In re Bridgestone/Firestone, Inc.

• Decision Date: 22 May 2003
• Docket Number: No. 01-1165.,01-1165.
• Citation: 106 S.W.3d 730
• Parties: In re BRIDGESTONE/FIRESTONE, INC., Relator.
• Court: Texas Supreme Court

106 S.W.3d 730

In re BRIDGESTONE/FIRESTONE, INC., Relator.

No. 01-1165.

Supreme Court of Texas.

Argued September 25, 2002.

Decided May 22, 2003.

Marie R. Yeates, Knox D. Nunnally, Catherine B. Smith, Vinson & Elkins, L.L.P., Houston, Debora B. Alsup, Thompson & Knight, L.L.P., Austin, C. Vernon Hartline, Jr., Scott G. Edwards, Hartline, Dacus, Barger, Dreyer & Kern, L.L.P., for Relator.

Robert J. Patterson, Patterson & Associates, Corpus Christi, Wendell Phillip Martens, Leon R. Russell, Law Office of Leon R. Russell, Dallas, N. Carlene Rhodes Lewis, Goforth Lewis LLP, Houston, C. Tab Turner, Turner & Associates, N. Little Rock, AR, Robert E. Ammons, Stevenson St. John & Ammons, Houston, Paula A. Wyatt, Wyatt & Wyatt, Corpus Christi, Michael L. Phifer, Law Office of Michael L. Phifer, Richard Warren Mithoff, Mithoff & Jacks, Houston, Vincent L. Marable, III, Paul Webb, P.C., Wharton, Catherine W. Smith, Law Office of Ramon Garcia, Edinburg, David G. Matthiesen, Matthiesen Chase & Erwin, Houston, Frank L. Branson, Law Office of Frank L. Branson, Dallas, for Respondent.

Justice HECHT delivered the opinion of the Court, in which Chief Justice PHILLIPS, Justice ENOCH, Justice OWEN, Justice JEFFERSON and Justice SMITH joined.

The plaintiffs in some 150 cases alleging Firestone tire tread separations and Ford Explorer roll-overs seek discovery of Firestone's skim stock formulas, which they concede in this Court are trade secrets. Although the plaintiffs contend that they can prove their tires were defective without knowing the skim stock formulas, they nevertheless argue that disclosure of the formulas is necessary for a fair adjudication of their claims. The pretrial judge assigned to the cases agreed, but in this original mandamus proceeding we conclude that the plaintiffs have failed to show, as they acknowledge they must, how access to Firestone's skim stock formulas is necessary for a fair adjudication of their claims. Accordingly, we conditionally grant mandamus relief.

A large number of similar cases have been filed in Texas, as in other states, alleging that certain Firestone tires are defective. In seven of nine administrative judicial regions in this State, the regional presiding judge assigned a pretrial judge for the cases in the region.¹ These seven pretrial judges must consult with each other in ruling on pretrial matters.² The original proceeding now before us involves a challenge to one such ruling by one of the pretrial judges in which all have joined. Relator, Bridgestone/Firestone, Inc., is a defendant in the cases before the pretrial judges. The real parties in interest are the plaintiffs in those cases.

The plaintiffs claim that "Wile defect with the Firestone tires is a skim stock deficiency which causes a lack of adhesion between the steel belts in the tires and separation of the tread and steel belts." Skim stock is a specially formulated rubber compound that coats the steel belts in a steel-belted radial tire and through vulcanization holds them together. In the pending cases, the plaintiffs requested discovery of the formulas and specifications for the skim stock Firestone used to produce ATX, ATXII, and Wilderness AT tires at its Decatur plant. Firestone responded that two skim stock formulas were used in manufacturing the specified tires, that both were used at all its plants, that one was still in use, and that its skim stock formulas are trade secrets privileged from discovery under Rule 507 of the Texas Rules of Evidence.³ Firestone presented evidence that it goes to great lengths to guard its skim stock formulas from its competitors, and that skim stock formulas are regarded as trade secrets throughout the tire manufacturing industry. Because skim stock is chemically altered by vulcanization, its components cannot be determined from the finished tire. The plaintiffs countered that the skim stock formulas they sought could not be of interest to Firestone's competitors, given the problems Firestone has had with its tires. Firestone answered that disclosing the formulas would reveal the approach Firestone has taken to engineering its tires.

