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In re Aqua Dots Products Liability Litigation

June 23, 2009


The opinion of the court was delivered by: Susan E. Cox, Magistrate Judge


Judge David H. Coar


The matter before the Court is plaintiffs' Motion to Undesignate Certain Documents and Written Discovery Responses Marked "Confidential" [dkt 218]. Defendants, Spin Master, LTD., Spin Master, Inc., Toys "R" Us, Inc., Target Corporation and Wal-Mart Stores, Inc. marked the disputed documents confidential pursuant to the May 16, 2008 Stipulated Protective Order [dkt 12], which protects documents that contain "trade secrets or proprietary, non-public commercial information protected by applicable law" or "individual consumer financial and medical records."*fn1 This description includes "sensitive information of a non-public nature that would not generally be available to the public" and information that "contains proprietary business information protected under Fed. R.Civ. P. 26."*fn2 Rule 26(c) allows for protection of "a trade secret or other confidential research, development, or commercial information."*fn3 Since the filing of the motion, the parties have come to an agreement on numerous documents. Presently, the issue is whether the rest of the documents are within the scope of the Protective Order.

Generally, "pretrial discovery must take place in the public" unless there is a "compelling reason" for "denying the public access."*fn4 Defendants must show "good cause" for keeping materials confidential, which includes showing that disclosure will lead to "a clearly defined and very serious injury."*fn5 First, plaintiffs assert that documents introduced during depositions of Iain Kennedy, Alan P. Kaufman, and Jamie Uitdenhowen are not confidential.*fn6 But even if they are, they argue that the confidentiality was waived because the documents were not designated at the time of the deposition. Defendants counter that this was not a voluntary waiver of confidentiality and that the Protective Order protects inadvertent disclosure of information without the confidential designation, when the designating party sends a "written request" to the other party for confidentiality. And defendants did, in fact, send plaintiffs a letter regarding these documents. In addition, defendants argue that the deponents were not provided with a copy of the Protective Order. In light of paragraphs 8-9 and 5 of the Protective Order, it seems defendants did not waive the confidentiality of documents disclosed during these depositions. Therefore, plaintiffs need to demonstrate why they think these documents should not be confidential.

Secondly, plaintiffs argue that there is no good cause for the other disputed documents to remain confidential and that they should be undesignated due to public interest and safety concerns. Defendants counter that there are four categories of protected documents that should remain designated. As to these four categories, defendants claim that the public interest is not as strong because Aqua Dots has been recalled and that undesignation would cause defendants commercial harm. Defendants' first point has merit. In another defective product case, a court rejected the plaintiffs' public safety argument because the defendant had "not kept the existence of the. . .defect a secret from the public" and had cooperated by voluntarily recalling the product.*fn7 In the present case, Aqua Dots has been voluntarily recalled and the information about the hazardous ingredients is available to the public.

As to whether the undesignation would cause defendants unwarranted commercial harm, the Court will analyze this issue within the confines of the four categories of documents that remain in dispute:

(A) internal business methods, protocols, and procedures; (B) financial information; (C) investigatory and testing data, and; (D) trade secrets.

A. Internal Business Methods, Protocols, and Procedures

Defendants assert that documents containing "policies and procedures with regard to product recalls, product development and launch, negotiations with distributors with regards to market strategy, and product disposal" should be kept confidential, because they will put defendants at a competitive disadvantage if disclosed. Defendants point out that making this type of information public would provide "competitors with information that they would otherwise have to spend money to create and develop on their own," providing them with a "guideline" as to how their business is run. In their reply brief, plaintiffs concede that Spin Master's internal safety and testing procedure manual, Spin Master's marketing presentation, and Target's marketing presentation should remain confidential.*fn8 Plaintiffs argue that the rest of the documents pertain to non-secret and routine matters, and that defendants fail to show specific harm that would result from undesignation. These documents contain mostly e-mail correspondence that includes general instructions to remove the product from the shelves, a list of affected products, discussion about Aqua Dots landfill disposal, discussions about quantities of recalled Aqua Dots, and logistical details for recall.*fn9 Overall, the disputed documents are less detailed and less formal than the protocol manual and marketing presentations mentioned above (which were left designated).

Internal business information is not confidential merely because it is "traditionally. . . private."*fn10

However, "matters whose disclosure would affect defendants with their respective competitors or in conjunction with the day-to-day operation of their business," warrant protection.*fn11 For example, documents containing "internal evaluation reports" and "potential business strategies" have been recognized as commercial confidential information.*fn12 Finally, mere allegations of "competitive disadvantage" is not enough to show "good cause" for confidentiality.*fn13

In the present case, the remaining documents fit more into the "traditionally. . . private" category than into the protected commercial information category.*fn14 Unlike reports, manuals, or other more formal and detailed documents, these communications do not provide a "guideline" for competitors to copy and disadvantage defendants. While it is understandable that defendants would prefer to keep any internal business information from the public eye, it is ...

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