Source: http://pa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180405_0000978.MPA.htm/qx
Timestamp: 2019-04-21 20:02:32+00:00

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FindACase | Jeddo Coal Co. v. Rio Tinto Procurement (Singapore) Ptd. Ltd.
Jeddo Coal Co. v. Rio Tinto Procurement (Singapore) Ptd. Ltd.
This litigation, which presents itself as a relatively straightforward commercial dispute over coal contracts, has been mired in procedural delays and discovery disputes for a substantial time.
In order to assist the parties, and to facilitate the continued progress of this litigation, we provide the following guidance and resolution of the outstanding discovery and scheduling issues as we understand them.
District courts provide magistrate judges with particularly broad discretion in resolving discovery disputes. See Farmers & Merchs. Nat'l Bank v. San Clemente Fin. Group Sec., Inc., 174 F.R.D. 572, 585 (D.N.J. 1997). When a magistrate judge's decision involves a discretionary [discovery] matter . . ., “courts in this district have determined that the clearly erroneous standard implicitly becomes an abuse of discretion standard.” Saldi v. Paul Revere Life Ins. Co., 224 F.R.D. 169, 174 (E.D. Pa. 2004) (citing Scott Paper Co. v. United States, 943 F.Supp. 501, 502 (E.D. Pa. 1996)). Under the standard, a magistrate judge's discovery ruling “is entitled to great deference and is reversible only for abuse of discretion.” Kresefky v. Panasonic Commc'ns and Sys. Co., 169 F.R.D. 54, 64 (D.N.J. 1996); see also Hasbrouck v. BankAmerica Hous. Servs., 190 F.R.D. 42, 44-45 (N.D.N.Y. 1999) (holding that discovery rulings are reviewed under abuse of discretion standard rather than de novo standard); EEOC v. Mr. Gold, Inc., 223 F.R.D. 100, 102 (E.D.N.Y. 2004) (holding that a magistrate judge's resolution of discovery disputes deserves substantial deference and should be reversed only if there is an abuse of discretion).
Halsey v. Pfeiffer, No. 09-1138, 2010 WL 2735702, at *1 (D.N.J. Sept. 27, 2010).
Mindful of this broad discretion to resolve the current discovery disputes that have persisted in this litigation, and finding that resolution of those disputes and addressing scheduling issues relating to that discovery is necessary to the efficient resolution of parties' claims, we address each of the areas of conflict that the parties have identified.
Rio Tinto defends its designation of these many pages of documents on the grounds that the information contained within them represents a kind of trade secret, even though much of the information seems to relate only to the coal prices agreed upon by Rio Tinto and its current trading partners. Nevertheless, Rio Tinto argues that if Jeddo's business team has access to this information it would give Jeddo an unfair competitive advantage “over Defendants and over Jeddo's competitors related to the sales of coal because the documentation shows how much Defendants are paying for coal and the characteristics of that coal and how much Jeddo's competitors are charging clients for coal, the amount of coal those competitors are committed to providing, and the characteristics of that coal.” (Doc. 60, at 7.) Rio Tinto attempts to analogize the price it pays for coal, and the suppliers with which it deals, to a pricing or customer list, which some courts have found to constitute trade secrets that may be subject to some measure of confidentiality in litigation.
Jeddo dismisses these concerns, arguing that the commercial information on these documents does not constitute a trade secret, and noting that Rio Tinto and Jeddo are not competitors and that it is extremely unlikely that the parties will be doing business again in the future. Even if they do, Jeddo maintains that nothing about this information could reasonably be expected to give either party an unfair advantage over the other, and that Rio Tinto would be free to decline to business with Jeddo if it found the terms of any hypothetical business relationship to be unfavorable.
