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Ex parte Industrial Warehouse Services, Inc.

Supreme Court of Alabama

March 2, 2018

Ex parte Industrial Warehouse Services, Inc.
v.
Kenneth Oneal Herbert et al. In re: Chapman Wilson, as administrator of the Estate of Janie Holt Wilson, deceased Ex parte Industrial Warehouse Services, Inc. In re: Olivia Taylor, as administrator of the Estate of Willie James Taylor, Jr., deceased
v.
Kenneth Oneal Herbert et al.

         Bibb Circuit Court, CV-17-900051, CV-17-900052

          PETITION FOR WRIT OF MANDAMUS

          PARKER, JUSTICE.

         Industrial Warehouse Services, Inc. ("IWS"), petitions this Court, in two separate petitions, for writs of mandamus directing the Bibb Circuit Court to vacate its order denying IWS's motion for a protective order concerning certain discovery requested by Chapman Wilson, as administrator of the estate of Janie Holt Wilson, deceased ("Wilson"), and by Olivia Taylor, as administrator of the estate of Willie James Taylor, Jr., deceased ("Taylor"), and to enter a protective order pursuant to Rule 26(c), Ala. R. Civ. P. We grant the petitions in part and deny them in part and issue the writs.

         Facts and Procedural History

         On April 20, 2017, a truck driven by Kenneth Oneal Herbert, an employee of IWS, collided with a vehicle driven by Willie James Taylor, Jr. ("Willie"); Janie Holt Wilson ("Janie") was a passenger in the vehicle. Willie and Janie died from injuries incurred as a result of the accident.

         On May 3, 2017, Wilson sued IWS, among others, asserting various tort claims. On May 5, 2017, Taylor also sued IWS, among others, asserting various tort claims. The circuit court consolidated the cases.

         Also on May 5, 2017, Wilson and Taylor requested that IWS respond to several interrogatories and produce numerous documents. Before responding to the discovery requests, IWS notified Wilson and Taylor that they had requested "materials from IWS ... that are proprietary to IWS and contain confidential information and/or trade secrets" and requested that the parties develop an agreed-upon protective order. The parties then engaged in negotiations over the language of the proposed protective order. IWS did not object to producing any of the requested discovery but sought to limit the use of the discovered information to the litigation of these consolidated cases. Wilson's and Taylor's trial attorneys, on the other hand, sought to use the discovery for purposes beyond the instant litigation. Specifically, Wilson's and Taylor's trial attorneys sought to be able to use the discovered information in any future litigation against IWS and to share the discovered information with other plaintiffs' attorneys. Ultimately, the parties could not agree on a protective order.

         On August 25, 2017, Wilson and Taylor filed a motion to compel IWS to fully respond to their discovery requests. On the same day, IWS filed a motion for a protective order "with regard to the production of certain confidential and/or proprietary materials." Specifically, IWS sought to prohibit the dissemination by Wilson and Taylor of its bills of lading and its operations and safety manuals.[1] Although the rule is not cited by IWS, it appears that IWS sought a protective order pursuant to Rule 26(c)(7), Ala. R. Civ. P., which states:

"Upon motion by a party or by the person from whom discovery is sought, and for good cause shown, the court in which the action is pending ... may make any order that justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: ... that a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way ...."

         On September 20, 2017, Wilson and Taylor filed a response to IWS's motion for a protective order arguing that IWS had failed to meet its burden of demonstrating good cause for the requested protective order. Wilson and Taylor argued that IWS had not demonstrated that the information in IWS's bills of lading and operations and safety manuals was actually "a trade secret or other confidential research, development, or commercial information."

         On September 25, 2017, following a hearing at which the parties presented arguments, the circuit court denied IWS's motion for a protective order. The circuit court held that IWS "failed to establish 'good cause' under Rule 26(c)[, Ala. R. Civ. P., ] that the requested production would create ... an annoyance, embarrassment, oppression, or undue burden or expense or that the documents constitute confidential or proprietary information deserving of special protection." The circuit court noted that IWS "failed to produce any affidavits, testimony or other evidence suggesting that the records sought by [Wilson and Taylor] are somehow confidential and proprietary."

         On October 2, 2017, IWS filed a motion requesting that the circuit court reconsider its ruling denying IWS's motion for a protective order. In support of its motion to reconsider, IWS attached the affidavit testimony of Phyllis Hahn, IWS's director of safety and human resources. Hahn's affidavit testimony indicated that IWS's bills of lading include some information that is subject to confidentiality agreements IWS has entered into with its clients. Hahn's affidavit testimony states that allowing IWS's clients' information on the bills of lading to be made public "could easily be interpreted by our clients as a breach of confidentiality." Hahn also states in her affidavit testimony that IWS's bills of lading are "essentially ... a client list" that, if made public, would allow IWS's competitors an unfair advantage. Hahn's affidavit testimony also indicates that IWS's operations and safety manuals are "created in-house" or "purchased from reputable trucking compliance companies" and "are incorporated into our particular business model and practice and, therefore, unique to our company." On October 4, 2017, Wilson and Taylor filed a response to IWS's motion to reconsider and a motion to strike Hahn's affidavit testimony as untimely.

