This is from the non-Reed Smith side of the blog.

Sometimes a protective order just isn’t enough.  As product liability defense attorneys, we are often faced with discovery requests for highly sensitive trade secret information.  Plaintiffs’ counsel tend to think that a confidentiality or protective order is a cure-all that should allow companies to throw wide their doors, drawers, disks and anything else.  Afterall, there’s this court order, agreed to by the parties, signed by the judge, that carries penalties for failure to comply.  But all that means is that the receiving party, in our case plaintiffs, has an obligation to not make confidential documents and information public.  But what if making the information public is something unintentional or not within their control.  Just by way of example, in October 2013 hackers stole nearly 3 million encrypted credit card records from Adobe; in 2017 Equifax had a data breach that exposed about 147.9 million consumers; in 2012 LinkedIn had 6.5 million user passwords stolen and posted onto a Russian hacker forum; and in 2014 Yahoo was the victim of a data breach that compromised the names, email addresses, dates of birth and phone numbers of 500 million users.  And, while this is just a guess, we think the cyber security at these companies might just be a little more sophisticated than that used by most plaintiffs’ counsel.  We don’t say that to belittle their security efforts.  They’re just not Yahoo.  So, that little piece of paper signed by a judge isn’t protection against potential leaks as unintentional as they may be.

That was an important consideration in Schmidt v. Navistar, Inc., 2020 WL 5548837 (D.N.M. Sep. 16, 2020).  This is not a drug or device decision, but we thought the message was worth sharing.  It is a product liability case brought against the manufacturer of a commercial truck that rolled over causing the driver fatal injuries.  Id. at *1.  At issue was plaintiff’s request that defendant produce is computer assisted design (“CAD”) and finite element analysis (“FEA”) models for the subject vehicle and similar models.  Plaintiff claimed the CAD and FEA files were needed for their expert to address alternative safer designs and to “evaluate the structural integrity and design” of the vehicle.

Instead of the CAD and FEA files, defendant produced its testing files, drawings and corporate engineering specifications.  Id. at *2.  Both sides submitted affidavits from experts explaining why the CAD/FEA files were necessary (plaintiff) and why they were not (defendant).  Defendant’s employees and experts also detailed that these files were “Defendant’s most highly valued trade secrets” that even few of defendant’s employees had access to.  Id.  Further, the CAD/FEA files had never been produced outside of the company.  Id. at *3.  Defendant’s engineers explained that if leaked, CAD models (unlike the drawings/specs produced) could be entered into computers to create counterfeit parts.  Id. at *4.

Also detrimental to plaintiff’s need-based argument was testimony by her expert that in prior cases involving the same defendant, the expert had not been provided  CAD or FEA files and that they were not necessary for the expert to conduct his analysis.  Id. at *5.

It was against this factual background that the court conducted its analysis.  It was undisputed that the CAD and FEA files were trade secrets.  This is precisely the type of data if it fell into the wrong hands could cause defendant serious economic harm.  Id. at *8.  Therefore, “the burden shifts to Plaintiff to show that the information sought is relevant to the subject matter of the lawsuit and is necessary to prepare the case for trial.”  Id.  While relevance may be difficult to dispute in this context, necessity was not proven.  Given all of the data defendant did produce, the court was persuaded that defendant produced the “substantial equivalent” of what plaintiff sought without risking its trade secret information. Id. at *9.  Just because the CAD or FEA files may have made the expert’s job easier that did not justify disclosure of these highly-guarded trade secrets.

We are unaware of this type of material previously being held discoverable in other product liability litigation and we hope it stays that way because the same issue could easily arise in medical device litigation.  We haven’t had to blog about the issue before and as long as the law stays this way, we won’t have to again.