FORT LAUDERDALE TRADE SECRET LAW: DISCOVERY ORDERS MUST PROTECT BUSINESS TRADE SECRETS

There are circumstances when a business, who is not a party to a lawsuit, will be required to disclose its trade secret information to respond to a subpoena. Florida law provides safeguards for that disclosure to be made in a manner that still protects the business’ trade secrets. However, a business may need to vigorously defend those rights when the trial court refuses to do so. Peter Mavrick is a Fort Lauderdale trade secret attorney, and also advocates for clients in Miami, Boca Raton, and Palm Beach, Florida. Mavrick Law Firm also represents clients in breach of contract litigation, non-compete agreement litigation and injunction proceedings, business litigation , trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

An example of this occurred in the case of Columbia Hosp. (Palm Beaches) Limited Partnership v. Hasson, 33 So. 3d 148 (Fla. 4th DCA 2010), where the plaintiff filed a motor vehicle negligence lawsuit and claimed to have incurred injuries and expenses for a procedure performed at Columbia Hosp. (Palm Beaches) Limited Partnership (Columbia). Defendants served Columbia, a non-party to the lawsuit, with a subpoena requesting documents relating to the particular medical procedure performed on plaintiff. The documents requested by the subpoena included the amounts Columbia charged patients with and without insurance, those with letters of protection, and differences in billing for litigation patients versus non-litigation patients.

Columbia filed a motion for protective order and contended that the information requested by defendants’ subpoena was confidential and amounted to protected trade secrets under Florida law. Defendants conceded that the information sought was protected as trade secrets, however they explained why the information they sought was relevant to, among other things, to the reasonableness of the hospital’s bills. At the hearing on the motion for protective order, defendants contended that the discovery of a hospital’s charges, discounts to different classes of patients, and its internal cost structure was relevant information. Defendants further contended that the amounts a health care provider accepts as payment from private non-litigation payors was relevant for a jury to determine what amount was a reasonable charge for the procedure.

The trial court denied Columbia’s motion for protective order. Although the trial court found that Columbia’s information was confidential, the trial court balanced Columbia’s interest in nondisclosure of its confidential information against Defendants’ need for the information, and decided it was more important to produce the information. Columbia requested if the information could be produced subject to a confidentiality order. The trial court stated that the confidentiality order could be addressed in a separate hearing, but “right now just produce it.” Columbia immediately appealed seeking certiorari relief. Certiorari review is appropriate when a discovery order departs from the essential requirements of law, causing material injury that cannot be remedied on post-judgment appeal.

Columbia sought a writ of certiorari that required the trial court to narrowly tailor any order requiring disclosure to protect its trade secrets. Columbia contended that the trial court departed from the essential requirements of the law by ordering production of its confidential information without balancing the interests.

When trade secret privilege is asserted as the basis for resisting production, the trial court must determine whether the requested production constitutes a trade secret; if so, the court must require the party seeking production to show reasonable necessity for the requested materials …. If production is then ordered, the court must set forth its findings.

Salick Health Care, Inc. v. Spunberg, 722 So.2d 944 (Fla. 4th DCA 1998).

The appellate court concluded that Defendants sufficiently explained why they needed the information to dispute the amount of medical expenses that the plaintiff sought to recover from them as unreasonable, if the hospital charged non-litigation patients a lower fee for the same medical services. A party claiming damages for bodily injuries has the burden of proving the reasonableness of his or her medical expenses, citing earlier precedent in the case of E.W. Karate Ass’n v. Riquelme, 638 So.2d 604 (Fla. 4th DCA 1994). The appellate court found that the trial court’s findings satisfied this requirement. However, a trial court must also take such protective measures as are required.

Pursuant to Section 90.506, Florida Statutes, trade secrets are privileged from disclosure. Section 90.506 states, in pertinent part:

A person has a privilege to refuse to disclose, and to prevent other persons from disclosing, a trade secret owned by that person if the allowance of the privilege will not conceal fraud or otherwise work injustice. When the court directs disclosure, it shall take the protective measures that the interests of the holder of the privilege, the interests of the parties, and the furtherance of justice require. The privilege may be claimed by the person or the person’s agent or employee.

The appellate determined that the trial court erred by simply denying Columbia’s motion for protective order without taking protective measures. Defendants did not dispute that Columbia was entitled to an accommodation to protect its trade secrets, such as a confidentiality order. The appellate court concluded that Columbia was entitled to relief because the trial court should have stayed discovery until the parties negotiated a confidentiality agreement, and if no agreement could be reached, the trial court should have narrowly tailored any order requiring disclosure to protect the Columbia’s trade secrets. Columbia’s petition for writ of certiorari was granted only to the extent that the trial court ordered production of confidential information without first allowing the parties an opportunity to negotiate a confidentiality agreement.

Peter Mavrick is a Fort Lauderdale trade secret lawyer who also practices in Miami-Dade, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.