United States District Court, D. Oregon, Medford Division
OPINION & ORDER
D. CLARKE, United States Magistrate Judge
case comes before the Court on Defendant NIC's Motion for
Protective Order (#51). For the reasons stated below,
NIC's motion is GRANTED in part and DENIED in part.
and NIC entered into a Sales Agreement concerning the product
"Wipe New" prior to this litigation. Under the
Sales Agreement, Rust-Oleum assumed the obligation to
purchase certain minimum quantities of product from NIC or
alternatively pay a specified sum in exchange for the right
to be the exclusive purchaser of the Wipe New product for
"Covered Applications." Compl. Exhibit A, at 1
(#1-1). The parties mutually agreed to terminate the
Agreement approximately two years later and entered into a
Settlement Agreement. After receiving a cease and desist
letter from NIC, Rust-Oleum filed this action seeking a
determination that it has not breached its obligations under
both the Sales Agreement and Settlement Agreement.
Additionally, Rust-Oleum is seeking damages for NIC's
alleged breach of duty of good faith and fair dealing
resulting from its interference with Rust-Oleum's
business operations. In response, NIC filed counterclaims for
breach of contract, misappropriation of trade secrets, and is
also seeking damages. NIC claims that Rust-Oleum used its
trade secrets to reverse engineer its product and sell it
themselves. Before discovery commenced, a stipulated
protective order was filed in this case to protect the
disclosure of confidential information as litigation
conducting some discovery, Rust-Oleum filed an amended
complaint adding claims for fraud in the inducement and
breach of contract. Rust-Oleum alleges that NIC breached its
exclusivity obligations under the Sales Agreement by selling
products to third parties that were substantially similar or
the same as the "Products" defined by the Sales
Agreement, and by selling these products to third parties for
"Covered Applications." Rust-Oleum further alleges
that NIC intentionally misrepresented that it had maintained
exclusivity to induce Rust-Oleum into entering the Settlement
motion for protective order requires a showing of good cause
that the party will suffer harm or will be subject to
"undue burden or expense." Ciuffitelli v.
Deloitte & Touche LLP, 3:16-cv-0580-AC (D. Or. Nov.
28, 2016). The party seeking the protective order must
establish that "specific harm or prejudice will result
if no protective order is granted." Foltz v. State
Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1130 (9th Cir.
2003). Good cause is generally a "heavy burden."
Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th
motion for protective order, NIC seeks an order prohibiting
Rust-Oleum from obtaining information related to NIC's
CERAKOTE product line. NIC argues that the CERAKOTE product
line is not substantially similar to Wipe New and is
therefore irrelevant to the issues in this case and should
not be a topic for discovery. The Federal Rules of Civil
Procedure regarding discovery create a "broad right of
discovery" because "wide access to relevant facts
serves the integrity and fairness of the judicial process by
promoting the search for the truth." Epstein v. MCA,
Inc., 54 F.3d 1422, 1423 (9th Cir. 1995) (quoting
Shoen v. Shoen, 5 F.3d 1289, 1292 (9th Cir. 1993)).
The scope of discovery includes "any nonprivileged
matter that is relevant to any party's claim or defense
and proportional to the needs of the case." Fed. R Civ.
light of Rust-Oleum's recently added claims for breach of
contract and fraud in the inducement, the question of whether
CERAKOTE and Wipe New are substantially similar is now
directly at issue in this case. During the time of the Sales
Agreement between the parties, NIC allegedly sold a product
in the CERAKOTE Clear Product line named MC-156, which is
allegedly the original name for Wipe New. What was disclosed
to customers or the public about the formula or application
of these products and the actual similarities between these
products is relevant to the claims brought by both parties in
this case. Therefore, NIC cannot prohibit Rust-Oleum from
obtaining discoverable information related to CERAKOTE.
in consideration of the concerns raised by NIC, discovery
related to the CERAKOTE products shall be limited to the
CERAKOTE clear ceramic coating product line, also referred to
in the briefs as CERAKOTE Clear Products, and the following
specific products: MC-156, MC-156 Cerakote Clear, Crystal
Micro-Clear, AI Clear BB CA, and AI Clear RCA. The timeframe
for discoverable information related to CERAKOTE products
will be limited to January 1, 2015 through January 31, 2018.
In addition to the confidentiality terms included in the
Stipulated Protective Order, all review of the produced
information related to these products will be limited to
trial attorneys and outside experts.
reasons discussed above, NIC's Motion for Protective
Order (#51) is GRANTED in part and ...