1 

# I n the United States Court of Federal Claims

Nos. 09-844C & 10-741C (consolidated)

(Filed: August 20, 2013)

**************************************

SIKORSKY AIRCRAFT CORPORATION,

Plaintiff,

v.

UNITED STATES,

Defendant.

************************************** ) ) ) ) ) ) ) ) ) ) ) Post-judgment motions to modify and effectively negate a protective order; timeliness; Federal Circuit Rule 11(d); confidential commercial information; RCFC 26(c)(1)(G); cost-of-production data; competitive harm

Jeffrey A. Hall, Bartlit Beck Herman Pa lenchar & Scott LLP, Chicago, Illinois, for plaintiff. With him on the brief were Kather ine M. Swift, Bartlit B eck Herman Palenchar & Scott LLP, Chicago, Illinois, and Karen L. Ma nos, Gibson, Dunn & Crutcher LLP, Washington,

D.C.

James W. Poirier, Attorney, Commercial Li tigation Branch, Civil Division, United States Department of Justice, Washingt on, D.C., for defendant. With him on the briefs were Stuart F. Delery, Acting Assistant Attorney General, J eanne E. Davidson, Director, and Steven J. Gillingham, Assistant Director, Commercial Li tigation Branch, Civil Division, United States Department of Justi ce, Washington, D.C.

OPINION AND ORDER

LETTOW, Judge.

A final post-trial decision and a judgment we re entered in these consolidated cases on March 22, 2013. See Sikorsky Aircraft Corp. v. United States , 110 Fed. Cl. 210 (2013); Judgment of March 22, 2013, ECF No. 321. Appeals from that judgment are now pending before the Court of Appeals for the Federal Circuit. See appeals docketed , Nos. 13-5096, 13-5099 (Fed. Cir. May 24, 2013, May 30, 2013). Given the appellate stage of these cases, this court has a very limited role jurisdictionally, having power to address only a restricted set of post-judgment matters. See Griggs v. Provident Consumer Discount Co. , 459 U.S. 56, 58 (1982) (reite rating the principle that upon the filing of an appeal, the tr ial court surrenders “its control over those aspects of the case involved in the appeal.”). One of those potentia lly residual issues has now been put before the2 court, by way of a motion by the government to unseal virtually all of the s ealed portions of the

trial record. See Def.’s Mot. to Unseal the Trial Record, or , in the Alternative, to Redact Sealed Documents in the Trial Record (“De f.’s Mot. to Unseal”), ECF No. 329. 1 Sikorsky vigorously opposes this motion, arguing both that it is untim ely and that it is without merit because the relevant portions of the trial record contain competitively se nsitive information that is appropriately subject to a previous ly entered protec tive order.

Concurrently, the government has filed a sec ond motion to seal one page of the trial transcript that has not been sealed. See Def.’s Sealed Mot. to Seal Page 172 of the Trial Tr. (“Def.’s Further Mot.”), ECF No. 330. Sikor sky opposes this motion on the ground that the pertinent page contains no specific competitively sensitive information. Pl.’s Opp’n at 9.

The government’s motions in effect seek to negate the protective order entered early in this litigation at the behest of the parties pursuan t to Rule 26(c)(1)(G) of the Rules of the Court of Federal Claims (“RCFC”), to protect confiden tial and proprietary information from public

disclosure. 2 The motions also constitute a belated volte-face from an earlier, timely effort by both parties to calibrate and settle the protec ted portions of the record on appeal. See Joint Mot. to Unseal Portions of the Trial Tr. (June 26, 2013), ECF No. 327. That joint motion had been filed with the court pursuant to Federal Circuit Rule 11(d), 3 and it was promptly granted. See Order of June 26, 2013, ECF No. 328.

1 The government concedes that one exhibit could not be unsealed because it contains export-controlled technical data on the UH-60L BLACKHAWK helicopter, and disclosure of export-controlled information is not permitted by federal law. See Def.’s Mot. to Unseal at 1; Pl.’s Opp’n to Def.’s Mots. to Unseal the Trial Record and to Seal One Page of the Trial Tr. (“Pl.’s Opp’n”), at 2, ECF No. 331.

2 RCFC 26(c)(1)(G) is identical to Fed. R. Ci v. P. 26(c)(1)(G), and provides that for good cause, a protective order may be entered “requiring that a trade secret or other confidential research, development, or commercial informati on not be revealed or be revealed only in a specified way.” RCFC 26(c)(1)(G).

