In re Cooper Tire & Rubber Co. (pdf) (Tex.App. - Houston [14th Dist.] Feb. 2, 2010)(Anderson)
(discovery mandamus granted to protect trade secrets)(trade secret privilege-relevant factors)
We hold the trial court abused its discretion by compelling Cooper Tire to produce to the
plaintiffs the documents submitted in camera. Accordingly, we conditionally grant the
petition for writ of mandamus and direct the trial court to set aside its October 12, 2009
order compelling Cooper Tire to produce to the plaintiffs the subject documents.
MOTION OR WRIT GRANTED: Opinion by Justice Anderson
Before Chief Justice Hedges, Justices Anderson and Boyce
14-09-00906-CV In Re Cooper Tire & Rubber Company
Appeal from 127th District Court of Harris County
Trial Court Judge: R.K. Sandill
OPINION
On October 26, 2009, relator, Cooper Tire & Rubber Company, filed a petition for writ of mandamus in this
Court. See Tex. Gov’t Code Ann. §22.221 (Vernon 2004); see also Tex. R. App. P. 52. In the petition, Cooper
Tire asks this Court to compel the Honorable R.K. Sandill, presiding judge of the 127th District Court of Harris
County, to set aside his October 12, 2009 order compelling relator to produce documents reviewed in camera
because they contain confidential trade secret information and, alternatively, are not relevant.
We conditionally grant the petition.
Background
On October 27, 2007, the plaintiffs were involved in a head-on collision with Dustin Langstaff.[1] The
plaintiffs allege that the tread separated from the right rear tire on Langstaff’s vehicle, causing him to lose
control and collide with the vehicle driven by one of the plaintiffs, Maria Del Rocio Rodriguez, and occupied by
the other plaintiffs. The plaintiffs sued Cooper Tire, the manufacturer of the tire at issue, the Weather-Master
S/T, for strict liability, design defect, manufacturing defect, marketing defect, and negligence. The plaintiffs
allege that Cooper Tire failed to incorporate a design element known as belt edge gumstrips (“BEGs”) into the
design for the Weather-Master S/T, and that the incorporation of this design element would have resulted in a
safer alternative design.
The plaintiffs seek documents regarding a different tire that show when BEGs were added and removed from
that tire. The tire involved in the accident was made from Green Tire Spec 3004, while the documents the
plaintiffs seek are for the tire made from Green Tire Spec 2257. The Green Tire Spec (“GTS”) is essentially
the tire design or fundamental blueprint according to which the given tire is manufactured and reflects the
various manufacturing and design changes to a GTS.
In response to the plaintiffs’ requests for production, Cooper objected on the basis of relevance. The
plaintiffs moved to compel production. In response to the plaintiffs’ motion to compel, Cooper Tire argued that
the requested documents contain trade secrets and they are not relevant because they concern information on
a tire other than the tire involved in the accident.
The plaintiffs contend that the documents for GTS 2257 are relevant because they show when BEGs were
added and removed and the circumstances surrounding tire failures both with and without BEGs. Specifically,
the plaintiffs argue that this information is necessary to establish that Cooper Tire had actual knowledge of the
defect in its tire design and that BEGs would cure the defect, but continued to produce defective tires with
conscious disregard for the rights and safety of people like the plaintiffs.
On August 18, 2009, the trial court ordered Cooper Tire to produce in camera documents responsive to the
plaintiffs’ motion to compel regarding GTS 2257. On October 5, 2009, the trial court conducted the in camera
review and, on October 12, 2009, the trial court signed the following order:
To prevail on their design defect claim at trial, Plaintiffs have the burden of proving Defendant could have
provided a safer alternative. Documents which show that Cooper Tire knew of possible design changes that
could have made the tire at issue less likely to fail are relevant and a proper subject for discovery. Any danger
of disseminating this information is remedied by the Protective Order that is in place.
IT IS THEREFORE ORDERED that Defendant Cooper Tire shall produce the documents reviewed in camera
on October 5 2009, to Plaintiffs within 5 business days of this order.
The trial court determined the documents are relevant, but did not address whether the documents contain
trade secret information.
