Court Opinion

ID: 9965766
Source: CourtListenerOpinion
Date Created: 2024-05-03 14:10:16.307383+00
Date Added: 2024-06-11T08:25:38.676037
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-2361-22

MEZZION PHARMA CO.
LTD. and MEZZION
INTERNATIONAL, LLC,

         Plaintiffs-Appellants,

v.

DR. REDDY'S
LABORATORIES, INC.
and DR. REDDY'S
LABORATORIES, LTD.,

     Defendants-Respondents.
___________________________

                   Argued January 31, 2024 – Decided May 3, 2024

                   Before Judges Accurso, Vernoia and Gummer.

                   On appeal from an interlocutory order of the Superior
                   Court of New Jersey, Law Division, Mercer County,
                   Docket No. L-0098-17.

                   Joshua D. Curry (Lewis Brisbois Bisgaard & Smith,
                   LLP) of the Florida and Georgia bars, admitted pro
                   hac vice, argued the cause for appellants (Lewis
                   Brisbois Bisgaard & Smith, LLP, and Joshua D.
            Curry, attorneys; Jonathan M. Preziosi, of counsel and
            on the briefs).

            Roger B. Kaplan argued the cause for respondents
            (Greenberg Traurig, LLP, attorneys; Roger B. Kaplan,
            on the brief).

PER CURIAM

      We granted plaintiffs Mezzion Pharm. Co. LTD and Mezzion Int'l,

LLC's (Mezzion) motion for leave to appeal a discovery order requiring

Mezzion to turn over information Mezzion characterizes as its "competitively

sensitive trade secrets" to defendants Dr. Reddy's Laboratories, Inc. and Dr.

Reddy's Laboratories, Ltd. (DRL), the former manufacturer of Mezzion's

"flagship drug udenafil." Mezzion contends the information is irrelevant to the

claims and defenses in the litigation and cannot lead to the discovery of

admissible evidence but would allow DRL to compete unfairly against

Mezzion "in the rare pediatric Fontan market that is valued in the billions of

dollars per year." Having reviewed the extensive record presented on this

interlocutory appeal and having heard oral argument, we agree with the trial

court that the information is relevant and discoverable and thus affirm Judge

Hurd's order compelling the discovery in accordance with the negotiated

protective order entered by the court.

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                                         2
      Although the chemistry of udenafil and the processes for manufacturing

it are no doubt complicated, 1 the discovery dispute is not. According to

Mezzion, "[u]denafil is an oral phosphodiesterase-5 inhibitor," approved to

treat erectile dysfunction (the ED indication) in South Korea, where it was

developed by Mezzion's predecessor, Dong-A Pharmaceutical Co., Ltd., and in

several other countries but not in the United States. Mezzion is also

developing udenafil for the treatment of congenital ventricle heart disease in

adolescents post-Fontan palliative surgery (the Fontan indication). The U.S.

Food & Drug Administration has designated udenafil an orphan drug for the

Fontan application, meaning the number of people affected by the condition

for which the drug is intended is fewer than 200,000 persons, which will

permit a longer period of exclusivity to Mezzion upon approval of the drug for

the Fontan indication. See 21 U.S.C. § 360cc; 21 C.F.R. 316.

      Mezzion does not have its own manufacturing facility. In 2007, it

partnered with DRL, a generic manufacturer based in India, to produce both

the active pharmaceutical ingredient (API), that is, the udenafil, as well as the

1
  Mezzion claims the manufacturing process is complicated because it requires
a separate process to manufacture a starting material critical to the
manufacture of udenafil. According to Mezzion, that "procedure is highly
volatile and outside of the capabilities of most manufacturers."
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finished udenafil tablets for both clinical trials and commercial development in

the United States. Mezzion's new drug application (NDA) for udenafil for the

ED indication, filed with the FDA in December 2014, relied on DRL's drug

master file to provide the detailed information about the facilities and

processes DRL used in the manufacture of the drug.

