Free Appeal of Magistrate Judge Decision to District Court - District Court of Colorado - Colorado

Case 1:04-cv-00617-LTB-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-00617-LTB-BNB POLYROCK TECHNOLOGIES, LLC, a Colorado limited liability company, Plaintiff, vs. GENERAL STEEL DOMESTIC SALES, LLC, a Colorado limited liability company, d/b/a General Steel Corporation; GENSTONE ENTERPRISES, LLC, a Colorado limited liability company, d/b/a GenStone; JEFF KNIGHT; KEVIN KISSIRE; and CHUCK DEMAREST, Defendants. OBJECTION TO MAGISTRATE'S ORDER OF OCTOBER 12, 2005 Defendants General Steel Domestic Sales, LLC ("General Steel"), Genstone Enterprises, LLC ("Genstone") and Jeff Knight ("Knight") (collectively "Defendants"), through their attorneys, Lewis Scheid LLC, pursuant to Fed. R. Civ. Pro. 72 and 28 U.S.C. § 636 (b)(1), object to Magistrate Judge Boland's Order re: DEFENDANTS' JOINT MOTION FOR PROTECTIVE ORDER entered on October 12, 2005, attached hereto as Exhibit A ("Magistrate's Order"). Defendants have not received the transcript of the hearing as of October 26, 2005 and requests that the court set a briefing schedule for these issues, as counsel for Defendants has not had the opportunity to review the entire record. Certificate of Compliance with D.C.COLO.LCivR 7.1 Counsel for Defendants, Kurt Lewis, attempted to contact John DeSisto, counsel for Plaintiff, by telephone, and believes counsel opposes the filing of this objection because of the previous opposition to the underlying motion.

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I. SUMMARY OF OBJECTIONS For purposes of this Objection, Defendants incorporate by reference the following: Plaintiff's First Combined Discovery Requests dated July 1, 2005 ("July 1, 2005 Discovery Requests"); and Defendants' Joint Motion for Protective Order filed September 19, 2005 ("September 19, 2005 Motion for Protective Order"). Defendants object to the Magistrate's Order on the following grounds: A. The Magistrate's Order essentially denied the September 19, 2005 Motion for

Protective Order and required the Defendants to answer the discovery requests objected to within 20 days without requiring the Plaintiff to identify the trade secret it claims. In doing so, the Magistrate found that those discovery requests objected to could lead to the discovery of information relevant to a claim for misappropriation of trade secret. B. The Magistrate found that the Plaintiff's failure to identify the existence of a trade

secret was not an issue for consideration in ruling on the motion. C. The Magistrate's Order failed to consider the indisputable proof offered by

Defendants at the October 12, 2005 Hearing, which demonstrated that Plaintiff's trade secret as plead in the Second Amended Complaint was previously disclosed to the public prior to any disclosure to Defendants. D. The Magistrate's Order failed to consider the fact that absent identification of a trade

secret, it was impossible to determine the relevance, or lack thereof, of the July 1, 2005 Discovery Requests.

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II. ARGUMENT It is well-established law that discovery requests that are overbroad, ambiguous or otherwise do not describe the request with reasonable particularity are objectionable and regularly stricken. St. Paul Reinsurance Co., Ltd. v. Commercial Fin. Corp., 198 F.R.D. 508, 514 (N.D. Iowa 2000); See also, Jewish Hospital Ass'n of Louisville, Ky, Inc. v. Struck Constr. Co., Inc., 77 F.R.D. 59, 60 (W.D. Ky. 1978). In addition, parties are not required to answer interrogatories that call for legal conclusions. Jewish Hospital Ass'n, 77 F.R.D. at 60. Courts have also commented on the requisite specificity before making a determination on responsiveness to discovery requests. See Carlson v. Freightliner LLC, 226 F.R.D. 343 (D. Neb. 2004); Leucadia, Inc. v. Intermas Nets USA, Inc., 2003 WL 366590 (D. Minn. 2003) (unpublished opinion) (discovery sought information on competing products that did not involve trade secrets). In Carlson, the court stated that a plaintiff's failure to "identify the trade secrets with sufficient specificity renders the Court powerless to enforce any trade secret claim.'" 226 F.R.D. at 364 (internal quotations omitted). Because Plaintiff has failed to provide even the slightest amount of specificity in the pleadings or upon subsequent requests by Defendants in preparing their responses, it is impossible to determine whether the information sought has even the slightest bearing on the Plaintiff's claims for misappropriation of trade secrets. In the July 1, 2005 Discovery Requests, Plaintiff makes overly broad requests for information concerning "any process or method...by which General Steel, Genstone or any person or entity acting for or on behalf of either of them, has ever manufactured or produced any product made from polyurethane or including polyurethane as an ingredient and designed, intended or marketed as achieving the look of rock, stone, stucco or brick." See July 1, 2005 Discovery 3

