Title: Farnum v. GD Searle & Co.
Citation: 339 N.W.2d 384
Docket Number: 68882
State: Iowa
Issuer: Iowa Supreme Court
Date: October 19, 1983

339 N.W.2d 384 (1983) Kathy FARNUM, Joe Farnum, and Kathy and Joe Farnum, as Next Friends and Natural Parents of Joe Jr., Cory and Michael Farnum, Appellees, v. G.D. SEARLE &amp; CO., a Corporation, Appellant, and Dr. Robert C. Smith, Dr. Raymond Fitzsimmons, and Dr. John Kunciates, Defendants. No. 68882. Supreme Court of Iowa. October 19, 1983. Rehearing Denied November 16, 1983. *386 Richard W. Lozier, Jr. of Grant, Lozier &amp; Sarcone, Des Moines, and William P. Richmond of Sidley &amp; Austin, Chicago, Ill., for appellant. Fredd J. Haas of Humphrey &amp; Haas, Des Moines, for appellees. Considered en banc. McCORMICK, Justice. The trial court refused to enter a protective order to prevent plaintiffs and their attorneys from disclosing to anyone else or from using in any other case all copies of documents or information acquired by them during discovery of defendant G.D. Searle &amp; Co.'s previously private and unpublished records. We granted interlocutory review of the trial court's ruling. Because we do not find an abuse of the court's discretion, we affirm. Plaintiffs Kathy and Joe Farnum and their children Joe Jr., Cory, and Michael brought this action against Searle on a theory of products liability, seeking damages for injuries allegedly caused to Kathy Farnum from taking Searle's birth control pill Ovulen 28. They separately sought damages from defendant doctors Smith, Fitzsimmons and Kunciates for alleged negligence in prescribing the pill. We have decided an unrelated issue in this case in a separate opinion filed today. See Farnum v. G.D. Searle &amp; Co., Inc., 339 N.W.2d 392 (Iowa 1983). When they filed their petition, plaintiffs also addressed interrogatories and requests for production of documents to Searle. Included in the interrogatories were questions about animal tests, human tests, and reported consequences of using Ovulen 28. In responding to the interrogatories, Searle alleged that much of the information sought by plaintiffs was contained in its New Drug Application (NDA) for Ovulen 28. Searle said its only copy of the NDA was kept secure at its Skokie, Illinois, headquarters, where it was required at all times to be available for Food and Drug Administration inspection. Searle offered to let plaintiffs' counsel inspect relevant portions of the NDA at its Skokie office if counsel would agree not to disclose any of its contents to persons not associated with the litigation. When plaintiffs' counsel rejected this proposal, Searle filed a motion for protective order. The motion was as follows: The motion was accompanied by the following affidavit: Searle requested entry of the following protective order: Plaintiffs resisted the motion on the ground of an absence of sufficient "particular and specific facts" to establish good cause and because of its alleged conflict with the purpose of the rules of civil procedure "to secure the just, speedy, and inexpensive determination of every action." See Iowa R.Civ.P. 67. In oral argument plaintiffs' counsel stated: Searle's counsel responded by arguing that its NDA contained trade secrets and confidential information and that any discovery of its contents should be limited to use in the present litigation. Counsel expressed concern about possible trafficking of discovered information among attorneys for use in other litigation. The trial court denied the motion for protective order because of an asserted failure of Searle to meet its burden of proof and because Searle's desire to prohibit use of the information in other cases was contrary to the purpose of the rules of civil procedure. Iowa Rule of Civil Procedure 123 provides in relevant part: This court has noted that our discovery rules are to be liberally construed to effectuate the disclosure of relevant information to the parties. The trial court has wide discretion in its rulings on discovery issues and will be reversed only when an abuse of discretion is found. Pollock v. Deere and Co., 282 N.W.2d 735, 738 (Iowa 1979). These principles are exemplified in cases interpreting rule 123. See Farley v. Seiser, 316 N.W.2d 857, 858 (Iowa 1982) (rule 123 protective order is not appropriate to limit admissibility of evidence, only its discovery or its effect); Iowa Civil Rights Commission v. City of Des Moines, 313 N.W.2d 491, 496-97 (Iowa 1981) (no trial court abuse of discretion in permitting persons to urge physician-patient privilege in objecting to disclosure of their medical records); Pollock, 282 N.W.2d at 739 (expense of discovery not so great as to justify foreclosing it altogether); Winegard v. Oxberger, 258 N.W.2d 847, 852-53 (Iowa 1977), cert. denied, 436 U.S. 905, 98 S. Ct. 2234, 56 L. Ed. 2d 402 (1978) (first amendment concerns did not require quashing of subpoenas). This court, however, has not previously interpreted rule 123(g). Federal cases interpreting its counterpart in Federal Rule of Civil Procedure 26(c) therefore provide helpful guidance in the present case. It is first necessary to determine what constitutes a trade secret or confidential information within the meaning of the rule. A useful definition is provided in comment b to Restatement of Torts § 757 (1939), which defines a trade secret as "information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." See United States v. International Business Machines Corp., 67 F.R.D. 40, 46-47 (S.D.N.Y.1975). This definition is consistent with the discussion of the concept in Roberts v. DeKalb Agricultural Association, Inc., 259 Iowa 131, 139-40, 143 N.W.2d 338, 343 (1966), where this court recognized that the discovery issue ordinarily cannot "receive intelligent treatment without some evidence extrinsic to the pleadings and questions themselves." Id. at 139, 143 N.W.2d at 343. Factors to be considered in determining whether information is a trade secret or confidential include: Restatement of Torts § 757 (1939) comment b. By its terms rule 123 authorizes a protective order when good cause is shown for finding that disclosure of a trade secret or other confidential information should be prevented or restricted to protect a party "from annoyance, embarrassment, oppression, or undue burden or expense ...." Federal courts uniformly insist "on a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements, in order to establish good cause." 