Curtis, Inc. v. District Court In and For City and County of Denver

• Decision Date: 30 September 1974
• Docket Number: No. 26511,26511
• Citation: 186 Colo. 226,526 P.2d 1335
• Parties: CURTIS, INC., a Delaware corporation, Petitioner, v. The DISTRICT COURT IN AND FOR the CITY AND COUNTY OF DENVER, State of Colorado and the Honorable Robert E. McLean, one of the Judges thereof, Respondents.
• Court: Colorado Supreme Court

Page 1335

526 P.2d 1335

186 Colo. 226

CURTIS, INC., a Delaware corporation, Petitioner, v. The DISTRICT COURT IN AND FOR the CITY AND COUNTY OF DENVER State of Colorado and the Honorable Robert E McLean, one of the Judges thereof, Respondents.

No. 26511.

Supreme Court of Colorado, En Banc.

Sept. 30, 1974.

Robert Leland Johnson, Morris Rutland, Denver, for petitioner

Ireland, Stapleton, Pryor & Holmes, P.C., Kenneth L. Starr, Denver, Gretchen Vander Werf, Boulder, for respondents.

DAY, Justice.

In this original proceeding, C.A.R. 21, petitioner Curtis, Inc., seeks a writ of mandamus directing respondent court: (1) to issue a protective order pursuant to C.R.C.P. 26(c)(7) and C.R.C.P. 30(d); and (2) to grant a motion for inspection and copying of certain documents described as logs and record-keeping systems sought pursuant to C.R.C.P. 34. We issued an order to show cause why requested relief should not be granted, and the parties have briefed the respective issues. As to the protective order, we make the rule absolute, though only as approved herein. The rule requiring the requested inspection of documents is also made absolute.

On November 17, 1972, the petitioner filed an action in respondent court; the named defendants were Columbine Carriers and Kenneth D. Rudy, who like petitioner are in the trucking business. The basis for the complaint was the allegation that defendants had appropriated petitioner's record keeping and truck log methods--a system that petitioner alleges it developed at great cost and effort, and thus was a trade secret. A temporary injunction was sought and was issued and still remains in effect. Trial on the question of damages and permanent injunction is pending. After defendants filed an answer, discovery was initiated. Two aspects of that discovery are at issue here.

I. PROTECTIVE ORDERS

Petitioner filed a motion for protective orders, alleging that trade secrets in its possession had been sought, or would be sought by the defendants. Set out in the request were the following security measures:

'1. That these proceedings be had In camera, and that the public be excluded from these proceedings.

'2. That the record of the evidence in this hearing be sealed and made available only to counsel upon order of court.

'3. That defendants be prohibited from copying or otherwise reproducing plaintiff's documentary evidence.

'4. That defendants be prohibited, until further order of the court, from disclosing, except to defendants' attorneys, the contents of any papers or documents, or any testimony given by plaintiff's witnesses which relate to plaintiff's trade secrets and confidential internal matters.

'5. That each and every person permitted in the courtroom during these proceedings be sworn to secrecy as to the plaintiff's trade secrets and confidential information which may be presented during the course of this hearing.

'6. That except for one advisory witness for each party all witnesses be excluded from these proceedings except when actually giving testimony.'

Respondent ultimately denied petitioner this relief and ordered pretrial discovery to proceed without benefit of any protection.

At the outset, we note that matters relating to pretrial discovery are ordinarily reviewable only by appeal and not in an original proceeding. In a proper case, however, a writ of mandamus will issue to insure the full observance of the rules of civil procedure. It must be shown that the damage to petitioner cannot be cured by appeal, Lucas v. District Court, 140 Colo. 510, 345 P.2d 1064 (1959); McCoy v. District Court, 126 Colo. 32, 246 P.2d 619 (1952), and that judicial discretion has been abused. Both requirements are met here.

Under C.R.C.P. 26(c)(7), the trial court is authorized to issue a protective order upon a showing of good cause that a trade secret or other confidential commercial information wiull be disclosed without benefit of such order. The rule itself does not bar disclosure of trade secrets, but permits the trial court to grant disclosure 'in a designated way.' Similarly C.R.C.P. 30(d) permits trial courts to limit examination of those whose depositions are to be taken prior to trial. Taken together, these rules establish that a party desiring to protect trade secrets is entitled to a protective order upon a showing of good cause. What constitutes good cause for a protective order is a matter to be decided on the basis of the facts of each particular case. 4 J. Moore, Federal Practice, 26.68 (2d ed. 1973).

There is no absolute right to hide the nature or existence of trade secrets from an opposing party, Natta v. Zletz, 405 F.2d 99 (7th Cir. 1968), and the test of whether good cause exists in a particular case is largely determined by balancing the need to limit the exposure of the secret against the need of the opposing party to have knowledge of the nature of the secret. 4 J. Moore, Federal Practice 26.60(4) (2d ed. 1973); Id., 26.68.

In this case, the conflict of the parties' interests is obvious. Petitioner is entitled to protect its trade secrets from Unnecessary disclosure, and the defendants need to know the exact nature of the trade secrets in order to adequately defend on the charge that they have stolen such secrets. While one cannot defend a suit if he does not know what he has damaged, it also would be folly to commence a suit to protect a thing that will be lost by that suit. Reasonable measures must be taken to insure the protection of both interests.

Looking then to the requested protective orders, we hold that good cause was shown for the granting of all but one of the limitations on public exposure. Without these limitations, we perceive of no method which would insure that petitioner's trade secrets remain as secret as the circumstances allow. Still, the defendant will receive the information necessary for a full defense on the merits. See State ex rel. Ampco Metal, Inc. v. O'Neill, 273 Wis. 530, 78 N.W.2d 921 (1956).

The one exception to...