United States District Court, D. Kansas
MEGAN AND JACOB McKELLIPS, Individually and as Co-Personal Representatives of the Estate of Wesley Jacob McKellips, Plaintiffs,
KUMHO TIRE CO., INC., et al., Defendants.
MEMORANDUM AND ORDER
TERESA J. JAMES, Magistrate Judge.
This product liability case is before the Court on Plaintiffs' Motion to Compel Discovery (ECF No. 65). Plaintiffs request an order, pursuant to Fed.R.Civ.P. 37(a)(1), overruling Defendant Kumho's objections and compelling Kumho to answer Plaintiffs' First Interrogatories and produce documents responsive to Plaintiffs' First Request for Production. As explained below, the motion is granted in part and denied in part.
I. RELEVANT FACTS
Plaintiffs allege that on September 12, 2011, in Miami County, Kansas, Plaintiff Megan McKellips, who was 32 weeks pregnant, was riding in a 2001 Ford F-250 pickup truck driven by Jennifer Heisman. Plaintiffs allege that Heisman lost control of the truck when its right front tire suffered a sudden, unexpected, and catastrophic tread and belt separation. The truck left the roadway and rolled over, ejecting Ms. McKellips. She sustained life-threatening injuries and underwent an emergency Caesarean section delivery of her son, who died three hours later. The tire that allegedly separated and caused the accident was a Kumho Road Venture All Terrain ("AT") tire KL78, size LT235/85R16, DOT K2ORYD4A3508, manufactured by Kumho Tire (Vietnam) Co., Ltd. at its Binh Duong plant in Vietnam, during the 35th week of 2008 (hereinafter referred to as the "Subject Tire").
Plaintiffs commenced this action on August 7, 2013, claiming that Defendants defectively designed and manufactured the Subject Tire. In their First Amended Complaint, Plaintiffs allege that the Subject Tire was defective in that it "lack[ed] proper adhesion between the steel belts, and/or between the steel belts and the surrounding materials." Plaintiffs further allege that Defendants' negligence in connection with the Subject Tire consisted of:
(a) Inadequate and/or improper belting; (b) Failure to design and manufacture the tire to account for the effects of ozone, oxygen and/or moisture; (c) Using inadequate and improper specifications and formulas; (d) Inadequate consideration of the ambient temperatures to which the tire would be subjected in ordinary road operation in the Midwestern United States; (e) Designing the tire with an inadequate margin of safety to prevent tread and belt separations in ordinary road operations or under expected and anticipated road conditions; (f) Inadequate sizing or compounding of the belt wedges and/or insulation strips; (g) Excessive use of fillers or other ingredients in inner liner compound(s) and/or the use of an inappropriate inner liner compound(s); and (h) Utilization of improper compounds for, or ingredients in, the ply rubber stocks, belt rubber stocks and tread base rubber stocks to achieve a cost savings at the expense of adequate adhesion of tire components.
Before the parties began serving their discovery requests, they proposed an agreed upon protective order limiting the disclosure and use of confidential information, but they disagreed on the inclusion of a sharing provision. After a hearing, the Court denied Plaintiffs' request for a sharing provision, finding it a preemptive sharing provision that would essentially allow discovery of Defendants' designated confidential information by as-yet unnamed plaintiffs or potential plaintiffs in other litigation without any court supervision, and without any opportunity for Defendants to object to the disclosure. The provision as proposed also would have given Plaintiffs' counsel the sole discretion to determine who met the criteria for disclosure. On July 22, 2014, the parties submitted and the Court entered a Protective Order (ECF No. 43) without any sharing provision.
On June 26, 2014, Plaintiffs served their First Request for Production and First Interrogatories upon Defendant Kumho Tire Co., Inc. ("Kumho"), consisting of 120 requests for production of documents and 16 interrogatories. On September 5, 2014, Kumho served its Responses and Objections to Plaintiff's First Request for Production (111 pages), and its Answers and Objections to Plaintiffs' First Interrogatories (13 pages). Kumho also produced nearly 500 documents responsive to these discovery requests (149 of which are English translations), but objected to nearly every request. Kumho unilaterally limited the scope of its discovery responses and limited its production to responsive information that it identified as pertaining to "the Subject Tire and the subject model and size tire."
