In re Domestic Drywall Antitrust Litigation
300 F.R.D. 234
| E.D. Pa. | 2014Background
- Nonparty Thompson Research Group (TRG) produces confidential industry reports and investigative files based on interviews with confidential sources; sells reports to institutional investors and limits distribution.
- Plaintiffs in a multidistrict antitrust case about alleged drywall price-fixing subpoenaed TRG for: (1) reports on the wallboard market, (2) documents supporting those reports, and (3) communications with drywall manufacturers.
- TRG moved to quash the subpoena, arguing undue burden, protection as confidential commercial information/trade secrets under Rule 45(d)(3)(B)(i), and protection for unretained expert opinion under Rule 45(d)(3)(B)(ii).
- Plaintiffs argued the materials (especially contemporaneous source statements and investigative notes) are highly relevant and that TRG may have served as a conduit relaying information among alleged conspirators.
- The Court transferred and heard the motion, finding reports and investigative files relevant but affording partial protection: source-attributed factual statements and investigative notes may be produced (with redactions for source identities and redaction of TRG analysis/opinion), subject to protective conditions and reasonable compensation for production costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument (TRG) | Held |
|---|---|---|---|
| Relevance of TRG materials | TRG reports and notes likely contain contemporaneous communications about pricing and may show TRG as a conduit between manufacturers | TRG disputed relevance only insofar as material is proprietary expert analysis; conceded some factual relevance | Reports and underlying files are relevant to antitrust claims; nonparty standard met |
| Whether reports are protected expert IP under Rule 45(d)(3)(B)(ii) | Plaintiffs need reports to see what signals/contemporaneous statements reached defendants | TRG: reports contain proprietary expert analysis and research; disclosure would be uncompensated taking of IP | Factual statements from confidential sources are not protected by (ii); TRG analytical opinion is protected and may be withheld/redacted unless substantial need later shown |
| Whether investigative files (including notes) are protected commercial/confidential information under Rule 45(d)(3)(B)(i) | Plaintiffs have substantial need—may show conduit communications and contain phone notes not available elsewhere | TRG: files reveal identities of confidential sources; disclosure would chill sources and cause severe commercial harm | Investigative files are protected but Plaintiffs demonstrated substantial need for content; production permitted if narrowly tailored, source identities redacted, and use limited by protective order |
| Compensation and undue burden | Plaintiffs will pay reasonable costs of production; protective order suffices | TRG seeks compensation for production costs and argues disclosure is a taking of IP/licensing value | Court requires Plaintiffs to reasonably compensate TRG for production costs (including attorney time); no licensing fee for TRG IP beyond production costs absent showing of owner loss; subpoena not unduly burdensome given tailoring and payment |
Key Cases Cited
- Bayer AG v. Betachem, 173 F.3d 188 (3d Cir. 1999) (discovery scope is broad but may be limited for undue burden)
- Mycogen Plant Sci., Inc. v. Monsanto Co., 164 F.R.D. 623 (E.D. Pa. 1996) (allocation of burdens in motions to quash subpoenas)
- Mannington Mills, Inc. v. Armstrong World Indus., Inc., 206 F.R.D. 525 (D. Del. 2002) (balancing relevance, need, confidentiality, and harm in discovery)
- Klay v. All Defendants, 425 F.3d 977 (11th Cir. 2005) (compensation under Rule 45 measured by owner’s loss; rivalrous vs. nonrivalrous property)
- EEOC v. Kronos, 694 F.3d 351 (3d Cir. 2012) (nonparty subpoena fairness and allocation of compliance costs)
- United States v. Causby, 328 U.S. 256 (U.S. 1946) (takings principles: compensation measured by owner’s loss)
- Katz v. Batavia Marine & Sporting Supplies, Inc., 984 F.2d 422 (Fed. Cir. 1993) (consider nonparty status when weighing discovery burdens)