Alcoa, Inc. v. Universal Alloy Corp.
Alcoa, Inc. v. Universal Alloy Corp.
2016 WL 11499567 (N.D. Ga. 2016)
September 9, 2016

Vineyard, Russell G.,  United States Magistrate Judge

Failure to Produce
Proportionality
Cost Recovery
Sanctions
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Summary
The court found that Alcoa's initial production of 100% AEO designated documents did not comply with its obligations under the CPO, and its subsequent productions leaving the percentage of AEO designation above 99% were presumptively unreasonable. The court granted UAC's motion to compel Alcoa to review and re-designate its document production in part, and emphasized the importance of ESI in this case. The court also noted the need for parties to review and re-designate documents in accordance with the terms of the CPO.
ALCOA, INC., Plaintiff,
v.
UNIVERSAL ALLOY CORPORATION, Defendant
CIVIL ACTION NO. 1:15-cv-01466-ELR
United States District Court, N.D. Georgia, Atlanta Division
Signed September 09, 2016

Counsel

Bahrad A. Sokhansanj, Stephanie Adams, McKool Smith Hennigan, PC, Jennifer P. Estremera, Joachim B. Steinberg, Kate Falkenstien, Reichman Jorgensen LLP, Redwood Shores, CA, Caroline Walters, Matthew P. Gelfand, McKool Smith Hennigan, Los Angeles, CA, Eric S. Hansen, McKool Smith, Dallas, TX, James Allen Maines, Holland & Knight LLP, Mellori Evonn Lumpkin-Dawson, Greenberg Traurig, LLP, Courtland Lewis Reichman, Sarah O. Jorgensen, Reichman Jorgensen, LLP, Atlanta, GA, John B. Campbell, Scott L. Cole, McKool Smith, Austin, TX, Andrew R. Stanton, Pro Hac Vice, James P. Angelo, Melissa J. Tea, Thomas E. Birsic, K&L Gates, LLP, Pittsburgh, PA, for Plaintiff.
David Herzog, Justin R. Olson, Pro Hac Vice, Matthew Burkhart, Faegre Baker Daniels, LLP, Katrina Gossett Kelly, Pro Hac Vice, Baker & Daniels, Indianapolis, IN, Kerry L. Bundy, Pro Hac Vice, Randall E. Kahnke, Pro Hac Vice, Tyler Young, Faegre Baker Daniels LLP, Minneapolis, MN, John Gregory Perry, Michael Joseph Sullivan, Vonnetta Leatrice Benjamin, Womble Bond Dickinson (US) LLP, Atlanta, GA, for Defendant.
Vineyard, Russell G., United States Magistrate Judge

ORDER

*1 Plaintiff Alcoa, Inc. (“Alcoa”) has filed a motion to compel defendant Universal Alloy Corporation (“UAC”) to participate in discovery and for costs, [Doc. 97],[1] which UAC opposes, [Doc. 116].[2] UAC has filed a motion to compel Alcoa to review and re-designate its document production, [Doc. 108],[3] which Alcoa opposes, [Doc. 114].[4] Both parties have also filed replies in support of their respective motions. See [Doc. 124 (Alcoa's reply in support of its motion to compel); Doc. 122 (UAC's reply in support of its motion to compel) ].[5] UAC also has filed a motion to exclude from consideration portions of a declaration Alcoa submitted with its reply in support of its motion to compel. [Doc. 126].[6] Alcoa opposes UAC's motion to exclude, [Doc. 132],[7] and has filed a cross-motion to exclude evidence, [Doc. 131], which UAC opposes, [Doc. 137].[8] These motions have been referred to the undersigned for ruling. See [Minute Orders by docket entries dated 03/04/2016, 03/25/2016, 06/01/2016]. For the reasons that follow, Alcoa's motion to compel, [Doc. 97], and UAC's motion to compel, [Doc. 108], are GRANTED IN PART and DENIED IN PART, and UAC's motion to exclude, [Doc. 126], and Alcoa's cross-motion to exclude, [Doc. 131], are DENIED.
A. Alcoa's Motion to Compel
Alcoa's amended complaint alleges that UAC misappropriated “Alcoa's trade secret stretch form extrusion process and all of its component parts (the ‘Stretch Form Process’) in order to siphon away hundreds of millions of dollars of Alcoa's sales of aluminum aerospace extrusion parts (the ‘Stretch Form Extrusion Parts’) to The Boeing Company (‘Boeing’).” [Doc. 27 at 1 ¶ 1 (alterations in original) ]. Specifically, Alcoa alleges that UAC hired several former and current Alcoa employees and consultants who had been entrusted with Alcoa's trade secret information regarding the Stretch Form Process, and at “UAC's urging, these former Alcoa employees and consultants betrayed that trust and improperly disclosed Alcoa's trade secrets to UAC, who used them for the express purpose of replicating the Stretch Form Process at UAC's manufacturing facility.” [Id. at 2 ¶ 5]. Alcoa asserts that UAC used Alcoa's misappropriated trade secret Stretch Form process to obtain business from Boeing, “reducing Alcoa's share of the Stretch Form Extrusion Parts business by $200 million over the life of the upcoming 2016 to 2025 contract term.” [Id. at 3 ¶ 7].