On September 23, 2014, Plaintiffs' counsel sent a five-page "Golden Rule" email to Kumho's counsel pursuant to D. Kan. Rule 37.2, identifying and attempting to resolve what Plaintiffs believed to be deficiencies in Kumho's responses to Plaintiffs' discovery requests. Kumho responded to that email on October 6, 2014. Plaintiffs thereafter made further attempts to confer as required by Fed.R.Civ.P. 37(a) and D. Kan. Rule 37.2, and ultimately filed their Motion to Compel Discovery on November 14, 2014. Kumho filed its Response (ECF No. 68) on December 12, 2014, and Plaintiffs filed their Reply (ECF No. 71) on January 9, 2015.
The Court held a non-evidentiary motion hearing on February 17, 2015 to address issues related to Plaintiffs' Motion to Compel Discovery. Among the issues discussed at length during the hearing were Kumho's trade secret objections to Plaintiffs' discovery requests. Because Kumho asserted one or more trade secret objections of varying degrees to nearly every one of Plaintiffs' Requests for Production, the Court inquired during the hearing whether and to what extent Kumho claimed Plaintiffs' discovery requests sought documents or information warranting such a high level of protection that such documents or information could not safely be disclosed even under the terms of a protective order. Kumho's counsel indicated there are certain "crown jewels" trade secrets that fall into this category.
At the conclusion of the hearing, the Court took Plaintiffs' Motion to Compel Discovery under advisement and ordered Kumho to: (a) serve amended responses to Plaintiffs' discovery requests, identifying those responses/answers for which responsive documents or information may have existed at one time, but which were no longer available at the time of its response/answer due to Kumho's document retention or destruction policy; (b) serve amended responses to Plaintiffs' discovery requests specifically identifying those requests which Kumho contends seek to discover its "crown jewels" trade secrets that could not safely be produced, even under the terms of a protective order; and (c) provide information on the number of subject model tires (Kumho Road Venture AT, APT, and MT) that would have the same belt skim stock formulation and the number with the same inner liner halobutyl content as the Subject Tire.
On February 24, 2015, Kumho served its First Supplemental Responses and Answers, in which it claims that 50 of Plaintiffs' Requests for Production and three Interrogatories seek documents and information that could not safely be produced even under the terms of a protective order. Kumho also confirmed in its First Supplemental Responses and Answers that its document retention period for warranty adjustment data is five years, it had produced the warranty adjustment data for 2010-14, and it would supplement the warranty adjustment data for 2009 in a separate supplemental production. On March 9, 2015, Kumho also submitted to the Court for in camera review its responses to the Court's inquiry regarding the number of Road Venture AT, APT, and MT tires with the same belt skim stock formulation and inner liner halobutyl content as the Subject Tire. Having reviewed Kumho's amended discovery responses, in camera submission, all of the briefing on the motion, and the transcript of the motion hearing, the Court is now ready to rule.
