Opinion
CV 2008-4890 (JG) (MDG).
November 2, 2009
The Law Office Of Sheldon Eisenberger, Attorneys for Plaintiff, Sheldon Eisenberger, Esq. (SE-2021), New York, NY.
Robert Rimberg, Attorney for Defendants, Robert Rimberg (RR-2453), Goldberg Rimberg PLLC, New York, NY.
ORDER
Defendants International Watch Group, Inc., Swiss Watch Outlet LLC and Joshua Friedman (collectively the "defendants") seek to challenge certain of plaintiff Firmode (International) Company Limited's confidentiality designations pursuant to Paragraph 8 of the "Stipulation and Order Governing Confidential Information" (the "Stipulation") signed by the parties. See ct. doc. 23. Defendants' counsel has submitted the documents at issue for in camera review. For the following reasons, the Court confirms plaintiff's confidentiality designations.
BACKGROUND
Plaintiff alleges that defendants failed to pay for watches that it manufactured and delivered to defendants. The documents challenged by defendants are largely invoices, which include pricing and vendor information, for the component parts that plaintiff purchased from its suppliers to manufacture the watches ordered by the defendants. Defendants' counsel argues that his clients must be permitted access to the documents "to properly assess the merits of Plaintiff's claims for damages and to demonstrate Plaintiff's breaches and failure to properly perform in a timely manner." See ct. doc. 23 at 1.
The Stipulation provides in relevant part:
The producing party may further restrict disclosure of [documents and testimony] to the opposing party by designating the material "HIGHLY CONFIDENTIAL." Such designation shall be restricted to such items as trade secrets as defined by the Restatement of Torts which would include any formula, pattern, device, compilation of information as used in one's business and it gives the party the opportunity to obtain an advantage over the competitors who do not know where to use it, and can include financial projections, business plans, statements of business policy or procedure, customer lists and customer information as well as sourcing information and all pricing information.See ct. doc. 24-1. Documents designated "HIGHLY CONFIDENTIAL" are to be disclosed only to counsel for the parties and any expert or consultant they retain. Id. Although the Stipulation is termed "Stipulation and Order," the Stipulation was never separately filed to be "so ordered" by the Court. Since a copy has now been filed as part of plaintiff's response to the instant motion, the Stipulation is hereby "so ordered."
DISCUSSION
"Rule 26(c) confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required." Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). Rule 26(c)(1)(G) provides that the court may, for good cause shown, issue a protective 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." Fed.R.Civ.P. 26(c)(1)(G). "To determine whether good cause exists, courts balance `the need for information against the injury that might result if uncontrolled disclosure is compelled.'" In re Zyprexa Injunction, 474 F. Supp. 2d 385, 413-16 (E.D.N.Y. 2007) (quoting Pansy v. Borough of Stroudsburg, 23 F.3d 772, 787 (3d Cir. 1994)).
Pricing and supplier information have been widely recognized as "confidential business information" that falls within the scope of Rule 26(c)(1)(G)(7) and warrants a protective order limiting disclosure to counsel for the parties. See, e.g., Brookdale Univ. Hosp. and Med. Ctr. v. Health Ins. Plan of Greater N.Y., No. 07-CV-1471, 2008 WL 451014, at *1 (E.D.N.Y. Oct. 7, 2008) (internal cost and vendor data); Chembio Diagnostic Sys., Inc. v. Saliva Diagnostic Sys., Inc., 236 F.R.D. 129 (E.D.N.Y. 2006) (manufacturing costs and communications with vendors); Cornell Res. Found., Inc. v. Hewlett Packard Co., 223 F.R.D. 55, 67-68 (N.D.N.Y. 2003) (invoices and purchase orders); Moore U.S.A. Inc. v. The Standard Register Co., No. 98-CV-485C, 2000 WL 876884, at *2 (W.D.N.Y. May 26, 2000) (same); Vesta Corset Co., Inc. v. Carmen Founds., Inc., No. 97 CIV. 5139, 1999 WL 13257 (S.D.N.Y. Jan. 13, 1999) (pricing and costs); Sullivan Marketing, Inc. v. Valassis Commc'ns, Inc., No. 93 CIV. 6350, 1994 WL 177795, at *3-*4 (S.D.N.Y. May 5, 1994) (pricing); see also Lehman v. Dow Jones Co., 783 F.2d 285, 298 (2d Cir. 1986) (cost and pricing information are trade secrets); Medtech Prods. Inc. v. Ranir, LLC, 596 F. Supp. 2d 778, 804 (S.D.N.Y. 2008) (supplier lists and pricing information are trade secrets). Nevertheless, "[w]hether information merits protection in a particular case depends upon: 1) the extent to which the information is known outside the business; 2) the extent to which information is known to those inside the business; 3) the measures taken to guard the secrecy of the information; and 4) the value of the information to the business and its competitors." ABC Rug Carpet Cleaning Serv. Inc. v. ABC Rug Cleaners, Inc., No. 08 Civ. 5737, 2009 WL 105503, at *3 (S.D.N.Y. Jan. 14, 2009).
