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hibu Inc. v. Peck

United States District Court, D. Kansas

March 13, 2017

hibu INC., Plaintiff,
v.
CHAD PECK, Defendant.

          MEMORANDUM AND ORDER

          Teresa J. James U.S. Magistrate Judge

         During a February 6, 2017 in-person discovery conference, one of the issues the Court discussed with counsel was the “Attorney Eyes Only” (“AEO”) designation Dex One Service, Inc. placed on many of the documents it produced to Plaintiff pursuant to Plaintiff's Rule 45 subpoena (ECF No. 74). This was not the first discussion about the issue, but as it became clear that the parties were at an impasse, the Court ruled as follows:

Defendant continues to designate approximately 3, 700 documents as AEO.[1]Because discovery is rapidly drawing to a close and counsel have exhausted their ability to narrow this number, the Court direct[s] each party to choose 8 documents and provide copies of those documents to Judge James, and further direct[s] Defendant to provide Judge James with a list of the document numbers of the documents it continues to designate as AEO. From that list, the Court will randomly choose 25 to 30 documents. After reviewing the documents just described, the Court will rule on whether the documents should retain their AEO designation.[2]

         The parties have made their submissions and the Court has reviewed the documents, some of which are quite lengthy. For the reasons that follow, the Court will not require the AEO designation to be removed from all but one subset of documents.

         The Court has considered a number of factors in reaching its decision, beginning with the agreed protective order entered in this case. In a paragraph entitled “Definition of Confidential Information and Confidential-Attorney's Eyes Only Information, ” the order states as follows:

As used in this Order, "Confidential Information” is defined as information that the producing party designates in good faith has been previously maintained in a confidential manner and should be protected from disclosure and use outside the litigation because its disclosure and use is restricted by statute or could potentially cause harm to the interests of disclosing party or nonparties. “Confidential - Attorney's Eyes Only” information is a subset of “Confidential Information” and shall be treated as “Confidential Information” subject to any specific provisions of this order addressing “Confidential - Attorney's Eyes Only” information.[3]

         While the documents in question have not been produced by a party, the protective order contains an agreement that its provisions extend to confidential information produced in the case by third parties upon timely request from the third party.[4] The parties' conduct indicates Dex made such a request. And to be clear, Dex has produced to Plaintiff all 3, 700 documents in question, limiting the issue at hand to whether Dex has properly designated the documents AEO. As Plaintiff has made no challenge to a confidential designation for the Dex documents, any such document stripped of its AEO designation will continue to be treated as confidential.

         Plaintiff has challenged the AEO designation, and Dex has the burden to prove the designation is warranted. In reviewing a challenge, the Court must

balance the risk of inadvertent disclosure to competitors against the risk of prejudice to the other party's ability to prosecute or defend the present action. When balancing these risks, courts should consider whether the prohibited individual ‘would be virtually unable to compartmentalize the information and not use the information to seek or gain an unfair competitive advantage.'[5]

         The Court notes that Plaintiff brought this action against Chad Peck only. While the Court intends no criticism of Plaintiff's decision and none should be inferred, the Court finds relevant the fact that hibu and Dex are strong business competitors who fiercely resist providing access to each other's confidential information. Dex argues the documents at issue deserve AEO protection because they fall into one of the following categories:

. Pricing information (including prices of particular ads, “proposal approval requests, ” how much a client paid, discounts, “marketing service agreements, ” etc.);
. The sales representatives' sales numbers (sold lists with payment information, lead lists, accounts solicited lists, etc.);
. The sale representatives' compensation structure (offer letters including compensation, strategy re: percentage of commissions, etc.);
. Distribution numbers (including the amount of books distributed to each market, and strategy discussions ...

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