Bridgestone/Firestone, Inc. v. Superior Court

• Decision Date: 24 June 1992
• Docket Number: No. A053717,A053717
• Citation: 7 Cal.App.4th 1384,9 Cal.Rptr.2d 709
• Court: California Court of Appeals Court of Appeals
• Parties: BRIDGESTONE/FIRESTONE, INC., Petitioner, v. The SUPERIOR COURT of the County of Alameda, Respondent, Nathan RIOS, a Minor, etc., et al., Real Parties in Interest.

Page 709

9 Cal.Rptr.2d 709

7 Cal.App.4th 1384

BRIDGESTONE/FIRESTONE, INC., Petitioner, v. The SUPERIOR COURT of the County of Alameda, Respondent, Nathan RIOS, a Minor, etc., et al., Real Parties in Interest.

No. A053717.

Court of Appeal, First District, Division 1, California.

June 24, 1992.

As Modified on Denial of Rehearing

July 23, 1992.

Review Denied Sept. 24, 1992.

Hancock, Rothert & Bunshoft, Paul D. Nelson and Peter J. Koenig, San Francisco, Jones, Day, Reavis & Pogue, Dean B. Allison, Harvey M. Grossman, Los Angeles, Crosby, Heafey, Roach & May and Patrick J. Becherer, Oakland, for petitioner.

LeBoeuf, Lamb, Leiby & MacRae, Stephen T. Waimey and Viken K. Pakradouni, Los Angeles, for amicus curiae Product Liability Advisory Council, Inc. on behalf of petitioner.

No appearance for respondent.

Horowitz & Pietraczyk, Hagai Horowitz, Hayward, Law Office of Daniel U. Smith, Daniel U. Smith, Kentfield for real parties in interest.

NEWSOM, Acting Presiding Justice.

SUMMARY

Petitioner Bridgestone/Firestone, Inc. (Firestone), seeks extraordinary relief to compel respondent Alameda County Superior Court to set aside its order requiring Firestone to provide certain trade secret (Evid.Code, § 1060) information to real parties in the underlying personal injury action. The disclosure is subject to a protective order. (Civ.Code, § 3426.5.)

Firestone insists that on the record below respondent was required to deny the motion in its entirety or alternatively to first require real parties to pursue less intrusive alternatives to disclosure.

As will be seen, we grant the petition, and in doing so, we specify guidelines for trial courts to evaluate trade secret discovery requests in future cases. (Oceanside Union School Dist. v. Superior Court (1962) 58 Cal.2d 180, 185-186, 23 Cal.Rptr. 375, 373 P.2d 439.)

BACKGROUND

Petitioner is the defendant in a wrongful death action. Real parties are the survivors of Lydia Consuela Rios, who was killed August 14, 1988, in an automobile accident allegedly caused by the failure of one of the Firestone "721" tires on the car she was driving. ¹ Real parties' complaint pleads Firestone's liability under theories of negligent design and manufacture and failure to warn, breach of express or implied warranty, and strict liability for defective design, manufacture and failure to warn. Petitioner answered the complaint with various affirmative defenses.

In the course of the litigation, real parties served petitioner with interrogatories seeking manufacturing specifications for the tire involved in the accident (incident tire) and other tires of the same type and size. ² The specifications include code numbers Respondent first determined that the formula information sought by the interrogatories constituted a trade secret. (Civ.Code, § 3426.1; ³ Evid.Code, § 1060.) Respondent subsequently ordered Firestone to provide real parties with "the complete specifications, including, but not limited to, the compound formulas and 'recipes', for any Firestone '721' product line tire known ... to have been on or in the vehicle which is the subject of this lawsuit from the date of the manufacture of said vehicle to, and including, the date of the accident which gives rise to this litigation."

which correlate with formulas or "recipes" necessary to fully translate and describe each of the rubber compound [7 Cal.App.4th 1389] components identified by the code numbers. Petitioner objected; real parties moved to compel answers to the interrogatories.

Disclosure was made subject to a protective order. This petition followed, challenging the order to the extent it required Firestone to produce the trade secret formulas. Petitioner did not claim that the specifications (as opposed to the formulas) are a trade secret. Following our denial, Firestone petitioned for review in the Supreme Court, and the matter was retransferred to us with directions to issue our alternative writ. (Code Civ.Proc., § 1087.) ⁴ We complied.