      A few weeks before Mezzion submitted its NDA, the FDA inspected a

DRL facility in India where DRL was manufacturing udenafil. Following its

inspection, the FDA issued an FDA Form 483 report to DRL, notifying it of

several problems the FDA had observed at the facility regarding DRL's

compliance with the agency's current Good Manufacturing Practice (cGMP)

regulations through which the agency oversees the methods, facilities, and

controls used in the manufacture of drugs. DRL's failure to correct the

problems to the agency's satisfaction led the FDA to issue a warning letter to

DRL in November 2015, and to the FDA's advice to Mezzion around the same

time "that the violations at [DRL] are very serious," DRL's "responses for

corrective actions were insufficient," and "the 483 observations involved

udenafil."

      Specifically, the FDA's Office of Compliance informed Mezzion that

"the 483 observations related to lack of control on data integrity and analytical

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                                        4
equipment" caused "concerns for the authenticity and reliability of the

analytical test results and data" generated by DRL and submitted to the FDA in

support of Mezzion's NDA for udenafil. Mezzion claims it was advised by "a

senior official from the Office of Manufacturing Quality at the FDA . . . that it

needed to find a new commercial supplier and should not continue to rely on

[DRL] in its effort to launch udenafil in the U.S." In January 2016, the FDA

rejected Mezzion's NDA for udenafil based on "the serious deficiencies"

identified at DRL, "currently the sole manufacturing facility" for the API. The

FDA advised Mezzion its NDA could not be approved until those deficiencies

were corrected.

      Mezzion ended its relationship with DRL and moved the manufacture of

udenafil to two new manufacturers, Polpharma in Poland for API and Halo

Pharma in Canada for finished tablets, a process the parties refer to as "the

tech transfer." Although Mezzion advised the FDA it might be possible to

resubmit its NDA in the third quarter of 2017, it sought further extensions in

2017, 2018, 2019, and 2020, advising "the 483 observations at [DRL's] facility

and the subsequent Warning Letter . . . have not been resolved causing a

severe delay in resolving the CMC [chemistry, manufacturing and controls]

issues that are preventing resubmission" of Mezzion's NDA. Mezzion

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                                        5
attributes the delay to the FDA's edict that Mezzion not use or reference any

information in DRL's udenafil drug file in support of the NDA unless the

information was publicly available from another source. Mezzion finally

abandoned the effort to gain approval of udenafil for the ED indication

sometime in 2020, claiming it missed its launch window into a "branded ED

market" after the ED market opened to generics in 2017. It is continuing to

pursue FDA approval of udenafil for the Fontan indication, having submitted

its initial NDA for that application in June 2020.2

      Mezzion claims the only reason the FDA denied its NDA for udenafil in

2016 was because of DRL's cGMP violations. It asserts that had Mezzion not

chosen DRL as its manufacturing partner, Mezzion's NDA would have been

approved in 2016. Mezzion asserts it suffered three distinct categories of

damages as a result of "DRL's fraud and complete disregard for cGMP and

U.S. law": the costs of the tech transfer from DRL to Polpharma and Halo,

which it estimates at $20 million; its out-of-pocket costs of over $400,000 to

retest tablets DRL made for Mezzion's early Fontan clinical trials, which the

2
  DRL asserted at oral argument in the trial court that the FDA had denied
Mezzion's NDA for the Fontan indication in June 2020 based not on the
manufacturing process for udenafil but on issues relating to the clinical trials ,
and that its 2021 resubmission remains pending.
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                                         6
FDA required Mezzion to prove were not adulterated; and the profits Mezzion

lost due to its inability to obtain FDA approval to launch udenafil into a

branded ED market, which Mezzion now estimates at over $900 million.

      The discovery dispute is rooted in Mezzion's response to question six of

DRL's third set of interrogatories, asking Mezzion to "[i]dentify and describe

in detail all work performed by any manufacturer other than DRL regarding

udenafil at Mezzion's request or direction after November 2015." Mezzion

responded by alluding to the "laborious and time-consuming" process of

transferring the technology from DRL to Polpharma and Halo from January

2016 until October 2019. And further responded that

            [d]uring the process of moving manufacturers, it
            became apparent that DRL's manufacturing process
            for udenafil contained significant flaws that were
            likely to present serious impediments to getting the
            FDA to approve of the manufacturing process that
            DRL was following (e.g., failed batches late in tech
            transfer process and discovery of unidentified and
            unknown impurities). This required Mezzion and its
            new manufacturers to spend significant amounts of
            time, money, and resources to attempt to remedy the
            problems that existed in DRL's manufacturing process.