Mandamus Standard of Review
To be entitled to the extraordinary relief of a writ of mandamus, the party resisting discovery bears the heavy
burden of establishing an abuse of discretion and an inadequate remedy by appeal. In re CSX Corp., 124 S.W.
3d 149, 151 (Tex. 2003) (orig. proceeding) (per curiam). A trial court abuses its discretion if it reaches a
decision so arbitrary and unreasonable as to constitute a clear and prejudicial error of law, or if it clearly fails to
correctly analyze or apply the law. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig.
proceeding) (per curiam); Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). In reviewing
whether appeal is an adequate remedy, we consider whether the benefits of mandamus review outweigh the
detriments. In re BP Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex. 2008) (orig. proceeding).
Analysis
Trade Secret Privilege
“A trade secret is any formula, pattern, device or compilation of information which is used in one’s business
and presents an opportunity to obtain an advantage over competitors who do not know or use it.” Computer
Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996).
Rule 507 of the Texas Rules of Evidence provides for the protection of trade secrets:
A person has a privilege, which may be claimed by the person or the person’s agent or employee, to refuse
to disclose and to prevent other persons from disclosing a trade secret owned by the person, if the allowance
of the privilege will not tend to conceal fraud or otherwise work injustice. When disclosure is directed, the judge
shall take such protective measure as the interests of the holder of the privilege and of the parties and the
furtherance of justice may require.
Tex. R. Evid. 507.
The trade secret privilege seeks to accommodate two competing interests. In re Continental Gen. Tire., Inc.,
979 S.W.2d 609, 612 (Tex. 1998) (orig. proceeding). First, it recognizes that trade secrets are an important
property interest, worthy of protection. Id. Second, it recognizes the importance placed on fair adjudication of
lawsuits. Id. Rule 507 accommodates both interests by requiring a party to disclose a trade secret only if
necessary to prevent “fraud” or “injustice.” Id. Disclosure is required only if necessary for a fair adjudication of
the requesting party’s claims or defenses. Id.
The party asserting the trade secret privilege has the burden of proving that the discovery information sought
qualifies as a trade secret. In re Bass, 113 S.W.3d 735, 737 (Tex. 2003) (orig. proceeding). If the resisting
party meets its burden, the burden shifts to the party seeking the trade secret discovery to establish that the
information is necessary for a fair adjudication of its claim. Id. It is an abuse of discretion for the trial court to
order production once trade secret status is proven if the party seeking production has not shown necessity for
the requested materials. Id. at 738.
To determine whether a trade secret exists, the following six factors are weighed in the context of the
surrounding circumstances: (1) the extent to which the information is known outside of the business; (2) the
extent to which it is known by employees and others involved in the business; (3) the extent of measures taken
to guard the secrecy of the information; (4) the value of the information to the business and to its competitors;
(5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with
which the information could be properly acquired or duplicated by others. In re Union Pac. R.R. Co., 294 S.W.
3d 589, 592 (Tex. 2009) (orig. proceeding) (per curiam). The party claiming a trade secret is not required to
satisfy all six factors because trade secrets do not fit neatly into each factor every time. In re Bass, 113 S.W.3d
at 740.
The Texas Supreme Court has not stated conclusively what would or would not be considered necessary for
a fair adjudication; instead, the application depends on the circumstances presented. In re
Bridgestone/Firestone, Inc., 106 S.W.3d 730, 732 (Tex. 2003) (orig. proceeding). The degree to which
information is necessary depends on the nature of the information and the context of the case. Id. However,
“we can say with certainty that the test cannot be satisfied merely by general assertions of unfairness.” Id.
“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.” Id. at 732–33.
An appellate remedy does not exist if a trial court orders a party to produce privileged trade secrets absent a
showing of necessity. In re Bass, 113 S.W.3d at 745.
Application of Six Factors
In support of its claim of trade secret privilege, Cooper Tires submitted three affidavits of Anthony E.
Brinkman, Cooper Tire’s Principal Tire Analysis Engineer, dated August 5, 2008, February 20, 2009, and
August 7, 2009. After reviewing Brinkman’s three affidavits together and applying the six factors, we conclude
that Cooper Tire has established that the subject documents contain trade secrets.