II. DISCOVERY OBJECTIONS BASED UPON CONFIDENTIALITY AND TRADE SECRETS
In its original discovery responses, Kumho asserted three different categories of confidentiality or trade secret objections: (a) objections to discovery requests allegedly seeking production of "highly confidential and proprietary information"; (b) objections to discovery requests allegedly seeking either Kumho's "most secret manufacturing information" or "most secret production information"; and (c) objections to discovery requests seeking Kumho's allegedly "most secret research, development, information, formula, method, technique, or process" that constitute its trade secrets. For the last two categories, Kumho contends this information has a significant economic value and cannot be safely produced even with a protective order in place. Kumho also contends that Plaintiffs have made no showing the requested information is relevant to prove that a defect existed in the Subject Tire
In the First Supplemental Responses and Answers that it served pursuant to the Court's direction, Kumho supplemented its trade secret objections to 50 of Plaintiffs' Requests for Production and three Interrogatories. Kumho stated that information and documents sought by these discovery requests are entitled to "heightened protection because they pertain to skim stock compounds and formulas that constitute [Kumho's] highest level of trade secrets" (the "Heightened Protection Objections"). Although the specific language of these Heightened Protection Objections varies slightly, the following is representative:
Subject to this Court's February 17, 2015 direction and [Kumho's] original response and applicable objections, [Kumho] states that the information and documents directly sought by this request are entitled to heightened protection because they pertain to skim stock compounds and formulas that constitute [Kumho's] highest level of trade secrets, encompassing its most secret research, development, techniques and processes. These most highly confidential trade secrets should not be discoverable, even where a Protective Order is in place, absent plaintiffs demonstrating through competent and admissible evidence that it is relevant to, and necessary for, proving the existence of a defect in the subject tire and that their "need" outweighs the burden on [Kumho] in producing it.
Kumho asserted this supplemental Heightened Protection Objection to 34 Requests and three Interrogatories to which it previously objected as seeking its "most secret research and development" trade secrets and to 15 Requests to which it had previously objected only as seeking its most secret production and manufacturing information. Kumho asserted this Heightened Protection Objection to one Request, RFP 84, to which it previously only objected as seeking "highly confidential and proprietary information."
A. Objections that Discovery Requests Seek Highly Confidential and Proprietary Information
Kumho objects to RFP 2-20, 25, 28, 36, 70-71, 76, 78-79, 82, and Interrogatories 5-6, and 14 on the basis that they seek "highly confidential and proprietary information, " without any showing by Plaintiffs of the relevance of this information. Kumho argues the damage caused by producing this information would outweigh any evidentiary value. It claims that this secret information is very valuable not just to it, but also to its competitors, and is not relevant.
"A concern for protecting confidentiality does not equate to privilege." While a confidentiality objection may be appropriate when a party seeks a protective order limiting the parties' use or disclosure of confidential information, it generally is not a valid objection for withholding discovery altogether. Courts in this District have repeatedly held that "confidential" does not equate to "nondiscoverable" or privileged.
The Protective Order (ECF No. 43) entered in this case limits the disclosure, dissemination, and use of any confidential research, development, or proprietary business information produced during discovery. The Court further notes that the Protective Order specifically excludes the sharing provision proposed by Plaintiffs, which would have allowed Plaintiffs to share designated confidential information with attorneys representing plaintiffs in other Kumho Road Venture tire tread or defect cases against Defendants.
The Court also notes that Kumho did not include these discovery requests among those identified in its supplemental responses as requiring heightened protection. In light of the protections of the Protective Order, Kumho's objections based on the highly confidential and proprietary nature of the information sought by RFP 2-20, 25, 28, 36, 70-71, 76, 78-79, 82, and Interrogatories 5-6, and 14 are therefore overruled. The Protective Order (ECF No. 43) entered in this case has adequate provisions for the protection of any confidential research, development or proprietary business information produced during discovery.
B. Objections that Discovery Requests Seek Most Secret Production and Manufacturing Information
Kumho objects to RFP 30, 32, 39-47, 51, 55-57, 59-62, and 90 to the extent they seek Kumho's "most secret manufacturing information" or "most secret production information" that:
is not publicly or generally known and has a significant economic value, constituting trade secrets that are not to be revealed without plaintiffs demonstrating that they are relevant to, and necessary for, proving the existence of a defect in the subject tire, even where a Protective Order is in place.
