Opinion
X08FSTCV176038381S
11-15-2019
Edgewell Personal Care Company v. Michael O’Malley et al.
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Lee, Charles T., J.
MEMORANDUM OF DECISION RE DEFENDANT O’MALLEY’S RECLAIMED MOTION TO REQUIRE DISCLOSURE OF TRADE SECRETS AND CONFIDENTIAL INFORMATION PRIOR TO FURTHER DISCOVERY (DOCKET NO. 278)
Hon. Charles T. Lee Judge.
The discovery dispute in this trade secret litigation arises out of the document requests and interrogatories directed by the plaintiff, Edgewell Personal Care Co., to defendant Michael O’Malley, a former high-level employee of the plaintiff. The plaintiff accuses Mr. O’Malley of misappropriating its trade secrets and confidential information, having joined a personal care competitor, Dollar Shave Club, Inc. Mr. O’Malley seeks an order directing plaintiff to identify with reasonable particularity what trade secrets and confidential information it claims Mr. O’Malley appropriated prior to further compliance by Mr. O’Malley with plaintiff’s requests.
Because the present motion relates to a discovery dispute between Edgewell and Mr. O’Malley, any references to "the defendant" herein refer exclusively to Mr. O’Malley.
Background
The plaintiff is "in the business of manufacturing and marketing personal care items including razor blades and shaving products ..." 2d Am. Compl., ¶2. Defendant O’Malley is alleged to have worked for the plaintiff and its predecessor, Schick, for approximately thirty years, during which time he achieved the position of Director of Program Management and New Product Development and purportedly had access to extensive trade secrets and other confidential information kept by the plaintiff. O’Malley is further alleged to have entered into various agreements with the plaintiff between 2010 and 2015, which contained covenants not to disclose the plaintiff’s confidential information and not to compete with the plaintiff for a period of one year in the event that O’Malley’s employment with the plaintiff were to end. In October 2017, Mr. O’Malley left Edgewell, moved to California, and joined Dollar Shave Club.
On November 15, 2017, the plaintiff filed a three-count complaint against Mr. O’Malley in this court, claiming breach of contract and breach of the implied covenant of good faith and fair dealing, and seeking to enjoin O’Malley’s purported use of the plaintiff’s confidential information as well as O’Malley’s employment with the defendant. Plaintiff’s motion for a temporary injunction enjoining Mr. O’Malley’s competition was denied after a hearing. The plaintiff filed its first amended complaint on August 16, 2018, repeating its contractual claims against O’Malley and adding several more claims, including misappropriation of trade secrets and violation of the Connecticut Computer Crimes Act, General Statutes § § 53a-251 and 52-570b. Docket No. 161.
On August 2, 2018, plaintiff filed a motion for an order seeking inspection of all data storage devices in O’Malley’s possession. This court denied that request and directed the parties to engage in a phased discovery process. Docket No. 146.01. The plaintiff was to identify electronic search terms "calculated to elicit information relating to the trade secrets, confidential or proprietary information that Edgewell contends is at issue in this matter," Docket No. 146.01, Section (e)(4). Before producing documents identified by the search terms, defendant was permitted to move for an order requiring the plaintiff to "disclose with reasonable particularity the specific trade secrets and confidential information it alleges O’Malley misappropriated." Id., Section (e)(6).
The parties engaged in extensive negotiation and agreed on a group of search terms. The defendant ran an electronic data search using those terms and indicated that a large number of documents were "hits." On May 15, 2019, before the documents were produced, the defendant filed a motion requiring the identification of the trade secrets and confidential information that the plaintiff suspected the defendant had misappropriated. At a hearing on June 29, 2019, the court directed the parties to negotiate further to see if the scope of discovery could be refined, as it appeared that a large number of irrelevant documents had been identified. As a result of more discussion and correspondence, the parties were able to narrow their dispute from almost eighty search terms to eight. Although the defendant has produced approximately 2000 documents to date, the parties remain deadlocked as to the production of documents responsive to the remaining search terms.
