*1 This matter was referred to resolve a discovery dispute concerning a list of customers requested by plaintiff through Interrogatory No. 14 from Archer Interiors, Inc. (Archer). Plaintiff seeks a list of customers, their phone numbers and a description of the work performed for each customer. At the telephone conference held on February 5, 2009, Archer contested first the relevance of such evidence under plaintiff's theory that Archer is an alter ego of Heppner-Pritt & Associates, Inc., a signatory to the collective bargaining agreement entitled the “Carpenters’ Agreement.” Secondly, Archer claimed that its customer list constituted “trade secrets” which are privileged, confidential and proprietary pursuant to Fed. R. Civ. P. 26(c)(1)(G).[1] As instructed by the undersigned, plaintiff filed a motion to compel discovery, Archer filed a responsive brief and plaintiff filed a reply. (ECF #18, 19, 21).

Plaintiff's Alter Ego Argument:

Plaintiff contends that Archer is the alter ego of Heppner-Pritt and there is in reality a single employer who is evading its obligations under the “Carpenter's Agreement.” To briefly summarize:

Plaintiff in its reply has produced evidence which it contends supports common ownership of Archer and Heppner-Pritt. Archer concedes “some” identity of ownership, and that it has subcontracted work to Heppner-Pritt, but maintains that both entities operate separately and Heppner-Pritt continues to employ union workers and comply with collective bargaining obligations, whereas Archer employs non-union labor.

Such parallel unionized /non-unionized or “double-breasted” operations are not unheard of. See Trustees of Resilient Floor Decorators Ins. Fund v. A & M Installations, Inc., 395 F.3d 244, 248, 34 Employee Benefits Cas. 1257 (6th Cir. 2005)(“double-breasted corporate arrangement was not alter ego where there was no intent to evade pre-existing obligations). The cases cited by plaintiff as NLRB v. Fullerton Transfer & Storage, Inc., 910 F.2d 331 (6th Cir. 1990), and NLRB v. Allcoast Transfer, Inc., 780 F.2d 576 (6th Cir. 1986), in its argument that intent to evade labor law obligations is not a prerequisite to finding alter ego status, should be tempered in light of Resilient Floor. Resilient Floor dismissed language in Fullerton Transfer as dicta, concerning the application of the alter ego doctrine to double-breasted operations, and stated “an intent to evade’ pre-existing obligations is ‘clearly the focus of the alter ego doctrine.” See Resilient Floor, 395 F.3d at 248, citing Allcoast Transfer, Inc., 780 F.2d at 579.

Relevance of Customer Lists:

*2 Returning to the discovery dispute, discovery under Rule 26(b)(1) allows the parties “to obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense.” Plaintiff contends that Archer did not object to production of customer lists on the basis of relevance. Relevance is generally the primary issue. Customer lists are relevant to the issue of intent to evade, despite plaintiff's refusal to acknowledge the necessity of establishing intent. Evidence of “substantially identical management, business, purpose, operation equipment, customers, supervision and ownership (emphasis supplied),” together with intermingling of funds and operations support intent to evade union obligations. See Nelson Elec. v. NLRB, 638 F.2d 965, 968 (6th Cir. 1981) cited in Resilient Floor, 395 F.3d at 248-49.[2]

Archer's Customer List is not Privileged under Federal Law:

Archer's defense of privileged “trade secret” rests on state law. The Ohio Supreme Court had adopted the definition of ‘trade secret’ found in Restatement (Fourth) of Torts (1939), § 757 cmt. (b) in Valco Cincinnati, Inc. v. N & D Machining Service, Inc., 24 Ohio St.3d 41, 44, 492 N.E.2d 814 (1986). See also Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 474, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974)(Supreme Court reached same conclusion based on lower state court decisions).[3] Since 1994, however, the Uniform Trade Secrets Act (UTSA) has governed. See Al Minor & Assoc., Inc. v. Martin, 117 Ohio St.3d 58, 61, 881 N.E.2d 850, 852-53,2008-Ohio-292 (2008). The UTSA's definition of “trade secret” is codified under Ohio Rev. Code § 1333.61 as:

There is a wrinkle in Archer's argument. Plaintiff brought this action under the Labor-Management Relations Act of 1947, 29 U.S.C. § 185, and jurisdiction is premised on 28 U.S.C. § 1331, as a federal question. Rule 501 of the Federal Rules of Evidence on privileges was promulgated to accommodate the Erie Doctrine that, “[e]xcept in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the state.” Erie RR Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938); Legg v. Chopra, 286 F.3d 286, 289 (6th Cir. 2002). As Rule 501 stands, the first portion contains a general mandate for the federal courts to apply the law of privilege under principles of common law as interpreted by the federal courts in light of reason and experience. The second portion requires that state rules governing privilege must be applied “in civil actions and proceedings with respect to an element of a claim or defense as to which State Law supplies the rule of decision.” 28 U.S.C.A. Evid. R. 501.[4] Nowhere in the motion to compel arbitration (which serves as the complaint in this matter) or answer, is there a claim or defense governed by the laws of the State of Ohio. (See ECF # 1, 6). Accordingly, federal principles govern Archer's assertion of privilege. See Hancock v. Dodson, 958 F.2d 1367, 1372-73 (6th Cir.1992); Pearson v. Miller, 211 F.3d 57, 61, 53 Fed. Evid. Serv. (3rd Cir. 2000)(Discovery disputes in federal court are governed by federal law).