Factors One, Two and Three
The first three factors are the extent to which the information is known outside Cooper Tire’s business; the
extent to which the information is known by employees and others involved in Cooper Tire’s business; and the
extent of measures taken by Cooper Tire to guard the secrecy of the information. Brinkman testified that
Cooper Tire keeps the information contained in the GTS History of GTS 2257, Product Change Notifications
(“PCNs”) related to the addition and removal of BEGs in GTS 2257, the Experimental Mold Design for GTS
2257, and Adjustment Follow-Up Reports for GTS 2257 secret, and this information is not generally known or
ascertainable by its competitors. Cooper Tire’s policies with respect to handling trade secret information are
given to all salaried employees when they are hired. All salaried employees must sign a nondisclosure
agreement stating they understand that Cooper Tire’s internal information and documentation such as
research, drawings, formulae, methods, processes, know-how, and facilities are trade secrets and this
information will be treated as such. Cooper Tire’s policy statement on business ethics and standards of
conduct emphasizes the importance of appropriately safeguarding the company’s trade secrets, including
without limitation, planned new products, the ways Cooper Tire manufactures its products, and test data.
Cooper Tire’s policy on disclosures and use of corporate information forbids all employees from disclosing
trade secret information without proper authorization from an officer of Cooper Tire.
Access is limited and tight controls are maintained for any vendors, business partners, contractors, and all
other individuals who are not employed by Cooper Tire, but require entry onto Cooper Tire property for a
compelling business necessity. Cooper Tire’s Technical Center in Findlay, Ohio is locked and accessible only
through special, computerized coded access cards and/or coded keypad access 24 hours a day. A similar
system is employed at Cooper Tire’s corporate headquarters in Findlay, Ohio. Access to Cooper Tire’s
manufacturing plant is through 24-hour guarded entrances.
Cooper Tire may share its trade secret information with its employees or agents without endangering the
trade secret’s protection. See In re Bass, 113 S.W.3d at 742. Brinkman details Cooper Tire’s efforts maintain
the secrecy of its information. See Phillips v. Frey, 20 F.3d 623, 631 (5th Cir. 1994) (explaining party that fails
to take reasonable precautions to secure its secrecy cannot properly claim that information constitutes trade
secret). Therefore, Cooper Tire has established that it maintains procedures to keep the information secret.[2]
Accordingly, we conclude that factors one, two, and three weigh in favor of finding that the documents contain
trade secret information.
Factor Four
The fourth factor is the information’s value to Cooper Tire and its competitors. In his affidavits, Brinkman
explained the importance of the type of information in the GTS 2257 documents. Brinkman explained that the
GTS History summarizes revisions that have been made to a GTS throughout the history of the GTS, and such
documents reflect various manufacturing and design changes and can include rubber compound formula
information.
Product Change Notifications (“PCNs”) are issued to notify personnel of an impending authorized product
change, and these documents include a description of the change, the reason for the change, the data
supporting the change, the products affected by the change, a proposed implementation schedule, and the
plants affected by the change. PCN documents may also contain analysis and data regarding the material
production, and processing requirements necessary to implement the change and rubber compound formula
information.
With respect to the Experimental Mold Designs, in the manufacturing process, tire builders assemble raw and
uncured components into a “green” tire that is placed in a curing mold. The green tire is then subjected to heat
and pressure to achieve its final form.
Adjustment Follow-Up Reports, which contain trade secret information, are issued at the request of the
engineer to determine the impact of a design or manufacturing change to a particular tire design or GTS on the
number of tires manufactured to that GTS returned to Cooper Tire for a specific condition. The reports contain
its adjustment or tire return information for the particular GTS and specific condition being examined as well as
the analysis and conclusions drawn from that information. They may also contain production information and
background information regarding the change being examined.