The defendant objected to this production, claiming that those responsive documents contained trade secrets and confidential documents belonging to his new employer, Dollar Shave Club. As a result, the defendant demanded that the plaintiff identify the alleged misappropriation with greater detail. The plaintiff claimed that the allegations of the complaint, testimony of an executive at the temporary injunction hearing, and its responses to a first set of interrogatories provided adequate detail. The defendant disagreed.
On September 13, 2019, Mr. O’Malley filed the present motion to require Edgewell to disclose the specific trade secrets and confidential information it alleges Mr. O’Malley misappropriated before he produces additional documents responsive to the search terms. Docket No. 278. The motion was accompanied by several exhibits and an expert affidavit stating that plaintiff’s identifications to date had been too vague or generic to adequately identify the trade secrets and confidential information plaintiff sought to protect.
On October 11, 2019, plaintiff submitted an opposition, Docket No. 296, with several exhibits, including its objections and responses to defendant’s second set of interrogatories, attached as Exhibit D and dated October 1, 2019. In that exhibit, the plaintiff collected its prior descriptions of suspected misappropriated trade secrets and confidential information, and supplemented them with substantial new information. On October 25, 2019, the defendant filed its reply memorandum, contending that plaintiff’s responses did not specify its trade secrets or confidential information with reasonable particularity. Therefore, defendant contended that he should not be ordered to produce the documents identified by the eight remaining search terms in dispute.
Discussion
The parties have identified only one state case addressing the sequence of disclosures in a trade secret case. Microtech Int’l, Inc. v. Fair, Superior Court, judicial district of New Haven, 1992 WL 239087, *3 (September 18, 1992, Hadden, J.) . In that case, the court stated,
[P]ursuant to General Statutes § 35-55, the court is directed to: preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings holding in-camera hearings, sealing the records of the action and ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval.
...
Both of the ... proposed protective orders disregard the fact that in order for the plaintiff to demonstrate any wrongdoing on the part of the defendant, the plaintiff must first discover the very information which the defendant seeks to preclude. The court is of the opinion that the plaintiff’s cause of action for misappropriation of trade secrets requires the plaintiff to demonstrate that the defendant utilized confidential information relating to the plaintiff’s customers, solicitation techniques, and product sales while in the employ of [the corporate defendant]. Thus, the plaintiff’s discovery requests, related as they are to the defendant’s conduct in the solicitation of customers shared by the plaintiff and the defendant’s employer, do not merely affect the amount of damages that may be recouped in the plaintiff’s action, but rather, bear directly upon the issue of wrongdoing raised by the plaintiff’s claim.
As a result of this reasoning, the court ordered production of defendant’s documents without further description by the plaintiff. In Automation Systems Integration, Inc. v. Autoswage-Products, Inc., Superior Court, 1996 WL 278275, at *3 (May 6, 1996, Pellegrino, J.) , the court stated, "It appears that Connecticut law does not address whether trade secrets constitute privileged information that is beyond the scope of discovery. Microtech International, Inc. v. Fair, supra ... [citation omitted]]. Since Practice Book § 221 [the predecessor to § 13-5] is nearly identical to Federal Rule of Civil Procedure 26(c), it is appropriate for this court to look to federal case law for guidance in this matter. See Beta Squared, Inc. v. Thor Designs, Superior Court, judicial district of Danbury, Docket No. 307139 (April 19, 1993, McGrath, J.) ."
The only Connecticut federal case to discuss the issue, Powerweb Energy v. Hubbell Lighting, Inc., Docket No. 3:12CV220 WWE, 2012 WL 3113162 (D.Conn. July 31, 2012, Fitzsimmons, USMJ), ordered the plaintiff to provide further of its secrets at issue before ordering disclosure by defendant. The court cited the leading federal case on the subject:
In DeRubeis v. Witten Technologies, Inc., 244 F.R.D. 676 (N.D.Ga. April 23, 2007) ["DeRubeis "], the Court discussed the unique challenge trade secret cases pose to the timing and scope of discovery and the different policies supporting early or late identification of the trade secrets. On one hand, the Court described the policies supporting the practice of allowing plaintiff to take discovery prior to identifying with specificity the trade secrets, noting plaintiff’s broad right to discovery, the fact that plaintiff may have no way of knowing what trade secrets have been misappropriated until discovery is received, and the unfairness of forcing a plaintiff to identify the trade secrets without the benefit of discovery. Id. at 679-80. On the other hand, the Court described the policies in favor of an early identification of the trade secrets, noting that this prevents frivolous lawsuits, narrows the scope of discovery, permits defendant to mount a defense, and prevents plaintiff from tailoring its cause of action based on the discovery received. Id. at 680-81.
