Quotron Systems, Inc. v. Automatic Data Processing, Inc.

141 F.R.D. 37, 1992 U.S. Dist. LEXIS 1518, 1992 WL 33118
CourtDistrict Court, S.D. New York
DecidedFebruary 12, 1992
DocketNo. 91 Civ. 6526 (RPP)
StatusPublished
Cited by11 cases

This text of 141 F.R.D. 37 (Quotron Systems, Inc. v. Automatic Data Processing, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Quotron Systems, Inc. v. Automatic Data Processing, Inc., 141 F.R.D. 37, 1992 U.S. Dist. LEXIS 1518, 1992 WL 33118 (S.D.N.Y. 1992).

Opinion

OPINION AND ORDER

ROBERT P. PATTERSON, Jr., District Judge.

In this action for damages and injunctive relief, Quotron Systems, Inc. (“Quotron”) alleges copyright infringement and misappropriation of trade secrets by Automatic Data Processing, Inc. (“ADP”) and Smith Barney, Harris Upham & Co. (“Smith Barney”). Quotron now moves pursuant to Fed.R.Civ.P. 37(a) and 26(c) for entry of a protective order in a form proposed by Quotron, effective as to all documents produced by ADP in this action. ADP cross-moves to quash subpoenas served by Quotron on non-parties Bear Stearns & Co. (“Bear Stearns”) and Oppenheimer & Co. (“Oppenheimer”) and to have its proposed protective order, rather than the order proposed by Quotron, entered by- this Court. Oral argument on the motions was heard on February 6, 1992.1

DISCUSSION

1. Quotron’s Motion for Entry of Protective Order

Quotron alleges that ADP and Quotron have attempted but have been unable to agree on the proper scope of any protective order to be entered in this case. On December 13, 1991, pending resolution of this disagreement, Quotron and ADP signed an interim agreement governing ADP’s production of documents in this case (“the interim agreement”). Under the interim agreement, all documents produced by ADP, and all information contained-in such documents, may be reviewed by and disclosed and disseminated only to attorneys at Proskauer Rose Goetz & Mendelsohn and their legal assistants, and Quotron’s retained expert, Andrew Johnson Laird. The interim agreement remains effective “unless and until a confidentiality stipulation and order, or other agreement superseding this interim agreement” is executed by the parties or entered by the Court. A clause was added providing that “[i]f, following a reasonable period of time, no such agreement has been reached, the parties shall apply to the Court to resolve any outstanding confidentiality disputes.” Quotron Jan. 2, 1992 Letter, Exh. 2.

Quotron’s proposed protective order would limit disclosure of confidential documents to not more than three employees designated by each of the parties, in addition to outside counsel and in-house counsel preparing for the trial of this action and their support staff, independent experts, and court reporters. The order would provide access to these persons only on condition that (a) they sign confidentiality agreements limiting use of information obtained to the litigation and (b) such access is limited to inspecting the documents on the premises of outside counsel or qualified experts. Quotron’s proposed order defines the sort of information that may be designated “Confidential.” Quotron Jan. 2, 1992 Letter, Exh. 1.

ADP’s proposed protective order provides for a “Highly Confidential” category of documents. The order does not define this category, but instead provides that a producing party or nonparty may designate any document or other item to be produced “Highly Confidential” by so stamping it. Access to such documents, as well as the information contained therein, is limited to counsel working for or retained in connection with this litigation and their support staff, and approved outside experts. ADP Jan. 15, 1992 Letter, Exh. J.

[40]*40In the production of documents to date, Quotron accuses ADP of restricting Quotron’s ability to prepare for trial by overdesignating documents “Highly Confidential.” Quotron Jan. 2, 1992 Letter at 3. In its letter of January 15, 1992, and at oral argument it became apparent that ADP had unnecessarily stamped documents “Highly Confidential.” ADP Jan. 15, 1992 Letter at 20. Indeed, at oral argument, ADP offered to reclassify the documents it produced in order to remove from the “Highly Confidential” category any documents whose placement in that category ADP determined to have been unwarranted. The Court ordered ADP to perform this reclassification within ten days from the date, of oral argument. In view of the impending holiday this is amended to February 18, 1992. The Court imposed this deadline for the reclassification of the documents because it concluded that ADP had, as a litigation tactic and not due to inadvertence, overstamped documents “Highly Confidential.” Any extra costs incurred by ADP as a result of this deadline, such as assigning additional ADP personnel to review and reclassify the documents over weekends and holidays, are in the nature of sanctions imposed by the Court due to the actions of ADP and its counsel in the original classification of the documents.

With respect to Quotron’s proposed protective order, at oral argument, counsel for Quotron, Mr. Rauchberg, indicated that Quotron would agree to withdraw its request that three Quotron employees be permitted to examine the documents produced by ADP, in light of concerns expressed by the Court during the argument that the parties may well be using this litigation to engage in commercial espionage. The Court notes that, although the interim agreement signed by Quotron and ADP was clearly intended as a temporary measure, Quotron has so far been able to operate under its strictures, and the constraints Quotron has experienced appear to have resulted from the over-designation of documents as “Highly Confidential” and Quotron’s utilization of only one expert. Utilization of only one expert may be penny-wise in the light of the limited damages available in a copyright action, but Plaintiff having invoked the Court’s process must be prepared to make expenditures necessary to proceed to a prompt trial of this action.

In view of countervailing concerns of potential commercial espionage and the attendant possibility of engendering a counterclaim by AdP, this Court is hesitant to permit Quotron employees access to material that may well contain proprietary ADP programming. Furthermore, Quotron has not demonstrated a need for Quotron employees’ access to the documents sufficient to outweigh these concerns. Quotron should hire as experts to assist them in examining the documents additional consultants, including former employees of Quotron, who are familiar with Quotron’s software. Protective orders that limit access to certain documents to counsel and experts only are commonly entered in litigation involving trade secrets and other confidential research, development, or commercial information. See, e.g., United States v. Davis, 131 F.R.D. 391, 400 (S.D.N.Y.1990); Culligan V. Yamaha Motor Corp., 110 F.R.D. 122, 125-26 (S.D.N.Y. 1986); Stillman v. Vassileff, 100 F.R.D. 467, 468 (S.D.N.Y.1984).

Accordingly, Quotron’s motion for entry of its proposed protective order is denied, pending ADP’s reclassification of the documents previously stamped “Highly Confidential,” due to be completed on February 18, 1992. After production of these documents, Quotron may renew its request for entry of a protective order should it still find such a motion necessary. In the expectation that ADP’s reclassification of the documents may facilitate agreement between the parties on a mutually satisfactory protective order, without the need for this Court’s intervention, the Court also denies ADP’s request for entry of ADP’s proposed protective order at this time.

2. ADP’s Motion to Quash Subpoenas

Quotron has served subpoenas duces tecum on non-parties Bear Stearns and Oppenheimer, who join in ADP's letters seeking to quash the subpoenas. ADP asserts that Bear Stearns and Oppenheimer, who [41]

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Bluebook (online)
141 F.R.D. 37, 1992 U.S. Dist. LEXIS 1518, 1992 WL 33118, Counsel Stack Legal Research, https://law.counselstack.com/opinion/quotron-systems-inc-v-automatic-data-processing-inc-nysd-1992.