Opinion
Civil Action Case No. 01-2009-KHV
November 8, 2001
MEMORANDUM AND ORDER
Pending before the Court is Plaintiff's Motion to Show Cause/Compel Discovery Against Southeast Kansas Vending and Sales (doc. 105). Plaintiff seeks an order compelling subpoenaed non-party Southeast Kansas Vending and Sales to respond to the subpoena served upon it by Plaintiff. The subpoena at issue seeks "all records, invoices, purchase orders, credit card summaries, receipts or records of any membership cards from Sam's Club and/or any other wholesale merchandiser, or from any source for personal or business and documents of any kind for the purchase of any and all soft drink and or beverage products, . . ." for forty-nine listed beverage products. Southeast Kansas Vending and Sales objects to the subpoena on the grounds it seeks documents which are trade secrets or proprietary information that if disclosed would give Plaintiff a competitive advantage. Southeast Kansas Vending and Sales also objects to the subpoena on the grounds it is overly broad and seeks information not relevant to this action in that it seeks documents relating to purchase of "any and all" beverage products purchased by Southeast Kansas Vending and Sales, including beverage products not sold or distributed by Defendants.
On August 7, 2001, the Court issued an order for Plaintiff to show cause why the subpoena issued to Southeast Kansas Vending and Sales should not be limited to documents showing the source and quantity of Southeast Kansas Vending and Sales' purchases of the particular beverage products at issue in this litigation (doc. 133). Plaintiff and subpoenaed non-party Southeast Kansas Vending and Sales have filed their respective supplemental briefs (docs. 136 and 143). The Court is now ready to rule.
Federal Rule of Civil Procedure 45(c) governs the protection of persons subject to a subpoena. Specifically, Rule 45(c)(3)(B)(i) provides that the court may quash or modify a subpoena if the subpoena requires disclosure of "a trade secret or other confidential research, development, or commercial information." The court also may order appearance or production upon specified conditions if the party in whose behalf the subpoena was issued shows a "substantial need" for the testimony or material that cannot be otherwise without undue hardship and assures that the subpoenaed party will be reasonably compensated. Fed.R.Civ.P. 45(c)(3)(B). While there is little caselaw on what constitutes "a trade secret or other confidential research, development, or commercial information" as referenced in Rule 45(c)(3)(B), the Court finds caselaw addressing the similar language contained within Rule 26(c)(7) instructive. Furthermore, the Advisory Committee Notes state that this section of Rule 45(c) corresponds to Rule 26(c)(7).
Generally, courts have not given trade secrets automatic and complete immunity against disclosure, but have in each case weighed the claims to privacy against the need for disclosure. Advisory Committee Notes to Rule 26(c)(7). Frequently, they have been afforded limited protection. Id. There is no absolute privilege for trade secrets and similar confidential information. Pulsecard, Inc. v. Discover Card Servs., Inc., Civ.A. No. 94-2304-EEO, 1995 WL 526533, *5 (D.Kan. Aug. 31, 1995) (quoting Federal Open Mkt. Comm'n of Fed. Reserve Sys. v. Merrill, 443 U.S. 340, 362, 99 S.Ct. 2800, 61 L.Ed.2d 587 (1979)). To resist discovery under Rule 26(c)(7), one must first establish that the information sought is a trade secret or other confidential research, development, or commercial information and then demonstrate that its disclosure might be harmful. Centurion Indus. v. Warren Steurer Associates, 665 F.2d 323, 325 (10th Cir. 1981). If these requirements are met, the burden shifts to the party seeking discovery to establish that the disclosure of the information is relevant and necessary to the action. Id. Once a party establishes relevance and necessity, the court must balance the need for the information against the claim of injury resulting from disclosure. Id. The court should not require disclosure in the absence of a showing of relevancy and need. Id. However, if the requesting party establishes relevancy and sufficient need, the court should order disclosure of the confidential information, unless the information is privileged, or the subpoena or other request for discovery is unreasonable, oppressive, annoying, or embarrassing. In re Indep. Serv. Org. Antitrust Litig., 162 F.R.D. 355, 356 (D.Kan. 1995).
The decision whether trade secrets are relevant and whether the need outweighs the harm of disclosure is within the sound discretion of the trial court. Snowden By and Through Victor v. Connaught Labs., Inc., 136 F.R.D. 694, 698 (D.Kan. 1991). If the trade secrets are relevant and necessary, the contents of a protective order to safeguard the disclosure of those trade secrets are also within the trial court's discretion. Id.(citing Centurion, 665 F.2d at 326).
In Covey Oil Co. v. Continental Oil Co., 340 F.2d 993, 998 (10th Cir. 1965), the Tenth Circuit concluded that the interests of justice required the enforcement of a subpoena in which the subpoenaed party claimed trade secrets relating to price, cost, and volume of sales of gasoline rather than processes, formulas, or methods. Id. To protect the subpoenaed party, the court imposed conditions designed to protect the subpoenaed party. These conditions included, among others, forbidding the use of the material for business or competitive purposes, limiting the disclosure of documents to counsel and only for purposes of the litigation, limiting the right to presence at the depositions, and ordering that documents and depositions to be held by the clerk under seal.
In this case, Plaintiff's subpoena seeks "all records, invoices, purchase orders, credit card summaries, receipts or records of any membership cards from Sam's Club and/or any other wholesale merchandiser, or from any source for personal or business and documents of any kind for the purchase of any and all soft drink and or beverage products, . . ." Southeast Kansas Vending and Sales has the burden to establish that the information sought by Plaintiff's subpoena is a trade secret or other confidential research, development, or commercial information.
The Court finds that Southeast Kansas Vending and Sales has not met its burden of establishing the information requested by Plaintiff's subpoena is "a trade secret or other confidential research, development or commercial information" pursuant to Rule 45(c)(3)(B)(i). Furthermore, the Court determines that Southeast Kansas Vending and Sales' concerns could be adequately addressed by a protective order prohibiting the use of the information by Plaintiff outside the present litigation.
The Court therefore orders that Southeast Kansas Vending and Sales provide all the information and documents requested by Plaintiff's subpoena. Even if Southeast Kansas Vending and Sales had met its burden of establishing the information requested was a "trade secret or other confidential research, development or commercial information" pursuant to Rule 45(c)(3)(B)(i), Plaintiff has demonstrated the relevancy of the location and pricing of Southeast Kansas Vending and Sales' purchases of the beverage product indicated in the subpoena. Plaintiff has also demonstrated the relevancy of its discovery requests for beverage products other than the particular beverage products at issue in this litigation.
In order to protect the confidential nature of the information and documents to be produced, Plaintiff and Southeast Kansas Vending and Sales shall submit a jointly-prepared proposed Protective Order to the Court by December 7, 2001. If Plaintiff and Southeast Kansas Vending and Sales cannot agree to a jointly-prepared proposed Protective Order, then each shall submit their proposed Protective Order to the Court by December 7, 2001. The Protective Order to be submitted shall contain language prohibiting Plaintiff from using the materials and information obtained for any commercial advantage and limiting its use to purposes of this litigation only.
IT IS, THEREFORE, BY THE COURT ORDERED, that Plaintiff's Motion to Show Cause/Compel Discovery Against Southeast Kansas Vending and Sales (doc. 105) is granted. Subject to the conditions set forth in the Protective Order to be entered in this case, Southeast Kansas Vending and Sales shall produce and permit inspection of the documents sought by Plaintiff's subpoena within ten (10) days after the Protective Order is entered by the Court. Plaintiff shall bear its own costs in bringing this motion.
IT IS SO ORDERED.