Brinkman testified that the documents contain trade secret information developed at great expense to Cooper
Tire; such information would be extremely valuable to its competitors; a competitor could use the information to
copy Cooper Tire’s products and sell them in the tire market in competition with Cooper Tire; and such
competitor could do so without compensating Cooper Tire for its design expenses. The availability of Cooper
Tire’s specifications for tire building, manufacturing, and design, and other documents to another tire
manufacturer would enable that manufacturer to gain a significant competitive advantage over Cooper Tire
because it would allow the competitor to evaluate the performance of various tire components, without investing
any time or expense.
Brinkman further testified that conceptualizing, developing, testing, and implementing new products and
improving the durability or performance characteristics of current products require a substantial commitment of
time and personnel and an enormous financial and technological investment. Any advantage, whether it is a
gain in lead time for the introduction of new products or an understanding of the competition’s weakness,
thinking, goals, and strategy can lead to significant gains.
With adjustment data, a competitor could discern or infer certain qualities about Cooper Tire’s products and
thereby adjust its product or warranty practices to the same quality level to better compete. Adjustment data
would permit a competitor to learn Cooper Tire’s production schedule, including the numbers and types of tires
produced, from which the competitor could discern or infer the demand for particular types of products, and
such information could be used to the competitor’s advantage. Cooper Tire’s competitors do not publicize their
tire return and other adjustment data because of its competitive value.
Brinkman’s affidavits sufficiently establish the value of the information contained in the subject documents to
Cooper Tire and its competitors. Therefore, we conclude that factor four weighs in favor of finding that the
subject documents contain trade secret information.
Factor Five
The fifth factor is the amount of money expended by Cooper Tire in developing information. Cooper Tire
admits that Brinkman does not place a dollar figure on developing the requested information about the GTS
2257. This factor weighs against finding that the documents contain trade secret information.
Factor Six
Factor six is the ease or difficulty with which the information could be properly acquired or duplicate by
others. Brinkman testified that this information could not be easily duplicated, and this information would
facilitate easy duplication of Cooper Tire’s product. With regard to adjustment data reports, the plaintiffs
concede that a competitor generally cannot acquire or duplicate data that would appear in such reports given
that these reports are generated by information gathered by Cooper Tire. Brinkman testified that Cooper Tire’s
competitors do not publish their adjustment data. We find that this factor weighs in favor of finding that the
documents contain trade secret information.
Cooper Tires has established five of the six factors. However, Cooper Tire is not required to establish all six
factors. See In re Bass, 113 S.W.3d at 740. Weighing the factors in the context of the surrounding
circumstances, we conclude that Cooper Tire has established that the documents contain trade secrets. See In
re Union Pac. R.R. Co., 294 S.W.3d 589, 592). Because Cooper Tire met its burden to establish that the
documents contain trade secret information, the burden shifted to the plaintiffs to establish that the information
is necessary for a fair adjudication of their claims. See Bass, 113 S.W.3d at 737.
Necessary for Fair Adjudication
Cooper Tire argues that the plaintiffs did not meet their burden to produce evidence “demonstrat[ing] with
specificity exactly how the lack of information will impair the presentation of the case on the merits to the point
that an unjust result is real, rather than a merely possible, threat.” In re Bridgestone/Firestone, Inc., 106 S.W.
3d at 733. The plaintiffs argue that there is sufficient evidence to support a determination that these
documents are necessary for the fair adjudication of their claims because the information is essential to prove
two elements of their claims. First, the plaintiffs’ design defect claims require evidence that a safer alternative
design was available when the subject tire was manufactured, and evidence that the use of BEGs on other
Cooper Tires reduced the number of tire separation incidents establishes this point. Second, the plaintiffs’
claim for punitive damages requires proof that Cooper Tire had actual subjective awareness of the risk
associated with producing defective tires that could be remedied by BEGs and, nevertheless, proceeded to
produce defective tires with conscious indifference to the rights and safety of people like the plaintiffs.
Brinkman stated that the use of BEGs is a method of providing the proper thickness of rubber at the belt
edges, and that the rubber on the subject tire was at the proper thickness. Based on these statements, the
plaintiffs contend that Cooper Tire intends to argue that the inclusion of the BEGs would not decrease the
number of tread separations in the subject tire. Therefore, the plaintiffs claim it would be unjust to allow Cooper
Tire to assert that the inclusion of the BEGs would not have been a safer alternative design while depriving the
plaintiffs of evidence that the inclusion of BEGs as part of a different Cooper Tire designs decreased the
number of tread separations.
