United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER
STEPHAN M. VIDMAR, UNITED STATES MAGISTRATE JUDGE
MATTER is before the Court on Plaintiffs Motion for
Protective Order from Plant Inspection [Doc. 71], filed on
April 6, 2018. Defendants Intrepid Potash, Inc. and Intrepid
Potash-New Mexico, LLC ("Defendants") responded on
April 18, 2018. [Doc. 82]. Plaintiff replied on May 2, 2018.
[Doc. 88]. Having considered the briefing, relevant portions
of the record, and relevant authorities, and being otherwise
fully advised in the premises, the Court finds that
Plaintiffs motion is well-taken and will be GRANTED.
and Defendants are competitors. They both operate langbeinite
processing facilities outside of Carlsbad, New Mexico. [Doc.
66]at 4, 6. Langbeinite is a mineral from
which agricultural fertilizers are produced. Id. at
5. Plaintiff claims that Defendants misappropriated
Plaintiffs trade secrets and other confidential information
concerning langbeinite processing and granulation.
alleges that in November 2014, Defendant Steve Gamble, its
long-time head of research and development, accepted
employment with Defendants without its knowledge.
Id. at 12-15. Plaintiff alleges that before leaving,
Defendant Gamble copied hundreds of confidential files to use
in his new position. Id. Once Defendant Gamble began
his employment with Defendants, Plaintiff alleges, he shared
trade secrets to improve their operations. Defendant Gamble,
who had been intimately involved in the design of Plaintiff s
plants, allegedly made recommendations to Defendants as to
how to re-design their facility to improve its efficiency.
Id. at 18. To that point, Plaintiff claims it had
enjoyed a "distinct and significant competitive
advantage" over Defendants, recovering approximately 80%
of the langbeinite it mined compared with Defendants'
30%, as a result of its trade secret methods for langbeinite
processing and granulation. Id. at 6, 21. Plaintiff
claims that Defendants did then re-design their processing
facility and change their granulation formula. As a result,
they improved their langbeinite production and recovery.
Defendants' rapid success allegedly followed years of
attempts-and millions of dollars in investments-to improve
its langbeinite recovery, without success. See Id.
2015, Plaintiff filed suit in state court for trade secrets
misappropriation, identifying several related causes of
action based on these allegations. It subsequently initiated
a second suit in federal court in this District. The first
case was removed to federal court, and the two cases were
consolidated into the present action. See [Doc. 54].
March 14, 2018, Plaintiff served Defendants with a notice of
inspection of their facilities. [Doc. 71] at 7; [Doc. 75]. Two
days later, Defendants served Plaintiff with a reciprocal
notice of inspection. [Doc. 71] at 7; [Doc. 63]. On April 6,
2018, Plaintiff filed the instant motion for a protective
order to prevent Defendants from inspecting its facilities.
Plaintiff argues that inspection of its facilities is not
designed to obtain relevant information, namely because
whether or not Plaintiff is actually using its own trade
secrets is immaterial to its claims. [Doc. 71] at 8-12.
Plaintiff additionally argues that inspection is not
proportional to the needs of the case. Id. at 12-15.
Finally, Plaintiff asserts that Defendants made their
inspection request only because Plaintiff itself requested an
inspection. This "retaliatory" reciprocal request
was improper, Plaintiff contends. Id. at 15-16.
contend that inspection of Plaintiff s plant would yield
relevant information and is otherwise proportional to the
needs of the case. [Doc. 82]. In the main, Defendants argue
that inspection is necessary so they can better understand
the trade secrets at issue in this lawsuit. Id. at
4, 7-9. While Plaintiff has provided answers to
interrogatories purporting to describe its trade secrets,
Defendants contend they remain unclear. Id. at 7-8.
Defendants further argue that inspection is necessary to
determine "the extent to which the processes are or are
not protected from public disclosure." Id. at
2. They argue that the attorneys' eyes only procedures
provided for in the parties' protective order will
alleviate any concern about new or further exposure of
Plaintiffs trade secrets.
proper scope of discovery is "any nonprivileged matter
that is relevant to any party's claim or defense and
proportional to the needs of the case." Fed.R.Civ.P.
26(b)(1); see also Sanchez v. Matta, 229 F.R.D. 649,
654 (D.N.M. 2004) ("The federal courts have held that
the scope of discovery should be broadly and liberally
construed to achieve full disclosure of all potentially
relevant information."). Whether requested discovery is
proportional depends on "the importance of the issues at
stake in the action, the amount in controversy, the
parties' relative access to relevant information, the
parties' resources, the importance of the discovery in
resolving the issues, and whether the burden or expense of
the proposed discovery outweighs its likely benefit."
Fed.R.Civ.P. 26(b)(1). Though broad, the scope of discovery
"is not without limits and the trial court is given wide
discretion in balancing the needs and rights of both
plaintiff and defendant." Gomez v. Martin Marietta
Corp., 50 F.3d 1511, 1520 (10th Cir. 1995) (internal
quotation marks omitted). The Rules expressly permit
inspection into premises, so long as the request comes within
the scope of Rule 26(b). See Fed. R. Civ. P. 34(a).
26(c) provides that, upon a showing of good cause, a court
may "issue an order to protect a party or person from
annoyance, embarrassment, oppression, or undue burden or
expense, " which order may include forbidding disclosure
or discovery. Fed.R.Civ.P. 26(c)(1)(A). The district court
has "broad discretion to decide when a protective order
is appropriate and what degree of protection is
required." Layne Christensen Co. v. Purolite
Co., 271 F.R.D. 240, 244 (D. Kan. 2010) (quoting
Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36
(1984)); see also Miller v. Regents of the Univ. of
Colo., 188 F.3d 518, 1999 WL 506520, at *12 (10th Cir.
1999) (unpublished table decision) (reasoning that
"[t]he district court is in the best position to weigh
these variables and determine the appropriate limits because,
unlike an appellate court, the district court has the ability
to view firsthand the progression of the case, the litigants,
and the impact of discovery on parties and nonparties").
The party seeking the protective order has the burden to show
that good cause exists for the protective order.
Velasquez v. Frontier Med. Inc., 229 F.R.D. 197, 200
Court finds that Plaintiff has shown good cause for a
protective order preventing Defendants from inspecting its
initial matter, the Court notes that Plaintiffs planned
inspection of Defendants' plant does not bear on
the relevance or proportionality analysis here. Plaintiff
seeks inspection of Defendants' plant to determine
whether Defendants are using its alleged trade secrets in
processing and granulation. But that rationale for inspection
does not apply to the reverse scenario. Whether Plaintiff is
using its own trade secrets is not relevant to the
claims or defenses here. As Plaintiff points out (and as