*2 According to the amended complaint, “[t]he Stretch Form Process, used to produce Stretch Form Extrusion Parts, is a multi-staged manufacturing process during which a proprietary aluminum alloy composition in the form of a billet is processed through three different pieces of equipment: a large extrusion press, a horizontal heat treat furnace and quench, and a large stretch former.” [Id. at 5 ¶ 19]. “The aluminum billet made with this proprietary alloy composition is created using a proprietary alloying process that is specific to the particular alloy composition Alcoa uses.” [Id. at 6 ¶ 21]. “The aluminum billet is then processed through each of the Stretch Form Process stages pursuant to very precise parameters developed and optimized by Alcoa covering an extensive array of variables that can be and are carefully manipulated and controlled to produce the desired end product.” [Id.].
To enhance its Stretch Form Process, Alcoa began working on an iterative improvement project in the late-1990s, and this process took place over the course of many years, consisting of “making thousands of adjustments to each piece of equipment to control for and calibrate the variables specific to each part.” [Id. at 8 ¶¶ 26-27]. “Alcoa recorded all of the proprietary data that was accumulated, which reflected the inputs made and the outputs achieved, on ‘Process Target Pages’ applicable to each part number and ‘Practices and Program Materials’ applicable to each piece of equipment used in the Stretch Form Process.” [Id. at 8 ¶ 27]. Alcoa alleges, upon information and belief, that “at the direction of UAC, the former Alcoa employees and contractors improperly disclosed to UAC Alcoa's proprietary knowledge and information relating to the Stretch Form Process, including, but not limited to, information regarding Alcoa's proprietary aluminum alloy compositions, the information captured in the Process Target Pages and the Practices Materials, and the cumulative body of knowledge and information amassed as a consequence of the multi-year iterative improvement project[.]” [Id. at 10 ¶ 35].
In support of its motion to compel, Alcoa asserts that it “has propounded various discovery requests seeking information regarding UAC's manufacturing process corresponding to the seven stages of Alcoa's trade secret process.” [Doc. 97-1 at 3]. Alcoa contends that, although all seven stages of the Stretch Form Process are part of its claim in this case, “UAC has categorically refused to participate in discovery of any kind as to six of the seven steps of Alcoa's trade secret manufacturing process.” [Id.]. Alcoa has attached as Exhibit A to its motion a list of Alcoa's discovery requests and UAC's objections. See [Doc. 97-2]. As relief, Alcoa requests that the Court grant its motion to compel UAC to participate in discovery regarding all seven stages of its manufacturing process, including responses to document requests, interrogatories, depositions, and other discovery, and that the Court order UAC to pay Alcoa's reasonable expenses, including its attorneys' fees, incurred in making the motion. [Doc. 97-1 at 16].
UAC opposes Alcoa's motion, arguing that the products at issue in this case are stretch-formed “spar chords” used by Boeing to manufacture airplane wings, [Doc. 116 at 2], and despite “[h]aving no credible evidence to support its claim that UAC misappropriated the stretch-form process, Alcoa now wants to expand discovery beyond the stretch-form process -- to include all of the processes that UAC has employed to manufacture aluminum products for the past 30 years,” [id. at 3]. UAC contends that “Alcoa is moving to compel UAC to produce the details of how UAC – in competition with Alcoa and other aluminum manufacturers around the world -- has been producing aluminum products generally, irrespective of whether those products are (1) stretch-formed products created using the new machine that UAC acquired in 2015 or, instead, (2) non-stretch-formed products that UAC has been manufacturing since the 1980s.” [Id.]. UAC maintains that this case is only about the stretch-former, and “Alcoa is not entitled to discovery unrelated to stretch-forming.” [Id.]. UAC further asserts that “[e]xpanding the lawsuit to include UAC's other manufacturing processes would impose a staggering financial burden on UAC with no legitimatebenefit to Alcoa.” [Id. at 4]. UAC asks the Court to confine “discovery to the stretch-form process that UAC began performing in 2015, because that is the only process that is at issue.” [Id. at 5]. Alternatively, UAC proposes that discovery be conducted in stages, with the first stage limited to the stretch-former, and if, based on that discovery, “Alcoa can show some material basis for its claim that UAC actually misappropriated an Alcoa trade secret, then Alcoa could be allowed to show how discovery regarding the Extrusion Process might be warranted.” [Id. at 25 (citation omitted) ]. UAC further proposes that if Alcoa is allowed “some discovery regarding the Extrusion Process, that discovery should at a minimum be limited to (1) the period after Boeing asked Alcoa to acquire a stretch-former, and (2) the relevant parts at issue.” [Id. at 25-26 (citation omitted) ]. Finally, UAC contends that if the Court permits “any discovery beyond the stretch-former, the costs of that discovery should be shifted to Alcoa.” [Id. at 26 (citation omitted) ].[9]
*3 In reply, Alcoa maintains that it simply seeks discovery on its claims and UAC's defenses, as expressly permitted by Rule 26(b)(1), and that “UAC's extraordinary argument is that it should not be required to participate in discovery on about 90% of the manufacturing process at issue because it allegedly is innocent.” [Doc. 124 at 3]. Alcoa contends that UAC essentially is seeking summary judgment on a portion of Alcoa's claims by asking “the Court to decide the facts and merits in its favor as to six of the seven stages of this process, and deny Alcoa any discovery into these stages.” [Id.]. Alcoa asserts that its discovery requests are narrowly tailored to the subjects set forth in the amended complaint and to UAC's defenses, and its motion “seeks only: (1) the details of UAC's process for manufacturing the parts at issue; (2) how UAC developed that process; (3) the extent to which Alcoa's information was used to develop that process; and (4) UAC's defenses.” [Id. at 5]. Alcoa argues that UAC's conclusory assertions regarding the burden imposed by its discovery requests are insufficient to justify preventing or limiting discovery, and Alcoa opposes the alternatives proposed by UAC regarding staging or limiting the scope of discovery and rejects UAC's call for shifting discovery costs to it. [Id. at 6-17].