Kumho did not supplement its responses to RFP 30, 32, 51 and 55-56 to seek heightened trade secret protection. The Court thus considers these objections based solely on Kumho's original objections that the Requests seek Kumho's most secret manufacturing or production information. The Court finds that Kumho has not demonstrated that the information and documents sought by RFP 30 and 32 (number of tires produced), 51 (Subject Tire specifications and blueprints) and 55-56 (Ford evaluations and correspondence) would require the disclosure of secret manufacturing or production information that constitutes a trade secret and that disclosing such information, especially given the protections of the non-sharing Protective Order already entered in the case, would be harmful to Kumho. The specifications and blueprints for the Subject Tire are clearly relevant and materially significant to the claims in this case. Kumho states in its response to RFP 51 that it produced the design drawings and manufacturing specifications for the Subject Tire, and the Cut Measure Drawing and Cut Measure Sheet. Further, with regard to RFP 55-56, as it is likely that any evaluations and correspondence would have been communicated to Ford, this undercuts Kumho's claim that the information is its "most secret" information. Kumho's objections that RFP 30, 32, 51, and 55-56 seek its "most secret manufacturing or production information" are therefore overruled.
Kumho supplemented its original responses and objections to RFP 39-47, 57, 59-62, and 90, asserting its Heightened Protection Objection for Kumho's highest level of trade secrets. For each of these Requests, Kumho supplemented its Response and Objection as follows:
Subject to this Court's February 17, 2015 direction and [Kumho's] original response and applicable objections, [Kumho] states that the information and documents sought by this request are entitled to heightened protection because, based upon the broad language utilized in the request, they would cover skim stock compounds and formulas that constitute [Kumho's] highest level of trade secrets, encompassing its most secret research, development, techniques and processes. These most highly confidential trade secrets should not be discoverable, even where a Protective Order is in place, absent plaintiffs demonstrating through competent and admissible evidence that it is relevant to, and necessary for, proving the existence of a defect in the subject tire and that their "need" outweighs the burden on [Kumho] in producing it.
Under Fed.R.Civ.P. 26(b)(1), privileged matter is exempt from discovery. Although there is no federal discovery privilege for trade secrets,  state law governs privileges in civil diversity cases. As this is a diversity case and the Court sits in Kansas, the Court looks to Kansas law to determine whether any privilege applies.
Kansas recognizes a trade secret privilege, which is embodied in K.S.A. 60-432:
The owner of a trade secret has a privilege, which may be claimed by the owner or his or her agent or employee, to refuse to disclose the secret and to prevent other persons from disclosing it if the judge finds that the allowance of the privilege will not tend to conceal fraud or otherwise work injustice.
K.S.A. 60-3220(4) defines a "trade secret" as:
[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Based on its review of Kumho's objections to Plaintiffs' discovery requests, the Court finds that Kumho has not expressly made a claim that the information sought is subject to a trade secret privilege pursuant to Kansas state law. The Court thus finds that Kumho is not asserting a trade secret privilege as recognized under Kansas law, but rather is seeking an order under Fed.R.Civ.P. 26(c)(1)(G).
Under Rule 26(c)(1)(G), the court may, for good cause, issue an order "requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way." When a party seeks such a protective order under Rule 26(c)(1)(G), it "must first establish that the information sought is a trade secret and then demonstrate that its disclosure might be harmful." If the party makes such a showing, "the burden shifts to the party seeking discovery to establish that the disclosure of trade secrets is relevant and necessary to the action." The court must then "balance the need for the trade secrets against the claim of injury resulting from disclosure." It is within the sound discretion of the court to decide whether trade secrets are relevant and whether the need for them outweighs the harm of disclosure. If the trade secrets are found to be relevant and necessary, the court also has the discretion to fashion appropriate safeguards for their disclosure by means of a protective order.
Kumho asserts Heightened Protection Objections to RFP 39-47, 57, 59-62, and 90 to the extent that they call for the production of information or documents pertaining to Kumho's "skim stock compounds and formulas" that Kumho alleges constitute its highest level of trade secrets. In this case, Kumho has shown that its skim stock compounds and formulas meet the definition of "trade secrets" under K.S.A. 60-3220(4). It has demonstrated that its skim stock compounds and formulas provide independent economic value from not being generally known to, and not being readily ascertainable by proper means by, others who can obtain economic value from their disclosure or use. Kumho also has shown that it has developed numerous intricate measures and invests great time and expense to maintain the secrecy of these closely guarded skim stock compounds and formulas. In the context of tire defect cases, several courts have found tire skim stock rubber formulas to be trade secrets.