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Requests, Interrogatory Nos. 1-4 and 6-9, and Requests for Production Nos. 4, 6, 8-10, 12-18, and 20. The information sought by these discovery requests is overbroad, ambiguous, and not relevant to Plaintiff's UTSA Act claim because: (a) the information sought is completely duplicative of the subject matter of the `683 patent, which was published with the European Patent Office (App. No. EP0985507) on March 15, 2000, over two full years prior to any disclosure to Defendants; and (b) Defendants cannot divine at this point what Plaintiff's alleged trade secrets were composed of in 2002. Any information provided to Defendants other than the process or method of manufacturing polyurethane products designed to achieve the look of rock, stucco or brick is also not a trade secret, as demonstrated previously in September 19, 2005 Motion for Protective Order. "Information already known to competitors or readily ascertainable elsewhere cannot be protected as confidential." Mulei v. Jet Courier Service, Inc., 739 P.2d 889, 892 (Colo. Ct. App. 1987). Because the information shared with Defendants by Polyrock's predecessors was already generally known throughout the polyurethane manufacturing community, it could not be protected as the confidential subject matter of a non-disclosure agreement. Although there is no precedent in Colorado to guide the Court as to the ability to challenge the relevancy during discovery, there are several decisions from other jurisdictions in recent years that are illustrative on this issue. "The rule requiring a plaintiff to disclose its trade secrets at the outset of discovery serves four purposes. First, it promotes well-investigated claims and dissuades the filing of meritless trade secret complaints. Second, it prevents plaintiffs from using the discovery process as a means to obtain the defendant's trade secrets. Third, the rule assists the court in framing 4

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the appropriate scope of discovery and in determining whether plaintiff's discovery requests fall within that scope. Fourth, it enables defendant's to form complete and well-reasoned defenses, ensuring that they need not wait until the eve of trial to effectively defend against charges of trade secret misappropriation." Computer Economics, Inc. v. Gartner Group, Inc., 50 F.Supp. 2d 980, 985 (S.D. Cal. 1999) (Internal citations omitted). California courts require that "the party alleging misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate..." Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 148 F. Supp. 2d 1322, 1323 (S.D. Fla. 2001). Other states have recognized the importance of the identification of trade secrets when a party is faced with a claim for misappropriation of those trade secrets. See, e.g., Del Monte, 148 F. Supp. 2d 1322; Porous Media Corp. v. Midland Brake, Inc., 187 F.R.D. 598 (D. Minn. 1999); Leucadia, Inc. v. Applied Extrusion Technologies, Inc., 755 F.Supp. 635 (D. Del. 1991); Xerox Corp. v. Int'l Bus. Mach. Corp., 64 F.R.D. 367 (S.D.N.Y. 1974). The Delaware case is particularly on point. In Leucadia, the defendant filed a motion to postpone discovery pending the plaintiff's court ordered disclosure of its precise trade secrets. 755 F.Supp. at 637. The Court treated the motion as a motion for protective order, and held that "disclosure of plaintiff's trade secrets prior to discovery of defendant may be necessary to enable the defendant and ultimately the Court to ascertain the relevance of plaintiff's discovery." Id. In the present dispute, that is precisely the problem Defendants are faced with in answering the majority of the July 1, 2005 Discovery Requests. III. CONCLUSION Based upon the arguments made in the September 19, 2005 Motion for Protective Order and the Exhibits submitted therewith, and based upon the objections contained herein, Defendants

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request that the Court order that the specified discovery requests be denied and the Defendants Motion for Protective Order be granted. Defendants also request the opportunity to further brief these issues following receipt of the transcript for the October 12, 2005 hearing.

Dated this 26th day of October, 2005. LEWIS SCHEID LLC s/Kurt Lewis Kurt S. Lewis 2300 15th Street, Suite 320 Denver, CO 80202 (303) 534-5040 (303) 534-5039 fax ATTORNEYS FOR DEFENDANTS GENERAL STEEL, GENSTONE AND KNIGHT

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CERTIFICATE OF SERVICE I hereby certify that on this 26th day of October, 2005, I electronically filed the foregoing OBJECTION TO MAGISTRATE'S ORDER OF OCTOBER 12, 2005 with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following email addresses: John DeSisto Email: [email protected] Susan Hargleroad Email: [email protected] s/Kurt Lewis

Kurt S. Lewis Lewis Scheid LLC Attorneys for Defendants General Steel, Genstone and Knight

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