“The Local Rules of this court set forth the manner in which motions to compel are to be presented to the court.” Perez v. Reit Mgmt. & Research, LLC, Civil Action No. 1:06-CV-0938-JOF, 2007 WL 1810145, at *2 (N.D. Ga. June 20, 2007). “Specifically, Local Rule 37.1 requires that a motion to compel, among other things: quote verbatim the interrogatory or production request objected to; state the specific objection raised by the non-complying party; state the grounds assigned for the objection; and cite authority and include a discussion supporting the motion.” Id. (citing LR 37.1A(1)-(5), NDGa.). “Additionally, ‘[t]he motion shall be arranged so that the objection, grounds, authority, and supporting reasons follow the verbatim statement of each specific [discovery request] to which an objection is raised.’ ” Id.(alterations in original) (quoting LR 37.1A, NDGa.) (denying defendant's motion to compel for failure to comply with the local rules, with leave to renew within ten days of order).
Alcoa's motion to compel does not comply with the requirements of Local Rule 37.1. Alcoa has attached as Exhibit A to its motion a list of Alcoa's discovery requests and UAC's objections, see [Doc. 97-2], but Alcoa has not arranged the motion as required by the rule “so that the objection, grounds, authority, and supporting reasons follow the verbatim statement of each specific disclosure, interrogatory, ... or request for inspection to which an objection is raised.” LR 37.1A, NDGa. Although the motion to compel could be denied on this basis alone, see Perez, 2007 WL 1810145, at *2, the Court will address the merits of the arguments presented by the parties.
Rule 26 of the Federal Rules of Civil Procedure governs the scope of discovery and provides in pertinent part:
Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.
See Fed. R. Civ. P. 26(b)(1). As amended on December 1, 2015, Rule 26(b)(1) recognizes that “[i]nformation is discoverable ... if it is relevant to any party's claim or defense and is proportional to the needs of the case.” SeeRule 26 Advisory Committee Notes to 2015 Amendments. Thus, “although not fundamentally different in scope from the previous version,” Gonzalez v. Allied Concrete Indus., Inc., CV-14-4771 (JFB) (AKT), 2016 WL 4444789, at *2 (E.D.N.Y. Aug. 23, 2016), amended Rule 26(b)(1) “constitute[s] a reemphasis on the importance of proportionality in discovery but not a substantive change in the law,” id. (alteration in original) (citation and internal marks omitted) (quoting Vaigasi v. Solow Mgmt. Corp., 11 Civ. 5088 (RMB)(HBP), 2016 WL 616386, at *13 (S.D.N.Y. Feb. 16, 2016) ); see Robertson v. People Magazine, 14 Civ. 6759 (PAC), 2015 WL 9077111 at *2 (S.D.N.Y. Dec. 16, 2015) (citation omitted) (“[T]he 2015 amendment [to Rule 26] does not create a new standard; rather it serves to exhort judges to exercise their preexisting control over discovery more exactingly.”). Accordingly, “the amendments to Rule 26(b) and Rule 26(c)(1) do not alter the basic allocation of the burden on the party resisting discovery to–in order to successfully resist a motion to compel–specifically object and show that the requested discovery does not fall within Rule 26(b)(1)'s scope of relevance (as now amended) or that a discovery request would impose an undue burden or expense or is otherwise objectionable.” Orchestratehr, Inc. v. Trombetta, No. 3:13-cv-2110-P, 2016 WL 1555784, at *24 (N.D. Tex. Apr. 18, 2016) (alteration in original) (citations omitted).
