6:20-cv-07031
W.D.N.Y.Oct 20, 2023Background
- CIC sued Foundry Associates and its CEO James Schwartz for breach of fiduciary duty and unjust enrichment, alleging Foundry colluded with CIC’s former employee (Chen) to take CIC’s U.S. customers.
- CIC previously sued Chen in China and seeks to use sales data produced in this U.S. litigation to prove actual damages on appeal in the Chinese case.
- Parties negotiated and the court entered a Protective Order allowing designations of "Confidential" and "Attorneys' Eyes Only (AEO)," with an illustrative (non‑exhaustive) list of protectible categories.
- Defendants produced a 106‑page Sales Report (monthly invoice tables by customer) and designated the entire document AEO; CIC moved to de‑designate, narrowing its request to names of former CIC customers and their invoiced amounts (Customer Invoiced Amounts).
- The court considered whether Customer Invoiced Amounts qualify for AEO or Confidential protection under the Order, and whether older versus recent invoices differ in sensitivity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Sales Report (Customer Invoiced Amounts) merited AEO protection | CIC: invoice totals and customer names are not highly sensitive; CIC needs them for Chinese litigation; narrow use only | Foundry: sales data reveals customers, order history and volumes; disclosure would cause irreparable competitive harm | Denied — AEO designation not justified; defendants' showing was conclusory and non‑specific |
| Whether Customer Invoiced Amounts qualify as Confidential (less restrictive) | CIC: info falls outside illustrative categories and is too general; defendants previously disclosed customer identities without restriction | Foundry: data is proprietary/competitively sensitive and could be used to target customers | Granted in part — recent invoices (since 2018) may be Confidential; older invoices (pre‑2018) are not protectible |
| Whether paragraph 2(c) of the Protective Order is an exhaustive list | CIC: paragraph 2(c) limits protectible information to listed categories | Foundry: list is illustrative and not exclusive; other commercial info may be protectible | Court: 2(c) is illustrative (non‑exhaustive); other info can be protected if good cause shown |
| Temporal scope of protection (stale vs. recent data) | CIC: older sales data is stale and not competitively sensitive | Foundry: more recent years are more sensitive; older years less so | Court: no good cause for Confidential designation pre‑2018; allowed Confidential protection for more recent invoices |
Key Cases Cited
- In re Zyprexa Injunction, 474 F. Supp. 2d 385 (E.D.N.Y. 2007) (trial courts have broad discretion to issue protective orders under Rule 26)
- In re Parmalat Sec. Litig., 258 F.R.D. 236 (S.D.N.Y. 2009) (producing party bears burden to justify confidentiality when challenged)
- Pearlstein v. BlackBerry Ltd., 332 F.R.D. 117 (S.D.N.Y. 2019) (court may de‑designate and permit use of documents in foreign proceedings under protective order)
- Glob. Material Techs., Inc. v. Dazheng Metal Fibre Co., 133 F. Supp. 3d 1079 (N.D. Ill. 2015) (conclusory assertions of competitive harm insufficient for AEO; confidential designation may be appropriate)
- Two Locks, Inc. v. Kellogg Sales Co., 68 F. Supp. 3d 317 (E.D.N.Y. 2014) (contract interpretation disfavors readings that render clauses superfluous)
- LaSalle Bank Nat'l Assoc. v. Nomura Asset Cap. Corp., 424 F.3d 195 (2d Cir. 2005) (courts avoid contract interpretations that make provisions meaningless)