3 Federal Circuit Rule 11 is enti tled “Forwarding the Record.” Subdivision (d) provides:

(d) Agreement by Parties to Modify a Protective Order; Certificate of Compliance. If any portion of the record in the trial court is subject to a protec tive order and a notice of appeal has been filed, each party must pr omptly review the record to determine whether protected portions need to remain protected on appeal. If a party determines that some portions no longer need to be protected, that part y must seek an agreement with the other party. Any agreement that is reached must be promptly presented to the trial court, which may issue an appropriate order. Whether or not an agreement is reached, each party must file a certificat e of compliance within 45 days of docketing stating it complied w ith this rule. This Federal3 BACKGROUND

On the merits, these cases concern the appl ication of the government’s Cost Accounting Standards (“CAS”) set out at 48 C.F.R. Chapter 99, Subchapter B, Part 9904. Sikorsky has and has had a number of contracts with the government to manufacture and supply aircraft and spare parts to the government, primarily for military use. The government challenged Sikorsky’s allocation of indirect costs to its governme nt contracts and sought reimbursement of approximately $80 million plus interest. See Sikorsky , 110 Fed. Cl. at 213. After trial, the court ruled that the government had failed to carry its burden of proof to demons trate that Sikorsky had improperly allocated indirect costs under the CAS, and Sikorsky accordingly defeated the government’s claim. Id . at 230. The proofs at trial incl uded extensive evidence of various categories of Sikorsky’s costs, and portions of the trial record were sealed to maintain confidentiality of cost data. Correspondingly, the court’s final de cision reflected redactions of data and information about specific costs. Portions of the trial record were sealed and redactions

were made in the court’s final decision in acco rd with the narrowly drawn protective order

entered in the cases.

STANDARD FOR DECISION

The court’s protective order is a non-final orde r, reconsideration of which is governed by RCFC 54(b) and 59(a). RCFC 54(b) specifies that a non-final order “may be revised at any time before the entry of a judgment adjudicating al l the claims and all the parties’ rights and liabilities.” Even though these cases have been finally ad judicated, the protective order has a continuing effect and constrains the parties’ public disc losure of certain fa ctual aspects of the litigation. The protective order c onsequently is subject to rec onsideration on grounds applicable to interlocutory orders. Cf. L-3 Commc’ns Integrated Sys., L.P. v. United States , 98 Fed. Cl. 45, 48 (2011) (addressing a motion for reconsideration of a prior or der for supplementation of an administrative record in a bid protest). Substa ntively, RCFC 59(a)(1) provides that a court may grant a motion for reconsideration for, among othe r things, “any reason for which a rehearing has heretofore been granted in a suit in equity in federal court.” RCFC 59(a)(1)(B). In general, “[t]he decision whether to grant reconsideration lies largely with in the discretion of the [trial]

court.” Yuba Natural Res., Inc. v. United States , 904 F.2d 1577, 1583 (Fed. Cir. 1990).

ANALYSIS

A. Timeliness

The government brings its motions pursuan t to Federal Circuit Rule 11(d). See Def.’s Mot. to Unseal at 1; Def.’s Further Mot. at 1. Sikorsky objects that th e government’s motion to

unseal the trial record is untimel y under that Rule. Pl.’s Opp’n at 3. Federal Circuit Rule 11(d) requires parties to seek unsealing of any non-conf idential material in th e trial record and to

Circuit Rule 11(d) does not a pply in a case arising under 19 U.S.C. § 1516a.

Federal Circuit Rule 11(d).4 certify compliance with the Rule “within 45 days of docketing” of the appeal. The government’s appeal was docketed on May 24, 2013, and the partie s consequently were obliged to complete their responsibilities under Fe deral Circuit Rule 11(d) and ce rtify compliance by July 2, 2013. The parties undertook to adhere to this schedule by conferring a nd then filing their Joint Motion

to Unseal Portions of the Tr ial Transcript on June 26, 2013, which motion was granted by this court on the same day. Then, 27 days later, the government sought to obviate that effort by filing the pending motions.

A protective order ordinarily is subject to modification at any time it remains in effect. 4
As a case progresses, even on appeal, circumstances may change such that a previously entered protective order is no longer fully appropriate a nd modification is warrante d. In this instance, however, no showing of such changed circumstances has been made, or even attempted. Nothing has happened to affect Sikorsky’s posture regarding its cost data since the parties completed their obligations under Federal Circuit Ru le 11(d) and filed their Joint Mo tion to Unseal Portions of the Trial Transcript. The time has run under Federa l Circuit Rule 11(d) fo r action to settle the appellate record, and the government has made no showing of any need to reopen the matter.