*4 Alcoa asserts that its discovery requests simply seek discovery on its claims and UAC's defenses, as expressly permitted by Rule 26(b)(1), and a review of the pleadings lends support to Alcoa's position. See [Docs. 27 & 39]. Indeed, UAC has not seriously contested this point. Instead, UAC's arguments focus on the relevance and proportionality requirements of Rule 26(b)(1). UAC maintains that discovery should be confined “to the stretch-form process that UAC began performing in 2015, because that is the only process that is at issue.” [Doc. 116 at 5]. However, the amended complaint specifically alleges that UAC misappropriated “Alcoa's trade secret stretch form extrusion process and all of its component parts[.]” [Doc. 27 at 1 ¶ 1 (emphasis added) ]. Alcoa has explained that its motion “seeks only: (1) the details of UAC's process for manufacturing the parts at issue; (2) how UAC developed that process; (3) the extent to which Alcoa's information was used to develop that process; and (4) UAC's defenses.”[10] [Doc. 124 at 5]. While UAC denies and vigorously disputes the merits of Alcoa's claims, the allegations of the amended complaint clearly encompass all of the component parts of the stretch-form process, at least for the parts at issue in this case,[11] so UAC's objections based on relevance to the discovery sought within the scope defined by Alcoa are unpersuasive and its arguments challenging the merits of Alcoa's claims must be reserved for a motion for summary judgment.[12]
As for its proportionality arguments, UAC has the burden of demonstrating that it would be unduly burdensome to respond to the discovery sought, and the bare assertion that it would be based on the quantity of the data produced alone is insufficient to support its objection. All Moving Servs., Inc. v. Stonington Ins. Co., No. 11-61003-CIV, 2012 WL 718786, at *5 (S.D. Fla. Mar. 5, 2012); Wagner v. Viacost.com, No. 06-81113-CIV, 2007 WL 1879914, at *1 (S.D. Fla. June 29, 2007). Contrary to UAC's contention, Alcoa is not seeking records of “all of the processes that UAC has employed to manufacture aluminum products for the past 30 years.” [Doc. 116 at 3]. Rather, as stated, Alcoa is only seeking to compel discovery of “(1) the details of UAC's process for manufacturing the parts at issue; (2) how UAC developed that process; (3) the extent to which Alcoa's information was used to develop that process; and (4) UAC's defenses.” [Doc. 124 at 5]. UAC has simply not demonstrated an undue burden from producing the discovery sought by Alcoa in its motion to compel that justifies limiting or prohibiting the discovery in the manner requested by UAC. Likewise, UAC has not demonstrated that the costs of the scope of discovery sought by Alcoa, as defined in its motion to compel, should be shifted to Alcoa.
*5 UAC's alternative requests for staging the discovery and placing reasonable time limitations on the scope of the discovery are plausible approaches for managing voluminous discovery. However, the parties were not able to come to such an agreement, and UAC's proposals too narrowly restrict the relevant discovery to which Alcoa is entitled with respect to the parts at issue in this case. Alcoa's discovery requests, limited to the scope defined by Alcoa, see [id.], are relevant and proportional to the claims and defenses in this case. However, as previously noted, to the extent that any particular discovery request attached to the motion exceeds the scope of discovery sought as defined by Alcoa in its motion, UAC's objections based on relevance and over breadth are sustained. Because Alcoa did not comply with the Local Rules for filing its motion to compel, and since some of the discovery requests attached as Exhibit A to the motion are beyond the scope of discovery that Alcoa asserts it is seeking through its motion, the motion to compel, [Doc. 97], is GRANTED IN PART and DENIED IN PART, and Alcoa's request for expenses, including its attorneys' fees, is DENIED.[13]
B. UAC's Motion to Compel Discovery Responses
UAC moves to compel Alcoa to review and re-designate its document production, [Doc. 108], contending that Alcoa has over-utilized the attorneys' eyes only (“AEO”) designation without actually reviewing the documents to determine whether the designation was proper. [Doc. 108-1 at 2]. UAC contends that Alcoa should be ordered “to confine its AEO designations to the documents it reasonably believes, after good-faith review, qualify for such treatment.” [Id. at 3]. UAC seeks an award of its fees and costs in bringing this motion. [Id. at 20-21].[14] Alcoa opposes UAC's motion, arguing that it was not required to undertake a document-by-document review to make AEO designations, and that it made a reasonable determination as to the commercial sensitivity of the categories of documents that it designated AEO. [Doc. 114-6 at 1]. Alcoa asserts that UAC is not entitled to its costs and fees because the motion to compel is without merit, Alcoa's position is substantially justified, and UAC failed to meet and confer before filing the motion. [Id. at 24-25].
Rule 26(c) of the Federal Rules of Civil Procedure authorizes a court to enter an order “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense,” including by “requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way.” Fed. R. Civ. P. 26(c)(1)(G). In this case, the parties agreed to entry of a Consent Protective Order (“CPO”) pursuant to Rule 26(c) “in order to preserve and maintain the confidentiality of trade secret, confidential, proprietary, commercially sensitive, private or personal information which may be disclosed or obtained by the Parties through the course of discovery or otherwise, including third party subpoenas[.]” [Doc. 38 at 1]. The CPO “is intended to preserve personal, private, confidential and proprietary business information, including but not limited to, technical information (including research and development, process and formula information), customer and prospective customer information, account information, cost, rate and pricing information, compensation arrangements, business and marketing plans, and information not known to the general public, the disclosure of which could cause serious injury or damage to the Parties.” [Id. at 3-4 ¶ 5 (alteration in original) ].