Jeddo represents that the AEO issue is the most urgent of its discovery disputes with Rio Tinto. Jeddo argues that in order to prepare meaningfully for looming depositions, Jeddo's counsel needs to be able to talk with his client about “the many important documents that are still designated as AEO.” (Doc. 60, at 2.) Given counsel's interest in being able to confer with his client throughout the litigation, including about a substantial number of the documents Rio Tinto has produced; and because Jeddo contends that the AEO-designated documents should not be considered trade secrets in any event, Jeddo urges the Court to overrule Rio Tinto's efforts to prevent counsel from sharing these responsive materials with his in-house counterpart.
We agree with Jeddo that on the current record before us Rio Tinto's designation of these documents as AEO appears overly broad and insufficiently supported, and find that at minimum Jeddo's outside lawyers should be able to confer about the materials with in-house counsel and other Jeddo representatives to the extent necessary. Given what is now before us we disagree with Rio Tinto that the basic commercial information contained in the documents is so closely-held that it would be considered tantamount to a trade secret.
Under Rule 26(c)(7), a protective order may issue to protect trade secrets or other confidential research, development, or commercial information. Smith v. Bic Corp., 869 F.2d 194, 199 (3d Cir. 1989). The party seeking protection has the burden of showing that it is entitled to the protection sought. Gulf Oil Co. v. Bernard, 452 U.S. 89, 102 n.16 (1981). Establishing that a particular document is a trade secret requires specific showings, and the party seeking to shield potentially responsive information from disclosure as a trade secret faces a high burden. Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102, 109-110 (3d Cir. 2010). “Good cause is established on a showing that disclosure will work a clearly defined and serious injury to the party seeking disclosure. The injury must be shown with specificity.” Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1071 (3d Cir. 1984). “Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning” will not establish good cause. Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir. 1986).
Using this well-settled legal standard as our guide, we find that Rio Tinto simply has not demonstrated that basic pricing information relating to the cost of coal and related transactions, which is shared between Rio Tinto and its trading partners, is of such a commercially-sensitive nature that it deserves the stamp of confidentiality that would prevent counsel from communicating with his client about it.
Furthermore, although Rio Tinto has recently reduced the overall number of documents and pages that it would designate as AEO, that number is still substantial relative to the defendant's total document production, and in our view is excessive. Courts have expressed concern about over-designation of discovery production as AEO, particularly since it has the potential to keep the opposing party “in the dark about the important facts of the case.” Defazio v. Hollister, Inc., No. CIV S-04-1358, 2007 WL 2580633, at *1-2 (E.D. Cal. Sept. 5, 2007); see also Election Systems & Software, LLC v. RBM Consulting, LLC, No. 8:1CV438, 2015 WL 1321440, at *5 (D. Neb. Mar. 24, 2015) (recognizing that the AEO designation “must be used sparingly and only when truly necessary because it limits the ability of the receiving party to view the relevant evidence, fully discuss it with counsel, and make intelligent litigation decisions.”). Moreover, the use of AEO designations often is limited to cases where a party has demonstrated good cause for the designation by “articulating concrete and specific harms that would result from de-designation.” Bobrick Washroom Equipment, Inc. v. Scranton Products, Inc., No. 3:14-CV-00853, 2017 WL 841286, at *1 (M.D. Pa. Mar. 3, 2017) (Mariani, J.).
In this case, we do not find that Rio Tinto has met this exacting standard for showing good cause to restrict the plaintiff's in-house counsel and other representatives assisting in this case from reviewing the documents in order to coordinate Jeddo's litigation strategy. As described by the parties, the documents themselves do not clearly appear to be trade secrets and, equally significantly, the parties seem to agree that Jeddo and Rio Tinto are no longer business competitors, and thus any arguable risk posed by sharing this information with in-house counsel appears especially limited, if it exists at all. Rather, as reported by the parties, the documents appear to contain information reflective of Rio Tinto's assessment of the coal market, and concerns information regarding prices and profits, and Rio Tinto's business decisions regarding the amount of coal to purchase and the suppliers of that coal. We find that this information is potentially relevant to the claims and defenses in this case, and do not find that Rio Tinto has articulated “concrete and specific harms” that would result from counsel reviewing these documents with Jeddo's in-house lawyer and other representatives who may be necessary.

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