      DRL sought to compel a more specific answer to that interrogatory ,

arguing that any purported problems with the manufacturing process DRL

developed for udenafil that Mezzion claimed had required Mezzion "and its

                                                                             A-2361-22
                                        7
new manufacturers to spend significant amounts of time, money, and resources

to attempt to remedy," were relevant to Mezzion's claim for its out-of-pocket

costs and its lost-profit damages, as well as to DRL's defense that Mezzion had

failed to mitigate its damages.

      Specifically, DRL argued that invoices Mezzion produced in discovery

to support its tech-transfer costs included invoices for work performed by the

new manufacturers for changes to DRL's process, entitling DRL to inquire

about the changes Mezzion claimed were necessary. DRL also argued

information about those changes was relevant to Mezzion's claim that its

commercial launch of udenafil was delayed and ultimately abandoned because

of the time it took to replace DRL as the manufacturer and prepare to resubmit

the NDA. DRL argued it was entitled to know why Mezzion couldn't have

simply resubmitted the NDA in late 2017, as it had planned, using DRL's

process with the new manufacturers' data, because had Mezzion been able to

launch in 2018, it would've suffered only a year or two in lost profits instead

of the damages for the permanent inability to enter the ED market it claimed.

      Finally, DRL argued it was entitled to "full discovery" regarding

Mezzion's claim that there were problems with DRL's manufacturing process,

including what the issues were, when they were discovered, why Mezzion

                                                                           A-2361-22
                                        8
believed they presented impediments to the FDA's approval of a resubmitted

NDA, what Mezzion and its manufacturers did to attempt to remedy the issues,

whether Mezzion acted diligently to effect a remedy, and how long it took to

do so, as well as full details about the allegedly new manufacturing process

Mezzion and its manufacturers had developed. DRL claimed it was entitled to

that information because it was relevant to its claim that Mezzion had failed to

mitigate its damages by simply resubmitting the NDA using DRL's process and

the new manufacturers' data.

      Mezzion countered that the information DRL sought related only to

Mezzion's manufacture of udenafil for the Fontan indication, and it "is not

seeking any damages related to Fontan — whether out-of-pocket, lost profits,

or otherwise [—] except for the out-of-pocket costs that Mezzion incurred to

retest tablets DRL made for early Fontan clinical trials," which both parties

agree are not part of their discovery dispute. Mezzion claimed the research

and development manufacturing changes it made with Polpharma and Halo for

the Fontan indication are not relevant to its claims, which are limited to the ED

indication, or DRL's defenses, which are circumscribed by the claims, and

would not lead to the discovery of admissible evidence under Rule 4:10-2(a).

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                                       9
      First, Mezzion contended that because the FDA would not allow

Mezzion to use any of DRL's data in resubmitting its NDA for the ED

indication, the problems with DRL's manufacturing process did not become

apparent until late in the tech-transfer process, leaving Mezzion no time to

correct them and launch udenafil into the branded ED market. Specifically,

Mezzion contended it had used its "new manufacturing details" comprised of

"detailed scientific, chemistry, synthesis, research, and manufacturing data,"

only in connection with the Fontan indication because by the time those details

were developed the ED market had already been "heavily genericized."

