Opinion
8:00CV580.
August 12, 2003.
MEMORANDUM AND ORDER
I. Introduction
Defendant American Hydraulics and the plaintiff appeal, Filing Nos. 184 and 186, the magistrate judge's protective order, Filing No. 176, ruling that American Hydraulics and Windom may not depose David Nors and Angel Guevara, two employees of defendant FM Industries. Both American Hydraulics and Windom filed supporting briefs. Filing Nos. 185 and 187. FM Industries filed a brief opposing the appeal. Filing No. 203. For the reasons discussed below, I find that the protective order should be vacated.
II. Facts
The plaintiff, William Windom, is a former employee of the defendant Railcar America, Inc., d/b/a American Hydraulics, Inc. While employed at American Hydraulics, Windom sustained injuries working on a railroad car cushion unit. Windom sued FM Industries, the remanufacturer of the cushion unit, and Aramark, the manufacturer of the uniform he was wearing. American Hydraulics was originally named a defendant in order to preserve its workers' compensation subrogation interests. FM Industries, however, filed a cross-claim against American Hydraulics, alleging that American Hydraulics negligently failed to train and supervise the plaintiff.
FM Industries also cross-claimed against Aramark for contribution and indemnity. Windom recently dismissed his claims against Aramark, but FM Industries' cross-claim against Aramark remains. See Filing No. 268.
The dispute here concerns American Hydraulics' attempt to depose two employees of FM Industries, David Nors and Angel Guevara. Nors and Guevara perform "tear down" operations for FM Industries, the same type of job that the plaintiff was doing at the time he was injured. FM Industries sought a protective order to prevent the depositions, claiming that information from its employees about how they do their jobs is irrelevant.
Arguing against the protective order, American Hydraulics claimed that the information is relevant because the two companies are so similarly situated. American Hydraulics and FM Industries are two of the only three companies in the United States remanufacturing cushion cars. American Hydraulics argued that the depositions therefore could be useful in determining an industry standard of care. In addition, information about FM Industries' procedures could potentially help a jury understand how cushion cars are remanufactured.
FM Industries argued that the industry has no standard of care for remanufacture operations. Its procedure is a trade secret, not shared with the industry. Further, FM Industries maintained that because American Hydraulics' alleged negligence proximately caused the plaintiff's injuries, any procedures FM Industries may or may not use are irrelevant to the plaintiff's claims. How FM Industries trains and supervises its employees is irrelevant to how American Hydraulics trains and supervises its employees.
The magistrate judge granted the protective order, accepting FM Industries' assertion that the practices of the individual remanufacturers do not establish the industry standard of care. Rather, the magistrate judge ruled, the industry standard of care is derived from standards set by national safety organizations such as OSHA, ANSI, and the like.
Consequently, she ruled that the two companies are not similarly situated and FM Industries' procedure is irrelevant in establishing a industry standard of care.
I have carefully reviewed the order, the parties' briefs, and the applicable law, and I find that magistrate judge's order should be reversed and the protective order vacated.
III. Discussion
By granting the protective order, the magistrate judge improperly limited scope of discovery. "The spirit of Rule 26(a) of the Federal Rules of Civil Procedure is that discovery be self-effectuating, without need to resort to the court, and that its scope be liberal, extending to all matters reasonably calculated to lead to admissible evidence. This standard is well-ensconced, and is generally known and understood by civil practitioners." Kramer v. Boeing Co., 126 F.R.D. 690, 692 (D.Minn. 1989). The district court has broad discretion in resolving discovery disputes so that the purposes of Rule 26(a) are met: providing parties with "information essential to the proper litigation of all relevant facts, to eliminat[ing] surprise, and to promot[ing] settlement." Rolscreen Co. v. Pella Prods. of St. Louis, Inc., 145 F.R.D. 92, 94 (S.D.Iowa 1992) (quoting In re Hawaii Corp., 88 F.R.D. 518, 524 (D.Haw. 1980)).
Under this broad standard, evidence about how FM Industries' drain tank operators perform their duties is clearly relevant to the plaintiff's claims and to American Hydraulics' defense of FM Industries' negligence cross-claim. Only a very small number of companies repair cushion cars, and the two involved in this litigation have taken opposing views on what standards control the industry. By ruling at this early stage of the litigation that national standards control, the magistrate judge has effectively decided the issue as a matter of law, thereby cutting off American Hydraulics' opportunity to develop and present evidence that FM Industries' assertion about national standards is incorrect. A question with such importance to a product liability/negligence action should not be resolved in the context of a discovery dispute. Rather, the parties should have the opportunity to elicit evidence not only about national standards but also about the practices used in each companies' cushion car remanufacture operation.
FMI claims that the practices of individual remanufacturers cannot determine a standard of care because the practice of each remanufacturer is unique. FMI further asserts that because its process is a trade secret not shared with the rest of the industry, its process cannot be used to determine the industry standard. However, no evidence now before the court establishes that FM Industries' remanufacturing process is unique and wholly incomparable to American Hydraulics' remanufacturing process. Merely because FM Industries considers its remanufacturing process a trade secret does not mean that its process bears no resemblance to American Hydraulics' remanufacturing process. Indeed, American Hydraulics could have independently arrived at the same or a similar remanufacturing process without infringing FM Industries' alleged trade secret. See Weightman v. Texas, 975 S.W.2d 621, 627 (Tex. 1998) (trade secret does not lose its protection because another independently developed the same trade secret).
The depositions of the two FM Industries' employees that American Hydraulics seeks to take could show that FM Industries and American Hydraulics conduct business under similar circumstances. If so, the two companies' processes could in fact become the measure of an industry standard — albeit a very small industry. Accordingly, the plaintiff and American Hydraulics are entitled to conduct further discovery about FM Industries' remanufacture process by deposing David Nors and Angel Guevara.
IT IS THEREFORE ORDERED:
1) The appeals, Filing Nos. 184 and 186, by the plaintiff and defendant American Hydraulics are granted;
2) Defendant FM Industries' request for oral argument is denied;
3) The magistrate judge's order, Filing No. 176, is reversed and the protective order vacated; and
4) The plaintiff and defendant American Hydraulics shall be permitted to depose David Nors and Angel Guevara, employees of defendant FM Industries.