Defendants do not dispute that the documents at issue contain confidential business information subject to the proposed protective order. Rather, defendants argue that the information is relevant and there is a need for disclosure to the parties. Although neither party has submitted affidavits in support of their positions, it is apparent that pricing and vendor information is not widely disseminated and that such information is of value to the plaintiff and disclosure to its competitors would give those competitors an advantage in the market. Although defendants at this juncture, do not appear to be direct competitors of plaintiff in the importation and distribution of the products at issue, disclosure of the "highly confidential" information could be used by the defendants themselves or by other competing importers or distributors with whom defendants may engage in future business transactions.
On the other hand, defendants have not articulated how the information sought is relevant to the calculation of damages. The seller's remedy for a buyer's failure to pay for goods that have been accepted is the price of the contract. See U.C.C. § 2-709. Nor have defendants explained their claim that vendor and pricing information would "demonstrate Plaintiff's breaches and failure to properly perform in a timely manner." In any event, even assuming the relevance of the information, the defendants have not provided a compelling reason that they, rather than only their counsel, have a need to review the documents. The restriction on broader dissemination of the information will not prohibit the defendants from using the documents in litigation. Plaintiff's limited disclosure of the documents to counsel and experts balances the plaintiff's interest in confidentiality against the defendants' need to defend in this action.
CONCLUSION
For the foregoing reasons, defendants' motion to challenge plaintiff's confidentiality designations is denied. The attached Stipulation is hereby "so ordered."
SO ORDERED.
STIPULATION AND ORDER GOVERNING CONFIDENTIAL INFORMATION
It is hereby stipulated and agreed by the undersigned counsel:1. This stipulation shall govern the treatment of all documents and testimony reflecting or representing information designated "confidential" by the parties in this proceeding.
2. The term "Confidential Material," as used herein, shall include any and all documents denominated as such by the parties during the course of this litigation.
3. Each party shall designate the Confidential Material prior to the transmission of a physical copy thereof to any other party. In designating information as Confidential Material a party will make such designation only as to that information it believes, in good faith, contains Confidential Information.
4. Confidential Material may be used solely for the purposes of this proceeding and shall not be used for any other purpose whatsoever.
5. Absent prior written consent of the producing party, the Confidential Material may be disclosed only to:
a. parties;
b. counsel employed by a party, or any employee of such counsel to whom it is necessary that disclosure be made for the purposes of this litigation;
c. any person not employed by a party who is expressly retained or subpoenaed by a party for the purposes of testifying or rendering assistance or providing expert opinions in this litigation, including but not limited to consultants, who has signed an acknowledgment in the form attached as Schedule A that he or she has read this stipulation and agrees to be bound by its terms, and only to the extent necessary for such person to perform his or her assigned task;
d. the Court, Court personnel, Court reporters, or other personnel involved in the adjudicative process; and
e. any person of whom testimony is taken, except that such a person may only see copies of Confidential Material during his or her testimony, in preparation therefor, or in discussions of possible testimony, and may not thereafter retain any confidential material.
6. The producing party may further restrict disclosure of Confidential Material to the opposing party by designating the material "HIGHLY CONFIDENTIAL." Such designation shall be restricted to such items as trade secrets as defined by the Restatement of Torts which would include any formula, pattern, device, compilation of information as used in one's business and it gives the party the opportunity to obtain an advantage over the competitors who do not know where to use it, and can include financial projections, business plans, statements of business policy or procedure, customer lists and customer information as well as sourcing information and all pricing information. Confidential Material designated "HIGHLY CONFIDENTIAL" may not be disclosed to the opposing party, but may otherwise be disclosed in accordance with the provisions of paragraph 5(b)-(e) above, and otherwise will be governed by the provisions of this stipulation.
7. Nothing shall be regarded as Confidential Material or Highly Confidential Material if it is information that: (a) is in the public domain at the time of disclosure as evidenced by a written document; (b) becomes part of the public domain through no fault of the other party as evidenced by a written document; (c) the receiving party can show by written documentation that the information was in its rightful and lawful possession at the time of disclosure; or (d) the receiving party lawfully received such information at a later date from a third party without restriction to disclosure provided such third party has the right to make the disclosure to the receiving party.
