United States District Court, D. Arizona
J. Markovich United States Magistrate Judge.
before the Court is Plaintiffs' Motion for Protective
Order (Doc. 51) and Defendant's Motion to Compel
Discovery Responses (Doc. 61). Both motions have been fully
briefed and are ripe for ruling.
Factual and Procedural Background
filed this action on September 11, 2016 (Doc. 1) and filed
their first amended complaint on February 8, 2017 (Doc. 11).
This matter was originally assigned to United States District
Judge Soto, and later referred to the undersigned for all
pretrial proceedings and report and recommendation. (Doc.
Edward Sugg and David Sugg own FireClean LLC, a company that
produces a weapon lubricant marketed under the name FIREClean
(“FC”). (Doc. 47 at 2). Plaintiffs allege that
Defendant Andrew Tuohy published false and disparaging
statements against FC online and caused Plaintiffs economic
and noneconomic harm. Id. Specifically, Plaintiffs
Between September 12, 2015, and January 18, 2016, Mr. Tuohy,
through his website and social media pages, widely published
the false allegations that FIREClean® is a single oil, a
common soybean or canola oil of the kind sold in U.S. grocery
stores, not the proprietary blend of substances the
Plaintiffs had informed their consumers it was. Mr. Tuohy
claimed he had independently commissioned accurate and
appropriate scientific tests that confirmed his statements
were true. Mr. Tuohy falsely accused the Plaintiffs of
deceiving their consumers by manipulating a comparison test
between FIREClean® and another product that showed
FIREClean® is the more effective lubricant. Mr. Tuohy
also claimed that the Plaintiffs had overinflated the price
of their product by charging at least 100 times what it cost
to produce it, intentionally deceived the public, and engaged
[in] unlawful deceptive trade practices.
Id. at 2-3.
first amended complaint states claims against Defendant for
defamation, injurious falsehood (trade libel), false
advertising (Lanham Act), intentional interference with
business relations, false light invasion of privacy, and
aiding and abetting tortious conduct. (Doc. 11). Defendant
filed a motion to dismiss the defamation and Lanham Act
claims (Doc. 26), and Judge Soto granted the motion in part
and dismissed the Lanham Act claim (Doc. 42).
January 12, 2018 Plaintiffs filed a Motion for Protective
Order seeking to protect two expert reports. (Doc. 51).
Plaintiffs allege that the documents contain proprietary
information and trade secrets, and state that redisclosure of
the reports would cause Plaintiffs irreparable commercial
harm. Plaintiffs request that the Court enter an order
ordering that 1) the two reports may only be used in this
litigation; 2) the reports must be returned to Plaintiffs
after conclusion of the litigation; and 3) that reasonable
efforts be made to limit disclosure of the information
contained in the reports. Defendant does not oppose an order
protecting Plaintiffs' private financial information, but
contends that the expert reports do not contain any
information that qualifies for protection under Fed.R.Civ.P.
26(c). (Doc. 60).
February 6, 2018 Defendant filed a Motion to Compel certain
discovery responses. (Doc. 61). Defendant states that
Plaintiffs are refusing to respond to interrogatories about
FC's ingredients because their formula is allegedly a
trade secret. Defendant contends that even if the formula is
a trade secret, he is still entitled to discovery, and that
even if the Court enters a protective order, Plaintiffs
cannot prevent Defendant from obtaining relevant and
exculpatory evidence. Plaintiffs argue that FC's formula,
source of components, method of production, and research and
development are all trade secrets, and that Defendant has
failed to meet his burden to show that the trade secret
information is both relevant and necessary to any claim or
defense. (Doc. 65).
Motion for Protective Order
to Federal Rule of Civil Procedure 26(b), “[p]arties
may obtain discovery regarding any nonprivileged matter that
is relevant to any party's claim or defense . . .
.” “Generally, the public can gain access to
litigation documents and information produced during
discovery unless the party opposing disclosure shows
‘good cause' why a protective order is
necessary.” Phillips ex rel. Estates of Byrd v.
Gen. Motors Corp., 307 F.3d 1206, 1210 (9th Cir. 2002).
Pursuant to Federal Rule of Civil Procedure 26(c),
“[t]he court may, for good cause, issue an order to
protect a party or person from annoyance, embarrassment,
oppression, or undue burden or expense, including . . .
