ALVIN TODD, et al., Plaintiffs, v. TEMPUR-SEALY INTERNATIONAL, INC., et al., Defendants.
Case No. 13-cv-04984-JST (MEJ)
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA
March 6, 2015
MARIA-ELENA JAMES, United States Magistrate Judge
ORDER RE: MOTION TO RETAIN CONFIDENTIALITY; Re: Dkt. No. 102
Pending before the Court is Defendant Tempur-Sealy International, Inc.s (“Defendant“) Motion to Retain Confidentiality, in which Defendant moves to retain the confidentiality of certain documents produced in the course of litigation. Dkt. No. 102. Plaintiffs1 oppose the motion. Dkt. No. 104. The Court has reviewed each of the disputed documents in camera. Having considered the parties positions, relevant legal authority, and the record in this case, the Court issues the following order.
BACKGROUND
In this putative class action, Plaintiffs bring claims against Defendant arising out of its marketing and sale of mattresses, pillows, and other bedding products containing TEMPUR® material. Specifically, Plaintiffs allege that Defendants representation of its Tempur products as
The Court entered a Stipulated Protective Order in this case on September 16, 2014. Dkt. No. 68. The protective order allows the parties and non-parties to designate information or items for protection by marking them as “CONFIDENTIAL” or “HIGHLY CONFIDENTIAL – ATTORNEYS EYES ONLY.” Id. ¶¶ 2.2, 2.8. The protective order defines “CONFIDENTIAL” information or items as “information (regardless of how it is generated, stored or maintained) or tangible things that qualify for protection under
A party may challenge a confidentiality designation by providing written notice of each challenged designation and describing the basis for each challenge. Id. ¶ 6.2. If the dispute regarding the designation cannot be resolved informally, the Designating Party must file a motion to retain confidentiality. Id. ¶¶ 6.2-6.3.
On January 2, 2015, Defendant produced approximately 83,581 pages with every page designated for protection under the protective order. Adams Decl. ¶ 44, Dkt. No. 104-2. After receipt of this production, on January 14, 2015 Plaintiffs initiated a challenge to Defendants
LEGAL STANDARD
“It is well-established that the fruits of pretrial discovery are, in the absence of a court order to the contrary, presumptively public.” Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210 (9th Cir. 2002). Under
When the confidentiality of information under a protective order is challenged, the court must conduct a two-step analysis. “First, it must determine whether particularized harm will result from disclosure of information to the public.” In re Roman Catholic Archbishop of Portland in Ore., 661 F.3d 417, 424 (9th Cir. 2011) (quotation omitted). “Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the
“Second, if the court concludes that such harm will result from disclosure of the discovery documents, then it must proceed to balance the public and private interests to decide whether
DISCUSSION
A. Whether Defendant Will Suffer Particularized Harm from Disclosure
1. Research Documents
The designated materials at issue include documents marked as “Gallup Study Reports,” which contain research performed on behalf of Defendant by Multi-sponsor Surveys, Inc. See Appendix of Challenged Designations (“Appendix“) Docs. 1-8, Dkt. No. 102-1. These research reports are related to information about prospective mattress buyers, current mattress owners, and the consumer mattress market. Defendant submitted the Declaration of Kelly Faerber, Defendants Director of Internal Audit, attesting to the commercially sensitive nature of the facts and data in the designated documents. Faerber Decl. ¶¶ 2-6, 9-10, Dkt. No. 103-1. Faerber explains that the designated materials are for the guidance of company executives only and have not been made available to the public. Id. ¶¶ 9-10. Faerber further explains that Defendant has taken measures to prevent the public disclosure of these reports. Id. ¶¶ 2-6, 9-10.
Defendant argues that the information contained in the reports is highly sensitive as it is part of its business strategy and marketing information, which if revealed to a competitor, would put Defendant at a competitive disadvantage. Mot. at 3. Defendant maintains that disclosure would create a substantial risk of serious harm, such as by providing competitors with access to Defendants confidential research and a means to target their competing marketing strategies based on any weaknesses or strengths revealed by the reports. Id.
