Opinion
2:19-cv-00075-RJS-JCB
08-04-2021
IVANTI, INC., Plaintiff, v. STAYLINKED CORP., Defendant.
Robert J. Shelby Chief District Judge
MEMORANDUM DECISION AND ORDER
JARED C. BENNETT United States Magistrate Judge
Before the court is Ivanti, Inc.'s (“Ivanti”) short form motion for a protective order in which it seeks to maintain a “Confidential-Attorney's Eyes Only” (“CAEO”) designation for 734 documents that it produced in discovery to Staylinked Corp. (“Staylinked”) based on this court's Standard Protective Order (“SPO”). On May 28, 2021, Ivanti submitted an Excel spreadsheet in native file format to the undersigned's chambers after counsel for Staylinked had the opportunity to review it. On the spreadsheet, Ivanti listed the challenged documents and provided the reasons for its designation of CAEO. Staylinked provided counterannotations on the spreadsheet opposing Ivanti's proposed designations. Ivanti also submitted the documents to chambers for an in camera review of the CAEO designations.
ECF No. 69.
Id.
This court reviewed every document in camera and, on July 2, 2021, provided a tentative ruling on each by inserting a note on every line item in the spreadsheet that the parties previously submitted. The court's tentative ruling also ordered simultaneous briefing, which the parties provided. The court held oral argument on July 27, 2021. After considering the information provided in the parties' initial briefing, the court's in camera review, the parties' supplemental briefing, and oral argument, the court GRANTS IN PART AND DENIES IN PART Ivanti's motion for protective order. To provide context for the court's rulings on each document, the court first provides its view of the legal background for protecting documents. Thereafter, the court applies the legal background to the several categories of documents in the materials reviewed in camera. Next, the court explains the terms that it uses in the spreadsheet to denote its specific rulings as to each document.Finally, the court discusses why it declines to award reasonable expenses under Fed.R.Civ.P. 37(a)(5)(C).
ECF No. 74.
ECF Nos. 81, 82.
ECF No. 91.
A .pdf version of the spreadsheet will be attached to this document to memorialize the court's rulings. However, the explanatory notes for each ruling are only available in the native file format for the spreadsheet, which will be distributed to the parties in a separate email since an Excel spreadsheet cannot be filed on CM/ECF.
Legal Background
Because this dispute arises over a protective order, the court begins with the rule that governs protective orders: Fed.R.Civ.P. 26(c). Rule 26(c)(1) allows a court “for good cause” to “issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” As an example of this type of information, Rule 26(c)(1) provides that the court can order that “trade secret or other confidential research, development, or commercial information . . . be revealed only in a specified way.” Courts interpreting this provision under Rule 26 require that “[w]hen a party seeks such a protective order, it ‘must first establish that the information sought is a trade secret [or confidential information] and then demonstrate that its disclosure might be harmful.'”
In re Cooper Tire & Rubber, Co., 568 F.3d 1180, 1190 (10th Cir. 2009) (citation omitted) (alteration added).
Based on Rule 26(c) and to make discovery more efficient, this court has adopted the SPO, which applies in every civil case that is filed in this district. The SPO requires disclosure of even confidential information in a “specified way.” Parties can designate discovery “Confidential” or Confidential-Attorneys Eyes Only. To be CAEO, the discovery material must be “protected information, ” (i.e., confidential or proprietary technical, scientific, financial, business, health, or medical information). Additionally, to warrant a CAEO designation, the “protected information” must be “past, current, or future” that includes five categories:
DUCivR 26-2(a)(1).
(1) sensitive technical information; (2) sensitive business information; (3) competitive technical information; (4) competitive business information; and (5) “any other protected information the disclosure of which to non-qualified people . . . would likely cause harm.” The wording of the fifth category of CAEO information shows that categories (1)-(4) are also linked to Rule 26's requirement to show “harm” to protect discovery material. Accordingly, based on Rule 26 and the SPO itself, to properly designate discovery material CAEO, the party seeking protection must establish that: (1) the material is “protected information”; (2) material falls into one of the five CAEO categories; and (3) releasing the protected information without the CAEO designation would cause harm to the releasing party.
SPO, ¶ 2(b) (emphasis added) (capitalization omitted).
Id.
To determine whether discovery material is the type of protected information warranting protection, courts have considered multiple factors. For example, many courts have followed the Southern District of New York's approach in United States v. International Business Machines, Corp., 67 F.R.D. 40 (S.D.N.Y. 1975), which considered the following to determine whether a matter in discovery constituted a trade secret:
(1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
Courts use these same factors to determine whether material contains confidential business, commercial, financial, or technical information.
See, e.g., S. New England Tel. Co. v. Glob. Naps, Inc., No. 04-CV-2075, 2008 WL 11492786, at *3 (D. Conn. June 19, 2008) (relying on six-factor test for determining whether “commercial information” warranted protection under protective order).
But even if the information qualifies as “protected information” in one of the five CAEO categories, the party resisting discovery “must do more than simply allege that the documents are proprietary and confidential.” In addition, the party seeking protection must “set forth specific facts showing good cause, not simply conclusory statements.” “‘Competitive disadvantage is a type of harm cognizable under rule 26.'”