*6 Alcoa and UAC “may designate documents or information subject to the terms of [the CPO]” as containing Confidential Information or AEO Information. [Id. at 4 ¶ 6]. Documents or information that may be designated as Confidential Information “include personal, non-public, proprietary and/or confidential information that is not publicly known and is of technical or commercial advantage to its possessor, or any other information required by law or agreement to be kept confidential.” [Id. at 4-5 ¶ 7]. Documents or information designated as AEO constitute a subset of Confidential Information and include in relevant part:
[A]ny document or information supplied in any form that is so sensitive that the Producing Party reasonably believes that it is entitled to heightened protections, including but not limited to, technical information (including research and development, process and formula information)[ ], customer and prospective customer information, account information, cost, rate and pricing information, compensation arrangements, business and marketing plans, and other competitively sensitive business or technical information the disclosure of which to persons other than Qualified Persons -- Highly Confidential may cause harm to the competitive position of the Producing Party.”
[Id. at 5 ¶ 8]. The disclosure and dissemination of documents or information designated as Confidential Information or AEO is restricted to “the categories of persons and under the conditions described in [the CPO].” [Id.at 10 ¶ 13]; see also [id. at 6-8].
Paragraph 14 of the CPO provides that counsel “may seek permission of counsel for the Producing Party to have particular [AEO] documents or information presented to and/or viewed by a Party's representatives by submitting a written request which references the specific document(s) by a description sufficient to identify the document for which the Party's counsel is seeking permission for disclosure to the Producing Party.” [Id. at 10 ¶ 14]. This paragraph also provides that if “a dispute arises as a result of this procedure or as a result of any denial of a specific request, the Parties shall confer and attempt to resolve such dispute,” and if “a dispute cannot be resolved after the Parties have met and conferred, ... the Party challenging the confidentiality and/or disclosure of a particular document may submit that discovery dispute to the Court for consideration.” [Id. at 10-11 ¶ 14]. Paragraph 14 further states: “If the Court agrees with the Party challenging confidentiality and/or permits disclosure, the Producing Party shall pay the reasonable attorney's fees incurred as a result of the challenge.” [Id. at 11 ¶ 14].
UAC asserts that “Alcoa has designated more than 99% of its production AEO.” [Doc. 122 at 11]. UAC contends that “Alcoa admits that it designated all of its initial production, and most of what has followed, AEO without even reviewing the documents to determine whether that designation was fair.” [Doc. 108-1 at 2]. UAC maintains that the manner and extent of Alcoa's AEO designation violate the terms of the CPO and demonstrate bad faith. [Id. at 11-16].
Alcoa responds that the CPO does not require a document-by-document review to make AEO designations, as a party need only “make a reasonable determination that they contain commercially-sensitive information.” [Doc. 114 at 4]. Alcoa contends that each of UAC's requests for documents sought production of commercially-sensitive information, which it categorized as follows:
• Documents reflecting Alcoa's trade secrets (RFPs 2-5, 7, 10, 12-18, 25-30);
*7 • Documents relating to Alcoa's efforts to maintain secrecy of its trade secrets or confidential information, including Alcoa's policies (RFPs 8, 19-21, 23, 24);
• Communications with others such as Boeing regarding Alcoa's trade secrets or UAC (RFPs 11, 22);
• Documents relating to individuals' access to Alcoa's trade secrets or confidential information, including agreements with those individuals and personnel files (RFPs 6, 9).
[Id. at 9-10 (footnote and citation omitted) ]. Alcoa asserts that it undertook an analysis to determine how the documents to be produced should be marked under the CPO, and while it “was conducting its ongoing analysis, it decided to go ahead and produce the documents as AEO because discovery had been scheduled to close April 8, 2016, and Alcoa wanted UAC's counsel to have the documents without delay.” [Id. at 13 (footnote omitted) ].
After its preliminary production, “Alcoa continue[d] to analyze the documents to determine if there were types that could be classified differently.” [Id.]. Alcoa subsequently “determined that the following categories could be de-classified, and therefore shared with UAC's business and technical personnel: Alcoa's press releases; communications with UAC; and communications with third-party vendors with which there is no confidentiality agreement or that consents to the disclosure.” [Id.]. Accordingly, Alcoa de-designated these documents and provided UAC copies without the AEO legend. [Id. at 13-14]. Additionally, “to verify the accuracy of its AEO determinations,” Alcoa “reviewed on a document-by-document basis a sample of 1,000 produced documents designated as AEO,” and asserts that it “could not identify a single responsive document among those 1,000 documents that had been improperly designated as AEO.” [Id. at 14 (emphasis and footnote omitted) ].
