Third District Court of Appeal State of Florida
Opinion filed November 26, 2014. Not final until disposition of timely filed motion for rehearing.
________________
No. 3D14-973 Lower Tribunal No. 13-30743 ________________
Sea Coast Fire, Inc., etc., Petitioner,
vs.
Triangle Fire, Inc., and Andres Davila, Respondents.
A Writ of Certiorari to the Circuit Court for Miami-Dade County, Abby Cynamon, Judge.
Bello, Martinez & Ramirez, P.L., and Joel A. Bello, for petitioner.
Cadogan Law, and Gina Marie Cadogan, for respondents.
Before SHEPHERD, C.J., and EMAS and LOGUE, JJ.
LOGUE, J.
Sea Coast Fire, Inc., seeks certiorari review of discovery orders that compel
it to disclose alleged trade secrets to Triangle Fire, Inc., a business rival. Because the disclosure of trade secrets can cause irreparable harm, and because the trial
court departed from the essential requirements of law by ordering the production of
the materials without determining whether the requested documents were trade
secrets, we grant the petition and quash the discovery orders.
Facts
Triangle Fire is a fire equipment provider and service company that had
employed Andres Davila as a sales representative. As part of his employment
contract, Davila signed a non-competition and non-solicitation agreement (“the
Agreement”). The Agreement prohibited Davila from, among other things, (a)
disclosing certain confidential information, such as client pricing information,
marketing strategy, and forecasts for particular clients, (b) working for any
business similar to Triangle Fire, and (c) soliciting business from any of Triangle
Fire’s current customers or helping any entity do so.
Davila left Triangle Fire and began working for a rival fire equipment
service company, Sea Coast Fire. Triangle Fire ultimately brought suit against both
Davila and Sea Coast Fire. In regards to Davila, Triangle Fire alleged breach of the
Agreement, tortious interference, and misappropriation of trade secrets, proprietary
information, and confidential information. With respect to Sea Coast Fire, Triangle
Fire alleged tortious interference with a non-compete covenant, tortious
interference with business relationships, and misappropriation of trade secrets.
2 In the course of the litigation, Triangle Fire submitted interrogatories and
requests for production seeking information regarding Sea Coast Fire’s customer
lists, customer contact information, and pricing information. Sea Coast Fire
objected and filed a motion for a protective order. It alleged that Triangle Fire
sought trade secret information. Triangle Fire contended the requested materials
were not trade secrets.
Without conducting an in camera inspection of the requested information or
holding an evidentiary hearing, the trial court ordered the production of the
discovery. Two days later, the court entered a second order limiting the discovery
to certain dates. This petition followed.
Analysis
To support a writ of certiorari, the petitioner must demonstrate that the
challenged non-final order (1) departs from the essential requirements of law, (2)
results in material injury for the remainder of the case, and (3) such injury is
incapable of correction on postjudgment appeal. Citizens Prop. Ins. Corp. v. San
Perdido Ass’n, Inc., 104 So. 3d 344, 351 (Fla. 2012). The last two elements are
sometimes referred to as irreparable harm, the establishment of which is a
condition precedent to invoking certiorari jurisdiction. Nader v. Fla. Dep’t of
Highway Safety & Motor Vehicles, 87 So. 3d 712, 721 (Fla. 2012); Miami-Dade
Cnty. v. Dade Cnty. Police Benevolent Ass’n, 103 So. 3d 236, 238 (Fla. 3d DCA
3 2012). The disclosure of “cat-out-of-the-bag material” information, such as trade
secrets, can constitute irreparable harm. Cooper Tire & Rubber Co. v. Cabrera, 112
So. 3d 731, 733 (Fla. 3d DCA 2013).
Trade secrets are privileged under section 90.506, Florida Statutes, but the
privilege is not absolute. Freedom Newspapers, Inc. v. Egly, 507 So. 2d 1180,
1184 (Fla. 2d DCA 1987). Information constituting trade secrets can be obtained in
discovery under certain circumstances. To determine if those circumstances exist, a
trial court generally must follow a three-step process:
(1) determine whether the requested production constitutes a trade secret;
(2) if the requested production constitutes a trade secret, determine whether there is a reasonable necessity for production; and
(3) if production is ordered, the trial court must set forth its findings.