Balancing these competing interests, as in DeRubeis, the Court finds good reason to require plaintiff to describe with reasonable specificity the trade secrets that form the basis of its claim. Of paramount concern to the Court is fairness and efficiency. Further, the Court agrees that defendants are entitled to an explanation of plaintiff’s theory of the case before plaintiff gets the documents.DeRubeis is the most frequently cited case on the phasing of trade secret discovery, as revealed by the court’s research. The DeRubeis court considered the factors set forth above as follows:
To find the right approach in this case, the Court must balance the above-referenced policy considerations. See Microwave Research, 110 F.R.D. [669] at 672 [D.Mass., 1986] ("In cases involving the disclosure of confidential information and/or trade secrets, the Court must strike a balance"). Weighing the various considerations, the Court finds that it is appropriate in this case to require [counterclaim plaintiff] to first identify with "reasonable particularity" those trade secrets it believes to be at issue. The Court defines "reasonable particularity" to mean that [counterclaim plaintiff] must provide Plaintiffs ... with a sufficient description of the trade secrets it believes to be at issue in this case so that: (1) Plaintiffs are put on notice of the nature of [the] claims; and (2) Plaintiffs can discern the relevancy of any requested discovery on Plaintiffs’ trade secrets. Once [counterclaim plaintiff] has fulfilled its obligation, it will be entitled to discovery on Plaintiffs’ trade secrets, provided that what it seeks is relevant.DeRubeis v. Witten Techs., Inc ., 244 F.R.D. 681; see also, Kalencom Corp. v. Shulman, No. CV 17-5453, 2018 WL 1806037, at *5 (E.D.La. Apr. 17, 2018) (disclosure of general purpose of "secrets" insufficient); Mobilitie Management., LLC v. Harkness, No. 1:16-CV-04396, 2018 WL 7858685, at *3 (N.D.Ga. July 10, 2018) ("This Court also considers the type of trade secret alleged and whether something less than full disclosure can satisfy the competing interest set forth above. In some circumstances, full disclosure may not be necessary. One can imagine how the developer of trade secret manufacturing technology might be able to describe with reasonable particularity the manufacturing process, the materials used, and a high-level sequencing of events so the defendant can, nonetheless, mount his or her defense without full disclosure of the plaintiff’s alleged trade secret. Other trade secrets in a given case may be subject to similar creative and partial disclosures that adequately balance the competing interests"; but see, BioD, LLC v. Amnio Tech., LLC, No. 2:13-CV-1670-HRH, 2014 WL 3864658, at *6 (D.Ariz. Aug. 6, 2014) ("[P]laintiffs’ identification of their trade secrets to date has been much too vague and general ... Plaintiffs’ disclosure of their [standard operating procedures] and their highlighting of certain steps in the SOPs also fall short. Plaintiffs cannot claim that a method or process is a trade secret without identifying the steps in the process and explaining how those steps make their method or process unique (citation omitted). Plaintiffs must explain how the combination of much of what appears to be generally known information can constitute a trade secret. It is simply not sufficient for plaintiffs to identify a trade secret as a "method" without some explanation of why that "method" could be considered a legally protectable trade secret. Plaintiffs must provide some basis for their contention that their methods and processes are unique and thus legally protectable. Contrary to their contention, plaintiffs are not being asked to prove their trade secret claim prior to being able to take discovery. But, they must provide enough detail about their alleged trade secrets to at least suggest that the alleged trade secrets might be legally protectable. To date, they have not done so."
