Court Grants Motion to Quash Third Party Subpoena of Plaintiff Competitor: eDiscovery Case Law

In Little Bay Lobster v. Rhys, No. 1:20-cv-00246-DBH (D. Me. Feb. 25, 2021), Maine Magistrate Judge John H. Rich III granted the Motion to Quash from nonparty Greenhead Lobster, LLC (“Greenhead”, a competitor of the plaintiff) for the plaintiff’s Rule 45 third party subpoena and denied the plaintiff’s Motion to Compel Greenhead to respond to the subpoena as well.

Case Background

In this case involving claims of breach of contract, negligent misrepresentation, and fraudulent misrepresentation over the defendant’s failure to exclusively sell his lobster catch to the plaintiff company, the plaintiff served a subpoena and notice of deposition in December 2020 on third-party Greenhead (which was a company to which the defendant was selling his lobster catch).  The notice of deposition commanded Greenhead to designate one or more persons to testify on its behalf pursuant to Federal Rule of Civil Procedure 30(b)(6) with respect to 1) the relationship between Greenhead and the defendant relating to the purchase of lobsters and other fish by Greenhead, 2) all monies paid by Greenhead to the defendant and 3) the relationship between Greenhead and the defendant relating to the sale of bait and any other products by Greenhead – all from January 1, 2016 to the present.

The notice of deposition also commanded Greenhead to produce various documents (again from January 1, 2016 to the present) reflecting or relating to 1) agreements between Greenhead and the defendant, 2) the quantity and/or pounds of lobster purchased by Greenhead from the defendant, 3) all of the amounts paid by Greenhead to the defendant, 4) amounts charged or debited against the account of and/or paid by the defendant to Greenhead, 5) daily fuel, bait and lobster slips and other records relating to Greenhead and the defendant, and 6) monthly landings reports filed by Greenhead with the Maine DMR reflecting the lobsters purchased from and/or landed by the defendant.

On January 12, 2021, Greenhead filed the instant motion to quash and interposed objections to Little Bay’s document requests on several grounds, including that the requests sought confidential, proprietary and/or trade secret information and were vague, ambiguous, overly broad, unduly burdensome, and/or disproportionate to the needs of the case.

Judge’s Ruling

Judge Rich stated in his ruling: “For Greenhead, information about the quantity and pricing of products that it purchases from and sells to its vendors, including Rhys, is very valuable and confidential business information…Greenhead takes precautionary measures to limit the number of people at Greenhead who even know about such sales and pricing data…For instance, it limits the availability of that sort of information to only those with a business ‘need to know.’…Of about 140 employees, only three or four…have access to that information…Relatedly, Greenhead stores that data on software that is password-protected so that unauthorized people cannot obtain access to it…Therefore, its sales and pricing information is not publicly known or available.”

He also noted: “As a threshold matter, Little Bay contends that Greenhead falls short of demonstrating either that the information at issue constitutes a “trade secret” that has independent economic value or that Greenhead would be harmed by its disclosure…With respect to the both points, it underscores that Greenhead (i) ‘has provided no evidence that it protects the information beyond its office space by enforcing agreements with its vendors or employees restricting disclosure of its pricing terms or that disclosure by vendors and employees is prohibited’ and (ii) ‘has not suggested that it prohibits [a] lobsterman from whom it purchases lobsters from disclosing the price he receives from Greenhead for his catch.’”

In response to the plaintiff’s contention, Judge Rich stated: “I conclude that Greenhead’s showing suffices. First, as Greenhead notes,…it need not prove that its information constitutes a ‘trade secret’: Rules 26 and 45 specifically contemplate the protection of ‘other confidential … commercial information’…Second, ‘courts have generally viewed sales data as trade secrets or confidential information.’… Third, Greenhead adequately demonstrates that it has safeguarded its pricing and sales data by sharply limiting access to such information within the company, including password-protecting computerized data, and that it would be harmed by disclosure of its pricing and sales data to its direct competitor in Stonington, Maine. Reynolds avers that ‘[i]f a competitor such as Little Bay’ were to obtain that data, it ‘could use that information’ to Greenhead’s ‘detriment[,]’ for example, ‘by undercutting [its] prices and/or offering more favorable terms to the fishermen from whom [it] source[s] [its] products.’…That showing of harm is made with ‘appropriate specifics.’…As Greenhead argues, in the circumstances described by Reynolds, the potential harm from Little Bay’s acquisition of Greenhead’s confidential sales data is ‘plain on its face.’”

Noting that the burden “shifts to Little Bay ‘to establish that the information is sufficiently relevant and necessary to [its] case to outweigh the harm disclosure would cause to the person from whom [it] is seeking the information’”, Judge Rich concluded in granting the motion to quash and denying the motion to compel that “Little Bay’s showing falls short”, noting that “Little Bay does not explain, and it is not self-evident, why it needs to know the prices Greenhead paid Rhys for lobsters or charged him for supplies”, that “Little Bay does not explain, and it is not self-evident, why, for purposes of calculating its damages, it needs any data for the period prior to March 19, 2020, the date on which Rhys promised to commence doing business exclusively with Little Bay for at least two years” and that “Little Bay does not explain whether it sought information from defendant Rhys – whose dealings with Greenhead are at the heart of this lawsuit – before turning to nonparty Greenhead”.

So, what do you think?  Was the plaintiff’s request a “fishing” expedition? 😉 Or did it surprise you that the motion to quash was granted? Please share any comments you might have or if you’d like to know more about a particular topic.

We’ll be covering this case in our EDRM April case law webinar next Monday April 19 at 1pm ET!

Case opinion link courtesy of eDiscovery Assistant, an Affinity partner of eDiscovery Today.

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