United States District Court, D. Kansas
ORDER REGARDING PROTECTIVE ORDER DISPUTE
Teresa
J. James U.S. Magistrate Judge
This
matter is before the Court on Defendant Keating's Motion
for Protective Order (ECF No. 44), Plaintiff's Memorandum
in Support of Entry of Protective Order (ECF No. 46), and
Response (ECF No. 48) filed by Defendants Evergreen
Environmental Services, LLC (“Evergreen”) and
Industrial Services Acquisition, LLC (collectively the
“Evergreen Defendants”). All parties agree a
protective order should be entered, but Plaintiff and
Defendant Keating have submitted different versions.
The
protective order submitted by Plaintiff includes two tiers of
protection, one for “Confidential Information”
and another for “Highly Confidential Information,
” with information designated as “Highly
Confidential” subject to additional restrictions.
Specifically, it restricts viewing by the receiving party to
one in-house counsel who is actively involved in the case
with no business role or responsibilities. In comparison,
Defendant Keating's version only allows for the
designation of “Confidential Information, ” but
includes a footnote permitting the parties to stipulate or
move for the establishment of an additional category of
protection “if the confidential documents contain
highly sensitive trade secrets or other highly sensitive
competitive or confidential information and disclosure to
another party would result in demonstrable harm to the
disclosing party.”[1] The Evergreen Defendants did not submit
a proposed protective order, but request that if the Court
enters Plaintiff's proposed protective order, it be
amended to allow one or two employees with technical
expertise to view “Highly Confidential Information,
” and to allow Defendant Keating to view documents he
has been accused of misappropriating.
The
Court finds that Plaintiff has shown good cause for its
proposed two-tier protective order that places additional
restrictions on who may view designated “Highly
Confidential Information.” Plaintiff is alleging one of
its former employees, Defendant Keating, misappropriated its
confidential and trade secret information and diverted
business from one of its largest customers when Keating went
to work for Plaintiff's competitor, Evergreen. Because
Plaintiff and Defendant Evergreen are business competitors,
discovery in this case will likely include confidential
sensitive trade secrets and other customer information that
could affect the competitive positions of Plaintiff and
Evergreen.[2] In determining whether a party has shown
good cause for entry of a two-tier protective order, the
court should consider whether the more restrictive tier
protects one party against business harm that would result
from disclosure of sensitive documents to a
competitor.[3] A two-tier protective order is usually
reserved for “more sensitive information, such as trade
secret information, future product plans, competitive
pricing, customer lists, or competitive business financial
information.”[4] Given the competitor relationship between
Plaintiff and Defendant Evergreen and the allegations of
misappropriation, Plaintiff's proposed protective order
providing additional disclosure restrictions and limitations
on information designated as “Highly Confidential
Information” is therefore warranted in this case.
However, it is important that any such protective order
expressly identify what information a party can designate as
“Highly Confidential Information.”
The
version of the protective order proposed by Plaintiff fails
to adequately identify what information a party may designate
as “Highly Confidential Information.” Section 2
of Plaintiff's proposed protective order generally
requires the parties to limit their designation of both
“Confidential Information” and “Highly
Confidential Information” to the following same four
categories of information:
A. Information that the producing party contends in good
faith contains trade secrets or commercial information not
publicly known, which trade secrets or commercial information
is of technical or commercial advantage to its possessor, in
accordance with FED. R. CIV. P. 26(c)(7), or other
information required by law or agreement to be kept
confidential.
B. Personal financial information or personal identifying
information.
C. Information designated in good faith as confidential
research and development, financial, technical, marketing,
and any other sensitive or trade secret information.
D. Information relating to industrial cleaning services,
hydroblasting, and related processes, sales information,
technology, proposals, customer contact information, and
pricing claimed in good faith to represent or contain trade
secrets or confidential and proprietary
information.[5]
But
then separately defines “Highly Confidential
Information” as:
Information that the producing party deems especially
sensitive, which may include, but is not limited to,
confidential research and development, financial, technical,
marketing, and any other sensitive or trade secret
information, that may pose risk of competitive or other
economic harm if revealed or disclosed to a competitor or
third parties.[6]
Plaintiff's
proposed definition is too broad and lacks specificity with
regard to the categories of information a party may designate
as “Highly Confidential Information.” The
inclusion of the phrase “which may include, but is not
limited to” is also problematic. The Court refers the
parties to the Layne Christensen case, where the
court adopted a specific list of items that qualified for an
attorneys-eyes-only designation.[7] The Court therefore finds
that Plaintiff's proposed two-tier protective order shall
be adopted, but subject to the following:
The
Court orders the parties to confer in good faith and attempt
to agree on a more precise definition of “Highly
Confidential Information” to be included in
Plaintiff's proposed protective order. The parties shall
also confer in good faith and attempt to agree on which, if
any, of the four specific categories of information listed in
Section 2A-D of Plaintiff's proposed protective order
should be subject to the more restrictive “Highly
Confidential Information” designation. Finally, the
parties shall also confer in good faith and attempt to reach
an agreement regarding the issues raised by the Evergreen
Defendants of whether Plaintiff's proposed protective
order should be revised to allow Defendant Keating to view
“Highly Confidential Information” to the extent
it is information he is accused of having taken, and whether
Plaintiff's protective order should be revised as the
Evergreen Defendants propose to allow viewing of
“Highly Confidential Information” by two
additional employees with technical knowledge to analyze
and/or describe the designated material.
The
parties shall have until April 6, 2018 to complete all
further conferring efforts ordered above. If they are able to
reach an agreement on the additional or revised terms for the
two-tier protective order upon which they are ordered to
confer, they shall submit the proposed protective order to
KSDJamesChambers@ksd.uscourts.gov on or before
April 6, 2018. If, after
conferring, the parties still disagree over those potential
additional or revised terms, counsel shall email to chambers
a short summary describing their positions (with their
proposed protective order language) on the remaining disputes
by 12:00 PM noon on April 6, 2018
and the undersigned Magistrate Judge will conduct a
conference on April ...