Having reviewed the reports in camera, the Court finds that they are related to Defendants confidential business strategy and marketing information. The Court notes that most of the documents themselves are marked: “This report, the literary property therein and the common law copyright thereto, are the exclusive property of Multi-sponsor Surveys, Inc. This report is a privileged, confidential communication. The material herein is available to and is for the guidance of your executives only and is not to be copied, quoted from, published or divulged to others.” See Appendix Docs. 1, 3, and 5-8. Defendant has also shown the harm that could result from disclosure, including the potential for competitors with access to the reports to target their competing marketing strategies based on any weaknesses or strengths revealed therein. Defendant specifically argues that “[d]eveloping a protocol for a market survey is no small task, and to develop such a protocol costs money. Possession of market research can give a market participant an advantage over competitors, but only if they can possess the information exclusively.” Reply at 7, Dkt. No. 105. The Court agrees that the value of Defendants market research—including both the protocol and the results—could be significantly diminished if it was freely disclosed to the public.
Thus, based on the information before it, the Court finds that Defendant has shown a particularized harm that can result from disclosure of the challenged materials to the public—namely, that competitors would be able to see Defendants strengths and weaknesses, and use its business strategies to their own benefit or to Defendants detriment. See Muench Photography, Inc. v. Pearson Educ., Inc., 2013 WL 4475900, at *4 (N.D. Cal. Aug. 15, 2013) (permitting a party to retain confidentiality where the information at issue could reveal product development efforts and business strategies to competitors, who could then use those strategies themselves).
The designated materials also include a document identified by Defendant as “Internal Market Research.” Appendix Doc. 9. This document is entitled “2010 Tempur-Pedic Product
2. Product Training Guides
Plaintiffs also challenge the designation of 50 of Defendants “Product Training Guides,” which were attached to several internal employee emails. Appendix Docs. 10, 12, 14-16, 104-10, 119, 121-22, 131-47, 151-57, 160, 163, 174, 177, 186, 190, 201-02, 204, 207, and 211. According to Faerber, the Product Training Guides are internal documents distributed to employees and authorized distributors. Faerber Decl. ¶ 11. She explains that they are not meant for public dissemination and marked “Employee Use Only.” Id. Faerber further explains that Defendant has spent significant resources developing the brand, marketing, artwork and employee training information contained in the guides, and they are provided to third-party retailers on the condition that the retailers agree to hold them in confidence. Id. Defendant argues that public disclosure of these documents would cause harm to it in that competitors could “free-ride on Defendants investment of resources in developing the product training guides,” thus giving Defendants
Plaintiffs argue that the Product Training Guides consist of information about Defendant and its products, not trade secrets or other confidential research, development, or commercial information, which is required for protection. Opp n at 6. They maintain that the “fact that Defendants may have spent significant resources developing the guides does not change the subject matter contained in the guides, which subject matter and contents is not worth of protection from disclosure.” Id.
The Court agrees with Plaintiffs. First, the Court notes that Defendant has already produced at least one version of the Product Training Guide without designating it as confidential. Specifically, on October 9, 2014, Defendant produced 6,543 pages of documents, which included documents bates-numbered TCL 1-6508. Adams Decl. ¶ 30. Included in the October 9 production was Defendants Summer 2009 Product Training Guide, marked at TCL 5821-5839, which was not designated as confidential. Id., Ex. C. This document is very similar to the challenged Product Training Guide documents marked as TPTG 33-51, TWC 3105-3123, and TWC 3722-3757. See Appendix, Docs. 105, 155, and 160.
Second, Plaintiffs state that they had in their possession both the Winter 2010 Product Training Guide and October 2012 Product Training Guide prior to their production by Defendant. Adams Decl. ¶¶ 9-10, 15-16, Exs. A-B. They state that these documents have been in the public domain for at least six months. Id. ¶¶ 9, 15. According to the protective order, “the protections conferred . . . do not cover . . . (a) any information that is in the public domain at the time of disclosure to a Receiving Party or becomes part of the public domain after its disclosure to a Receiving Party as a result of publication not involving a violation of this Order” or (b) was “known to the Receiving Party prior to the disclosure.” Protective Order ¶ 3. Further,
3. Internal Emails
Finally, Plaintiffs challenge Defendants designation of (1) internal employee emails and (2) attachments to internal employee emails.
a. Internal Employee Emails
The following documents in the Appendix are marked as “Confidential Internal Employee Email“: 19,2 23-25, 27, 29-37, 41-44, 48-50, 59-68, 70-82, 86, 88-90, 92-95, 102-03, 111, 113,
In its Motion, Defendant maintains that these documents fall within the protection for “confidential research, development, or commercial information” covered by the protective order. Mot. at 5. Because Defendant sells products that come in close physical contact with consumers, testing is an essential element of the business. Id. Defendant argues that information regarding its research, testing, product development, market studies, and business strategy would be highly valuable to Defendants competitors, who would be able to use that information to advance their own research, testing, product development, market studies, and business strategy. Id. Defendant further argues that access to such documents would permit competitors to identify the strengths and weaknesses in Defendants products, giving them an unfair advantage in marketing and the ability gain insight into Defendants confidential business strategies. Id.