After a hearing, the pretrial judge found that Firestone had established its trade secret privilege. The burden then fell upon the plaintiffs to establish that the information is necessary or essential for a fair adjudication of their claims.⁴ The pretrial judge found that the plaintiffs had met this burden and ordered Firestone to produce the requested information. The judge ordered that the information be provided only to three attorneys for the plaintiffs named in the order and one expert to be designated by the Texas Plaintiffs' Steering Committee. The judge ordered that the information not be disseminated further and that it be provided on paper that cannot be photocopied. Firestone sought relief by mandamus from the court of appeals, which that court denied. Firestone then petitioned this Court for relief.

We have previously considered whether a tire manufacturer's skim stock formula is privileged from discovery in In re Continental General Tire, Inc.⁵ There, as here, the plaintiffs alleged a tire tread separation caused by a defect in the skim stock. In both cases the plaintiffs conceded in this Court that a skim stock formula is a trade secret.⁶ In Continental General Tire we held that for the plaintiffs to obtain discovery they were required to establish that the information was necessary or essential to the fair adjudication of the case, weighing the requesting party's need for the information against the potential of harm to the resisting party from disclosure.⁷ We concluded that the plaintiffs had failed to make this showing. We noted that the uncontroverted evidence from the defendant's expert was that "the physical properties of a tire cannot be determined from an examination of a compound formula; rather, the finished tire itself must be tested."⁸ Thus, there was no evidence that a defect in skim stock could be proved using the formula for its components. We also noted that the plaintiffs had no other manufacturer's formula to compare to the defendant's formula.⁹ One could not tell from the formula itself whether it was better or worse than any other formula. Finally, we stated that the plaintiffs had offered no evidentiary support for their theory that the skim stock formula would show whether sulfur found on the defective tire was a component of the skim stock or had been improperly introduced during manufacture.¹⁰

We did not attempt to state conclusively what would or would not be considered necessary for a fair adjudication, indicating instead that the application of the test would depend on the circumstances presented.¹¹ In the present case, Firestone argues that the test should be applied to preclude discovery of trade secret information unless the requesting party cannot prevail without it. While it would certainly be unfair to allow a party to prevail solely by withholding such information, our decision in Continental General Tire cannot be read so narrowly. It may be theoretically possible for a party to prevail without access to trade secret information and yet be unfair to put him to much weaker proof without the information. Obviously, the degree to which information is necessary in a case depends on the nature of the information and the context of the case.

While it is difficult to be more specific about the test to be applied, except by demonstrating how it is properly applied in particular cases, we can say with certainty that the test cannot be satisfied merely by general assertions of unfairness. The words "fair" and "unfair" are prone to indefinite use. Just as a party who claims the trade secret privilege cannot do so generally but must provide detailed information in support of the claim, so a party seeking such information cannot merely assert unfairness but must demonstrate with specificity exactly how the lack of the information will impair the presentation of the case on the merits to the point that an unjust result is a real, rather than a merely possible, threat. The plaintiffs' evidence and argument before us fall far short of this standard.

The plaintiffs do not challenge Firestone's assertion that a tire's physical properties can be tested without knowing the recipe for the skim stock compound. Indeed, the plaintiffs tell us that even without the skim stock formulas they have "presented evidence of a serious, pervasive deficiency with the skim stock manufactured by the Decatur plant". This is the same kind of evidence, the parties agree, that has been used in countless numbers of defective tire cases. This strongly suggests that the plaintiffs will not be hampered in their proof by not knowing Firestone's skim stock formulas. The plaintiffs concede that skim stock components are chemically changed in the vulcanization and curing process so that it may not be possible to know from the recipe of components how the finished tire will perform. In other words, tests on a finished tire are more probative of defect than its skim stock formula would be. The plaintiffs also acknowledge that, like the plaintiffs in Continental General Tire, they have no other skim stock formulas to compare. Indeed, neither Firestone nor the plaintiffs are able to point to a single case, other than those before us, in which a court has ordered disclosure of a skim stock formula.

Plaintiffs offered in support of their discovery request the affidavits of two experts, who both stated that "[t]he best way to be able to determine what is supposed to be in the tire is to know the compounds, formulas, and specifications for the tire". But this statement, which we assume to be true, is virtually tautological: the best way to determine what ingredients are supposed to be in a tire is to know what ingredients are supposed to be in a tire. The experts' statement does not indicate whether or how knowing a tire's specified...