The plaintiffs have not established that the trade secret information is necessary to the fair adjudication of
their claim that the use of BEGs provides a safer alternative design. In their briefing to the trial court, the
plaintiffs rely on documents already produced to them that “discuss[] the use of BEGs to improve Cooper’s
tires.” Moreover, the Texas Supreme Court recently rejected a similar argument regarding punitive damages,
explaining that “we would have difficulty concluding that evidence of damages, even punitive damages, could
not be anywhere but through trade secrets.” In re Union Pac. R.R. Co., 294 S.W.3d at 593. We hold that the
plaintiffs have not met their burden to establish the information in the GTS 2257 documents is necessary to a
fair adjudication of their claims. Because the plaintiffs have not established that the trade secret information is
necessary for a fair adjudication of their claims, the trial court abused its discretion by compelling Cooper Tire
to produce the GTS 2257 documents. See In re Bass, 113 S.W.3d at 737. Moreover, Cooper Tire does not
have an adequate remedy by appeal. See id. at 745 (holding appellate remedy does not exist if trial court
orders party to produce privileged trade secrets absent showing of necessity.).
Relevance
We also conclude, aside from our holding that the documents are trade secrets, that the GTS 2257
documents are beyond the scope of permissible discovery. The scope of discovery is a matter of trial court
discretion. In re CSX Corp., 124 S.W.3d at 152. Discovery is limited to matters relevant to the case. Texaco,
Inc. v. Sanderson, 898 S.W.2d 813, 814 (Tex. 1995) (orig. proceeding) (per curiam); see also Tex. R. Civ. P.
192 cmt. 1 (“While scope of discovery is quite broad, it is nevertheless confined by the subject matter of the
case and reasonable expectations of obtaining information that will aid resolution of the dispute.”). Therefore,
discovery requests must be reasonably tailored to include only matters relevant to the case. In re Am. Optical
Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam). The Texas Supreme Court has
repeatedly admonished that discovery may not be used as a fishing expedition. K Mart Corp. v. Sanderson,
937 S.W.2d 429, 431 (Tex. 1996) (orig. proceeding) (per curiam); Dillard Dep’t Stores, Inc. v. Hall, 909 S.W.2d
491, 492 (Tex. 1995) (orig. proceeding) (per curiam); Texaco, Inc., 898 S.W.2d at 915. A trial court abuses its
discretion when it compels overly broad discovery. In re Graco Children’s Prods., Inc., 210 S.W.3d 598, 600
(Tex. 2006) (orig. proceeding) (per curiam).
Cooper Tire argues that discovery sought in a product liability case is limited to the product at issue in the
case. We agree. Overbroad requests encompassing products beyond those at issue in a case violate the rule
that discovery requests must be reasonably tailored to include only matters relevant to the case. In re Alford
Chevrolet-Geo, 997 S.W.2d 173, 180 n.1 (Tex. 1999) (orig. proceeding). The Texas Supreme Court has
granted mandamus relief in several product-liability cases when the discovery order covered products the
plaintiff never used.[3]
Brinkman testified that the tires manufactured to GTS 2257 are not similar to the tire in this case, GTS 3004,
in terms of design or manufacture. Brinkman explained 22 ways in which the tires are different, including
manufacturing date, plant of manufacture, brand name, GTS, size, speed rating, estimated centrifugal force,
maximum load carrying capacity, maximum inflation pressure, UTQG rating, total cured weight, overall diameter,
section width, tread width, tread depth new, revolutions per mile, wheel fitment, belt, ply, and ply construction.
In light of these significant differences, we conclude that Cooper Tire has shown that the tires are substantially
different. Accordingly, we hold the GTS 2257 documents are not relevant and are beyond the permissible
scope of discovery. Moreover, Cooper Tires does not have an adequate remedy by appeal. See In re CSX
Corp., 124 S.W.3d at 153 (holding relator lacked adequate remedy by appeal where discovery order compelled
production of “patently irrelevant” documents).
