Opinion
Miscellaneous Case No. 2:06-mc-0034.
August 7, 2006
OPINION AND ORDER
This matter arises in connection with antitrust litigation currently pending the United States District Court for the Northern District of Georgia, in which plaintiffs, insulation contractors, allege that defendants, manufacturers of residential fiberglass insulation and Masco Corporation (and affiliated companies) [collectively "Masco"], identified as the nation's largest purchaser of residential insulation products, conspired to fix prices paid for such products by the members of the plaintiff class. Columbus Drywall Insulation, Inc., et al. v. Masco Corp., et al., 1:04-CV-3066JEC (N.D.Ga.)["the Antitrust Litigation"]. This matter is now before the Court on the motion of Installed Building Products ["IBP"], which is not a party to the Antitrust Litigation, to quash a subpoena issued to it in connection with the Antitrust Litigation by Masco, characterized by IBP as its "direct and largest competitor." Motion to Quash, at 5.
IBP contends that the information sought by the subpoena is proprietary and highly confidential. IBP resists the requested discovery on three (3) bases. It argues, first, that the requested information falls outside the ambit of discoverable information; second, that to the extent the subpoena may seek discoverable information, that information is reasonably available from other sources, including parties to the litigation or industry experts; and, third, that the protective order entered in the Antitrust Litigation is inadequate to secure the legitimate interests of IBP. In response, Masco insists that, because it does not seek "the specific prices that IBP pays for" insulation, Masco's Memorandum in Opposition, at 4, its anticipated inquiry does not go to proprietary or confidential information. Moreover, Masco contends that the relevance of the requested information is "obvious," Id., at 6, because it will tend to demonstrate that the conduct about which plaintiffs in the Antitrust Litigation complain "is perfectly legal." Id. Finally, Masco argues that the protective order entered in the Antitrust Litigation, Exhibit D attached to Motion to Quash, which would prohibit disclosure of highly confidential information to all but attorneys, including in-house counsel who do not make business decisions or advise on specific prices, should eliminate IBP's confidentiality concerns.
Rule 45 of the Federal Rules of Civil Procedure governs the issuance and enforcement of subpoenas. Rule 45(c)(3) provides, in pertinent part, as follows:
(A) On timely motion, the court by which a subpoena was issued shall quash or modify the subpoena if it
* * *
(iii) requires disclosure of privileged or other protected matter and no exception or waiver applies, or
(iv) subjects a person to undue burden.
(B) If a subpoena
(i) requires disclosure of a trade secret or other confidential research, development, or commercial information,
* * *
the court may, to protect a person subject to or affected by the subpoena, quash or modify the subpoena or, . . . the court may order appearance or production only upon specified conditions.Once objection to the subpoena has been made, "the party serving the subpoena shall not be entitled to inspect and copy the materials . . . except pursuant to an order of the court by which the subpoena was issued." Fed.R.Civ.P. 45(c)(2)(B).
Masco has identified its anticipated areas of inquiry as follows:
— General background of contractor
— Knowledge of market for sale of residential fiberglass insulation ( e.g., number of suppliers, alternative distribution outlets)
— Communications with suppliers re price increases
— Communications with suppliers re competitive pricing
— Efforts of contractor to track pricing data ( e.g., suppliers, rivals)
— Efforts of contractor to negotiate prices
Exhibit 1 to Affidavit of William W. Jenkins [" Jenkins Affidavit"], attached as Exhibit C to Motion to Quash. William W. Jenkins, President of the Central Region of IBP, Jenkins Affidavit, ¶ 2, characterizes the requested information as "proprietary, trade secret commercial information of the utmost sensitivity." Id. ¶ 5. This Court agrees with that characterization. However, the Court also agrees with Masco that the information sought by the subpoena is relevant to at least one defense in the Antitrust Litigation, i.e., that, in an oligopoly such as the residential insulation market, negotiating with manufacturers to obtain the best prices possible is not unlawful.
Although IBF disputes the legal sufficiency of Masco's proposed nature-of-the-market defense, and therefore the relevance of the requested information to the issues in the Antitrust Litigation, the fact apparently remains that Masco intends to pursue this defense in the Antitrust Litigation and the trial judge in the Northern District of Georgia has not prohibited Masco from doing so.
IBF argues in its Reply that, even assuming the relevance of the information sought, Masco should be required to first seek the equivalent information from other sources, such as the other parties to the Antitrust Litigation or industry experts. However, information from a non-party participant in the market may, from a tactical standpoint, present advantages in the litigation not easily realized from parties or experts. Because, for the reasons stated infra, IBF's legitimate business interests may be adequately protected, this Court will not deprive Masco from pursuing this litigation strategy.
A protective order addressing confidential matters has been entered by the court in the Antitrust Litigation. Exhibit D, attached to Motion to Quash. Although IBF discounts the ability of the trial court to enforce the terms of that order, this Court concludes that, except for the provision that permits the disclosure of even highly confidential trade secret information to Masco's in-house counsel, the protective order is adequate to preserve IBF's interest in maintaining its proprietary trade secret information.
WHEREUPON the Motion to Quash, Doc. No. 1, is DENIED on the condition that the information sought by the subpoena shall be obtained and maintained in conformity with the protective order entered in the Antitrust Litigation, except that such information may not, unless otherwise ordered by the United States District Court for the Northern District of Georgia, be disclosed to in-house counsel of the parties to that litigation.