Alcoa does not dispute UAC's contention that it has designated more than 99% of its production AEO, and it concedes that “the high number of AEO documents in its initial production may be atypical in an ordinary case.” [Id.at 4]. However, Alcoa contends that this is no ordinary case as the amended complaint alleges theft of trade secrets by a direct competitor, and “Alcoa is understandably concerned about the production of commercially-sensitive information in a way that could be used for competitive advantage by its rival.” [Id.]. Alcoa's concern regarding its commercially-sensitive information is certainly understandable, but the high percentage of documents designated AEO and the fact that it decided “to go ahead and produce the documents as AEO” in its first production while its analysis was ongoing support UAC's contention that the AEO designation in the preliminary production was presumptively improper. See Procaps S.A. v. Patheon Inc., CASE NO. 12–24356–CIV–GOODMAN, 2015 WL 4430955, at *7 (S.D. Fla. July 20, 2015) (citing cases finding designation percentages of 90% and higher to be “absurd” and indicative of bad faith). Alcoa attempts to rebut the presumption of over-designation by pointing out that it was trying to produce the documents to UAC without delay ahead of the scheduled close of discovery and that it has taken subsequent steps to de-designate certain documents and also randomly sampled 1,000 documents from its production and did not find any improper AEO designations. Alcoa also invites UAC to bring to its attention any documents UAC believes have not been properly designated, and Alcoa will review those documents. See generally [Doc. 114].
*8 UAC argues that Alcoa's explanations and offer to review documents identified by UAC do not absolve Alcoa of its responsibility to properly review and designate its document production in the first place. [Doc. 122 at 4]. UAC points out that Alcoa could have requested an extension of time to make its initial production instead of deciding to “go ahead” and produce the documents with AEO designation. [Id. at 8-9 (internal marks omitted) ]. UAC rejects Alcoa's proposal that it bring to Alcoa's attention any documents it contends should not have been designated AEO because that shifts to UAC the burden and expense of document review that Alcoa should bear and because it would result in UAC's counsel being “forced to reveal their own mental impressions to opposing counsel about what Alcoa documents they view as critical.” [Id. at 5].
The Court is not convinced that the CPO requires a literal document-by-document review of the entire production as UAC contends,[15] but it is clear that Alcoa's preliminary production of 100% AEO designated documents did not comply with its obligations under the CPO, and its subsequent productions leaving the percentage of AEO designation above 99% are presumptively unreasonable. See Global Material Techs., Inc. v. Dazheng Metal Fibre Co., Ltd., 133 F. Supp. 3d 1079, 1084 (N.D. Ill. 2015) (citation and internal marks omitted) (explaining that “[t]o justify the AEO designation, the designating party must do more than show that it is a competitor of the receiving party or that the documents in question disclose information about the designating party's relationships with other competitors,” but “[i]nstead, the designating party needs to show that the disclosure of the particular AEO-designated materials to even a small number of the other party's personnel would risk the disclosure of sensitive competitive information,” and “[c]onclusory statements are insufficient to show that a slight expansion of disclosure puts the designating party at an appreciable risk”). The fact that Alcoa's random sampling of 1,000 documents out of the 55,000 it has produced revealed no improper designations provides some support for Alcoa's position that it did not over-utilize the AEO designation, at least with respect to the documents actually reviewed, but it does not overcome the presumption that it has over-designated some portion of the remaining 54,000 documents it has produced as AEO. See McDonald Apiary, LLC v. Starrh Bees, Inc., 8:14-CV-351, 2016 WL 868185, at *1 (D. Neb. Mar. 4, 2016) (citations omitted) (“An AEO designation should only be used on a relatively small and select number of documents where a genuine threat of competitive or other injury dictates such extreme measures,” and “any designation of material as [AEO] should be reserved for only those rare instances in which it is truly justified, and there is no other effective alternative”).
To be sure, there are some categories of documents identified by Alcoa that clearly qualify for AEO designation, and that designation is so obviously appropriate that UAC could not credibly challenge it, regardless of whether Alcoa conducted the level of document review that UAC contends is required. For example, all documents reflecting Alcoa's trade secrets and documents relating to Alcoa's efforts to maintain secrecy of its trade secrets or confidential information clearly qualify for AEO designation, and depending on how those documents were retrieved from Alcoa for production in discovery, the document-by-document review that UAC contends is required may not have been necessary for Alcoa to make a reasonable determination that AEO designation was appropriate.
*9 However, UAC points out several categories of documents that Alcoa has designated AEO that it contends include some documents that do not qualify for that designation. For example, Alcoa argues that “nearly all” of its policy manuals, employee handbooks, and codes of ethics “will reflect either (1) technical information about Alcoa's manufacturing processes, (2) information about employee benefits, compensation, and similar information expressly within the ambit of the Protective Order's AEO designation, and/or (3) proprietary information about how Alcoa runs its business that Alcoa has developed over decades and does not reveal to competitors because the business approaches provide it a competitive advantage.” [Doc. 114 at 20 (citation omitted) ]. The fact that Alcoa asserts that “nearly all” of these documents meet the requirements for AEO necessarily means that not all do, and so, the near 100% designation of this category of documents is improper.
Another category that may include documents that do not qualify for AEO designation is described as “communications (including in particular emails) that Alcoa has sent or received, both internally and externally, concerning its stretch-form machine.” [Id. (internal marks omitted) ]. UAC concedes that many communications regarding Alcoa's stretch-former will be AEO, but others will not, and “Alcoa cannot know without looking at them.” [Doc. 122 at 15]. Likewise, another category described as “contracts between Alcoa and any current or former employees of UAC,” which “typically contain confidentiality provisions,” and are “part of confidential personnel files,” [Doc. 114 at 19 (citation omitted) ], implies by this very description that some, but not all, documents in this category would qualify for AEO designation. For these categories of documents, a more detailed review is necessary to determine which documents actually require heightened protection.