8. In the event a party seeks to challenge the designation as Confidential Material or as Highly Confidential Material of documents by another party, the parties shall attempt to resolve such dispute in good faith on an informal basis. If the dispute cannot be resolved, the objecting party may file a letter application pursuant to Rule 37 of the Local Rules of the United States District Court for the Southern and Eastern Districts of New York to challenge the designation as Confidential Material or as Highly Confidential Material, and upon such letter application, the Court shall be permitted to review in camera the confidentiality of the materials in question. During the pendency of any motion or application challenging a party's confidential designation, the document(s) at issue shall remain subject to all the terms and conditions of this stipulation.
9. In the event confidential information subject to this stipulation is disclosed during deposition, court proceedings, or in pleadings, motions or other papers submitted to the Court, the confidential portions of such deposition or Court proceeding transcripts and court papers shall be filed under seal with the permission of the Court, unless upon notice the designating party waives this provision in writing with respect to specifically designated information. All papers to be sealed shall bear the following designation:
CONFIDENTIAL
This envelope contains documents or information designated confidential pursuant to the stipulation of the parties in the above captioned action. This envelope shall not be opened or unsealed other than by a Justice of this Court or at the Court's express direction, and its content shall not be displayed or revealed except as the Court may order. This envelope and its contents shall at all times be maintained separate and apart from the publicly available files of this action.
10. Any party wishing to designate as CONFIDENTIAL or HIGHLY CONFIDENTIAL any deposition testimony or documents submitted as exhibits to depositions may do so on the record during the deposition, or, to the extent the party fails to do so on the record, within 10 days after receipt of the deposition transcript and exhibits by providing written notice of the designation to the other party. A party making the designation at the deposition shall be responsible for informing the court reporter in order to have those portions of the deposition transcript and exhibits designated as CONFIDENTIAL or HIGLY CONFIDENTIAL appropriately marked and separately bound by the court reporter.
11. By making confidential information available for use in this action, the parties have not waived or compromised, nor shall any other party contend that the party producing such materials has waived or compromised, the confidentiality or protectability of the same, or the activities of which they are a part, or any processes, methods, techniques, operations, equipment, conclusions, insights, or results.
12. Within ninety (90) days of the final conclusion of this litigation, all documents designated as Confidential Material and all transcript portions designated as "CONFIDENTIAL" or "HIGHLY CONFIDENTIAL" will be destroyed or returned to counsel for the producing party. Upon request by the producing party, the parties will confirm in writing that all such documents or testimony and any copies thereof have been destroyed or returned as provided in this paragraph.
13. Nothing in this stipulation shall be construed in any way to control the use, dissemination, publication, or disposition by any party of documents or information received at any time by that party outside the discovery process in this action.
14. In the event a party receives a document demand, subpoena or other request, including court or administrative order, for production of documents or information that would include CONFIDENTIAL or HIGHLY CONFIDENTIAL material (the "Request"), the party upon whom the Request is served shall provide immediate notice to the original producing party and provide the original producing party the opportunity to object and/or insist on confidentiality restrictions consistent with this Stipulation and Order. However, unless the original producing party seeks, within ten days of receipt of notice of the Request, an order from the appropriate court or administrative body staying compliance with the Request, the documents requested in the Request shall be produced notwithstanding this Confidentiality Stipulation and Order.
15. The parties acknowledge that in the event of a breach of this Stipulation and Order, the injured party or witness would be harmed irreparably and could not be made whole by money damages. The parties therefore agree that in the event of a breach of this Stipulation and Order, the injured party or witness may apply for and shall be entitled to a temporary restraining order, preliminary injunction, permanent injunction and/or specific performance of this Stipulation and Order plus monetary sanctions in an amount to be fixed by the Court. As to any such application, the alleged breaching party shall not oppose or contest the granting of such relief other than with respect to whether a breach in fact has occurred.
16. This Stipulation and Order may be executed in counterparts, and each counterpart shall be deemed an original, and all counterparts taken together shall constitute one and the same document, which shall be binding and effective as to all parties. Facsimile copies of signatures herein shall constitute originals for all purposes.
SO ORDERED. CONFIDENTIALITY STIPULATION
SCHEDULE A UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------X FIRMODE (INTERNATIONAL) COMPANY LIMITED, Plaintiff, Case No. 08-CV-4890 (JG) (MDG) -against- INTERNATIONAL WATCH GROUP, INC., ACKNOWLEGEMENT OF SWISS WATCH OUTLET LLC, and JOSHUA FRIEDMAN, Defendants. ----------------------------------X I HEREBY ACKNOWLEGE that I have reviewed the Stipulation and Order Governing Confidential Information dated July ___, 2009 entered into by the parties in the above-captioned action, attached hereto as Exhibit A, and that I agree to abide by the terms set forth therein. Dated: New York, New York ____________, 2009 By: ___________________ Name: Title: