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Research on law regarding issuance of protective orders permitting non disclosure of certain information

Author: LegalEase Solutions 

Legal Standard—Disclosure

Pursuant to CPLR 3103(a) “the court may at any time on its own initiative, or on motion of any party or of any person from whom discovery is sought, make a protective order denying, limiting, conditioning or regulating the use of any disclosure device. Such order shall be designed to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts”.

CPLR 3103(a) provides that the courts may make protective orders limiting the use of any disclosure device, and the courts must exercise their broad discretion to fashion judicial protective orders and similar safeguards. (Alpha Funding Group v. Continental Funding, LLC, 17 Misc.3d 959, 968, 848 N.Y.S.2d 825, 832 [N.Y. Sup. Ct. 2007]).  The burden of proving entitlement to an order of protection rests with the party seeking it. (Liebman & Charme v. Lanzoni (N.Y. Civ. Ct. 1995) 164 Misc.2d 302, 303 [624 N.Y.S.2d 752, 753] quoting Viruet v. City of New York, 97 A.D.2d 435, 467 N.Y.S.2d 285 (2d Dept.1983).

Further, it has been held that disclosure in New York civil actions is guided by the principle of “full disclosure of all matter material and necessary in the prosecution or defense of an action” (CPLR 3101[a]). The phrase “material and necessary” is “‘to be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test is one of usefulness and reason’” Kooper v. Kooper 74 A.D.3d 6, 10, 901 N.Y.S.2d 312, 317, [N.Y. App. Div. 2010]).  Put another way, the scope of New York’s disclosure law “is generous, broad, and is to be construed liberally” (Mann ex rel. Akst v Cooper Tire Co., 33 AD3d 24, 29 [1st Dept 2006]).

The requested information is “palpably improper” and, therefore, is irrelevant

“The key to permitting disclosure obviously turns on the sufficiency of the proof submitted by the party seeking disclosure in demonstrating the relevancy of the records or information sought” Van Epps v. County of Albany, 184 Misc.2d 159, 169, 706 N.Y.S.2d 855, 863, (N.Y. Sup. Ct. 2000). However, requests for disclosure may not be overbroad, burdensome, or lacking in specificity, and they may not seek irrelevant information. (Alpha Funding Group v. Continental Funding, LLC, 17 Misc.3d 959, 968, 848 N.Y.S.2d 825, 833, [N.Y. Sup. Ct. 2007]). Furthermore, “[w]hile plaintiff is entitled to relevant and necessary information, material confidential in nature, or information which is subject to abuse if widely disseminated, shall be accorded judicial safeguards where possible”(McLaughlin v. G. D. Searle, Inc., 38 A.D.2d 810, 811 [N.Y. App. Div. 1972]).

Generally, a motion to strike a pleading, or for an order of preclusion or to compel discovery must be denied when discovery demands are overbroad, burdensome, or lack specificity, or seek irrelevant or confidential information; under such circumstances, the appropriate remedy is a protective order vacating the improper demands rather than pruning them. Alpha Funding Group v. Continental Funding, LLC, 17 Misc.3d 959 (848 N.Y.S.2d 825), [N.Y. Sup. Ct. 2007]).

Additionally, where defendant fails to timely seek a protective order pursuant to CPLR 3122, the court will be foreclosed from inquiring into the propriety of the discovery requests (Aetna Ins. Co. v. Mirisola, 167 A.D.2d 270, 271, 561 N.Y.S.2d 770, 771, [N.Y. App. Div. 1990]) (quoting Zurich Insurance Company v. State Farm Mutual Automobile Insurance Company, 137 A.D.2d 401, 524 N.Y.S.2d 202). However, an exception to this general rule is recognized where discovery requests are “palpably improper” (Spancrete Northeast, Inc. v. Elite Assoc., Inc., 148 A.D.2d 694, 695, 539 N.Y.S.2d 441) “‘or seek information of a confidential and private nature … not relevant to the issues’” Id. at 271.

“[M]aterial is “palpably improper” if it is of a confidential and private nature, and irrelevant to the issues in the case”. (Watson v. Esposito, 231 A.D.2d 512, 516 [647 N.Y.S.2d 233, 236, [N.Y. App. Div. 1996])”.  “To withstand a challenge to a discovery request, therefore, the party seeking discovery must first satisfy the threshold requirement that the disclosure sought is “material and necessary,” whether the request is directed to a party (see CPLR 3101[a][1] ) or a nonparty (see CPLR 3101 [a][4] )” Kooper v. Kooper, 74 A.D.3d 6, 10, 901 N.Y.S.2d 312, 317, [N.Y. App. Div. 2010]).

Moreover, it has been held that “[w]hen the disclosure process is used to harass or unduly burden a party, a protective order eliminating that abuse is necessary and proper”.  Barouh Eaton Allen Corp. v. International Business Machines Corp. 76 A.D.2d 873, 874, 429 N.Y.S.2d 33, 35, [N.Y. App. Div. 1980]).

The trial court is vested with authority to impose, in its discretion, appropriate restrictions on demands which are “unduly burdensome” and to prevent abuse by issuing a protective order where the discovery request may cause “unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts”(Kooper v. Kooper, 74 A.D.3d 6, 10, 901 N.Y.S.2d 312, 317-18, [N.Y. App. Div. 2010])

Protecting Trade Secrets

Regarding propriety information, New York law does not specifically address protecting such information, specifically; but, it does speak about protecting trade secrets generally. “[D]ue in part to the important public benefits in protecting trade secrets . . . the liberal discovery rules are modified when trade secrets are sought to be discovered” (Curtis v Complete Foam Insulation Corp., 116 AD2d 907, 909 [3d Dept 1986]). “In such a case, the party seeking disclosure must show that the information sought appears to be indispensable to the ascertainment of truth and cannot be acquired in any other way” (Id.).

To begin with, “when trade secrets are sought by an adverse party in litigation, the burden of establishing that the information sought is a trade secret lies with the disclosure objectant” (Mann ex rel., 33 AD3d at 30). Furthermore, “[w]hen a party attempts to avoid discovery by asserting that the information sought is privileged as a trade secret, [only] a minimum showing is necessary to substantiate the assertion” (Curtis, 116 AD2d at 908). But, “as the Court of Appeals has observed, information cannot qualify for trade secret protection unless it is, in fact, secret” (Mann ex rel., 33 AD3d at 32).

The New York Court of Appeals adopted the definition of “trade secret as ‘any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not known or use it’” (Ashland Management Inc. v Janien, 82 NY2d 395, 407 [1993]) (citing Restatement of Torts § 757). Moreover, the Court of Appeals also agreed “that in deciding a trade secret claim[,] several factors should be considered:

(1) the extent to which the information is known outside of [the] business; (2) the extent to which it is known by employees and others involved in [the] business; (3) the extent of measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expended by [the business] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others”

(Id.). Finally, whether a trade secret is in fact a secret “is generally a question of fact” that will change from case to case (Id.).