JTS Choice Enters., Inc. v. E.I. Du Pont De Nemours & Co., No. 11-CV-03143, 2013 WL 791438, at *2 (D. Colo. Mar. 4, 2013).
Id.
Id. (quoting Zenith Radio Corp. v. Matsushita Elec. Indus. Co., 529 F.Supp. 866, 890 (E.D. Pa. 1981)).
Categorial Determinations
Over the course of the court's in camera review, the court came across several recurring issues and offers its opinion on each. First, regarding emails-the bulk of the documents at issue-the court notes the SPO's requirement that parties must “designate only that part of a document or deposition that is confidential information or confidential information - attorney's eyes only, rather than the entire document or deposition.” This requirement is significant because the court has found very few email records in which every email in the chain is CAEO. Ivanti has a duty to redact even if the record contains protected information that is CAEO. Withholding the entire document, which may contain parts that are not CAEO, is improper under the SPO. The court is unpersuaded that redacting is “unduly burdensome.” The court itself reviewed all the documents and is aware of how quickly documents can be redacted in Adobe Acrobat. Thus, redacting instead of withholding entire documents is the requirement here, too.
SPO, ¶ 4(g) (capitalization omitted).
Second, except for Zebra, the court believes that customer names must be redacted before sharing those documents with those other than counsel. Providing customer names to a competitor appears likely to cause Ivanti a competitive disadvantage. This is especially true where, as here, the basis for Staylinked's requesting these documents was to obtain information about the problems with Ivanti's product as a defense to Ivanti's claim that Staylinked was improperly stealing clients from Ivanti. Knowing the specific problems of Ivanti's product on a specific customer's system would provide any competitor with a competitive advantage. Redacting customer names should sufficiently alleviate the risk of competitive advantage because knowing the problems with Ivanti's product without the customer identity makes the prospect of purposefully taking customers unlikely.
Third, as mentioned in the preceding paragraph, many emails contain narrative discussions about problems that Ivanti or its customers were experiencing with certain software applications or hardware. In some emails, there are also actual error logs and code to fix the problems discussed in the emails. The court does not believe that discussions about a customer having problems with the application's buttons, for example, meets the requirements of “protected information” much less CAEO. In fact, the internet is replete with community fora that discuss troubleshooting of known problems of all sorts of products especially those of an electronic nature. Thus, a general awareness of product problems cannot be CAEO. Also, lists of problems in Ivanti's resolution queue, repair priority, who was assigned to fix them, or the exchange of pleasantries and jokes between employees, do not appear to the court to meet the definition of “protected information.”
For example, those who use Apple products can log on to Apple Support Communities, APPLE, https://discussions.apple.com/welcome (last visited Aug. 4, 2021), input the problem that a user is having with their Apple product, and a community of users will provide suggested remedies to the problem. The same type of forum exists for users of any Microsoft product. MICROSOFT, https://answers.microsoft.com/en-us (last visited Aug. 4, 2021).
However, the computer-generated error logs, resource reports, kernel traces, and resources traces-although not “code” as that term is used among computer scientists-appear to indicate how Ivanti's products are running and may provide information as to which system is running them and the specific problems that system is having with Ivanti's product. This provides a competitive advantage to Staylinked because it would be able to see the specific errors in Ivanti's system, on specific systems, performing certain functions. That information would be a helpful competitive marketing tool. Consequently, the logs on the spreadsheet marked as “code” will retain their CAEO status.
ECF No. 85 at 5.
The court acknowledges and appreciates the declaration of Bryan S. Morse, who holds a doctorate Ph.D. in Computer Science. Dr. Morse makes a compelling case that the materials marked as “code” do not contain the “secret sauce” of Ivanti's product in terms of its source code. Id. Dr. Morse also helpfully summarizes what the documents marked as “code” on the spreadsheet actually show. Id. at 4-8. The things contained in Dr. Morse's helpful summary undoubtedly reveal how Ivanti's product operates. Retail Ventures, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 691 F.3d 821, 834 (6th Cir. 2012) (stating that information that shows how a business is operated may be treated as protected information). Although Dr. Morse opines that none of this information, with 14 possible exceptions, would “provide StayLinked with any competitive advantage, ” ECF No. 85 at 5, the court is unsure the standard that Dr. Morse applied to reach that conclusion, especially where, as here, knowing how the product functions and how it errs when performing specific functions would be of benefit to a competitor. Although Staylinked may not review this information, its Technical Advisor certainly can, which still provides Staylinked with the ability to argue that Ivanti's errors caused its customers to go to Staylinked. Therefore, the court is unwilling, at this point, to allow Staylinked to see the materials designated as “code.”
Fourth, many documents contain charts that also list revenues generated from specific customers. As counsel for Staylinked recognizes, disclosing the revenues to Ivanti's competitor would place Ivanti at a competitive disadvantage. Therefore, these revenues (and customer names) can also be redacted prior to sharing with non-attorneys to avoid placing Ivanti at a competitive disadvantage. After redaction, these documents will not retain their CAEO designation.