Alcoa's proposed solution that UAC point out documents that it contends should not be designated AEO improperly shifts to UAC the responsibility that the producing party bears in originally designating documents under the CPO.[16] The AEO designation is reserved for “any document or information supplied in any form that is so sensitive that the Producing Party reasonably believes that it is entitled to heightened protections.” [Doc. 38 at 5 ¶ 8]. Although the CPO may not require a literal document-by-document review of the entire production, the categorical approach that Alcoa has taken sweeps too broadly, as evidenced by the near 100% rate at which it has applied the AEO designation. While categorizing may be an acceptable starting point to triage voluminous requests for production of documents, the assertion of AEO designation requires more precision to fulfill the producing party's obligation to apply it only to documents or information that it reasonably believes to be so sensitive as to be entitled to heightened protections. Drawing the line between AEO and Confidential Information designation requires some measure of document review to distinguish those documents and information entitled to heightened protection from those that are not, and it is apparent that Alcoa has begun, but not completed, that process. See, e.g., [Doc. 108-8 at 27, 32].
Accordingly, UAC's motion to compel Alcoa to review and re-designate its document production is GRANTED IN PART and DENIED IN PART.Specifically, for documents Alcoa produced in categories other than those reflecting Alcoa's trade secrets and relating to Alcoa's efforts to maintain secrecy of its trade secrets or confidential information, Alcoa shall review the AEO designations previously applied to determine that it has a reasonable belief that the documents or information are so sensitive as to be entitled to the heightened protections of AEO designation. As previously explained, this will require a more detailed review of documents in some categories than in others, and while the Court is not requiring a literal document-by-document review of the entire production, Alcoa shall exercise good faith in complying with its obligations under the CPO and this Order.[17] UAC's request for fees under the CPO and Rule 37 is DENIEDbecause, as UAC notes, see [Doc. 123 at 14 n.9], its motion was not brought pursuant to the procedures of paragraph 14 of the CPO which provides for an award of fees, and Alcoa's position in resisting a literal document-by-document review of its entire production sought by UAC was substantially justified, and although UAC included a certification of compliance with Rule 37(a) with its motion to compel, see [Doc. 108 at 5], it has not disputed Alcoa's contention that UAC failed to meet and confer in the manner required by Rule 37 prior to filing its motion, see [Doc. 114-6 at 28; Doc. 123 at 17].
*10 For the foregoing reasons, Alcoa's motion to compel, [Doc. 97], and UAC's motion to compel, [Doc. 108], are GRANTED IN PART and DENIED IN PART, and UAC's motion to exclude, [Doc. 126], and Alcoa's cross-motion to exclude, [Doc. 131], are DENIED. Since all matters referred to the undersigned have now been concluded, the Clerk is DIRECTED to terminate this referral.
IT IS SO ORDERED this 9th day of September, 2016.

The listed document and page numbers in citations to the record refer to the document and page numbers shown on the Adobe file reader linked to the Court's electronic filing database, CM/ECF.
UAC manually filed an unredacted version of its response in opposition to Alcoa's motion to compel and certain exhibits attached thereto under seal at [Doc 115], which is docketed as [Doc. 116-1].
UAC manually filed an unredacted version of its memorandum in support of the motion to compel and supporting exhibits under seal at [Doc. 109], which is docketed as [Doc. 108-8].
Alcoa manually filed an unredacted version of its memorandum in opposition to UAC's motion to compel and certain exhibits attached thereto under seal at [Doc. 120], which is docketed as [Doc. 114-6].
Alcoa filed an unredacted version of its reply in support of its motion to compel under seal at [Doc. 125], and UAC filed an unredacted version of its reply in support of its motion to compel under seal at [Doc 123].
UAC filed an unredacted version of its motion to exclude under seal at [Doc 128].
Alcoa filed an unredacted version of its response in opposition to UAC's motion to exclude under seal at [Doc 133].
UAC included its reply in support of its motion to exclude within its response to Alcoa's cross-motion to exclude evidence. See[Doc. 137]. UAC also filed an unredacted version of this reply under seal at [Doc 138]. Alcoa also filed a reply in support of its motion to exclude evidence, see [Doc. 143], and an unredacted version of this reply filed under seal is docketed as [Doc. 144].
UAC has also moved to exclude from consideration portions of the declaration of Edward Colvin, [Doc. 126], submitted by Alcoa with its reply in support of its motion to compel, see [Doc. 124-1], but the Court is persuaded by Alcoa's arguments opposing UAC's motion to exclude, see [Doc. 132], and the motion is DENIED because “UAC seeks the wholesale exclusion of many paragraphs without even explaining how it contends they are objectionable,” [id. at 2], other of its objections go to the weight of the evidence, and as UAC concedes, [Doc. 137 at 6-7], the Federal Rules of Evidence do not control in this type of preliminary proceeding, see Rogers v. Quality Carriers, Inc., CAUSE NO.: 4:15-CV-22-JD-JEM, 2016 WL 3413766, at *1-2 (N.D. Ind. July 21, 2016) (declining to strike an affidavit attached to a reply brief in support of a motion to compel where plaintiffs argued that Federal Rules of Evidence were not relevant at that stage of the litigation and that defendants' reliance on Federal Rule of Civil Procedure 56 was misplaced); see also Forsberg v. Pefanis, 261 F.R.D. 694, 700 (N.D. Ga. 2009). Moreover, even if the Court granted UAC's motion, it would not alter the Court's ruling on Alcoa's motion to compel.
