Discovery—Unsealing Trade Secrets Subject to Protective Order
Center for Auto Safety v. Goodyear Tire & Rubber Co., No. 1 CA-CV 18-0244 (App. Div. I, November 26, 2019) (J. Swann)
ARIZONA RULE OF CIVIL PROCEDURE 5.4 and THE UNIFORM TRADE SECRET ACT PROTECT TRADE SECRETS EVEN IN THE FACE OF IMPORTANT PUBLIC SAFETY INTEREST IN DISCLOSURE
Voluminous documents subject to a protective order were sealed in a product liability action against defendant Goodyear Tire & Rubber Company [Goodyear]. After the case settled it was learned that in another case in another jurisdiction important test results further proving the subject tire was defective had been disclosed, also pursuant to a protective order but which were not produced in the Arizona case. Goodyear and the defense lawyers were sanctioned for fraudulent conduct.
Meanwhile the Center for Auto Safety learned of the incriminating documents and intervened seeking a multitude of the records under seal be unsealed arguing it was in the public interest that the full nature of the defect in the tires be known. In the process it was learned that many of the protected documents were neither trade secret nor confidential and they were released. The trial court ruled all the records, including those it determined were trade secret should be released because Goodyear's interest in protecting the trade secret on this now old tire was outweighed by the public interest. Plaintiffs' lawyer also wrote to the National Highway Traffic Safety Administration including many of these documents and this letter was leaked to the press.
Goodyear appealed the trial court's order releasing the records and the Arizona Court of Appeals reversed and remanded finding that the parties and the trial court had not properly looked to Arizona Rule of Civil Procedure 5.4 which controls the decision to unseal trade secret records.
Arizona has adopted the Uniform Trade Secrets Act A.R.S. §§44-401 to-407 which gives strong protection to trade secrets. This act must be read in conjunction with Arizona Rule of Civil Procedure 5.4 in determining what documents deserve protection and when that protection can be overcome.
The superior court may order documents to be filed under seal [and conversely unsealed] only if it finds in a written order that:
(A) an overriding interest exists that supports filing the document under seal and overcomes the right of public access to it;
(B) a substantial probability exists that the person seeking to file the document under seal (or another person) would be prejudiced if it is not filed under seal;
(C) the proposed restriction on public access to the document is no greater than necessary to preserve the confidentiality of the information subject to the overriding interest; and
(D) no reasonable, less restrictive alternative exists to preserve the confidentiality of the information subject to the overriding interest.
Here, the trial court failed to “articulate the public interest in disclosure of trade secrets or the legal basis for such disclosure in the face of the UTSA. Indeed, the UTSA itself articulates no basis for unsealing .And because unsealing is tantamount to destroying trade secret protection, we conclude that a court may expose trade secrets only in extraordinary circumstances, such as when the information has lost the independent economic value created by its secrecy, or when secrecy represents a significant threat to the public welfare. . . .[Finally] Given the inflexible command in the Uniform Trade Secret Act that courts “shall preserve the secrecy of an alleged trade secret,” we see nothing in the court's findings to justify the unsealing order. See A.R.S. § 44-405.” The court found this to be particularly true here where the public's interest was adequately served by the non-trade secret data disclosed. There was no compelling reason to also release the technical documents containing tire specifications and adjustment data.