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A legal question that recently circulated on the defense counsel listserv for the Product Liability Advisory Council, Inc. (“PLAC”) drew a lot of attention, and thus strikes us as a good subject of discussion. That question was whether there’s authority allowing a product liability defendant to redact or otherwise keep confidential its customers’ contact information where such records are otherwise the subject of discovery. We think that the answer has to be “yes,” or else there’s nothing left of the protection of confidential trade secrets. After all, what’s more clearly a trade secret, or more clearly something that a company would want to keep away from its competitors, than a list of the persons with which they do business?

We’re not going to deal with a related confidentiality question involving the identities of doctors who submit adverse drug/device experience reports to the FDA. There’s a specific FDA regulation prohibiting release of that information in discovery. See 21 C.F.R. §20.63(f)(2). Also, to the extent a patient’s medical information were involved, there would be HIPAA implications. We’re simply dealing with customer lists here. Nor are we addressing the discoverability of customer lists in and of themselves. There are too many factual peculiarities in litigation for there to be an absolute position that such lists always are, or always aren’t, discoverable.

So can customer lists be protected? Based upon what we’ve found, which isn’t a great deal, we think the answer is yes.

A good place to start is Pioneer Electronics, Inc. v. Superior Court, 150 P.3d 198 (Cal. 2007), which authorized: (1) keeping the list itself away from plaintiff’s counsel, but (2) sending letters to the customers in question, who had complained about the product at issue. Relying on a right to privacy found in the state constitution, the California Supreme Court held that, where the customer had already contacted the defendant to complain (which the court saw as reducing the privacy interest), there should be no disclosure without first giving the affected customer the right to refuse:

[W]e think the trial court properly evaluated the alternatives, balanced the competing interests and permitted disclosure of contact information regarding [defendants’] complaining customers unless, following proper notice to them, they registered a written objection.

Id. at 207. The court rejected a more restrictive “opt-in” procedure, id. at 205, but hinted that, if there had been an “ongoing business relationship” with the customer, a more restrictive approach to such discovery might be appropriate. Cf. City of San Jose v. Superior Court, 88 Cal. Rptr.2d 552, 562 (Cal. App. 1999) (refusing to order disclosure of similar complaint list from governmental entity).

In Kase v. Salomon Smith-Barney, Inc., 218 F.R.D. 149 (S.D. Tex. 2003), the court refused to provide class counsel unredacted access to a defendant brokerage’s customer lists:

[T]he protective order was entered in response to [plaintiff’s] request for contact information for all of [defendant’s] customers . . . during the class period. As the Court has repeatedly pointed out, the Court’s primary concern in restricting [plaintiff’s] access to [defendant’s] customers was that the privacy of the potential class members not be disturbed by unwanted calls or mailings from counsel.

Id. at 155 n.7. The court allowed a mailing to a random selection of the defendant’s customers, without plaintiff being given access to their names. Id. at 155.

A third case is Center for Auto Safety v National Highway Traffic Safety Administration, 809 F. Supp. 148 (D.D.C. 1993), in which the plaintiffs attempted an end run around the defendant and sought to obtain contact information for the defendant’s complaining customers from a government agency via a FOIA (Freedom of Information Act) request. The court refused to permit the action:

Since the consequences of a general mailing list of complainants. . .are clearly and foreseeably intrusive, complainants will have forfeited a degree of privacy because they chose to alert the proper agency of government to circumstances suggesting tighter auto safety controls. Yet [plaintiff] has failed to meet its burden of establishing that the public interest outweighs the privacy interests of complainants to the extent the complainants must, as a price for their interest in sound government, be confronted with the barrage of junk mail, telephone calls, and commercial exploitation that the list will invoke if their names and addresses are placed in the public domain. . . . The Court does not accept plaintiff’s self-centered view that the public interest requires disclosure to [it] of the list sought. The public interest is broader than plaintiff’s notion, and encompasses not only the uses of the list. . ., but also the interests of citizens generally to complain to their government in privacy.

Id. at 149-50.

Redaction of customer lists is also an alternative. That was a less restrictive option to outright refusal to allow any discovery considered in CSC Holdings, Inc. v. Redisi, 309 F.3d 988, 996 (7th Cir. 2002) (“the court could have permitted [plaintiff] to redact”). Redaction of customer lists was also continued, over objection, in Solaia Technology LLC v. Jefferson Smurfit Corp., 2002 WL 1964761 (N.D. Ill. Aug. 20, 2002):

[Third-party defendant] argues that the customer list is critical to the question of whether [third-party plaintiff] is the real party in interest in this case. . . . In court, [third-party plaintiff’s] counsel indicated that it had no objection to [third party defendant] being able to argue that the customer list contained 136 names, and that some of them were Fortune 100 of Fortune 500 companies. We do not see any reason to modify our original decision that the specific identity of [third party plaintiff’s] customers should not be disclosed and thus uphold that portion of the order.

Id. at *1 (footnote omitted). Redacted copies of customer lists were also justified, on purely trade secret (no privacy) grounds, in Autotech Technologies Ltd. Partnership v., Inc., 237 F.R.D. 405, 410-11 (N.D. Ill. 2006), and Intel Corp. v. VIA Technologies, Inc., 198 F.R.D. 525, 531 (N.D. Cal. 2000). Both cases involved the likelihood of competitive harm due to disclosure to in-house counsel.

Thus, in response to the question circulated through PLAC, we’d have to say that the law, while not overwhelming, supports the proposition that customer lists should be protected if ordered discovered at all. Both keeping the list away from prying counsel, and the equivalent result through redaction, has been ordered, with such relief justified on both privacy and trade secret grounds.

We’d also like to acknowledge the contribution of PLAC member Keith Gerrard of Perkins Coie, to the discussion in this post.