasonable particularity their trade secrets at
issue. Lastly, defendant contends that even if the Court
deems the 550 CAD documents relevant, rather than ordering a
lower designation the Court should compel plaintiffs to take
the 30(b)(6) deposition as permitted in the prior order (Doc.
50). Defendant states that a portion of the 550 CAD documents
have a reference number to a Cedarapids, Inc. part drawing,
and that the portion of the 550 CAD documents without such
reference number are “original and novel
design[s]” created by defendant. (Doc. 95-1). During
oral argument, defendant could not identify how many of the
550 CAD documents contained a reference to a Cedarapids, Inc.
Court now turns to the protective order in place. The order
specifies the process by which an opposing party may dispute
a designation and ultimately which party bears the burden of
proof with regard to the confidentiality designation. First,
paragraph 16 instructs the receiving party to notify, in
writing, the designating party that its AEO designation is
not in good faith and request relief. (Doc. 38, at 5 ¶
16). After a five-day waiting period, the objecting party may
apply to the Court for relief regarding the desired reduction
in designation. Plaintiffs complied with paragraph 16. (Doc.
88-3). Second, paragraph 17 specifies that the party
“assert[ing] the claim of confidentiality” bears
the burden of proof.
designation is a “drastic remedy” appropriate in
only limited situations because it limits the “ability
of the receiving party to view the relevant evidence, fully
discuss it with counsel, and make intelligent litigation
decisions . . . and limits the ability of a party to provide
needed assistance to counsel.” McDonald Apiary, LLC
v. Starrh Bees, Inc., 8:14CV351, 2016 WL 299014, *2 (D.
Neb. Jan. 25, 2016) (quotations omitted). Under Rule 26 of
the Federal Rules of Civil Procedure, a court may for good
cause issue an order to protect a party by requiring that
trade secret information be not revealed or revealed only in
a specified way. Fed.R.Civ.P. 26(1)(G). “There is no
absolute privilege [against disclosure] for trade secrets and
similar confidential information.” Taiyo Intern.,
Inc. v. Phyto Tech Corp., 275 F.R.D. 497, 500 (D. Minn.
2011) (quoting Fed. Open Mkt. Comm. Of Fed. Reserve Sys.
v. Merill, 443 U.S. 340, 362 (1979), and 8 Charles Alan
Wright et al., Federal Practice and Procedure §
2043). The designating party bears the burden of
“demonstrating ‘good cause' and requires a
particular and specific demonstration of fact as
distinguished from conclusory or stereotyped
statements.” EQ Oklahoma, Inc. v. A Clean Env't
Co., No. 11-CV-510-GKF-PJC, 2012 WL 5429869, at *1 (N.D.
Okla. Nov. 7, 2012) (citing Gen. Dynamics Corp.
v. Selb Mfg. Co., 481 F.2d 1204, 1212 (8th Cir. 1973)).
Plaintiffs cite the following passage from the Northern
District of Oklahoma case, which the Court finds persuasive.
An “Attorneys' Eyes Only” provision is
sometimes appropriate where there is a danger of proprietary
and highly confidential information being disclosed to and
used by a competitor. See Covelo Clothing, Inc. v.
Atlandia Imports, Inc., 2007 WL 4287731, *1 (D. Colo.
Dec. 5, 2007) (unpublished) (“confidential information
that may be used against the company by a direct competitor
is generally afforded more protection”). However, [the
defendant] has provided this Court with no insight whatsoever
into what proprietary or confidential information it believes
could be used by [the plaintiff] to [the defendant]'s
detriment. To establish good cause under Rule 26(c)(1)(H)
[sic], [the defendant] must first demonstrate that the
information sought constitutes a trade secret, or other
confidential research, development, or commercial
information, and then demonstrate that its disclosure might
be harmful. Centurion Indus., Inc. v. Warren Steurer
& Assocs., 665 F.2d 323, 325 (10th Cir. 1981). [The
defendant] has done neither. In fact, all [the defendant] has
done is alleged that “sensitive trade material”
should not be disclosed because of “potential
injury.” [Dkt. # 50, p. 1-2]. Other than a generic and
broad reference to financial information, [the defendant] has
not identified what “sensitive trade material, ”
if any, exists, or what the “potential injury”
could be. [The defendant]'s mere conclusory and
stereotyped statements do not satisfy [the defendant]'s
burden under Rule 26. Samson Resources [Co., LLC v. J.
Aron & Co.], [No. 08-CV-752-TCK-SAJ, ] 2009 WL
1606564 [(N.D. Okla. Jun. 8, 2009)], (requiring a particular
and specific demonstration of fact).
EQ Oklahoma, Inc., 2012 WL 5429869, at *2.
consideration of the parties' oral arguments and
briefings, the Court finds that defendant is not justified in
designating approximately 1, 000 pages of drawings as AEO.
These drawings are relevant to plaintiffs' claims as
plaintiffs contend that these drawings are essentially
replicas of their drawings with some possible modifications.
Defendant has not made an adequate showing of the need for
AEO designation for all 1, 000 drawings other than the
generalized and conclusory assertions that they contain
defendant's own trade secrets. This case is about, in
part, whether these drawings contain plaintiffs' trade
secrets. Plaintiff have made an adequate showing of the need
to have people with knowledge of such drawings view them to
determine if they contain plaintiffs' trade secrets, a
task that is beyond the knowledge and skills of attorneys.
Although, in theory, plaintiffs' retained expert could do
this, there is little time left to complete ...