United States: District Court Determines Attorney's Eyes Only Designation Proper For Relevant Documents Even If They Do Not Constitute Trade Secrets

Plaintiff All Plastic contended it was a leading manufacturer of premium displays and containers for medicinal and recreational cannabis dispensaries. All Plastic filed a patent infringement action against Defendants SamDan LLC d/b/a Smokus Focus (“SamDan”), Samuel Whetsel (“Mr. Whetsel”), and Daniel Russell-Einhorn (“Mr. Russell-Einhorn”) (with Mr. Whetsel, “Individual Defendants” and collectively, “Defendants”) alleging that Defendants make, use, and sell containers for personal cannabis use, that infringe upon the patent-in-suit.

All Plastic filed a motion to compel seeking an order compelling Defendants to produce various documents, re-designate materials already produced and designated “Confidential-Attorneys' Eyes Only,” and remove redactions applied to materials produced on Defendants' asserted basis of “relevance.” All Plastic made three arguments to support its contention that “[m]ost of the materials designated by Defendants do not qualify as AEO,”: (1) materials designated as AEO by Defendants are not highly sensitive in nature so as to qualify as trade secrets; (2) the maintenance of Defendants' unwarranted AEO designations will prejudice All Plastic's ability to litigate this case because Plaintiff's counsel can share with their client almost “no material fact” learned from Defendants in this action; and (3) Plaintiff should not bear the expense of objecting to every single one of Defendants' designations to ensure Defendants' compliance with their duty to review documents in good faith before designating them as AEO, as per the Protective Order.

The district court disagreed with All Plastic's argument stating that “neither the definition of “Confidential – Attorney's Eyes Only” nor Rule 26(c) and its interpreting case law mandates that the AEO designation be limited to established trade secrets as discussed above. Indeed, even the proposal by Plaintiff – which sought to incorporate the Model Protective Order for the United States District Court for the Northern District of California and was declined by the court – was not that restrictive. And any requirement for the court to determine, in the first instance, if all designated “Confidential-Attorney's Eyes Only,” constituted, as a matter of law, a trade secret would invite side litigation and run counter to this court's intention, i.e., to facilitate the efficient production of documents and avoid unnecessary disputes arising from the designation of documents that might not ultimately be significant to the adjudication of the merits.”

The district court also disagreed with Plaintiff's contention that “AEO designation is improper if the documents are relevant.” The district court concluded that “[t]aken to its logical end, there would be no justification for a tier of documents to be designated as “Confidential-Attorney's Eyes Only” because the scope of all discovery under Rule 26(b)(1) is limited to material that is “relevant to any party's claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1) (emphasis added).

Nonetheless, the district court did find that certain categories were not properly designated as “Confidential-Attorney's Eyes Only.” The district court explained that “communication between Plaintiff's counsel and Mr. Whetsel is not properly designated under the Protective Order at all. Nor are materials offered to potential customers or investors, given that there has been no showing that such materials (or the pricing contained therein) were only offered under any confidentiality agreements to third parties.”

Finally, the district court concluded “that given the undisputed competitive nature of the relationship between the Parties, and the significant amount of distrust that has been reflected in this action, it is appropriate for Defendants to designate competitive information that has been maintained as confidential and that might provide a business advantage to a direct competitor, such as customer and supplier identification and communications, invoices, and sales information, as ‘Confidential-Attorney's Eyes Only.'”

As a result, the district court was not persuaded “that there has been wholesale over-designation. Nevertheless, this court ORDERS  Defendants to DOWN-DESIGNATE and/or PRODUCE UNREDACTED VERSIONS  of all documents that are publicly available and materials that have been made available to prospective customers and/or investors without confidentiality, including but not limited to advertisements, direct marketing, or investor presentations.”

All Plastic, Inc. v. Samdan LLC, Case No. 20-cv-01318-NYW (D. Col. Feb. 26, 2021)

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