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McDonald Apiary, LLC v. Starrh Bees, Inc.

United States District Court, D. Nebraska

January 25, 2016

MCDONALD APIARY, LLC, a Nebraska Limited Liability Company; Plaintiff,
v.
STARRH BEES, INC., a California Corporation; DALE ASHLEY, ANNE ASHLEY, AND JONATHAN GONZALEZ, Defendants.

MEMORANDUM AND ORDER

CHERYL R. ZWART UNITED STATES MAGISTRATE JUDGE.

This matter is before the court on Plaintiff McDonald Apiary, L.L.C.’s (“McDonald Apiary”) Motion for Protective Order, (Filing No. 72). For the reasons set forth below, the motion will be granted in part and denied in part.

BACKGROUND

McDonald Apiary is a beekeeping and honey production business located in western Nebraska. Defendant Starrh Bees, Inc. (“Starrh Bees”), located in Shafter, California, is also in the beekeeping and honey production business. While Starrh Bees and McDonald Apiary are competitors, they also recently engaged in a collective business venture based on an oral contract, whereby McDonald Apiary agreed to place approximately 6, 000 of Starrh Bees’ hives in Oklahoma and Nebraska. The parties apparently determined how the expenses, labor, and profits from the sale of honey were to be divided. McDonald Apiary gave Starrh Bees access to information which described the location of the beehives so Starr Bees could maintain and care for the bees and land.

McDonald Apiary alleges Starrh Bees breached their agreement and otherwise impeded the business venture in a number of ways. Starrh Bees moved to dismiss McDonald Apiary’s initial complaint under Fed. R. Civ. P. 12(b)(6). The Hon. John M. Gerrard dismissed some claims, but he allowed the claims based on alleged violations of the Nebraska Trade Secrets Act, among others, to survive, finding McDonald Apiary’s complaint sufficiently pled the necessary facts to overcome a motion to dismiss. (Filing No. 40). McDonald Apiary’s operative complaint asserts 12 claims including, but not limited to, theft of trade secrets; breach of contract; tortious interference with business relationships and expectancies; fraud; and unlawful restraint of trade. (Filing No. 59). Starrh Bees filed its answer and asserted several counterclaims, including breach of contract and misrepresentation. (Filing No. 61).

The parties began discovery. Starrh Bees’ written discovery requests information related to McDonald Apiary’s tracking of hive locations, any global positioning system information, bank account records, copies of all documents and information McDonald Apiary alleges are “trade secrets” for the purposes of its complaint, and copies of all contracts between McDonald Apiary “and any other person or entity related to the production of honey for the years 2012, 2013, and 2014.” The parties agree that if the requested information is otherwise discoverable, it should be produced subject to a protective order. However, McDonald Apiary asserts some of the documents and information should be subject to an Attorney’s Eyes Only (“AEO”) provision in the protective order. That is, McDonald Apiary seeks to prevent any owners or employees of Starrh Bees from reviewing certain categories of documents. Starrh Bees disagrees, arguing its clients must have access to the information in order to properly defend its case. Each party has submitted a proposed protective order for the court to consider.

The undersigned magistrate judge conducted a conference call on the matter prior to the Plaintiff filing its formal motion. The court was unable to assist in resolving the issue without formal motion practice. Plaintiff filed its motion for protective order shortly thereafter.

ANALYSIS

The parties cannot agree on the level of confidentiality that should be available to protect against the misuse of discovery by a non-producing party; that is, McDonald Apiary requests a protective order that allows production pursuant to an AEO designation, while Starrh Bees demands unfettered client access to all documents produced by McDonald Apiary.[1]

This court recently addressed the purpose and standard for an AEO designation in Bussing v. COR Clearing, LLC, no. 8:12cv238, 2015 WL 4077993 (D. Neb. July 6, 2015).

The court may enter a protective order which permits certain discovery to be seen by only counsel. An “attorneys eyes only” protective order prevents a party from viewing the opposing party's sensitive business information while allowing the parties' lawyers to litigate on the basis of that information. Paycom Payroll, LLC v. Richison, 758 F.3d 1198, 1202- 03 (10th Cir.2014) (quoting In re City of New York, 607 F.3d 923, 935 (2d Cir.2010)). But limiting disclosure of discovery to the attorneys is appropriate only in very limited situations. It is a drastic remedy because “it limits the ability of the receiving party to view the relevant evidence, fully discuss it with counsel, and make intelligent litigation decisions.” Ragland v. Blue Cross Blue Shield of N. Dakota, 2013 WL 3776495, at *1 (D.N.D. June 25, 2013). And it “limits the ability of a party to provide needed assistance to counsel, ” (Ragland, 2013 WL 3776495, at *1), which may result the in the denial of fundamental due process rights. Martinez v. City of Ogden, 2009 WL 424785, at *3 (D.Utah Feb. 18, 2009). An “attorneys eyes only” protective order “should not be authorized simply because one of the parties would prefer that certain information not be disclosed to an opposing party.” Ragland, 2013 WL 3776495, at *2.

Bussing v. COR Clearing, LLC, No. 8:12CV238, 2015 WL 4077993, at *2 (D. Neb. July 6, 2015).

The party seeking an AEO designation has the burden of proving the information sought is a trade secret, confidential research, development, or commercial information and that its disclosure to the opposing party might be harmful. Id. If the party seeking protection meets its burden, the party opposing the designation must prove the information is necessary and relevant to the action. Id. “Where discovery of confidential commercial information is involved, the court must ‘balance the risk of disclosure to competitors against the risk that a protective order will impair prosecution or defense of the claims.’ ” Id. at *2 (quoting Nutratech, Inc. v. Syntech (SSPF) Int'l, Inc., 242 F.R.D. 552, 555 (C.D.Cal.2007)).

McDonald Apiary asserts its “location information . . ., identifying information regarding the landowners and beehive owners with whom it works, its contract terms with those landowners and bee hive owners, and its bank account information” are trade secrets or confidential commercial information. It has proposed an ...


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