Gen. Caulking Coating Co., Inc. v. J.D. Waterproofing, Inc., 958 So. 2d 507, 508
(Fla. 3d DCA 2007).
Trade secrets are defined in Florida’s Uniform Trade Secrets Act as:
[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process that:
(a) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
4 § 688.002(4), Fla. Stat. (2013). Examples of trade secrets include confidential
business information such as a customer list, when the list is not just a compilation
of information readily available to the public, but rather acquired or compiled
through the owner’s industry. Kavanaugh v. Stump, 592 So. 2d 1231, 1232 (Fla.
5th DCA 1992); E. Colonial Refuse Serv., Inc. v. Velocci, 416 So. 2d 1276, 1278
(Fla. 5th DCA 1982).
To determine whether the requested information constitutes a trade secret,
the trial court may perform an in camera inspection or other document
examination. Messer v. E.G. Pump Controls, Inc., 667 So. 2d 321, 322 (Fla. 1st
DCA 1995) (holding a departure from the essential requirements of law occurred
when the trial court ordered production of documents without first conducting an
examination of the documents or an in camera review); Summitbridge Nat. Invs.
LLC v. 1221 Palm Harbor, L.L.C., 67 So. 3d 448, 450 (Fla. 2d DCA 2011)
(determining whether a trade secret exists usually requires an in camera review).
A trial court may also hold an evidentiary hearing. Bright House Networks,
LLC v. Cassidy, 129 So. 3d 501, 506 (Fla. 2d DCA 2014) (determining whether a
trade secret exists usually requires the court to perform either an in camera review
of the information or an evidentiary hearing). Such a hearing may include expert
testimony. Lovell Farms, Inc. v.
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Third District Court of Appeal State of Florida
Opinion filed November 26, 2014. Not final until disposition of timely filed motion for rehearing.
________________
No. 3D14-973 Lower Tribunal No. 13-30743 ________________
Sea Coast Fire, Inc., etc., Petitioner,
vs.
Triangle Fire, Inc., and Andres Davila, Respondents.
A Writ of Certiorari to the Circuit Court for Miami-Dade County, Abby Cynamon, Judge.
Bello, Martinez & Ramirez, P.L., and Joel A. Bello, for petitioner.
Cadogan Law, and Gina Marie Cadogan, for respondents.
Before SHEPHERD, C.J., and EMAS and LOGUE, JJ.
LOGUE, J.
Sea Coast Fire, Inc., seeks certiorari review of discovery orders that compel
it to disclose alleged trade secrets to Triangle Fire, Inc., a business rival. Because the disclosure of trade secrets can cause irreparable harm, and because the trial
court departed from the essential requirements of law by ordering the production of
the materials without determining whether the requested documents were trade
secrets, we grant the petition and quash the discovery orders.
Facts
Triangle Fire is a fire equipment provider and service company that had
employed Andres Davila as a sales representative. As part of his employment
contract, Davila signed a non-competition and non-solicitation agreement (“the
Agreement”). The Agreement prohibited Davila from, among other things, (a)
disclosing certain confidential information, such as client pricing information,
marketing strategy, and forecasts for particular clients, (b) working for any
business similar to Triangle Fire, and (c) soliciting business from any of Triangle
Fire’s current customers or helping any entity do so.
Davila left Triangle Fire and began working for a rival fire equipment
service company, Sea Coast Fire. Triangle Fire ultimately brought suit against both
Davila and Sea Coast Fire. In regards to Davila, Triangle Fire alleged breach of the
Agreement, tortious interference, and misappropriation of trade secrets, proprietary
information, and confidential information. With respect to Sea Coast Fire, Triangle
Fire alleged tortious interference with a non-compete covenant, tortious
interference with business relationships, and misappropriation of trade secrets.
2 In the course of the litigation, Triangle Fire submitted interrogatories and
requests for production seeking information regarding Sea Coast Fire’s customer
lists, customer contact information, and pricing information. Sea Coast Fire
objected and filed a motion for a protective order. It alleged that Triangle Fire
sought trade secret information. Triangle Fire contended the requested materials
were not trade secrets.