Conclusion
We hold the trial court abused its discretion by compelling Cooper Tire to produce to the plaintiffs the
documents submitted in camera. Accordingly, we conditionally grant the petition for writ of mandamus and
direct the trial court to set aside its October 12, 2009 order compelling Cooper Tire to produce to the plaintiffs
the subject documents. The writ will issue only if the trial court fails to act in accordance with this opinion. We
list the stay issued on October 26, 2009.
/s/ John S. Anderson
Justice
Panel consists of Chief Justice Hedges and Justices Anderson and Boyce.
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[1] The plaintiffs below are Maria Del Rocio Rodriguez, Individually and as Next Friend of William Vasquez, a Minor; Santiago
Vasquez; Macrina Hernandez, Individually and as Next Friend of Ximena Chavez and Jose Chavez, Minors; and Jose Chavez and
Elena Rodriguez, Individually and as Next Friend of Estefania Rodriguez, Yesenia Rodriguez, and Jesus Rodriguez, Minors.
[2] See Union Pac. R.R. Co., 294 S.W.3d at 592 (“The information is not generally known or readily available to Union Pacific’s
competitors or its customers or other businesses. The information is not even generally known throughout the company. Rather
the information is known only to a limited number of Union Pacific employees and certain management employees.”);
Bancservices Group, Inc. v. Strunk & Assocs., L.P., No. 14-03-00797-CV, 2005 WL 2674985, at *3 (Tex. App.—Houston [14th
Dist.] Oct. 20, 2005, pet. denied) (mem. op.) (“[T]he compilation and implementation of those parts were not generally known. . . .
All employees of Strunk were required to sign a confidentiality agreement. In addition, the banks who purchased the program
were required to sign a confidentiality agreement.”); In re The Cayman Island Firm of Deloitte & Touche, No. 04-01-00491-CV,
2001 WL 1042233, at *4 (Tex. App.—San Antonio Sept. 12, 2001, orig. proceeding) (not designated for publication) (“Pilling’s
affidavit details the efforts by DT Cayman to maintain the secrecy of the Manual, including that its disclosure is limited internally
on a ‘need to know’ basis. Pilling also states that the information is highly confidential and proprietary and would greatly benefit
DT Cayman’s competitors. Although the details offered in the affidavit are sketchy, the affidavit is sufficient to satisfy the initial
burden imposed on DT Cayman.”).
[3] See, e.g., In re Graco Children’s Prods., 210 S.W.3d at 600–01 (granting relief on discovery order regarding documents
related to products that did not relate to alleged defects in harness clip of car seat at issue); In re Am. Optical Corp., 988 S.W.2d
at 713 (granting relief on order allowing discovery related to respiratory protection equipment plaintiffs never claimed to have
used); Texaco, Inc., 898 S.W.2d at 814 (granting relief on discovery order regarding substances to which plaintiffs never alleged
exposure); Gen. Motors Corp. v. Lawrence, 651 S.W.2d 732, 734 (Tex. 1983) (orig. proceeding) (granting relief on discovery order
regarding vehicles without fuel filler-neck that was allegedly defective). The courts of appeals have similarly granted mandamus
relief. See, e.g., In re Merck & Co., 150 S.W.3d 747, 750 (Tex. App.—San Antonio 2004, orig. proceeding) (granting relief on order
allowing discovery of “pharmaceutical product that the deceased plaintiff never used, that has yet to be sold within the United
States, and that has a different chemical structure and patent than the purportedly defective medication at issue”); In re Sears
Roebuck & Co., 123 S.W.3d 573, 578 (Tex. App.—Houston [14th Dist.] 2003, orig. proceeding) (granting relief on order allowing
discovery of products to which plaintiffs were never exposed); but see In re Exmark Mfg. Co., 13-09-00438-CV, 2009 WL 3602078
(Tex. App.—Corpus Christi Oct. 30, 2009, orig. proceeding [mand. pending.]) (denying relief on order allowing discovery regarding
lawnmowers not used by plaintiffs).