Fifth, there are several presentations that appear to have been made to the troubleshooting staff about their efficiency and future workload. Most of these are designated as LANDesk Reports. The court does not see how this generic information is protected or how its disclosure would harm Ivanti by giving Staylinked a competitive advantage. Thus, the CAEO designation on these documents is denied.
Sixth, the documents contain several meeting agendas, which are sometimes called “coreteam notes.” These appear to be invitations to a team meeting that also track who was in attendance and the topics that were or may have been discussed. The meeting topics are generally one or two words. At times there is a productivity chart attached. There are also documents that discuss potential training topics for both staff and external customers. These discussions are general and are usually limited to one or two-word topics. The court does not see how meeting agendas and general training topics constitute protected information much less show competitive harm for their disclosure especially given how old some of these meeting agendas are and how generically the training topics are listed. Therefore, these materials are denied CAEO designation.
Seventh, the documents also contain several employee workplans that set goals and rate progress for a particular employee. Again, the court does not see how generic goals amount to protected information or meet the requirements of CAEO. The court does not understand how disclosure of a generic workplan would place Ivanti at a competitive disadvantage vis-a-vis its competitor. Accordingly, the CAEO status of these documents is denied.
Finally, the documents contain a few manuals that belong to other companies. The court does not see how these manuals that were shared with Ivanti could be considered Ivanti's “protected information.” On the other hand, the court does not see how these manuals from other companies could be used in this litigation against Ivanti, but, in any event, they do not appear to meet the requirements for CAEO. Therefore, they are denied CAEO status.
Guide to the Court's Spreadsheet Annotations
Given these general categorical observations, the court provides a key to its document-by-document rulings memorialized on the attached spreadsheet. Where the court denies protection for a document, the column labeled “Court Disposition” will include the word “No.” The explanation for that ruling is contained in a note attached to each cell, which is available only in the native file format of Excel, which the parties will receive via separate correspondence. For documents that may contain some CAEO information, the court uses “Partial” and explains that designation in an explanatory note attached to each cell in the native file format of the Excel spreadsheet. As to a document that the court rules is entirely protected, the court uses the word “Protected.” Where a document shares the same resolution as another version of that same document, the court uses “Same as above” or “Same as [specific number].” For such designations, the parties are directed to the designated cell for the court's more specific explanation of the court's ruling on that document.
Declination of Reasonable Expenses Under Fed. R. Civ. P. 37
The court declines to impose reasonable expenses for bringing and defending against Ivanti's Motion for Protective Order because the arguments are substantially justified. Fed.R.Civ.P. 37(a)(5)(C) provides that “[i]f the motion is granted in part and denied in part, the court may, after giving an opportunity to be heard, apportion the reasonable expenses for the motion.” Rule 37(a)(5)(A) and (B) provide the standards as to when fees should not be awarded. Specifically, both state that fees must be awarded unless the arguments of the losing party are “substantially justified.”
“Substantially justified” is a familiar term to those who have ever worked with the Equal Access to Justice Act (“EAJA”). EAJA allows a “prevailing party” to collect attorney fees against the United States government unless the United States' litigating position was “substantially justified.” The United States Supreme Court held that a position is substantially justified if it is “justified in substance or in the main-that is, justified to a degree that could satisfy a reasonable person.” Stated differently, a government position is substantially justified “if it has a reasonable basis in both law and fact.” Where, as here, Rule 37 employs the same term of art as EAJA for the same purpose of awarding costs and attorney's fees, the court borrows from EAJA jurisprudence to determine substantial justification.
Id.
Pierce v. Underwood, 487 U.S. 552, 565 (1988).
Hanover Potato Prods., Inc. v. Shalala, 989 F.2d 123, 128 (3d Cir. 1993).
Lawson v. FMR LLC, 571 U.S. 429, 459 (2014) (“[P]arallel text and purposes counsel in favor of interpreting . . . provisions consistently.”); Northcross v. Bd. of Educ. of Memphis City Sch., 412 U.S. 427, 428 (1973) (per curiam) (stating that when two provisions of different statutes share similar language, that is a “strong indication” they are to be interpreted consistently); Morissette v. United States, 342 U.S. 246, 263 (1952) (explaining that “where Congress borrows terms of art” it also borrows their meaning).
After a thorough review of the documents, the court observes that there were a few instances of what the court considers to be over designation of CAEO materials and a few instances in which the designation should not have been challenged because it was clearly warranted. However, any over designation and any misplaced opposition to designation are insufficient to convince the court that the arguments on which the parties relied lacked a reasonable basis in law or fact. Therefore, given the additional discretion entrusted to the court for granting in part and denying in party Ivanti's motion (i.e., “the court may . . . apportion the reasonable expenses for the motion”), the court declines to award reasonable expenses including attorney's fees.
ORDER
Based on the foregoing, the court orders Ivanti to produce copies of the documents reviewed in camera with redactions as set out above within 60 days of this order.