Star Scientific, Inc. v. Carter

204 F.R.D. 410, 61 U.S.P.Q. 2d (BNA) 1252, 2001 U.S. Dist. LEXIS 20970, 2001 WL 1606798
CourtDistrict Court, S.D. Indiana
DecidedNovember 15, 2001
DocketNo. IP 01-0838-C-T/K
StatusPublished
Cited by6 cases

This text of 204 F.R.D. 410 (Star Scientific, Inc. v. Carter) is published on Counsel Stack Legal Research, covering District Court, S.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Star Scientific, Inc. v. Carter, 204 F.R.D. 410, 61 U.S.P.Q. 2d (BNA) 1252, 2001 U.S. Dist. LEXIS 20970, 2001 WL 1606798 (S.D. Ind. 2001).

Opinion

ORDER DENYING PLAINTIFFS’ MOTION FOR A PROTECTIVE ORDER AND ENTRY ON COURT ORDERED PROTECTIVE ORDER

BAKER, United States Magistrate Judge.

I. Background

On July 12, 2001, Plaintiffs Star Scientific, Inc. and Star Tobacco & Pharmaceutics, Inc. filed an amended complaint against Steve Carter, in his official capacity as Attorney General for the state of Indiana. The [413]*413amended complaint alleges that the Qualifying Statute enacted by the Indiana General Assembly and the Master Settlement Agreement (“MSA”) entered into between forty-six states, the District of Columbia, and five other federal jurisdictions with the major cigarette manufacturers in the United States violate the Compact and Commerce Clauses of the United States Constitution. Further, the amended complaint alleges that the Qualifying Statute, standing alone, violates the Equal Protection, Due Process, and Commerce Clauses of the United States Constitution.

Plaintiffs moved for a preliminary injunction to prevent enforcement of the M.S.A. and Qualifying Statute. Pursuant to an Agreed Entry, the parties are engaging in expedited discovery. In responding to Defendant’s discovery- requests, Plaintiffs state they produced documents and information setting forth confidential information and trade secrets, including:

1. the identification of its customers and information relating to their purchasing habits;

2. pricing information;

3. sales techniques and sales volumes;

4. the operation and handling of its tobacco-cutting barns and the processing of burley tobacco; and

5. contracting policies and practices with tobacco growers.

(Pis.’ Br. for Protect. Ord., pp. 3-4). In tendering a proposed protective order to the Court, Plaintiffs seek to shield these documents from discovery by third parties, notably, its competitors in the tobacco industry and the National Association of Attorneys General (NAAG), believing good cause exists for the entry of its proposed protective order.

Defendant claims that Plaintiffs’ proposed protective order is overbroad, and that the information Plaintiffs seek to protect are not trade secrets. For the reasons set forth below, the Court DENIES Plaintiffs’ motion for entry of its proposed protective order. However, the Court holds that the information Plaintiffs seek to protect constitute trade secrets under the Indiana Uniform Trade Secrets Act, I.C. § 24-2-3-2, and finds that good cause exists for the entry of a protective order. Therefore, the Court sets forth in this Order parameters for a protective order governing the proceedings in this case.

II. Discussion

A. Protective Order Under Rule 26(c)(7)

Generally, “pretrial discovery must take place in the public unless compelling reasons exist for denying the public access to the proceedings.” Andrew Corporation v. Rossi, 180 F.R.D. 338, 340 (N.D.Ill.1998), quoting American Tel. and Tel. Co. v. Grady, 594 F.2d 594, 596 (7th Cir.1978). See also Bryan v. Eichenwald, 191 F.R.D. 650, 652 (D.Kan.2000) (“the public has an interest in everything that occurs in [a] case, whether at trial or during the discovery stage of the litigation.”).

However, there exists an exception to the presumption of disclosure. Under Federal Rule of Civil Procedure 26(c)(7)1, the movant must show that: (1) the interest for which protection is sought is an actual trade secret or other confidential business information protected under the rule; and (2) there is good cause for the entry of a protective order. Rossi 180 F.R.D. at 340, citing Culinary Foods, Inc. v. Raychem Corp., 151 F.R.D. 297, 300 (N.D.Ill.1993).

The rule facilitates disclosure. “If [parties] suspect that their trade secrets may [414]*414fall into the wrong hands, parties may be uncooperative with respect to discovery requests. Assuring the safety of these sensitive disclosures often has the effect of encouraging the apprehensive litigants to fully cooperate with the discovery process.” Rossi, 180 F.R.D. at 340, citing Matter of Krynicki, 983 F.2d 74, 75 (7th Cir.1992).

Recently, the Seventh Circuit addressed the issue of protective orders in cases involving potential trade secrets. In Citizens First National Bank of Princeton v. Cincinnati Insurance Co., 178 F.3d 943 (7th Cir.1999), the court noted it would be permissible for parties to keep trade secrets out of the public record provided that the judge, among other requirements, “satisfies himself that the parties know what a trade secret is and are acting in good faith in deciding which parts of the record are trade secrets.” Id. at 946. Accord Union Oil Co. of California v. Leavell, 220 F.3d 562, 568 (7th Cir.2000); In re Bridgestone/Firestone, Inc., 198 F.R.D. 654 (S.D.Ind.2001).

1. Trade Secrets

In this case, the Plaintiffs dispute whether the information they provided to Defendant in response to discovery requests constitutes either a trade secret or confidential business information.

In determining whether the information Plaintiffs seek to shield is a trade secret or a proprietary business interest entitled to protection under Rule 26(c)(7), the Court looks to the Indiana Uniform Trade Secret Act (IUTSA)2 for guidance.3 The IUTSA defines a “trade secret” as:

information, including a formula, pattern, compilation, program, device, method, technique, or process that:

(1) 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

(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Burk v. Heritage Food Service Equipment, Inc., 737 N.E.2d 803, 813 (Ind.Ct.App.2000), citing I.C. § 24-2-3-2. Thus, in Indiana, a “protectable trade secret” has four characteristics: “(1) information; (2) which derives independent economic value; (3) is not generally known or readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (4) the subject of efforts reasonable under the circumstances to maintain its secrecy.” Ackerman v. Kimball Int’l, Inc., 634 N.E.2d 778, 783 (Ind.Ct.App.1994), vacated in part, adopted in part, 652 N.E.2d 507 (Ind.1995).

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204 F.R.D. 410, 61 U.S.P.Q. 2d (BNA) 1252, 2001 U.S. Dist. LEXIS 20970, 2001 WL 1606798, Counsel Stack Legal Research, https://law.counselstack.com/opinion/star-scientific-inc-v-carter-insd-2001.