      Second, Mezzion contended the discovery of its new manufacturing

details, which would reveal to DRL exactly how to remedy the problems with

its defective manufacturing process for udenafil, thus allowing it to unfairly

compete in the Fontan market, which Mezzion estimates is worth more than $1

billion per year, cannot lead to the discovery of admissible evidence. 3

Mezzion argued the information DRL seeks, that is whether the FDA deemed

DRL's manufacturing process deficient, whether Mezzion needed to make

3
  We note that at oral argument in the trial court, Mezzion's counsel asserted
the manufacturing process for udenafil, which has been approved in other
countries for the ED indication, was not developed by DRL but by Mezzion's
predecessor. We do not know if that is accurate or its impact, if any, on
Mezzion's damage claims.
                                                                           A-2361-22
                                       10
changes to the manufacturing process, and whether the FDA would have

required the changes for NDA approval, are committed to the exclusive

jurisdiction of the FDA. And because whether the FDA would have approved

the ED NDA on resubmission, after first rejecting it solely based on DRL's

flawed process, is a question committed exclusively to the FDA, it is

preempted and beyond the judge's or any jury's purview.

      At argument on the motion, Judge Hurd took pains to establish that both

sides agreed the manufacturing process for making udenafil would be the same

whether Mezzion was producing it for the ED indication or for the Fontan

indication. After carefully questioning counsel about the points made in their

briefs, sharpened at oral argument, the judge agreed with DRL that the new

manufacturing details were discoverable.

      In a ruling from the bench, Judge Hurd concluded that "at the end of the

day it's not a question of admissibility, it's a question of is it reasonably

calculated to lead to the discovery of admissible evidence under [Rule] 4:10-

2." He reasoned that DRL needed to have the "technical scientific R&D

information" about the new manufacturing details to allow it "to test the

information" Mezzion had produced. The judge acknowledged it was not clear

whether the information "ultimately comes into court" but found it was

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                                        11
relevant to whether the ED NDA could have been resubmitted, which is

"relevant ultimately to damages."

      Following another hearing to settle the form of order, including the

terms of the protective order under which the discovery would be produced,

Judge Hurd entered an order directing Mezzion to provide an amended answer

to DRL's interrogatory six, that:

            (a) sets forth a detailed narrative description sufficient
            to show the purported problems with the
            manufacturing process used by [DRL] to manufacture
            udenafil and any changes or remedies made to the
            manufacturing process by or for Mezzion (e.g., by
            Polpharma, Halo, or anyone else) that Mezzion
            considered or pursued in connection with the
            purported problems or that resulted in a new, different,
            altered, or improved manufacturing process for
            udenafil, including, at a minimum, sufficient details
            regarding technical, scientific, chemistry, research and
            development information to show any problems,
            changes, and remedies with or to the manufacturing
            process used by [DRL] to manufacture udenafil,
            including the applicable dates and timelines, how
            significant the problems where, the potential impact of
            the problems on FDA approval of the ED NDA,
            whether the changes or remedies needed to be made,
            the efficacy of the changes or remedies, the costs of
            the changes or remedies, and time projected and
            actually spent on pursuing the changes or remedies
            (the "New Manufacturing Details");

            (b) cites by bates number or makes available for
            inspection documents that fully provide a detailed,

                                                                         A-2361-22
                                       12
            comprehensive, and complete description of the New
            Manufacturing Details; or

            (c) provides a combination of a detailed narrative
            description and makes available for inspection
            documents that fully provide a detailed,
            comprehensive, and complete narrative description of
            the New Manufacturing Detail.

      In their briefs on this interlocutory appeal, the parties reprise the

arguments they made to the trial court, with Mezzion emphasizing that the

court erred in ordering it to produce its proprietary, trade-secret manufacturing

information even pursuant to the protective order, the terms of which Mezzion

does not challenge. Mezzion asserts the information DRL seeks will not be

admissible at trial because its only use would be to second guess the FDA in

deciding whether to approve a new drug for manufacture and sale.

      Our review of a discovery order is decidedly deferential. Brugaletta v.

Garcia, 234 N.J. 225, 240 (2018). "We will not ordinarily reverse a trial

court's disposition of a discovery dispute 'absent an abuse of discretion or a

judge's misunderstanding or misapplication of the law.'" Ibid. (quoting Capital

Health Sys. Inc. v. Horizon Healthcare Servs. Inc., 230 N.J. 73, 79-80 (2017)).