The plaintiff contends that the court should exercise its discretion to order defendant’s disclosure without further description of plaintiff’s secrets. Pl. Opp. At 23-25. However, this approach is without support in the caselaw and is contrary to the rationale discussed above. Alternatively, the plaintiff contends that it has sufficiently described its trade secrets, citing Par Pharmaceuticals., Inc. v. QuVa Pharma, Inc., No. CV 17-6115 (BRM), 2019 WL 959700, at *3 (D.N.J., Feb. 27, 2019) (Bulsara USMJ) (trade secrets disclosed in detail early in case, later amendment permitted); CapRate Events, LLC v. Knobloch, No. 17-CV-5907-NGG-SJB, 2018 WL 4378169, at *3 (E.D.N.Y. Mar. 9, 2018) (trade secret is the customer list taken by former employee and in his possession); Tripwire, Inc. v. UpGuard, Inc., No. 3:17-CV-114-YY, 2017 WL 8682354, at *2 (D.Or. Nov. 13, 2017) (relying on Oregon federal precedent, general description of secrets sufficient because details uniquely in possession of defendants).
The above discussion is aptly summarized by the DeRubeis court, "Unfortunately, there is no talismanic procedure the Court may apply in order to obtain the best result in any given case." DeRubeis, supra, 244 F.R.D. 681. The court must take a fact-specific approach to render its decision.
Analysis
Turning to the applicable general factors, the court finds that plaintiff has a reasonable idea of the nature of the secrets which may have been taken by the defendant. On the other hand, defendant is concerned that disclosing his and DSC’s trade secrets and confidential information might be unnecessarily broad and facilitate opportunistic amendment of the plaintiff’s claims. However, Mr. O’Malley’s background with the plaintiff strongly suggests that he is intimately aware of the plaintiff’s processes and confidential information. The court rejects the defendant’s argument that this is a merely a "fishing expedition." The court has previously noted that discovery to date has proven that there are fish in the barrel. Other considerations include the entry of a comprehensive protective order, which permits designations of levels of confidentiality, including production for attorneys’ "eyes only"; and the disclosures of the plaintiff in its effort to satisfy the requirement of disclosure of its trade secrets and confidential information with "reasonable particularity."
Accordingly, the court must evaluate the adequacy of the plaintiff’s descriptions with respect to each of the eight search terms remaining in contention, as summarized in its October 1, 2019 interrogatory responses, Def. Opp., Exhibit D. The defendant is ordered to produce documents responsive to the search terms at issue as follows:
In order to protect the confidentiality of the plaintiff’s disclosures, the court must speak in generalities. Exhibit D has been lodged with the clerk of the court pending determination of plaintiff’s request for a sealing order. Docket No. 305.
1. "Bamboo" and/or "Bulldog"- Plaintiff’s identification is adequate. Protected details relate to the identity of vendors, technology and production, among other things.
2. "Breaker"- The plaintiff says it has a proprietary method for breaking continuous strips of razor blades, which it developed internally. While this may not be an adequate description to sustain its claim of trade secret misappropriation, it is adequate to put the defendant on notice of the claim.
3. "Stacker"- Same as 2, above. This relates to the stacking of razors and/or razor blades and is described sufficiently to justify production of responsive documents.
4. "Cartridge Geometry"- The numerous examples cited in Exhibit D provide a description of protected items with reasonable particularity.
5. "Descriptive Analysis Panel"- Exhibit D adequately explains what is proprietary about its Descriptive Analysis Panel ("DAP") process.
6. "RG Test"- Exhibit D adequately explains what is proprietary about its research guidance ("RG") tests.
7. "NPD"- New Product Development is a generic term used in the industry. The plaintiff explains that it refers to the terms of its own NPD, identified in a document identified as 2018 New Product, allegedly copied by O’Malley. However, the defendant asserts that it was not in Mr. O’Malley’s files and that plaintiff has refused to produce it. Accordingly, the court finds plaintiff’s description insufficiently particularized at this time.
8. "Saturn"- Exhibit D adequately identified the product to which the code name refers.
9. "Others"- Exhibit D supports disclosure of competition analyses, and decomposition analyses, but nothing else.
As a result of the foregoing discussion and its review of the documents and authorities submitted, the court in its discretion orders production of the documents responsive to the contested search terms, as specified above, and subject to the protective order in this case.
Conclusion
For the foregoing reasons, the defendant’s motion to require further pre-discovery identification of trade secrets and confidential information is denied, except the motion is granted with respect to Terms 7 and 9 (with two exceptions), as specified above.