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.
good cause to exist, the party seeking protection bears the
burden of showing specific prejudice or harm will result if
no protective order is granted.” Phillips, 307
F.3d at 1210-1211. “If a court finds particularized
harm will result from disclosure of information to the
public, then it balances the public and private interests to
decide whether a protective order is necessary.”
26 vests the trial judge with broad discretion to tailor
discovery narrowly.” Crawford-El v. Britton,
523 U.S. 574, 598 (1998). In particular, “[a]lthough
[Rule 26(c)] contains no specific reference to privacy or to
other rights or interests that may be implicated, such
matters are implicit in the broad purpose and language of the
Rule.” Seattle Times Co. v. Rhinehart, 467
U.S. 20, 35 n. 21 (1984). However, “‘there is no
absolute privilege for trade secrets and similar confidential
information.'” Fed. Open Mkt. Comm. of Fed.
Reserve Sys. v. Merrill, 443 U.S. 340, 362 (1979)
(quoting 8 C. Wright & A. Miller, Federal Practice and
Procedure § 2043, p. 300 (1970)). Rather, the Court must
weigh the claim to privacy against the need for disclosure.
argue that a protective order is necessary in this case to
protect proprietary information and trade secrets contained
in two expert reports. Plaintiffs state that they are willing
to disclose the information contained in the reports as long
as Defendant is precluded from using the information outside
of this litigation. Plaintiffs allege that Defendant has
publically disparaged their company and publishes court
documents on his blog, leading Plaintiffs to believe that
Defendant intends to publish any documents acquired through
this litigation. (Doc. 51 at 2). Plaintiffs state that as a
private company, their private financial records are entitled
to protection. Plaintiffs further state that although
FC's specific formulation is not identified in Dr.
Davis's chemical comparison report, the report contains
information on “chemical comparisons among [FC] and
canola oil and soybean oil[, ]” and “provides
data not generally known to the public that could be used, in
combination with previously disclosed information, to narrow
down or identify the components of the trade-secret
formulation.” Id. at 3-4. Plaintiffs further
explain that protection of Dr. Davis's report is
necessary because FC's formulation is a closely guarded
trade secret and that their competitors have gone to great
lengths to obtain the formula. Id. at 4.
contends that the two expert reports do not contain any
information that qualifies for protection under Rule 26(c)
and that Plaintiffs have failed to show good cause for
protecting the reports. Defendant states that because Dr.
Linsley's report on Plaintiffs' economic losses
contains some information that was already disclosed in the
Fennell action,  there is no basis to protect it here.
(Doc. 60 at 9-11). Defendant does not oppose an order
protecting Plaintiffs' private tax and other financial
data that has not been previously disclosed. (Doc. 60 at 17).
Defendant further argues that Dr. Davis's chemistry
report is so heavily redacted that Defendant is unable to
determine whether there is good cause to protect it, but
regardless, the report does not identify FC's components
or its formula and thus does not qualify for protection.
Id. at 11. Defendant further argues that FC's
formula is not a trade secret because most of the
formula's details have already been disclosed by
Plaintiffs and because the formula can easily be discovered
with testing; thus, there is no basis to protect Davis's
report. Id. at 12, 16.
response to Defendant's arguments, Plaintiffs note that
they are not asking to withhold the reports-they just want
the information contained in the reports kept confidential.
(Doc. 64 at 1). Plaintiffs state that Dr. Linsley's
report contains new information not previously disclosed in
the Virginia action and maintain that this sales and
profit/loss information should be kept confidential.
Id. at 2. As to Dr. Davis's report, Plaintiffs
state that the report addresses the following questions: 1)
whether it is necessary to know FC's formula to compare
it to soybean and canola oil; 2) whether the test used by
Defendant is a suitable technique; 3) whether the test shows
a difference between FC's formula and canola and soybean
oils; and 4) whether it is possible that canola or soybean
oil are components of FC. Id. at 2-3. Plaintiffs
allege that public disclosure of this information will put
Plaintiffs at a competitive disadvantage. Id. at 4.