Upon Kumho's showing that its skim stock compounds and skim stock formulas meet the definition of trade secret, the burden then shifts to Plaintiffs to establish that the disclosure of these trade secrets is relevant and necessary to the action. Plaintiffs state in their Reply (ECF No. 71) that they have not requested discovery of Kumho's skim stock formula, but that their discovery requests are directed only to tires with the same skim stock formula as the Subject Tire. Kumho's supplemented trade secret objections to RFP 39-47, 57, 59-62, and 90 are therefore sustained only to the extent that these requests encompass Kumho's skim stock compounds and/or formulas. Kumho must provide responsive information and produce responsive documents, but may redact from any responsive documents prior to production information that would disclose its skim stock compounds or skim stock formulas.
Kumho's Heightened Protection Objection only identifies Kumho's skim stock compounds and formulas and does not specifically identify any other formula, compound, technique, or process as constituting its trade secrets, which would be entitled to protection beyond the Protective Order. Even after Kumho supplemented its objections and lodged its Heightened Protection Objections, it did not identify any specific trade secrets worthy of non-disclosure, other than its skim stock formula and compounds. To the extent Kumho objects generally to producing trade secrets other than its skim stock formulas and compounds, the Court finds that Kumho has not met its burden to establish that any other particular formula, compound, technique, or process is a trade secret. This includes Kumho's vague references to its "manufacturing processes." Kumho has failed to identify any particular aspect(s) of its manufacturing processes that are unique to it, closely guarded, and, if disclosed, would be valuable to competitors and thus would constitute trade secrets. Kumho fails to convince the Court that its entire tire manufacturing process meets the definition of a trade secret under K.S.A. 60-3220(4). Further, as Plaintiffs are not competitors of Kumho, the Court finds that this other "manufacturing process" information can be adequately protected under the provisions of the non-sharing Protective Order.
C. Objections that Discovery Requests Seek Trade Secrets
Kumho objects to RFP 21-24, 26, 29, 37, 48, 54, 58, 63, 66-69, 72, 74, 83, 85-91, 93, 95-107, 109-120 to the extent they seek Kumho's:
most secret research, development, information, formula, method, technique or process that is not publicly or generally known and has a significant economic value, constituting trade secrets that are not to be revealed without plaintiffs demonstrating that they are relevant to, and necessary for, proving the existence of a defect in the subject tire, even where a Protective Order is in place.
It asserted similar objections to Interrogatories 10-12, objecting that they seek disclosure of information that relates to Kumho's "most secret research and development and to its techniques and processes of tire development and manufacturing formulas and methods, " which are not publicly or generally known and constitute trade secrets.
Kumho did not supplement its original responses and objections to RFP 29, 54, 68, 72, and 86-89, and therefore has not sought heightened protection to these Requests. The Court thus rules on the original objections. Upon review of the Requests, the Court finds that Kumho has not demonstrated that the information and documents sought by RFP 29 (tire production numbers), 54 (manufacturing or design defects found) and 68 (tread separation studies and testing), 72 (speed rating), and 86-89 (driver response, effects, risk, and causes of tread separation) require the disclosure of trade secrets or that disclosing such information would be harmful to Kumho, given the protections of the non-sharing Protective Order already entered in the case. Kumho's trade secret objections to RFP 29, 54, 68, 72, and 86-89 are therefore overruled.
