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Superior Edge, Inc. v. Monsanto Co.

United States District Court, D. Minnesota

December 16, 2014

SUPERIOR EDGE, INC., Plaintiff,
v.
MONSANTO COMPANY and SITE-SPECIFIC TECHNOLOGY DEVELOPMENT GROUP, INC., Defendants.

Walter Joseph Gates, III, WALTER J. GATES, III, P.A., First National Bank Minnesota Office Building, and William G. Osborne, WILLIAM G. OSBORNE, P.A., for plaintiff.

Dean B. Thomson, Lucas T. Clayton, and Richard G. Jensen, FABYANSKE WESTRA HART & THOMSON, PA, and James F. Bennett, Jennifer S. Kingston, and Robert F. Epperson, Jr., DOWD BENNETT LLP, for defendant Monsanto.

MEMORANDUM OPINION AND ORDER AFFIRMING MAGISTRATE JUDGE ORDER DATED

JOHN R. TUNHEIM, District Judge.

This discovery dispute arises out of Plaintiff Superior Edge, Inc.'s ("SEI") allegations that Defendants Monsanto Company and Site-Specific Technology Development Group, Inc. ("SST") misappropriated SEI's intellectual property to create Monsanto's FieldScripts software. On July 15, 2014, United States Magistrate Judge Franklin L. Noel granted SEI's motion to compel production of the FieldScripts source code. Monsanto objected on July 30, 2014, arguing that additional protections were needed to protect its trade secrets. Monsanto also moved to reconsider on August 20, 2014, asking the Magistrate Judge to require that (1) the source code only be viewed on computers not connected to the Internet, (2) the source code be encrypted when not being analyzed, and (3) a third-party custodian secure the source code and monitor its access. The Magistrate Judge modified the order on September 11, 2014, granting Monsanto's request in part by restricting access to computers disconnected from the Internet and requiring encryption. However, the Magistrate Judge denied Monsanto's request for a third-party custodian. The parties have not objected to the order on Monsanto's motion to reconsider. Therefore, the only remaining issue for this Court is whether a third-party custodian should be required. Because Monsanto has not demonstrated that the current protective order is inadequate or that SEI's attorneys are likely to violate its terms, the Court overrules Monsanto's objection requesting a third-party custodian.

BACKGROUND[1]

SEI commenced this litigation on October 19, 2012, following the termination of a Software Development and License agreement between the parties. ( See Compl. ¶¶ 21, 64, Oct. 19, 2012, Docket No. 1.) Among other claims, SEI alleged that Monsanto and SST misappropriated SEI's intellectual property. ( Id. ¶ 67; see also Second Am. Compl. ¶¶ 101-115, Dec. 13, 2013, Docket No. 102.)

On September 16, 2013, the parties stipulated to a protective order to guard against disclosure of trade secrets. ( See Stipulation for Protective Order, Sept. 25, 2013, Docket No. 69.) The stipulation included the right to designate documents as "Confidential - Attorneys' Eyes Only." ( Id. ¶ 5.) Documents with an "Attorneys' Eyes Only" ("AEO") designation may not be viewed by the opposing parties themselves. ( See id. ¶¶ 4, 5.) Instead, they may only be viewed by the parties' attorneys, the Court, the Court's officers and reporters, authors of the document, and expert witnesses.[2] ( Id. ) The documents may not be disclosed to an outside "person who is known to be an employee or agent of, or consultant to, any competitor of the party whose designated documents are sought to be disclosed" unless the producing party is given a fourteen-day notice and does not object. ( See id. ¶ 7.) The protective order provides that "[a]ny party may apply to the Court for a modification of the Protective Order, and nothing in the Protective Order shall be construed to prevent a party from seeking such further provisions enhancing or limiting confidentiality as may be appropriate." ( Id. ¶ 14.)

SEI served Monsanto with a request for production on October 2, 2013. (Monsanto's Mem. in Opp'n to Pl.'s. Mot. to Compel ("Mem. in Opp'n to Pl.'s Mot. to Compel") at 3, June 11, 2014, Docket No. 152.) The request included "[a]ny and all forms of the... source code... for the program or programs that at any time have been used or are currently being used to produce Fieldscripts' materials." (Monsanto's Objection to Magistrate Judge Order Requiring Production of Proprietary Source Code ("Objection"), Ex. 2 at 9, July 30, 2014, Docket No. 163-3.) Monsanto agreed to "produce documents... relating to the... source code" but resisted disclosing the source code itself. ( See id. ) When SEI moved to compel production of the source code, Monsanto argued that the information was too sensitive to be sufficiently protected by an AEO designation and that its discovery was unnecessary. (Mem. in Opp'n to Pl.'s Mot. to Compel at 16 n.8.) The Magistrate Judge ordered Monsanto to produce the source code, expressing "confiden[ce] that the current Protective Order already in place is sufficient to ensure the confidentiality of this highly sensitive information and that the parties will respect any Attorneys' Eyes Only' designation." (Order at 4, July 15, 2014, Docket No. 160.)

Monsanto objected to whether "an AEO designation provides sufficient protection for the Source Code." (Objection at 4.) In particular, Monsanto was concerned that SEI's attorneys would disclose the source code, advertently or inadvertently, or that it would fall into the hands of hackers. ( Id. at 11.) Monsanto requested three additional protections: (1) that the source code may not be viewed on computers connected to the Internet, (2) that the source code must be encrypted when not being analyzed, and (3) that a third-party custodian secure the source code and monitor its access. ( Id. at 4.) SEI argued that the protective order stipulated by the parties, particularly the AEO designation, was sufficient to protect the source code and that the use of a third-party custodian would be burdensome and likely result in further discovery disputes. (SEI's Resp. to Monsanto's Objection to Magistrate Judge Order Requiring Production of Proprietary Source Code at 9-11, Aug. 13, 2014, Docket No. 165.)

In addition to objecting, Monsanto moved for reconsideration, requesting that the Magistrate Judge incorporate the same three protections requested in the objection. (Monsanto's Mem. in Supp. of Mot. for Reconsideration ("Mem. in Supp. of Mot. for Reconsideration") at 2, Aug. 20, 2014, Docket No. 167.) The Magistrate Judge granted Monsanto's request in part, requiring that computers used to view the source code be disconnected from the Internet and that the code be encrypted when not being analyzed. (Order on Mot. to Reconsider at 1, Sept. 11, 2014, Docket No. 185.) However, the order denied Monsanto's request for a third-party custodian. ( Id. at 2.) The parties have not objected to the two new protections in the order on Monsanto's motion to reconsider. Therefore, only the request for a third-party custodian remains in dispute.

ANALYSIS

I. STANDARD OF REVIEW

A magistrate judge has broad discretion over matters of discovery. Shukh v. Seagate Tech., LLC, 295 F.R.D. 228, 238 (D. Minn. 2013). A district court's review of a magistrate judge's order on a nondispositive matter is "extremely deferential." Roble v. Celestica Corp., 627 F.Supp.2d 1008, 1014 (D. Minn. 2007); see also United States v. Raddatz, 447 U.S. 667, 673 (1980). The Court will reverse such an order only if it is clearly erroneous or contrary to law. See 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a); D. Minn. LR 72.2(a)(3). For an order to be clearly erroneous, the district court must have a "definite and firm ...


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