Plaintiffs further state that Rule 26 does not limit
confidential business information to only trade secrets, and
that the Court does not have to determine whether Plaintiffs
do in fact have any trade secrets in ruling on the Motion for
Protective Order. Id. at 3.
Plaintiffs do not object to disclosing the information in the
two expert reports-Plaintiffs simply request that the use of
the reports be limited to this litigation, that the
information in the reports not be publically disclosed, and
that the reports be returned to Plaintiffs at the conclusion
of this lawsuit. The Court finds this request is reasonable,
and will grant Plaintiff's motion.
Defendant spends much of his Response arguing why FC's
formula does not qualify as a trade secret, it is not
necessary for the Court to determine whether FC's formula
constitutes a trade secret in order to resolve
Plaintiffs' motion. As Plaintiffs point out, Rule 26(c)
extends protection to other confidential business
information, not just information that specifically qualifies
as a trade secret. Thus, for purposes of Plaintiff's
Motion for Protective Order, the Court need only determine
whether the information Plaintiffs wish to keep confidential
qualifies for protection under Rule 26(c).
the Court finds that Plaintiffs have met their burden under
Rule 26(c). Plaintiffs have shown good cause to keep Dr.
Linsley's report confidential because FireClean is a
private company and the report contains Plaintiffs'
private financial information. While Defendant argues that
there is no need to keep the information confidential because
the same or similar information was already disclosed in the
Fennell action, Defendant also states that he does not oppose
an order protecting Plaintiffs' private financial
information. And, Plaintiffs explain that Dr. Linsley's
report contains more recent information that has not been
Court further finds that Plaintiffs have shown good cause to
keep Dr. Davis's chemistry report confidential. While the
report does not contain FC's specific formulation or
ingredients, it does contain information and test results
indicating whether there are differences between FC and
soybean or canola oil, and whether it is possible that either
of these oils are components of FC. The Court finds that
disclosure of this information could place Plaintiffs at a
found that disclosure of the information in the reports will
likely result in harm to Plaintiffs, the Court must balance
the public and private interests to determine whether a
protective order is necessary. Phillips, 307 F.3d at
1210-1211. The factors the Court considers are:
(1) whether disclosure will violate any privacy interests;
(2) whether the information is being sought for a legitimate
purpose or for an improper purpose; (3) whether disclosure of
the information will cause a party embarrassment; (4) whether
confidentiality is being sought over information important to
public health and safety; (5) whether the sharing of
information among litigants will promote fairness and
efficiency; (6) whether a party benefitting from the order of
confidentiality is a public entity or official; and (7)
whether the case involves issues important to the public.
In re Roman Catholic Archbishop of Portland in
Oregon, 661 F.3d 417, 424-25 n.5 (9th Cir. 2011) (citing
Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d
disclosure of the expert reports will violate Plaintiffs'
privacy interests in their private financial information and
their confidential business information. Second, Defendant
properly seeks disclosure of the reports pursuant to the
discovery rules for use in this litigation; however, if the
reports are not subject to a protective order, Plaintiffs
have alleged that they have good reason to believe that
Defendant may publish the reports on his personal blog.
Third, disclosure of the reports may cause Plaintiffs
embarrassment to the extent that their sales have evidently
fallen since publication of Defendant's alleged
defamatory statements. Fourth, the reports do not contain
information important to public health or safety. Fifth,
sharing the information among litigants will promote
fairness; however, disclosing the information to Defendant
for purposes of this lawsuit does not necessarily mean it
must also be publically disclosed. Sixth, none of the parties
to this action are public entities or officials. Finally,
Judge Soto has previously found that this case involves
issues important to the public. While the undersigned does
not dispute that finding, it is not necessary to publically
reveal Plaintiffs' private financial information or the
chemistry report detailing the similarities or differences
between FC and canola and soybean oil in order to prove the
truth or falsity of Defendant's statements. Accordingly,
the undersigned finds that the balance between public and
private interests weighs in favor of granting Plaintiff's
Motion to Compel
moves the Court for an order requiring Plaintiffs to respond
to several interrogatories and a document request. Defendant
argues that even if FC's formula is a trade secret,
Defendant is still entitled to discovery in order to prove
whether his statements about FC are true. (Doc. 61 at 2).
However, the parties appear to have different theories as to
what Defendant actually meant when he published his
statements that FC was ...