Court Opinion

ID: 1038184
Source: CourtListenerOpinion
Date Created: 2013-08-22 00:02:52.093681+00
Date Added: 2024-06-11T12:47:04.651078
License: Public Domain

In the United States Court of Federal Claims
                            Nos. 09-844C & 10-741C (consolidated)

                                     (Filed: August 20, 2013)

**************************************                    Post-judgment motions to modify and
                                       )                  effectively negate a protective order;
SIKORSKY AIRCRAFT CORPORATION, )                          timeliness; Federal Circuit Rule 11(d);
                                       )                  confidential commercial information;
                  Plaintiff,           )                  RCFC 26(c)(1)(G); cost-of-production
                                       )                  data; competitive harm
      v.                               )
                                       )
UNITED STATES,                         )
                                       )
                  Defendant.           )
                                       )
**************************************

        Jeffrey A. Hall, Bartlit Beck Herman Palenchar & Scott LLP, Chicago, Illinois, for
plaintiff. With him on the brief were Katherine M. Swift, Bartlit Beck Herman Palenchar &
Scott LLP, Chicago, Illinois, and Karen L. Manos, Gibson, Dunn & Crutcher LLP, Washington,
D.C.

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

                                    OPINION AND ORDER

LETTOW, Judge.

        A final post-trial decision and a judgment were 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) (reiterating the principle that
upon the filing of an appeal, the trial court surrenders “its control over those aspects of the case
involved in the appeal.”). One of those potentially residual issues has now been put before the
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court, by way of a motion by the government to unseal virtually all of the sealed 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 (“Def.’s Mot. to Unseal”), ECF No. 329.1 Sikorsky vigorously
opposes this motion, arguing both that it is untimely and that it is without merit because the
relevant portions of the trial record contain competitively sensitive information that is
appropriately subject to a previously entered protective order.

        Concurrently, the government has filed a second 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. Sikorsky 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 pursuant to Rule 26(c)(1)(G) of the Rules of the Court of
Federal Claims (“RCFC”), to protect confidential 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 protected 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. Civ. 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 information not be revealed or be revealed only in a
specified way.” RCFC 26(c)(1)(G).
       3
           Federal Circuit Rule 11 is entitled “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 protective order and a notice of appeal
                 has been filed, each party must promptly 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 party 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 certificate of compliance within 45 days
                 of docketing stating it complied with this rule. This Federal

                                                    2
                                    BACKGROUND

        On the merits, these cases concern the application 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 government 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 demonstrate 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 included 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 decision 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 accord with the narrowly drawn protective order
entered in the cases.

                               STANDARD FOR DECISION

         The court’s protective order is a non-final order, 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 all the claims and all the parties’ rights and
liabilities.” Even though these cases have been finally adjudicated, the protective order has a
continuing effect and constrains the parties’ public disclosure of certain factual aspects of the
litigation. The protective order consequently is subject to reconsideration 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 order for supplementation of an
administrative record in a bid protest). Substantively, RCFC 59(a)(1) provides that a court may
grant a motion for reconsideration for, among other 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 within 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 pursuant to Federal Circuit Rule 11(d). See Def.’s
Mot. to Unseal at 1; Def.’s Further Mot. at 1. Sikorsky objects that the government’s motion to
unseal the trial record is untimely under that Rule. Pl.’s Opp’n at 3. Federal Circuit Rule 11(d)
requires parties to seek unsealing of any non-confidential material in the trial record and to

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

Federal Circuit Rule 11(d).

                                                3
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 parties consequently were obliged to complete
their responsibilities under Federal Circuit Rule 11(d) and certify compliance by July 2, 2013.
The parties undertook to adhere to this schedule by conferring and then filing their Joint Motion
to Unseal Portions of the Trial 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 and modification is warranted. 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 Rule 11(d) and filed their Joint Motion to Unseal Portions of the
Trial Transcript. The time has run under Federal Circuit Rule 11(d) for 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 protective 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 consider “confidential . . . commercial information,” and in that
context, the court evaluates the competitive 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 disclosure because “[s]uch information
reflects upon Boeing’s price competitiveness in its market. If the information sought was made
available to the general public, it would directly reflect Boeing’s labor costs allowing competitors
to examine Boeing’s production abilities.”). That balancing process 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 material or to include another person within its terms.
                  This court may decide the motion or may remand the case to the trial
                  court. This court, sua sponte, may direct the parties to show cause
                  why a protective order should not be modified.

                                                    4
direct materiel and labor costs as well as indirect 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 “shift[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 direct materiel costs and the accompanying decrease
or relative stability in its labor costs and indirect costs. Id.5

       Despite this explicit and extensive record, with the attendant 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 competitiveness 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 disclosure cost-of-production data that would cause
substantial competitive harm if made 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 “proprietary information
regarding Sikorsky’s manufacturing process and procedures” would “substantially harm
Sikorsky’s competitive position because its competitors would use this information to their
advantage in . . . adjusting their 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 under 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 disclosure under the Federal 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 contracts 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 Record, 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 terms compares Sikorsky’s cost
structure in years back to 1999. See Def.’s Further Mot. at 2. That page was not sealed under
the protective order because it did not contain any specific cost-of-production information. The
particular testimony does, however, show the competitive sensitivity of the cost information
dating back to 1999.

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