We approach our review mindful of "the well-established principle that

requests for discovery are to be liberally construed and accorded the broadest

possible latitude to ensure that the ultimate outcome of litigation will depend

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                                       13
on the merits in light of the available facts." Piniero v. Div. of State Police,

404 N.J. Super. 194, 204 (App. Div. 2008).

      Rule 4:10-2(a) provides "[p]arties may obtain discovery regarding any

matter, not privileged, which is relevant to the subject matter involved in the

pending action whether it relates to the claim or defense of the party seeking

discovery or to the claim or defense of any other party." The Rule further

makes clear "[i]t is not ground for objection that the information sought will be

inadmissible at the trial if the information sought appears reasonably

calculated to lead to the discovery of admissible evidence." The burden of

overcoming the presumption of discoverability is on the party resisting the

discovery. R. 4:10-3; Kerr v. Able Sanitary and Env't Servs., Inc., 295 N.J.

Super. 147, 155 (App. Div. 1996).

      The touchstone for discovery in our State is relevancy, that is "evidence

having a tendency in reason to prove or disprove any fact of consequence to

the determination of the action." N.J.R.E. 401; Payton v. N.J. Tpk. Auth., 148

N.J. 524, 535 (1997). "The relevance standard does not refer only to matters

which would necessarily be admissible into evidence, but includes information

reasonably calculated to lead to admissible evidence respecting the cause of

action or its defense." R.L. v. Voytac, 402 N.J. Super. 392, 408 (App. Div.

                                                                            A-2361-22
                                       14
2008) rev'd on other grounds, 199 N.J. 285 (2009); Serrano v. Underground

Utils. Corp., 407 N.J. Super. 253 (2009) (same).

      Mezzion claims it was permanently locked out of the ED market for

udenafil, suffering hundreds of millions of dollars in damages, based solely on

the FDA's denial of its NDA in 2016 because of DRL's "multiple failures . . .

to comply with cGMP." When DRL propounded interrogatories to understand

why Mezzion elected to abandon the ED market in 2020, instead of simply

resubmitting the NDA in late 2017 using data from its new manufacturers as it

planned, Mezzion revealed it had discovered "significant flaws" in DRL's

process for manufacturing udenafil. Mezzion claimed those problems,

including "failed batches late in [the] tech transfer process and discovery of

unidentified and unknown impurities," "were likely to present serious

impediments to getting the FDA to approve of the manufacturing process that

DRL was following," requiring Mezzion "and its new manufacturers to spend

significant amounts of time, money, and resources to attempt to remedy the

problems that existed in DRL's manufacturing process."

      We agree with Judge Hurd that DRL is entitled to know the "significant

flaws" Mezzion alleges it discovered in DRL's manufacturing process for

udenafil, when Mezzion discovered them, what it did to remedy them, how

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                                       15
long it took and how much it cost to do so, as the information is central to

Mezzion's ability to establish its claims and the extent of its damages.

      Although Mezzion asserts in its complaint that DRL's "multiple failures

. . . to comply with cGMP were the sole cause of the denial" of its NDA in

2016, it's Mezzion that's cast doubt on that claim by averring that DRL's

process for manufacturing udenafil, separate from its cGMP problems,

contained "significant flaws that were likely to present serious impediments to

getting the FDA to approve of the manufacturing process that DRL was

following." If Mezzion is aware of flaws in the manufacturing process DRL

was using that Mezzion believes would have prevented or put in doubt the

FDA's approval of udenafil in 2016, DRL is obviously entitled to the

information as it would bear on whether Mezzion can prove DRL's regulatory

violations were the sole reason that prevented approval of the NDA.

      Mezzion's assertion that it developed its new manufacturing details only

after it ended its relationship with DRL and only in connection with

developing "a new and improved manufacturing process for udenafil" for the

Fontan application, making them irrelevant to the claims and defenses in this

case, which relate solely to the manufacture of udenafil for the ED indication,

ignores its concession that the API of the drug is the same regardless of the

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                                       16
application. The issue is not whether Mezzion's manufacturing process

changes were made in connection with the ED or the Fontan indication; it's

whether the changes were necessary to secure the FDA's approval of the API,

the udenafil, for either indication.

      The evidence is also important to Mezzion's claim for damages.