Kumho did supplement its original responses and objections to RFP 21-24, 26, 37, 48, 54, 58, 63, 66-67, 69, 74, 83, 85, 90-91, 93, 95-107, 109-120, and Interrogatories 10-12, claiming that these Requests are entitled to heightened protection for Kumho's highest level of trade secrets. Again, the Court finds that Kumho has not identified any particular formula, compound, technique, or process-other than its skim stock formulas and compounds-such that the Court can conclude they are trade secrets requiring protection beyond the Protective Order. Thus, the Court construes Kumho's supplemental responses as objections to the Requests only to the extent that they seek production of information or documents pertaining to Kumho's skim stock compounds and formulas, which Plaintiffs have indicated they are not seeking. Therefore, Kumho's trade secret objections to RFP 21-24, 26, 37, 48, 54, 58, 63, 66-67, 69, 74, 83, 85, 90-91, 93, 95-107, 109-120, and Interrogatories 10-12 are sustained to the extent that any of these Requests seek Kumho's skim stock compounds and formulas. The Court further sustains Kumho's Heightened Protection Objection to RFP 84 (meeting minutes discussing tread separation), to which it previously had only asserted a confidentiality objection, to the extent that it may encompass Kumho's skim stock compounds and formulas. Once again, Kumho must provide information and produce responsive documents, but may redact from them its skim stock compounds and/or skim stock formulas prior to production.
D. Plaintiffs' Request for a Trade Secrets Privilege Log
After the February 17, 2015 hearing, Plaintiffs contacted the Court regarding their request that Kumho produce a log of all the responsive documents it is withholding from production on the basis that the documents are protected from discovery as trade secrets. The Court took up the matter at a telephone status conference on March 10, 2015. After a brief discussion, during which the Court indicated it was not aware of any cases from this jurisdiction requiring a trade secrets privilege log, the Court instructed the parties to file statements, citing any authorities supporting their respective positions on the trade secret privilege log issue. Having reviewed those statements (ECF Nos. 85 and 86), the Court denies Plaintiffs' request that Kumho be required to provide a log of all the responsive documents it has withheld from production as containing trade secrets.
Plaintiffs do not cite a single authority from the Tenth Circuit in which a party responding to discovery requests was ordered to provide a trade secrets privilege log. Nor do Plaintiffs cite any statutory basis for their request. And, to the extent Plaintiffs cite cases from this Circuit requiring parties seeking to withhold documents based upon other types of privileges, those cases are inapposite. Moreover, the cases cited provide no guidance regarding the practical and unwieldy issues as to just what information would be required on a trade secrets privilege log.
Plaintiffs cite two cases from other jurisdictions, Chicago Tribune Co. v. Bridgestone/Firestone, Inc.  and Third Party Verification, Inc. v. SignatureLink, Inc.,  as examples of courts requiring privilege logs from parties seeking to withhold documents on trade secret grounds. Both cases are distinguishable.
In Chicago Tribune, Firestone voluntarily created a privilege log of its previously sealed documents in a settled Firestone court case after members of the media moved to intervene for the purpose of unsealing Firestone's documents. Firestone agreed to unseal some of the material, but objected to disclosure of certain documents and pages as containing its trade secrets. In support of its objection, Firestone appended a privilege log and affidavit from one of its engineers. Firestone's voluntary preparation of a privilege log in response to nonparty media requests asserting First Amendment rights to view sealed court documents is far different from Plaintiffs' request that this Court order Kumho to provide a privilege log of documents withheld from discovery as trade secrets.
In Third Party Verification, the party asserting a trade secret privilege was required to serve a log establishing the essential elements of the privileged relationship or matter. However, in that case, the ruling is based upon a Florida statute that creates a privilege to refuse to disclose a trade secret.
Like Florida, Kansas has a statute, K.S.A. 60-432, which allows the owner of a trade secret "to refuse to disclose the secret and to prevent other persons from disclosing it if the [court] finds that the allowance of the privilege will not tend to conceal fraud or otherwise work injustice." The Florida trade secret privilege statute referenced in the Third Party Verification case includes the following additional sentence, which is not present in K.S.A. 60-432: "When the court directs disclosure, it shall take the protective measures that the interests of the holder of the privilege, the interests of the parties, and the furtherance of justice require."
In federal court, a party asserting a privilege in response to discovery requests is subject to the requirements of Fed.R.Civ.P. 26(b)(5)(A), which requires a party withholding information otherwise ...