         On October 5, 2017, the circuit court denied IWS's motion to reconsider and struck Hahn's affidavit testimony. IWS filed its mandamus petitions with this Court on October 6, 2017.

Standard of Review
"'"In Ex parte Norfolk Southern Ry., 897 So.2d 290 (Ala. 2004), this Court delineated the limited circumstances under which review of a discovery order is available by a petition for a writ of mandamus and the standard for that review in light of Ex parte Ocwen Federal Bank, FSB, 872 So.2d 810 (Ala. 2003):
"'"'"Mandamus is an extraordinary remedy and will be granted only when there is '(1) a clear legal right in the petitioner to the order sought, (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so, (3) the lack of another adequate remedy, and (4) properly invoked jurisdiction of the court.' Ex parte Alfab, Inc., 586 So.2d 889, 891 (Ala. 1991). In Ex parte Ocwen Federal Bank, FSB, 872 So.2d 810 (Ala. 2003), this Court announced that it would no longer review discovery orders pursuant to extraordinary writs. However, we did identify four circumstances in which a discovery order may be reviewed by a petition for a writ of mandamus. Such circumstances arise (a) when a privilege is disregarded, see Ex parte Miltope Corp., 823 So.2d 640, 644-45 (Ala. 2001); (b) when a discovery order compels the production of patently irrelevant or duplicative documents the production of which clearly constitutes harassment or imposes a burden on the producing party far out of proportion to any benefit received by the requesting party, see, e.g., Ex parte Compass Bank, 686 So.2d 1135, 1138 (Ala. 1996); (c) when the trial court either imposes sanctions effectively precluding a decision on the merits or denies discovery going to a party's entire action or defense so that, in either event, the outcome of the case has been all but determined and the petitioner would be merely going through the motions of a trial to obtain an appeal; or (d) when the trial court impermissibly prevents the petitioner from making a record on the discovery issue so that an appellate court cannot review the effect of the trial court's alleged error. The burden rests on the petitioner to demonstrate that its petition presents such an exceptional case -- that is, one in which an appeal is not an adequate remedy. See Ex parte Consolidated Publ'g Co., 601 So.2d 423, 426 (Ala. 1992)."'
"'"897 So.2d at 291-92 (quoting Ex parte Dillard Dep't Stores, Inc., 879 So.2d 1134, 1136-37 (Ala. 2003))."'
"Ex parte Nationwide Mut. Ins. Co., 990 So.2d 355, 360 (Ala. 2008) (quoting Ex parte Orkin, Inc., 960 So.2d 635, 638 (Ala. 2006))."

         Ex parte Bosch LLC, 177 So.3d 884, 890-91 (Ala. 2014). IWS argues that the circuit court's order denying its motion for a protective order pertains to a trade-secret privilege and thus is reviewable under category (a) ("[A] discovery order may be reviewed by a petition for a writ of mandamus ... when a privilege is disregarded ....").

         Further, this Court stated in Ex parte Compass Bank, 686 So.2d 1135, 1137 (Ala. 1996):

"Because discovery involves a considerable amount of discretion on the part of the trial court, the standard this Court will apply on mandamus review is whether there has been a clear showing that the trial court [exceeded] its discretion. Ex parte Clarke, 582 So.2d 1064, 1067 (Ala. 1991); Ex parte McTier, 414 So.2d 460 (Ala. 1982)."

         Discussion

         The issue before this Court is whether the circuit court exceeded its discretion in denying IWS's motion for a protective order. Rule 26(c), Ala. R. Civ. P., quoted earlier, vests the circuit court with authority to enter a protective order. Rule 26(c)(7) allows for a protective order to be entered to protect trade secrets or other confidential information. As set forth in Rule 26(c)(7), a protective order may be entered only upon a showing of good cause for the protection sought. In Ex parte Cuna Mutual Insurance Society, 507 So.2d 1328, 1329 (Ala. 1987), this Court stated that "it is the movant's burden to show good cause why the protective order should be granted." IWS, as the movant, had the burden of demonstrating good cause for the protective order it seeks. In the present case, the circuit court held that IWS "failed to establish 'good cause' under Rule 26(c)[, Ala. R. Civ. P., ] that the requested production would create ... an annoyance, embarrassment, oppression, or undue burden or expense or that the documents constitute confidential or proprietary information deserving of special protection."

         IWS argues that it presented good cause for the protective order because, IWS argues, the discovery sought by Wilson and Taylor contains confidential information and trade secrets. Specifically, IWS argues that the bills of lading contain confidential client information and that the operations and safety manuals, "prepared or obtained at cost and tailored specifically for [the] benefit of IWS's business operation, certainly qualify as proprietary trade secrets."

         Section 8-27-2(1), Ala. Code 1975, a part of the Alabama Trade Secrets Act, defines a "trade ...


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