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In re Cooper Tire & Rubber Co.

Court of Appeals of Texas, Fourteenth District, Houston · 2010 · Civil Procedure

Civil ProcedureDiscoveryMandamusTrade Secret Privilegetrade secretsRule 507mandamusdiscovery

Facts

Plaintiffs injured in an auto collision sued Cooper Tire, alleging defects in a Weather-Master S/T tire and claiming Cooper failed to use belt edge gumstrips (BEGs) as a safer alternative design. They sought documents concerning a different tire made from Green Tire Spec 2257 to show when BEGs were added and removed and what effect that had on tire failures. Cooper objected that the documents were irrelevant and contained confidential trade secret information, and it supported that claim with affidavits from its principal tire analysis engineer. After an in camera review, the trial court ordered production based on relevance and a protective order.

Issue

When a party establishes that requested discovery materials are trade secrets, may a trial court compel production based only on relevance and the existence of a protective order? More specifically, did the plaintiffs show with sufficient specificity that Cooper Tire's GTS 2257 documents were necessary for a fair adjudication of their claims?

Rule

Under Texas Rule of Evidence 507, a party may refuse to disclose trade secrets unless disclosure is necessary to prevent fraud or otherwise work injustice, meaning necessary for a fair adjudication of the requesting party's claims or defenses. The party asserting the privilege must first prove the information qualifies as a trade secret, evaluated under six surrounding-circumstances factors; if that burden is met, the burden shifts to the party seeking discovery to demonstrate with specificity exactly how lack of the information will impair presentation of the case on the merits so that an unjust result is a real, not merely possible, threat. It is an abuse of discretion to compel production of proven trade secrets absent that showing, and appeal is inadequate if privileged trade secrets are ordered disclosed.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In a design-defect suit in Dallas, Nora Kim seeks internal engineering change logs from Falcon Ridge Machines, a fictional manufacturer. Falcon Ridge submits detailed affidavits showing the logs contain proprietary formulas and testing sequences, are not publicly known, are disclosed only to limited employees under nondisclosure agreements, and would be valuable to competitors.

If the trial court finds the affidavits sufficient to establish trade secret status, what must Nora show to obtain the documents?

Explanation. Once the resisting party proves the requested material qualifies as a trade secret, the burden shifts to the requesting party to establish necessity for a fair adjudication of the claim or defense. Relevance alone and the existence of a protective order are insufficient. The requesting party must demonstrate with specificity exactly how the lack of the information will impair presentation of the case on the merits so that injustice is a real, not merely possible, threat. (Derived from In re Cooper Tire & Rubber Co. (n.d.).)