8 C. Wright &amp; A. Miller, Federal Practice and Procedure § 2035, at 265 (1970). See, e.g., General Dynamics Corp. v. Selb Manufacturing Co., 481 F.2d 1204, 1212 (8th Cir.1973), cert. denied, 414 U.S. 1162, 94 S. Ct. 926, 39 L. Ed. 2d 116 (1974). In evaluating the factual showing, a trial court should employ three criteria: In re Halkin, 598 F.2d 176, 191 (D.C.Cir. 1979). These criteria strike a balance between the policy favoring discovery and free expression on one side and a party's interest in avoiding commercial damage and preventing an abuse of discovery on the other. If disclosure is otherwise warranted, however, it should not be precluded merely because of a party's desire to keep adverse information from reaching the public or to bar the information from being used in other cases. See Waelde v. Merck, Sharp &amp; Dohme, 94 F.R.D. 27, 28 (E.D.Mich. 1981); Patterson v. Ford Motor Co., 85 F.R.D. 152, 154 (W.D.Tex.1980); In re Upjohn Antibiotic Cleocin Products Liability Litigation, 81 F.R.D. 482, 484 (E.D.Mich. 1979), aff'd, 664 F.2d 114 (6th Cir.1981); Johnson Foils, Inc. v. Huyck Corp., 61 F.R.D. 405, 410 (N.D.N.Y.1973); Williams v. Johnson &amp; Johnson, 50 F.R.D. 31, 32 (S.D.N. Y.1970). These cases leave the issue of any potential impropriety in dissemination of discovered information to appropriate attorney disciplinary proceedings. Dissemination is not wrong in itself: Patterson, 85 F.R.D. at 154. The federal case most nearly analogous to the present case is Waelde v. Merck, Sharp &amp; Dohme. In that case as in this one the defendant sought to preclude disclosure of all information in the NDA file. As in this case the motion consisted of conclusory allegations of confidentiality and competitive harm. The court held that the movant failed to offer sufficient particulars for the court to determine what information in the NDA was confidential and how its disclosure would cause harm. The court reasoned: 94 F.R.D. at 29. In the present case, Searle did not state facts as opposed to conclusions from which the court could identify what information in the NDA file constituted trade secrets or confidential information. Specifically, the requested information concerning animal tests, human tests, and reported effects from use of the pill was not shown to be in the protected category. Moreover, the alleged competitive harm that might occur from disclosure of the data was not particularized. We find, therefore, that Searle has not established an abuse of discretion in the trial court's refusal to enter a protective order. We add two final points, however. One is that we commend the parties' efforts to cooperate in discovery on an informal basis. Efforts of this kind assist greatly in saving judicial time and in minimizing the expense to litigants that is otherwise inevitable in complex litigation. We encourage these parties and others in similar situations to strive to work out their differences informally when possible. Secondly, we do not foreclose Searle's right to file a renewed motion for protective order subject to the standards delineated in this case, including the scope of trial court discretion. AFFIRMED. All justices concur except CARTER, HARRIS, McGIVERIN, and SCHULTZ, JJ., who dissent. CARTER, Justice (dissenting). I dissent. The defendant, G.D. Searle &amp; Co. is not asking the court to deny the plaintiffs access to information which the latter wish to obtain by way of litigation discovery. Defendant only requests that the court grant protection against other uses of the information by plaintiffs which go beyond the purposes for which they seek the information. Speaking with commendable candor during oral argument before this court, plaintiffs' counsel stated that unless restrained he intended to disseminate the material garnered from the present discovery effort among the members of a group which he identified as "the plaintiffs' bar." The documents in question have been identified as not being public records. They are the private papers of the defendant Searle. That defendant is not obliged to show them to anyone in the absence of a specific legal entitlement on the part of the person or persons seeking to view them. Plaintiffs' counsel has shown no entitlement to view the documents except as a representative of the plaintiffs. Plaintiffs only source of entitlement for viewing the documents is by reason of their assertion that the documents are material to the issues in the pending civil litigation. Given these circumstances, I submit that fairness to defendant Searle suggests that plaintiffs' use of the information obtained should be limited to those purposes upon which their right of access is based. The position which the court takes fails to adequately distinguish between the right to obtain information in the discovery process and the right to use it for purposes unrelated to the litigation. It seeks to turn the issue on some intangible public interest which is not identified. Quoting from In re Halkin, 598 F.2d at 191, it states "there must be no alternative means of protecting the public interest which intrudes less directly on expression." I fail to see where any public interest in expression is involved. What is involved is two competing private interests, both of which would have been fairly accommodated if the protective order which was sought had been granted. It is ironic that the majority concludes the opinion by encouraging "efforts to cooperate in discovery on an informal basis." The standards adopted in the opinion for the granting of a protective order destroy any incentive for such cooperation. I would reverse the trial court's order and remand the case for the entry of a protective order *392 in the form which defendant Searle requests. HARRIS, McGIVERIN and SCHULTZ, JJ., join this dissent.