Without conducting an in camera inspection of the requested information or
holding an evidentiary hearing, the trial court ordered the production of the
discovery. Two days later, the court entered a second order limiting the discovery
to certain dates. This petition followed.
Analysis
To support a writ of certiorari, the petitioner must demonstrate that the
challenged non-final order (1) departs from the essential requirements of law, (2)
results in material injury for the remainder of the case, and (3) such injury is
incapable of correction on postjudgment appeal. Citizens Prop. Ins. Corp. v. San
Perdido Ass’n, Inc., 104 So. 3d 344, 351 (Fla. 2012). The last two elements are
sometimes referred to as irreparable harm, the establishment of which is a
condition precedent to invoking certiorari jurisdiction. Nader v. Fla. Dep’t of
Highway Safety & Motor Vehicles, 87 So. 3d 712, 721 (Fla. 2012); Miami-Dade
Cnty. v. Dade Cnty. Police Benevolent Ass’n, 103 So. 3d 236, 238 (Fla. 3d DCA
3 2012). The disclosure of “cat-out-of-the-bag material” information, such as trade
secrets, can constitute irreparable harm. Cooper Tire & Rubber Co. v. Cabrera, 112
So. 3d 731, 733 (Fla. 3d DCA 2013).
Trade secrets are privileged under section 90.506, Florida Statutes, but the
privilege is not absolute. Freedom Newspapers, Inc. v. Egly, 507 So. 2d 1180,
1184 (Fla. 2d DCA 1987). Information constituting trade secrets can be obtained in
discovery under certain circumstances. To determine if those circumstances exist, a
trial court generally must follow a three-step process:
(1) determine whether the requested production constitutes a trade secret;
(2) if the requested production constitutes a trade secret, determine whether there is a reasonable necessity for production; and
(3) if production is ordered, the trial court must set forth its findings.
Gen. Caulking Coating Co., Inc. v. J.D. Waterproofing, Inc., 958 So. 2d 507, 508
(Fla. 3d DCA 2007).
Trade secrets are defined in Florida’s Uniform Trade Secrets Act as:
[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process that:
(a) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
4 § 688.002(4), Fla. Stat. (2013). Examples of trade secrets include confidential
business information such as a customer list, when the list is not just a compilation
of information readily available to the public, but rather acquired or compiled
through the owner’s industry. Kavanaugh v. Stump, 592 So. 2d 1231, 1232 (Fla.
5th DCA 1992); E. Colonial Refuse Serv., Inc. v. Velocci, 416 So. 2d 1276, 1278
(Fla. 5th DCA 1982).
To determine whether the requested information constitutes a trade secret,
the trial court may perform an in camera inspection or other document
examination. Messer v. E.G. Pump Controls, Inc., 667 So. 2d 321, 322 (Fla. 1st
DCA 1995) (holding a departure from the essential requirements of law occurred
when the trial court ordered production of documents without first conducting an
examination of the documents or an in camera review); Summitbridge Nat. Invs.
LLC v. 1221 Palm Harbor, L.L.C., 67 So. 3d 448, 450 (Fla. 2d DCA 2011)
(determining whether a trade secret exists usually requires an in camera review).
A trial court may also hold an evidentiary hearing. Bright House Networks,
LLC v. Cassidy, 129 So. 3d 501, 506 (Fla. 2d DCA 2014) (determining whether a
trade secret exists usually requires the court to perform either an in camera review
of the information or an evidentiary hearing). Such a hearing may include expert
testimony. Lovell Farms, Inc. v. Levy, 641 So. 2d 103, 105 (Fla. 3d DCA 1994)
(remanding for either an in camera inspection or evidentiary hearing with expert
5 testimony that would establish the existence of a trade secret). Expert testimony
may be particularly useful in cases where the trial court does not have the requisite
experience in examining the subject information. See, e.g., Revello Med. Mgmt.,
Inc. v. Med-Data Infotech USA, Inc., 50 So. 3d 678, 680 (Fla. 2d DCA 2010) (“If
the circuit judge does not have the requisite experience in examining [computer
source] code, he may wish to appoint a neutral computer expert to review [the
party’s] program.”).