B. “Trade Secret or Other Confidential Research, Development, or Commercial Information” Under RCFC 26(c)(1)(G)

To support and justify the prot ective order, the government contends that Sikorsky “must demonstrate a trade secret qualifying for the limited protection available under RCFC 26(c)(1)(G).” Def.’s Mot. to Unseal at 2 (citing In re: Violation of Rule 28(d) , 635 F.3d 1352, 1357 (Fed. Cir. 2011)). The protection available under the rule is not so narrow, however. Instead, the court must also cons ider “confidential . . . commerci al information,” and in that context, the court evaluates the competitiv e harm that may accrue through disclosure. See

, e.g. , Violation of Rule 28(d) , 635 F.3d at 1357; Miles v. Boeing Co. , 154 F.R.D. 112, 114-15 (E.D. Pa. 1994) (issuing a protective order to shield labor costs from disclo sure because “[s]uch information reflects upon Boeing’s price compe titiveness in its market. If th e information sought was made available to the general public, it would directly reflect Boeing’s labor costs allowing competitors to examine Boeing’s production abi lities.”). That balancing pro cess is an everyday, quotidian task for this court, particularly in acting on requests for protective orders in bid protests where competitive considerations are directly at issue.

In this instance, all of Sikorsky’s cost information over recent years was pertinent to the issues raised by the government’s claim under the Cost Accounting Standards. Because

allocation of indirect costs was the focus of the government’s claim, the evidence at trial covered

4 See

, e.g. , Federal Circuit Rule 11(e):

(e) Motion to Modify the Protective Order . A party may move at any

time in this court to modify a protective order to remove protection

from some mate rial or to include another person within its terms.

This court ma y decide the motion or may re mand the case to the trial

court. This court, sua sponte, may direct the parties to show cause

w hy a protective order should not be modified.5 direct materiel and labor costs as well as indire ct costs for military and commercial applications. See Sikorsky , 110 Fed. Cl. at 223-30. In addition, in its manufacturing operations during the relevant time, Sikorsky had “shi ft[ed] from making most parts in-house to buying a portion of finished components from suppliers.” Id . at 227. The cost data were accordingly very revealing about the consequent increase in Sikorsky’s dire ct materiel costs and the accompanying decrease or relative stability in its la bor costs and indirect costs. Id

. 5

Despite this explicit and ex tensive record, with the atte ndant strong showing of the competitive sensitivity of the cost data, the government asserts that Sikorsky provided only a “conclusory allegation” that the cost data were confidential under a comp etitiveness standard.

Def.’s Mot. to Unseal at 3. The assertion has no basis. The protective order entered in this case was narrowly drawn to shield from disclosu re cost-of-production data that would cause substantial competitive harm if ma de publicly available. Numerous other decisions have reached the same result in comparable circumstances. See United Techs. Corp. v. United States Dep’t of Defense , 601 F.3d 557, 564 (D.C. Cir. 2010) (holding that release of “propr ietary information regarding Sikorsky’s manufacturing process a nd procedures” would “substantially harm Sikorsky’s competitive position because its compet itors would use this information to their advantage in . . . adjusting th eir manufacturing techniques”); McDonnell Douglas Corp. v. United States Dep’t of the Air Force , 375 F.3d 1182, 1190-92 (D.C. Cir. 2004) (holding that

disclosure of a defense contractor’s costs could likely cause competitive harm and thus that those costs were exempt from disclosure u nder the Freedom of Information Act); Hitkansut LLC v.

United States , 111 Fed. Cl. 228, 237 (2013) (holding that “competitive information” including “manufacturing costs” was protected from di sclosure under the Fede ral Technology Transfer Act); General Elec. Co. v. Department of the Air Force , 648 F. Supp. 2d 95, 102-04 (D.D.C. 2009) (holding that protection of unit prices in engine parts co ntracts was proper due to likely competitive harm).

In sum, the government’s motions have no merit.

CONCLUSION

The government’s Motion to Unseal the Trial Re cord, or, in the Alternative, to Redact

Sealed Documents in the Trial Record is DENIED , as is the government’s Sealed Motion to Seal Page 172 of the Trial Transcript.

It is so ORDERED

. s/ Charles F. Lettow

Charles F. Lettow Judge

5 The one page of the trial transcript that the government does want to seal is a page reporting testimony of a Sikorsky official that in general te rms compares Sikorsky’s cost structure in years back to 1999. See Def.’s Further Mot. at 2. Th at page was not sealed under the protective order because it di d not contain any specific cost -of-production information. The particular testimony does, however, show the co mpetitive sensitivity of the cost information dating back to 1999.