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Business litigation between competitors often involves discovery of information that may be subject to trade secret protection. Parties will often enter stipulations for confidentiality orders to protect the information from third-party disclosure, however that may not protect a business from the damage caused by their competitor’s access to that information. Businesses must ensure that trial courts follow proper procedure for trade secret discovery in business litigation. Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach.  The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigationtrademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

A recent example of this occurred in the case of Lewis Tree Serv., Inc. v. Asplundh Tree Expert, LLC, 2D20-493, 2020 WL 5739751 (Fla. 2d DCA Sept. 25, 2020).  Lewis Tree Service, Inc. (Lewis Tree) and Asplundh Tree Expert, LLC (Asplundh) were competitors in vegetation management, which generally included tree pruning and removal, right-of-way clearing and maintenance, and emergency storm removals for cities, counties, and utility companies. Both Lewis Tree and Asplundh had contracts with Duke Energy in the north central region of Florida, covering different portions of the larger region. Their contracts were set to expire at the end of 2017, and both Lewis Tree and Asplundh intended to bid for new contracts. Asplundh fired one of its supervisors, Juan Angel Garza (Garza), for reasons unrelated to the current dispute. While employed with Asplundh, Garza had a signed noncompete agreement. Shortly after Garza was fired, he allegedly started working with Lewis Tree as a “consultant” in violation of the terms of this noncompete agreement, and he allegedly began recruiting Asplundh’s foremen and skilled workers on behalf of Lewis Tree. The alleged result of Garza’s efforts and those of the foremen he recruited was that more than sixty Asplundh employees—primarily the higher-skilled climbers—quit in late September and early October 2017. The majority of these workers were hired by Lewis Tree and left Asplundh’s north central region severely understaffed.

Asplundh filed a lawsuit against Lewis Tree, among others, for tortious interference with Garza’s noncompete agreement and alleged that Lewis Tree, Garza, and the foremen conspired to convince the skilled workers to breach their duty of loyalty to Asplundh. The trial court granted summary judgment in favor of Lewis Tree on the tortious interference claim, which left the conspiracy to steal skilled workers count as the only claim left against Lewis Tree. Asplundh served Lewis Tree with a request for production of the complete set of bid documents that Lewis Tree submitted for the Duke Energy contract in late 2017. Lewis Tree refused to disclose the requested documents because they contained trade secret information. Asplundh filed a motion to compel.

In business litigation, a trade secret privilege can be asserted to prevent disclosure of trade secrets during the discovery process. Lewis Tree contended that bids for vegetation management contracts are not bottom-line bids, but rather are similar to a guaranteed price list per unit, and the bid includes granular details of the labor and equipment cost components that comprise the different unit prices. Lewis Tree contended that its bid documents—including all of those granular details—could be examined by Asplundh and reverse-engineered to identify Lewis Tree’s proprietary bid development process, which it contended was a trade secret.

Lewis Tree asked the trial court to review its bid documents in camera (taking place in private chambers) and to provide it with an opportunity to explain how those documents could be used by a competitor to discover trade secret information and gain a competitive advantage in future bids. Lewis Tree also contended that producing the entirety of the bid documents was not reasonably necessary to Asplundh’s case. Asplundh contended that an in camera review was unnecessary because a bid was not a trade secret as a matter of law. Asplundh showed the court a partial copy of its own bid documents, however, it refused to allow Lewis Tree to see the documents it gave to the court, and those documents were not introduced into evidence or made part of the record. The trial court refused to conduct an in camera review of the bid documents, instead, the court entered an order finding that the bid documents were relevant to Asplundh’s remaining claim, and it concluded that Lewis Tree would not be harmed by production of the documents because there was a stipulated confidentiality agreement in place covering all discovery in the case. Asplundh immediately appealed.

Parties in business litigation may need to seek appellate intervention to prevent disclosure of their trade secrets. A writ of certiorari is appropriate when a trial court’s ruling departs from the essential requirements of the law that results in harm through the remainder of the case which cannot be remedied on a post judgment appeal. Parkway Bank v. Fort Myers Armature Works, Inc., 658 So. 2d 646 (Fla. 2d DCA 1995). Certiorari is suitable for “cat out of the bag” discovery orders that require the disclosure of information that is privileged or otherwise protected from disclosure. Allstate Ins. Co. v. Langston, 655 So. 2d 91 (Fla. 1995). Lewis Tree contended that the trial court’s order departed from the essential requirements of the law because it requires the production of trade secret information without the court having conducted the analysis necessary to ensure that such information is properly discoverable. The appellate court agreed.

To ensure that trade secret privilege is properly applied in business litigation, courts have set forth a three-step analysis. The court must determine: (1) whether the information requested constitutes or contains trade secret information; (2) if a trade secret, whether the party seeking production can show reasonable necessity for the requested information (this is a fact-specific analysis that will depend on the issues in the case and the nature of the discovery requested); and (3) what safeguards, such as a confidentiality order, should be put in place to properly protect that information. Ameritrust Ins. Corp. v. O’Donnell Landscapes, Inc., 899 So. 2d 1205 (Fla. 2d DCA 2005); Sea Coast Fire, Inc. v. Triangle Fire, Inc., 170 So. 3d 804 (Fla. 3d DCA 2014).

The appellate court held that the trial court inverted this process. The trial court stated that it would conduct an in camera review only after Lewis Tree established that its bid documents contained trade secret information. The appellate court held that this decision ignored the fact that the entire purpose of the in camera review is to determine whether the requested documents contain trade secret information. The trial court skipped step one of the analysis and proceeded directly to step three and ordered production of the bid documents because they were subject to a stipulated confidentiality agreement. The appellate court concluded that the trial court’s decision to wholly dispense with the first step of a three-step analysis constituted a departure from the essential requirements of the law that justified relief by certiorari. Lewis Tree’s Petition was granted, the trial order was quashed, and the case was remanded for the trial court to conduct an in camera inspection of the requested bid documents.

Businesses may risk losing their trade secrets if they do not require trial courts to follow the proper procedure.  A business litigator that is well-versed in the requirements of the Florida Uniform Trade Secret Act can avoid these consequences by zealously advocating for the proper procedure to be applied.  Peter Mavrick is a Fort Lauderdale business litigation attorney who also practices business litigation in Miami-Dade, Boca Raton, and Palm Beach.  This article does not serve as a substitute for legal advice tailored to a particular situation.

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