Defendant notes that many of the challenged emails relate to discussions regarding Defendants marketing strategies, including their marketing plans, product descriptions, and advertisements. It contends that marketing strategies “are among the most closely guarded secrets in any competitive industry, and the market for mattresses and pillows is no exception.” Id. at 6. Defendant argues that disclosure of these documents would reveal the marketing strategies that it determined to be effective, and would give competitors an unfair advantage in forming their own strategies. Id.
In response, Plaintiffs argue that “[j]ust because an email may be tangentially connected to research, testing and/or any of these other categories, in and of itself, would not qualify these documents as Confidential.” Opp n at 8. Plaintiffs contend that Defendant makes only generalizations about the harm that would result from disclosure, yet Plaintiffs are unable “to identify any challenged email that not only contains confidential material, but for which disclosure would result in prejudice or harm to the Defendants.” Id. at 9.
Having reviewed the documents in camera, the Court finds that Defendant has failed to meet its burden of showing the specific prejudice of harm that will result from disclosure of each email. As a preliminary matter, many of the emails contain no text at all, and the subject lines contain generalized terms such as “Direct Response Weekly Mattress Returns,” “Odor Returns
As to the remaining emails, they contain only generalized entries such as “Odor Log – Daily Summary” or brief communications among employees and/or customers. See Appendix Docs. 27, 30, 32, 36-37, 41, 43, 48, 59, 62, 64, 66, 70, 72-73, 75, 78, 86, 88-89, 92, 94-95, 102-03, 111, 113, 115, 161, 168, and 170. Nowhere does Defendant identify any specific secret or otherwise show the specific harm that will result from disclosure of any of the documents. See Contratto, 227 F.R.D. at 309; Foltz, 331 F.3d at 1130. Defendants broad allegations of harm with respect to either the documents as a whole, or categories of documents, do not satisfy the standard set forth in Foltz. See Foltz, 331 F.3d at 1130; Beckman, 966 F.2d at 476. Again, if any of the emails contain information identifying specific customers, Defendant may redact it. Accordingly, Defendants Motion is also DENIED as to Appendix Docs. 19, 23-25, 27, 29-37, 41-44, 48-50, 59-68, 70-82, 86, 88-90, 92-95, 102-03, 111, 113, 115, 161, 168, and 170.
b. Attachments
The following documents in the Appendix are marked as “Attachment to Confidential Email“: 11, 13, 17-18, 20-22, 39-40, 45, 69, 83-85, 87, 91, 96-101, 112, 114, 116-18, 120, 123-30, 148-50, 158-59, 162, 164-67, 169, 171-73, 175-76, 178-85, 187-89, 191-200, 203, 205-06, 208-10, and 212-13. In its Reply, Defendant identifies six documents that it mistakenly designated as confidential: Docs. 40, 45, 69, 100-01, and 165. Reply at 4 n.3. Accordingly, Defendants Motion is DENIED as to these documents.
Upon review of these documents, the Court finds that Defendant has not met its burden to show particularized harm that may result from their disclosure. The documents are largely draft versions of Product Training Guides and other materials that contain the same or similar information that has been made available for public viewing. As noted above, Defendants broad allegations of harm with respect to either the documents as a whole, or categories of documents, do not satisfy its burden to show that disclosure should be prevented. “[C]ourts have consistently granted protective orders that prevent disclosure of many types of information, such as letters protected under attorney-client privilege which revealed the weaknesses in a partys position,” “medical and psychiatric records,” “federal and grand jury secrecy provisions,” and “confidential settlement agreements.” Phillips, 307 F.3d at 1212 (citations omitted). By contrast, courts have held that documents similar to those sought to be protected in this case were not subject to protection under
Defendants general allegations of harm do not meet the
Accordingly, Defendants Motion is DENIED as to Appendix Docs. 11, 13, 17-18, 21-22, 39, 83-85, 87, 91, 96-99, 112, 114, 116-18, 120, 123-30, 148-50, 158-59, 162, 164, 166-67, 169, 171-73, 175-76, 178-85, 187-89, 191-200, 203, 205-06, 208-10, and 212-13.
