United States District Court, N.D. California
DISCOVERY ORDER Re: Dkt. No. 99
MARIA-ELENA JAMES, Magistrate Judge.
In this putative class action, Plaintiffs bring claims against Defendants Tempur-Sealy International, Inc. and Tempur-Pedic North America, LLC ("Defendants") arising out of Defendants' marketing and sale of mattresses, pillows, and other bedding products containing TEMPUR® material. Specifically, Plaintiffs allege that Defendants' representation of their Tempur products as "formaldehyde free, " "free of harmful (volatile organic compounds) VOCs, " "allergen resistant, " and "hypoallergenic" are false and misleading, because "reliable testing of Tempur-pedic products reveals that formaldehyde and other potentially harmful VOCs, that can trigger allergy and asthma symptoms, are present in Tempur-pedic products and in the chemicals off-gassing from Tempur-pedic products." Sec. Am. Compl. ¶ 11. The Court entered a Stipulated Protective Order in this case on September 16, 2014. Dkt. No. 68.
Plaintiffs now move to compel production of the formula for Defendants' TEMPUR® material. Jt. Ltr., Dkt. No. 99. The present dispute concerns Defendants' responses to Plaintiffs Tina White and Patricia Kaufman's First Set of Interrogatories and Requests for Production, specifically requests regarding the production of the chemical formulation/ingredients of Defendants' products. The following requests are at issue:
Tina White's Interrogatory No. 7: Please list the chemical ingredients that are included in Tempur-pedic mattresses manufactured during the Relevant Time that were sold in the Pertinent States. If different chemicals are involved based on the model of the mattress, please specify and describe those differences in your response.
Patricia Kaufman's Request for Production No. 2: Copies of documents [...], since January 1, 2001 related to the raw materials used in producing Tempur-pedic mattresses and/or pillows, including foam type and/or TEMPUR®, TEMPUR® and/or foam supplier, chemicals used to make the TEMPUR® and/or foam, the MSDS for the materials and/or components in the foam, the chemical additives in the foam.
Jt. Ltr. at 2. Defendants' objections read in part: "Plaintiff seeks the exact formula of TEMPUR® material, and Defendant objects to producing this information as the closest held trade secret of Defendant's business. Only a handful of people in Tempur-Pedic know the formula for TEMPUR® material. Disclosure of this information, accidental or otherwise, could destroy Defendant's business." Id.
Federal Rule of Civil Procedure ("Rule") 26 provides that a party may obtain discovery "regarding any nonprivileged matter that is relevant to any party's claim or defense." Fed.R.Civ.P. 26(b)(1). "Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id. A court "must limit the frequency or extent of discovery otherwise allowed by [the Federal] rules" if "(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues." Fed.R.Civ.P. 26(b)(2)(C).
"The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, " including by (1) prohibiting disclosure or discovery; (2) conditioning disclosure or discovery on specified terms; (3) preventing inquiry into certain matters; or (4) limiting the scope of disclosure or discovery to certain matters. Fed.R.Civ.P. 26(c)(1). "Rule 26(c) confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required." Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984).
"Trade secrets" and other "confidential research, development, or commercial information" are explicitly addressed in Rule 26. The Court, for good cause, may issue a protective order to protect this information. To obtain a protective order based upon a trade secret, the party seeking protection "must first establish that the information sought is a trade secret and then demonstrate that its disclosure might be harmful." Trevino v. ACB Am., Inc., 232 F.R.D. 612, 617 (N.D. Cal. 2006) (citations omitted). The burden then shifts to the party seeking the discovery to demonstrate that the information is relevant and "necessary to prepare the case for trial." Id. The Court must then weigh the risk of disclosure of the trade secret to unauthorized parties with the risk that a protective order will impede prosecution or defense of the claims. Id. Once the moving party has established relevance and necessity, "the discovery is virtually always ordered." Id. (quoting Compaq Computer Corp. v. Packard Bell Elecs., Inc., 163 F.R.D. 329, 338 (N.D. Cal. 1995) (additional citations omitted)).
Plaintiffs contend that the TEMPUR® formula is relevant because their claims revolve around Defendants' advertising campaign, which consisted of "numerous affirmative misrepresentations" on Defendants' marketing materials. Jt. Ltr. at 3. They argue that discovery of the formula used in Defendants' products would show whether they knowingly made the affirmative misrepresentations about their products and failed to disclose material information of which they had actual knowledge. Id. Plaintiffs maintain that they "are entitled to know whether Defendant's products start with and/or contain substances that pose the same or similar risks as those substances that the Defendants stated their products were free' of, and whether such substances were intentionally added to Defendants' product formulas." Id.
In response, Defendants note that Plaintiffs' claims in the Second Amended Complaint concern alleged misrepresentations and omissions regarding the off-gassing of potentially harmful VOCs and formaldehyde. Id. at 5 (citing Sec. Am. Compl. ¶¶ 3, 6, 50, 56, 58). They maintain that information regarding the formula and ingredients used to manufacture TEMPUR® foam is irrelevant to the issue of off-gassing and unnecessary and cumulative in light of Plaintiffs' numerous other discovery requests seeking specific information regarding off-gassing, VOCs, and testing. Id. However, after the parties met and conferred, Defendants agreed to disclose the formula ingredients used in the manufacture of its pillows and mattresses from 2007 to 2013, but only if Plaintiffs would agree to additional safeguards which would ...