Takata v. Hartford Comprehensive Employee Benefit Service Co.

Citations: 283 F.R.D. 617; 2012 U.S. Dist. LEXIS 90797; 2012 WL 2525603Docket: No. CV-11-5068-RMP

Court: District Court, E.D. Washington; June 29, 2012; Federal District Court

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The Court issued an order addressing several motions related to discovery in the case involving Plaintiff Debbie Takata and Defendants Hartford Comprehensive Employee Benefit Service Company, Battelle Memorial Institute, and associated entities. The order denies the Defendants' motion to strike and their motion to expedite, which is deemed moot. It partially grants and partially denies the Plaintiff’s motion to compel the production of discovery.

The Court previously compelled Defendants to produce specific documents relevant to the determination of potential conflicts of interest and procedural irregularities in the handling of disability benefits claims. The Defendants raised concerns about the sensitive and proprietary nature of the documents requested, particularly regarding Hartford's claims handling materials. Despite instructions from the Court to negotiate a stipulated protective order, the parties could not reach an agreement. The main contention revolves around whether Plaintiff's counsel may retain the documents for use in future cases. Defendants argue that the information should only be utilized in the current case, while Plaintiff's counsel insists on the right to use the information in other potential cases against Hartford.

Additionally, Defendants submitted a declaration from Bruce Luddy, Hartford's Director of Litigation and Appeals, asserting that certain internal documents, including job training materials and a reference manual, are confidential and constitute trade secrets developed over Hartford's extensive history in the insurance sector.

Public policy favors public access to discovery materials once filed with the court, as established in Foltz v. State Farm Mut. Auto. Ins. Co. (2003). However, materials that have been discovered but not admitted are not considered publicly accessible. A presumption of public access can be rebutted by demonstrating "good cause" for confidentiality, requiring a specific showing of prejudice or harm from disclosure. This burden must be met for each document the moving party seeks to protect. 

If good cause is established, courts must balance public and private interests to determine if a protective order is warranted, clearly stating the factors considered. For documents containing trade secrets, the moving party must prove the existence of a trade secret and that its disclosure would harm their interests. "Confidential business information" is legally recognized as property, and the protection of trade secrets is crucial since their public disclosure can extinguish the owner's property rights. 

Once the moving party shows that the information is confidential and harmful if disclosed, the opposing party must demonstrate the relevance and necessity of the information for trial preparation. The court then weighs the need for disclosure against the potential harm. If disclosure is ordered, the court should issue a protective order, which may include limiting the use of the information to the case at hand, restricting access to certain individuals, limiting the reproduction of documents, requiring a bond, and appointing an attorney as a custodian of confidential documents.

A court must evaluate the adequacy of a protective order in addressing the moving party's concerns, particularly regarding the confidentiality of information that provides a competitive advantage. Hartford seeks to protect its manual, which contains "technical reference tools" and "best practices" developed over years of extensive research. This information is kept confidential through limited employee access and strict confidentiality requirements. The court finds that public disclosure would harm Hartford and undermine its competitive advantage and trade secret status. It has previously determined the information's relevance in assessing conflicts of interest and procedural irregularities, thus compelling the production of certain documents. The court supports the need for confidentiality in this context, requiring that marked confidential materials not be disclosed publicly and must be returned post-litigation. 

Additionally, while recognizing the validity of protecting trade secrets under Fed. R. Civ. P. 26(c), the court notes deficiencies in the proposed protective order, specifically the lack of a definition for "Confidential Information," which could allow arbitrary designations. Consequently, the court grants in part and denies in part the motion for a protective order, modifying it to require proper designation of confidential materials and allowing for disputes over confidentiality designations to be resolved through a short objection and a telephonic conference with the court. The definition of trade secrets is referenced from § 757 of the Restatement of Torts, indicating that a trade secret can include any information that provides a business advantage over competitors.