4. Summary
Based on the analysis above, the Court finds that Defendant has failed to meet its burden as to the following documents: (1) Internal Market Research document (Appendix Doc. 9); (2) Product Training Guides (Docs. 10, 12, 14-16, 104-10, 119, 121-22, 131-47, 151-57, 160, 163, 174, 177, 186, 190, 201-02, 204, 207, and 211); and (3) Internal Emails/Attachments (Docs. 11, 13, 17-19, 21-25, 27, 29-37, 39-45, 48-50, 59-103, 111-18, 120, 123-30, 148-50, 158-59, 161-62, 164-67, 168-73, 175-76, 178-85, 187-89, 191-200, 203, 205-06, 208-10, and 212-13).
Accordingly, Defendants Motion is DENIED as to those documents, although Defendant may redact any information about specific customers.
However, Defendant has met its burden as to the Gallup Study Reports (Docs. 1-8). Accordingly, the Court next considers whether the public interest in disclosure is outweighed by Defendants private interest in confidentiality.
B. Public Interest In Disclosure vs. Defendants Confidentiality Interest
As the Ninth Circuit has instructed, the Court must look to the seven factors listed in Glenmede Trust to balance the public and private interests in deciding whether maintaining a protective order is necessary. In re Roman Catholic Archbishop, 661 F.3d at 424. Having already
Factor 2 requires consideration of “whether the information is being sought for a legitimate purpose or for an improper purpose.” While Plaintiffs brief argues extensively about whether Defendant has good cause to maintain confidentiality, nowhere have they identified a legitimate purpose for disclosing the challenged materials other than the publics right to know. The Ninth Circuit has said that “a litigant is not entitled to the courts protection” from “additional liability and litigation” due to the disclosure of confidential information. Foltz, 331 F.3d at 1137. But Defendant has met its burden to show that the reports should remain confidential at this time. The Court is unaware of any legitimate purpose for disclosing to the public the “confidential research, development, [and] commercial information” of a company before that information becomes material to the case. See
Factors 4 and 7 require consideration of whether confidentiality is being sought over information important to public health and safety, and whether the case involves issues important to the public, respectively. As noted above, this case involves allegations that Defendants representation of its Tempur products as “formaldehyde free,” “free of harmful (volatile organic compounds) VOCs,” “allergen resistant,” and “hypoallergenic” are false and misleading. Sec. Am. Compl. ¶ 11. Although these allegations involve matters related to public health and safety, the reports do not address any such issues. Plaintiffs have not even alleged that the challenged reports are material to their case. If there was a relevant public interest in the challenged materials, “the mere allegation of misconduct in the discovery documents . . . without more, does not create a public interest sufficiently large enough to outweigh [ ] private interests in confidentiality.” Id. at 427 (noting that there has been “no judicial determination” regarding the challenged materials).
Having weighed the relevant Glenmede Trust factors, the Court finds that the public interest in disclosure does not outweigh Defendants private interest in maintaining the confidentiality of the challenged reports. Accordingly, Defendants Motion is GRANTED as to Appendix Docs. 1-8.
CONCLUSION
Based on the analysis above, the Court finds that Defendant has shown good cause for maintaining the confidentiality of the Gallup Study Reports, as particularized harm may result from disclosure of information to the public, and the public interest in disclosure of the challenged materials does not overcome Defendants private interest in maintaining their confidentiality. Accordingly, the Motion to Retain Confidentiality is GRANTED as to Appendix Docs. 1-8.
However, Defendant has failed to meet its burden as to the remaining documents. Accordingly, Defendants Motion is DENIED as to: (1) the Internal Market Research document (Appendix Doc. 9); (2) Product Training Guides (Docs. 10, 12, 14-16, 104-10, 119, 121-22, 131-47, 151-57, 160, 163, 174, 177, 186, 190, 201-02, 204, 207, and 211); and (3) Internal Emails/Attachments (Docs. 11, 13, 17-25, 27, 29-37, 39-45, 48-50, 59-103, 111-18, 120, 123-30, 148-50, 158-59, 161-62, 164-67, 168-73, 175-76, 178-85, 187-89, 191-200, 203, 205-06, 208-10, and 212-13). Defendant may redact any information about specific customers.
IT IS SO ORDERED.
Dated: March 6, 2015
MARIA-ELENA JAMES
United States Magistrate Judge