To the extent that Alcoa's discovery requests seek anything beyond this defined scope, UAC's objections based on relevance and over breadth are sustained. For example, Request No. 8 of Alcoa's First Set of Requests for Production of Documents seeks: “All documents referring or relating to UAC's acquisition, installation, or operation of a large extrusion press, a horizontal heat treat furnace and quench, and a large stretch former.” [Doc. 97-2 at 3]. Unlike other requests for production, Request No. 8 is not limited to documents pertaining “to parts sold or to be sold to Boeing,” [id. at 4], or “to the claims in the Complaint,” [id. at 2-3]. Similarly, Interrogatory No. 3 of Alcoa's First Set of Interrogatories asks UAC to “Identify all persons involved in any way with the negotiation, drafting, or signing of contracts between UAC and Boeing for the sale of aluminum aerospace extrusion parts and describe the particular role of each person in that process.” [Id. at 7]. Unlike other interrogatories, Interrogatory No. 3 is not limited to “stretch form extrusion parts,” [id. at 9], or “to the subject matter in the Complaint,” [id. at 8]. Likewise, Topic Nos. 1, 2, and 3 of Alcoa's Rule 30(b)(6) Notice are not limited to “stretch form extrusion parts for Boeing,” [id. at 15], or “to the subject matter in the Complaint,” [id. at 14]. The Court has not addressed every discovery request listed in Exhibit A to Alcoa's motion since Alcoa has not complied with the requirements of Local Rule 37.1, but provides these examples to guide the parties in moving forward with discovery.
UAC asserts that the only parts at issue in this case are stretch-formed “spar chords” used by Boeing to manufacture airplane wings, [Doc. 116 at 2], and Alcoa has not disputed this contention, see generally [Doc. 124].
Alcoa has filed a cross-motion to exclude from consideration all merits-related evidence submitted in support of UAC's opposition to its motion to compel. [Doc. 131]. However, the Court agrees with Alcoa's assertion that “[t]here is no reason to be drawn into a debate about the admissibility of evidence that has no place in a discovery motion.” [Doc. 132 at 2]. Therefore, the cross-motion to exclude evidence is DENIED.
“For motions to compel, the rule allows the court to assess reasonable costs and attorneys' fees against the non-prevailing party.” Goodman v. New Horizons Cmty. Serv. Bd., No. 05-14717, 2006 WL 940646, at *3 (11th Cir. Apr. 12, 2006) (per curiam) (unpublished) (citation omitted); see also Fed. R. Civ. P. 37(a)(5)(A), (B). Indeed, “Federal Rule of Civil Procedure 37(a)(5) provides that when a motion to compel is granted in part and denied in part, “the court may issue any protective order authorized under Rule 26(c) and may, after giving an opportunity to be heard, apportion the reasonable expenses for the motion.” Fed. R. Civ. P. 37(a)(5)(C). Here, the Court finds that an award of attorney's fees against UAC is not warranted since Alcoa's motion failed to comply with the Local Rules and UAC was substantially justified, at least in part, in opposing the scope of certain discovery requests. See Scott-Warren v. Liberty Life Assurance Co. of Boston, CIVIL ACTION NO. 3:14-CV-738-CRS-CHL, 2016 WL 3866617, at *19 (W.D. Ky. July 13, 2016)(denying request for attorneys' fees where court granted in part and denied in part the motion to compel, finding that such an award was “simply unwarranted”).
UAC has attached copies of its discovery requests to its motion to compel, see [Doc. 108-8 at 40-76], but it has not complied with the requirements of Local Rule 37.1. However, the nature of the relief sought by UAC does not fit squarely within the format contemplated by Local Rule 37.1. Accordingly, as with Alcoa's motion to compel, the Court will address the merits of the arguments presented by the parties.
The Court agrees with Alcoa that, at least with respect to some of UAC's discovery requests, Alcoa's use of electronic and analytical methods of designating its documents for production could satisfy its obligations under the CPO as it is a common practice in cases of this size and scope. However, for the reasons to be discussed, some of the categories for production identified by Alcoa require closer review than others.
However, once Alcoa completes its review and re-designation consistent with the terms of this Order, the procedure the parties negotiated and agreed upon in paragraph 14 of the CPO applies.
If, after Alcoa's review and re-designation, UAC contends that AEO designation is improper with respect to any documents, it shall follow the procedures set forth in paragraph 14 of the CPO, but prior to filing any further motions to compel, the parties shall contact the Court to schedule a conference. See [Doc. 6 at 2].