ISSUES

Evidence Code section 1060 provides: "If he or his agent or employee claims the privilege, the owner of a trade secret has a privilege to refuse to disclose the secret, and to prevent another from disclosing it, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice." Firestone reads the section to permit disclosure of a trade secret only if there is a clear and compelling need for the disclosure, insists that the superior court failed to apply such a standard in the proceeding below, and argues that under such a standard real parties have no need for the formulas. At the very least, says Firestone, respondent should have required real parties to pursue less intrusive alternatives than complete disclosure of the formulas. Further, Firestone contends that a protective order is of no significance. Last, it attacks specific provisions of the order. Because we conclude that real parties failed as a matter of law to make a prima facie showing of their need for the formulas (Greyhound Corp. v. Superior Court (1961) 56 Cal.2d 355, 383, 15 Cal.Rptr. 90, 364 P.2d 266), we need not address petitioner's other contentions.

DISCUSSION

I. The Trade Secret Privilege

The legislative history of Evidence Code section 1060 is sparse. Law Revision Commission Comment to the section explain that the privilege "is granted so that secret information essential to the continued operation of a business or industry may be afforded some measure of protection against unnecessary disclosure.... Copyright and patent laws provide adequate protection for many of the matters that might otherwise be classified as trade secrets. Recognizing the privilege as to such information would serve only to hinder the courts in determining the truth without We agree with petitioner that it would be error for respondent to have ordered disclosure of trade secret information which was only relevant to the subject matter of the pending action within the meaning of Code of Civil Procedure section 2017, for such a rule would render Evidence Code section 1060 meaningless.

providing the owner of the secret any needed protection. ... [D]isclosure of the matters protected by the privilege may be essential to disclose unfair competition or fraud or to reveal the improper use of dangerous materials by the party asserting the privilege.... [p] Therefore, the privilege exists under this section only if its application will not tend to conceal fraud or otherwise work injustice."

Evidence Code section 1060 may not be read in isolation. The Civil Discovery Act of 1986 (Code Civ.Proc., § 2016 et seq.) permits any party to obtain "discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence...." (Code Civ.Proc., § 2017, subd. (a), emphasis ours.) But " ' ... [a]n appellate court cannot reverse a trial court's grant of discovery under a "relevancy" attack unless it concludes that the answers sought by a given line of questioning cannot as a reasonable possibility lead to the discovery of admissible evidence or be helpful in preparation for trial.' " (Colonial Life & Accident Ins. Co. v. Superior Court (1982) 31 Cal.3d 785, 790, 183 Cal.Rptr. 810, 647 P.2d 86.) Relevancy to the subject matter has been construed to be broader than relevancy to issues (Laddon v. Superior Court (1959) 167 Cal.App.2d 391, 334 P.2d 638) and may vary with the size of the case. (See generally Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (Rutter 1991) §§ 8:66-8:67, pp. 8C-1-8C-1.1.)

Allowance of the trade secret privilege may not be deemed to "work injustice" within the meaning of Evidence Code section 1060 simply because it would protect information generally relevant to the subject matter of an action or helpful to preparation of a case.

Our view finds support in federal authorities. Federal Rules of Civil Procedure, rule 26(c)(7) requires the party opposing discovery of a trade secret to bring itself within the rule, but then requires the party requesting discovery to demonstrate the relevance and the necessity of the information to the action. Cases have required the requesting party to "make a clear showing that the documents are relevant to the issues involved in this litigation." (Duplan Corporation v. Deering Milliken, Inc. (D.S.C.1975) 397 F.Supp. 1146, 1185, emphasis in the original; see also American Standard Inc. v. Pfizer Inc. (Fed.Cir.1987) 828 F.2d 734, 742.)

California authority addressing the privilege is sparse.

Prior to the enactment of Evidence Code section 1060, Willson v. Superior Court (1924) 66 Cal.App. 275, 225 P. 881, had recognized the necessity of protecting trade secrets from wholesale disclosure during litigation, but then required disclosure of protected information on grounds that "[n]o man is entitled to be protected in his property right to a trade secret where, by the exercise of such right, he has wrought an injury to another and the disclosure of such secret is indispensable to the ascertainment of the truth and the ultimate determination of the civil rights of the parties." (Id., at p. 280, 225 P. 881, emphasis added.)

In Willson, an employee was injured by an actinic flare which exploded when he attempted to use it. The plaintiff employee's attorney had asked for the "chemicals or substances or drugs" and their proportions which made up the flare. This was the trade secret.

The Willson court explained that "[t]he position of the injured employee with reference to the chemical composition of the flare is not one either of idle curiosity, or yet one of an interest from the standpoint of a business competitor or a rival. The case of the injured employee may of In Agricultural Labor Relations Bd. v. Richard A....