Sea Coast Fire, Inc. v. Triangle Fire, Inc.

• Decision Date: 26 November 2014
• Docket Number: No. 3D14–973.,3D14–973.
• Citation: 170 So.3d 804
• Parties: SEA COAST FIRE, INC., etc., Petitioner, v. TRIANGLE FIRE, INC., and Andres Davila, Respondents.
• Court: Florida District Court of Appeals

170 So.3d 804

SEA COAST FIRE, INC., etc., Petitioner

v.TRIANGLE FIRE, INC., and Andres Davila, Respondents.

No. 3D14–973.

District Court of Appeal of Florida, Third District.

Filed Nov. 26, 2014.

Rehearing Denied Aug. 10, 2015.

Bello, Martinez & Ramirez, P.L., and Joel A. Bello, Coral Gables, for petitioner.

Cadogan Law, and Gina Marie Cadogan, Fort Lauderdale, for respondents.

Before SHEPHERD, C.J., and EMAS and LOGUE, JJ.

Opinion

LOGUE, J.

Sea Coast Fire, Inc., seeks certiorari review of discovery orders that compel it to disclose alleged trade secrets to Triangle Fire, Inc., a business rival. Because the disclosure of trade secrets can cause irreparable harm, and because the trial court departed from the essential requirements of law by ordering the production of the materials without determining whether the requested documents were trade secrets, we grant the petition and quash the discovery orders.

Facts

Triangle Fire is a fire equipment provider and service company that had employed Andres Davila as a sales representative. As part of his employment contract, Davila signed a non-competition and non-solicitation agreement (“the Agreement”). The Agreement prohibited Davila from, among other things, (a) disclosing certain confidential information, such as client pricing information, marketing strategy, and forecasts for particular clients, (b) working for any business similar to Triangle Fire, and (c) soliciting business from any of Triangle Fire's current customers or helping any entity do so.

Davila left Triangle Fire and began working for a rival fire equipment service company, Sea Coast Fire. Triangle Fire ultimately brought suit against both Davila and Sea Coast Fire. In regards to Davila, Triangle Fire alleged breach of the Agreement, tortious interference, and misappropriation of trade secrets, proprietary information, and confidential information. With respect to Sea Coast Fire, Triangle Fire alleged tortious interference with a non-compete covenant, tortious interference with business relationships, and misappropriation of trade secrets.

In the course of the litigation, Triangle Fire submitted interrogatories and requests for production seeking information regarding Sea Coast Fire's customer lists, customer contact information, and pricing information. Sea Coast Fire objected and filed a motion for a protective order. It alleged that Triangle Fire sought trade secret information. Triangle Fire contended the requested materials were not trade secrets.

Without conducting an in camera inspection of the requested information or holding an evidentiary hearing, the trial court ordered the production of the discovery. Two days later, the court entered a second order limiting the discovery to certain dates. This petition followed.

Analysis

To support a writ of certiorari, the petitioner must demonstrate that the challenged non-final order (1) departs from the essential requirements of law, (2) results in material injury for the remainder of the case, and (3) such injury is incapable of correction on postjudgment appeal. Citizens Prop. Ins. Corp. v. San Perdido Ass'n, Inc., 104 So.3d 344, 351 (Fla.2012). The last two elements are sometimes referred to as irreparable harm, the establishment of which is a condition precedent to invoking certiorari jurisdiction. Nader v. Fla. Dep't of Highway Safety & Motor Vehicles, 87 So.3d 712, 721 (Fla.2012) ; Miami–Dade Cnty. v. Dade Cnty. Police Benevolent Ass'n, 103 So.3d 236, 238 (Fla. 3d DCA 2012). The disclosure of “cat-out-of-the-bag material” information, such as trade secrets, can constitute irreparable harm. Cooper Tire & Rubber Co. v. Cabrera, 112 So.3d 731, 733 (Fla. 3d DCA 2013).

Trade secrets are privileged under section 90.506, Florida Statutes, but the privilege is not absolute. Freedom Newspapers, Inc. v. Egly, 507 So.2d 1180, 1184 (Fla. 2d DCA 1987). Information constituting trade secrets can be obtained in discovery under certain circumstances. To determine if those circumstances exist, a trial court generally must follow a three-step process:

(1) determine whether the requested production constitutes a trade secret;

(2) if the requested production constitutes a trade secret, determine whether there is a reasonable necessity for production; and

(3) if production is ordered, the trial court must set forth its findings.

Gen. Caulking Coating Co., Inc. v. J.D. Waterproofing, Inc., 958 So.2d 507, 508 (Fla. 3d DCA 2007).

Trade secrets are defined in Florida's Uniform Trade Secrets Act as:

[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process that:

(a) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

§ 688.002(4), Fla. Stat. (2013). Examples of trade secrets include confidential business information such as a customer list, when the list is not just a compilation of information readily available to the public, but rather acquired or compiled through the owner's industry. Kavanaugh v. Stump, 592 So.2d 1231, 1232 (Fla. 5th DCA 1992) ; E. Colonial Refuse Serv., Inc. v. Velocci, 416 So.2d 1276, 1278 (Fla. 5th DCA 1982).

To determine whether the requested information constitutes a trade secret, the trial court may perform an in camera inspection or other document examination. Messer v. E.G. Pump Controls, Inc., 667 So.2d 321, 322 (Fla. 1st DCA 1995) (holding a departure from the essential requirements of law occurred when the trial court ordered production of documents without first conducting an examination of the documents or an in camera review); Summitbridge Nat. Invs. LLC v. 1221 Palm Harbor, L.L.C., 67 So.3d 448, 450 (Fla. 2d DCA 2011) (determining whether a trade secret exists usually requires an in camera review).

A trial court may also hold an evidentiary hearing. Bright House Networks, LLC v. Cassidy, 129 So.3d 501, 506 (Fla. 2d DCA 2014) (determining whether a trade secret exists usually requires the court to perform either an in camera review of the information or an evidentiary hearing). Such a hearing may include expert testimony. Lovell Farms, Inc. v. Levy, 641 So.2d 103, 105 (Fla. 3d DCA 1994) (remanding for either an in camera inspection or evidentiary hearing with expert testimony that would establish the existence of a trade secret). Expert testimony may be particularly useful in cases where the trial court does not have the requisite experience in examining the subject information. See, e.g., Revello Med. Mgmt., Inc. v. Med–Data Infotech USA, Inc., 50 So.3d 678, 680 (Fla. 2d DCA 2010) (“If the circuit judge does not have the requisite experience in examining [computer source] code, he may wish to appoint a neutral computer expert to review [the party's] program.”).

Of course, in a case where it is undisputed that the information requested is a trade secret, an inspection or hearing may not be required to determine that a trade secret exists. See Columbia Hosp. (Palm Beaches) Ltd. P'ship v. Hasson, 33 So.3d 148, 150 (Fla. 4th DCA 2010). The burden is on the party resisting discovery to show that the information sought is a trade secret. Am. Exp. Travel Related Servs., Inc. v. Cruz, 761 So.2d 1206, 1209 (Fla. 4th DCA 2000).

If the materials are trade secrets, the court must then determine whether there is a reasonable necessity for production. Gen. Caulking Coating Co., 958 So.2d at 509. Once a party has demonstrated that the information sought is a trade secret, the burden shifts to the party seeking discovery to demonstrate reasonable...