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Deman Data Systems, LLC v. Schessel

United States District Court, Third Circuit

January 16, 2014

DEMAN DATA SYSTEMS, LLC, FLORIDA SOFTWARE SYSTEMS CORPORATION, & FLORIDA SOFTWARE SYSTEMS, INC., Plaintiffs,
v.
MARC R. SCHESSEL & PRIMROSE SOLUTIONS LLC, Defendants.

MEMORANDUM

MATTHEW W. BRANN, District Judge.

Presently before the Court is Geisinger System Services' ("Movant" or "GSS") Motion for a Protective Order (ECF No. 1) concerning requests for information by the Plaintiffs in the above-captioned lawsuit, Deman Data Systems, LLC, Florida Software Systems, Corp., and Florida Software Systems, Inc. ("Plaintiffs"). GSS is not a party in that lawsuit. For the reasons discussed, the Movant's Motion for a Protective Order is granted.

I. BACKGROUND

The Plaintiffs, Deman Data Systems, LLC, Florida Software Systems, Corp., and Florida Software Systems, Inc., are presently involved in litigation against the Defendants, Marc R. Schessel and Primrose Solutions, LLC ("Defendants"), in the United States District Court for the Middle District of Florida. See Movant's Mot. Protective Order Ex. A, Oct. 25, 2013, ECF No. 1-2 [hereinafter GSS Mot.]. Geisinger System Services is a non-party to the lawsuit and one of Plaintiffs' customers with a license to use Plaintiffs' software. GSS is affiliated with the Geisinger Health System ("Geisinger") and supports its supply chain and materials management operations. GSS Mot., at 1.

Defendant Marc Schessel is a former employee of Plaintiffs. In the underlying lawsuit, the Plaintiffs allege Schessel and Primrose Solutions LLC ("Primrose"), his new company, committed various business torts, including misappropriating and stealing Plaintiffs' trade secrets and software that processes information obtained from healthcare providers into enriched data. GSS Mot., Ex. A; Pls.' Br. Opp'n Movant's Mot. Protective Order 2, Nov. 8, 2013, ECF No. 9 [hereinafter Pls.' Br.]. GSS's only relation to these allegations concern its business relationship as a customer of the parties.

As part of discovery in the lawsuit, Plaintiffs served a subpoena on GSS seeking a broad range of its business documents. See GSS Mot., Exs. B, C, D. GSS responded by objecting to the subpoena, explaining that the requests for production were overly broad and burdensome and that they raised issues relating to confidential business information belonging to GSS. See GSS Mot., Ex. E. Some of the requested information is highly confidential to GSS because it concerns the pricing and terms of license agreements GSS has negotiated with various software vendors. GSS Mot., at 6. The information also includes spending data GSS has analyzed regarding Geisinger's purchases through the use of software licensed from businesses, including the Defendants. Id . GSS is concerned with the prospect of the Plaintiffs or other entities viewing these aspects of the requested information because, if the specifics were known to the Plaintiffs or others, it could undercut GSS's future license negotiations and adversely affect its business. GSS Mot., Ex J. Moreover, GSS regularly maintains this type of information confidentially and takes steps to protect it, consistently utilizing confidentiality clauses in its software licenses including in those at issue. See GSS Mot., at 9.

These objections prompted negotiations between GSS and the Plaintiffs that resulted in an agreement to address GSS's concerns. The parties agreed to narrow the scope of the subpoena to documents relating to communications between GSS and the Defendants and a representative sample report analyzing GSS's spending data using Primrose's software. GSS Mot., at 5-6, Ex. F. The Plaintiff's also agreed to provide GSS with a confidentiality agreement between the parties in the lawsuit that would protect GSS's trade secrets and allow GSS to mark certain documents with the privacy designations "confidential" and "attorneys' eyes only." Id . GSS then began preparing the documents, using these confidentiality labels on particularly sensitive pricing and licensing negotiation information. Id.

The Plaintiffs and Defendants, however, were unable to agree upon a confidentiality agreement between them with respect to GSS's information, so GSS attempted to work with Plaintiffs to negotiate a stipulated protective order to achieve the same ends originally discussed. At this juncture, the Plaintiffs objected to GSS's right to utilize the "attorneys' eyes only" designation, although previously agreeing to its use. See GSS Mot., at 7-8, Exs. E, F, I; Pls.' Br., at 6-8. The Plaintiffs alleged GSS would abuse the use of that label by affixing it to less than highly confidential documents, which GSS denies. Id . The Plaintiff also seeks the ability to file GSS's confidential information publicly in the underlying litigation. Pls.' Br., at 10. The parties could not agree on these two issues and, consequently, GSS filed a Motion for a Protective Order in this Court.

II. DISCUSSION

Federal Rule of Civil Procedure 26(c) authorizes a district court to "issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including... requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specific way." FED. R. CIV. P. 26(c)(1). Specifically regarding subpoenas, Rule 45(d)(3)(B)(i) provides that "[t]o protect a person subject to or affected by a subpoena, the court for the district where compliance is required may, on motion, quash or modify the subpoena if it requires... disclosing a trade secret or other confidential research, development, or commercial information." FED. R. CIV. P. 45(d)(3)(B)(i).

When a court receives such a motion, it employs a three-pronged analysis cogently articulated by Judge Christopher C. Conner:

[t]he party resisting discovery must first establish that the information is a trade secret and that its disclosure would be harmful. The burden then shifts to the requesting party to demonstrate the information's relevance and necessity. If the information is relevant and necessary, the court must balance the requesting party's need for disclosure against the resisting party's potential for injury.

Procter & Gamble Co. v. Be Well Marketing, Inc., 12-mc-392, 2013 WL 152801, at *2 (M.D. Pa. Jan. 15, 2013) (Conner, J.) (internal citations omitted). Judge Conner added that "[t]ypically, courts will balance the parties' interests by entering a protective order ...


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