Of course, in a case where it is undisputed that the information requested is a
trade secret, an inspection or hearing may not be required to determine that a trade
secret exists. See Columbia Hosp. (Palm Beaches) Ltd. P’ship v. Hasson, 33 So. 3d
148, 150 (Fla. 4th DCA 2010). The burden is on the party resisting discovery to
show that the information sought is a trade secret. Am. Exp. Travel Related Servs.,
Inc. v. Cruz, 761 So. 2d 1206, 1209 (Fla. 4th DCA 2000).
If the materials are trade secrets, the court must then determine whether
there is a reasonable necessity for production. Gen. Caulking Coating Co., 958 So.
2d at 509. Once a party has demonstrated that the information sought is a trade
secret, the burden shifts to the party seeking discovery to demonstrate reasonable
necessity for production. Scientific Games, Inc. v. Dittler Bros., Inc., 586 So. 2d
1128, 1131 (Fla. 1st DCA 1991) (citing Goodyear Tire & Rubber Co. v. Cooey,
359 So. 2d 1200, 1202 (Fla. 1st DCA 1978)). This requires a trial court to decide
6 whether the need for producing the documents outweighs the interest in
maintaining their confidentiality. See Gen. Caulking Coating Co., 958 So. 2d at
509.
Such an inquiry should not be conducted in a “vacuum or on a mere whim.”
Beck v. Dumas, 709 So. 2d 601, 603 (Fla. 4th DCA 1998). In this regard, a trial
court generally cannot rely on arguments of counsel alone. Id. (holding a trial court
departed from the essential requirements of law in denying an evidentiary hearing
and relying solely on an attorney’s argument that he “needed” the requested
production, where “the matters were of a highly technical nature, and the court
candidly acknowledged its lack of familiarity with the requested materials”). It is,
however, conceivable for a trial court to do so “on a matter with which the court is
familiar and which is not the subject of a genuine factual dispute.” Id.
As noted above, if the trial court ultimately decides to order production of
trade secrets, it must set forth findings on these points. Gen. Caulking Coating Co.,
958 So. 2d at 509 (“Because the order under review makes no specific findings as
to why it deemed the requested information not to be protected by the trade secret
privilege we find that ‘it departs from the essential requirements of the law for
which no adequate remedy may be afforded to petitioners on final review.’”
(quoting Arthur Finnieston, Inc. v. Pratt, 673 So.2d 560, 562 (Fla. 3d DCA
1996))).
7 Further, if disclosure is ordered, the trial court should take measures to limit
any harm caused by the production. See § 90.506 (“When the court directs
disclosure, it shall take the protective measures that the interests of the holder of
the privilege, the interests of the parties, and the furtherance of justice require.”).1
In this case, the parties disputed whether the requested customer lists,
customer contact information, and pricing information were trade secrets. Triangle
Fire, for example, maintains that the requested customer lists are a compilation of
information readily available to the public as opposed to information acquired or
compiled through Sea Coast Fire’s industry. The trial court departed from the
essential requirements of the law by failing to conduct the necessary inquiry and
determine whether the information requested constituted trade secrets. See Cooper
Tire & Rubber Co., 112 So. 3d at 734; Messer, 667 So. 2d at 322.
Petition granted; orders quashed.
1 Examples of measures taken by courts to protect trade secrets include, but are not limited to, the following: (a) specifying individuals that may have access to the materials for the limited purposes of assisting counsel in the litigation; (b) requiring that the designated confidential materials and any copies be returned or destroyed at the end of the litigation; (c) allowing the disclosure of the trade secret to only counsel and not to the clients; and (d) requiring all attorneys who request access to confidential information to first sign an attached agreement and be bound by its restrictions. See Capital One, N.A. v. Forbes, 34 So. 3d 209, 213 (Fla. 2d DCA 2010); Cordis Corp. v. O’Shea, 988 So. 2d 1163, 1165 (Fla. 4th DCA 2008); Bestechnologies, Inc. v. Trident Envtl. Sys., Inc., 681 So. 2d 1175, 1177 (Fla. 2d DCA 1996).