Although Mezzion asserts in a footnote in its reply brief that it "is not seeking

damages based upon the costs to develop the New Manufacturing Details," that

assertion is not clear from its complaint or its answers to interrogatories.

Mezzion alleges in its complaint that it "has been forced to incur out-of-pocket

costs that are likely to total well over $10 million to secure the new

manufacturers, conduct the required new interactions with the FDA, undertake

the new studies, prepare the revised NDA, and move ahead with the Fontan

clinical trials." In its interrogatory answers, Mezzion claims the tech-transfer

"required Mezzion and its new manufacturers to spend significant amounts of

time, money, and resources to attempt to remedy the problems that existed in

DRL's manufacturing process."

      Further, in its opening brief to this court, Mezzion asserts it has incurred

over $20 million in out-of-pocket costs to move udenafil manufacturing to

Polpharma and Halo, and that it "is seeking its costs to transfer the udenafil

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                                       17
manufacturing (i.e., tech-transfer costs) and to cure the defects in DRL's

manufacturing process."4 (Emphasis added). Obviously, DRL is entitled to

know the details of Mezzion's efforts to cure any purported defects in DRL's

manufacturing process for which Mezzion is seeking reimbursement. And

there is no basis of which we are aware that would preclude the admissibility

of that evidence at trial.

      The new manufacturing details, as well as when Mezzion discovered the

defects in DRL's process, when it acted to remedy them and how long it took

to do so are also critical to assessing the validity of Mezzion's claim that

discovery of the flaws came too late in the tech-transfer process to allow it to

correct them and launch udenafil into the branded ED market, not simply

delaying its entry into the ED market but locking it out forever. And the

information is likewise important to DRL's claim that Mezzion failed to

mitigate its damages by resubmitting the NDA with its new manufacturers'

data without changes to the manufacturing process.

      We are unpersuaded by Mezzion's claim that its new manufacturing

details are immune from discovery because the information will be

4
 Asked about this at oral argument, Mezzion's counsel asserted the
emphasized wording was not correct and was mistakenly included in the brief.
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                                       18
inadmissible at trial as DRL could use it only "to second-guess the FDA's

decision on whether the FDA would or would not have required the

manufacturing changes if Mezzion's . . . NDA for the ED indication had been

resubmitted after the FDA rejected it because of DRL."

      Leaving aside that at this juncture it appears it's Mezzion that is

speculating "that DRL's manufacturing process for udenafil contained

significant flaws that were likely to present serious impediments to getting the

FDA to approve" it and DRL that's maintaining Mezzion could have timely

cured the only stated basis for the FDA's denial by resubmitting the NDA with

data from a cGMP-compliant manufacturer, Mezzion has not established that

any of the discovery ordered, none of which has yet been produced, would be

inadmissible at trial.

      We agree with Judge Hurd it is not possible to divine from this record

the admissibility of the information Mezzion has been ordered to produce,

which is plainly relevant to whether Mezzion could have resubmitted its ED

NDA, which is, in turn, relevant to damages. Without knowing what the

evidence will reveal, it is premature to rule on its admissibility. See Marrero

v. Feintuch, 418 N.J. Super. 48, 62 (App. Div. 2011) (noting it premature to

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                                       19
assess whether information gleaned from a deposition would be admissible in a

malpractice action without knowing the content of the testimony).

      We are not insensitive to Mezzion's claim that discovery will disclose its

trade secrets to a would-be competitor; it is the reason we permitted it an

interlocutory appeal. 5 Having considered its arguments, however, in light of

both the record and our Supreme Court's admonition that "discovery rules are

to be construed liberally in favor of broad pretrial discovery," Payton, 148 N.J.

at 535, we are satisfied the trial court did not err in compelling the discovery

subject to the heavily-negotiated protective order entered by the court.

Although we cannot at this juncture say whether the evidence would be

admissible at trial, we can say there is no reason on this record to question its

discoverability. See Isetts v. Borough of Roseland, 364 N.J. Super. 247, 262

(App. Div. 2003).

      Affirmed.

5
  Neither party, however, has submitted the certification of an expert
explaining why these processes are proprietary.
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