*3 In assessing “privilege” afforded to “trade secrets” as a matter of federal law:

Federal Open Market Committee of Federal Reserve System v. Merrill, 443 U.S. 340, 362, 99 S.Ct. 2800, 2813, 61 L.Ed.2d 587 (1979). The Court noted that court orders forbidding disclosure are rare and “[m]ore commonly, the trial court will enter a protective order restricting disclosure to counsel.”

See id., note 24.

Naturally, before delving further into this issue, this court must assure itself that the matter before it involves a “trade secret.” “To resist discovery under Rule 26(c)[ (1)(G) ], a person must first establish that the information sought is a trade secret. (footnotes omitted).” Centurion Industries, Inc. v. Warren Steurer and Associates 665 F.2d 323, 325, 9 Fed. R. Evid. Serv. 795 (10th Cir. 1981). “A customer list developed by a business through substantial effort and kept in confidence may be treated as a trade secret and protected at the owner's instance against disclosure to a competitor, provided the information it contains is not otherwise readily ascertainable.” North Atlantic Instruments, Inc. v. Haber, 188 F.3d 38, 44 (2nd Cir.1999), quoting Defiance Button Mach. Co. v. C & C Metal Prods. Corp., 759 F.2d 1053, 1063 (2d Cir.), cert. denied, 474 U.S. 844, 106 S.Ct. 131, 88 L.Ed.2d 108 (1985); and see W.R. Grace & Co. v. Hargadine, 17 Ohio Misc. 199, 392 F.2d 9,15-17 (6th Cir. 1968) (Under pre-UTSA law customer lists were traditionally regarded as trade secrets of any sales company in Ohio).

Archer recognizes that it carries the burden of demonstrating that the customer lists are protected trade secrets, and correctly identifies the six factor Restatement test:

Restatement of Torts § 757 cmt. b (internal quotation marks and brackets omitted), quoted in North Atlantic Instruments, Inc., 188 F.3d at 44; and see State ex rel. Plain Dealer v. Ohio Dept. of Ins., 80 Ohio St.3d 513, 524-25, 687 N.E.2d 661, 672 (1997)(Ohio's six factor test is essentially the same but slightly rephrased as in the sixth factor “the amount of time and expense it would take for others to acquire and duplicate the information.”). Th application of the six factor test is a question of fact under the law of Ohio. See State ex rel. Besser v. Ohio State Univ., 89 Ohio St.3d 396, 400, 732 N.E.2d 373 (2000); and see Thermodyn Corp. v. 3M Co., - F. Supp. 2d -, 2008 WL 5516632, 10 (N.D. Ohio); Hoffmann-La Roche Inc. v. Yoder, 950 F.Supp. 1348, 1357 (S.D. Ohio 1997), citing Valco, 24 Ohio St.3d at 48, 492 N.E.2d 814; Water Management, Inc. v. Stayanchi, 15 Ohio St.3d 83, 86, 472 N.E.2d 715 (1984).[5]

*4 Archer argues that its customer information is not generally known outside the business and D. Scott Archer as the sole employee take precautions to safeguard the customer lists to avoid losing business. Archer states that as a small, specialized operation it could not survive the loss of a significant portion of its customers. These assertions do not quite fulfill the majority of the six Restatement factors quoted above. In addition plaintiff refutes the assertion that Mr. Archer is the sole employee with Archer Interior's W-2's and discovery responses which establish that James Heppner is also employed by Archer Interiors, as vice-president, secretary, and treasurer. (Reply brief p.2).

However, customer lists, which lack “trade secret” status may still be confidential commercial information so as to fall within the scope of limited protection under 26(c)(1)(G). See Chesa Intern., Ltd. v. Fashion Associates, Inc., 425 F.Supp. 234, 237 (S.D.N.Y. 1977); Russ Stonier, Inc. v. Droz Wood Co., 52 F.R.D. 232, 234 (E.D.Pa.1971)(customer list was not trade secret but responses to interrogatories were to be restricted solely for purposes of the litigation); Zenith Radio Corp. v. Matsushita Elec. Indus. Co., 529 F.Supp. 866, 890 n. 42 (E.D.Pa.1981)(collecting cases for the “wide variety” of confidential commercial information courts have recognized as subject to protection).

Protective Order:

Plaintiff concedes that Archer was willing to respond “upon execution of a suitable confidentiality order” since November 24, 2008. Plaintiff submitted what it believed was such a suitable “Stipulated and Qualified Protective Order” on that same date. (See Ex. B, Motion to Compel ECF # 18). Plaintiff and Archer continued rare communications with Archer promising additional production. These unfulfilled promises led to plaintiff's request for a discovery conference in plaintiff's January 22, 2009 letter and the February 5, 2009 discovery conference. Plaintiff filed its motion to compel discovery electronically on February 9, 2009. On February 12, 2009, Archer proposed a compromise where it would produce the customer list and agree to sign the previously proposed confidentiality agreement providing the customer list information was designated as confidential. Archer requested in exchange that plaintiff withdraw the pending motion to compel.

Under the circumstances of this belated concession, plaintiff's request for attorney fees and cost under Fed. R. Civ. P. 37(a)(5) is warranted. Plaintiff's motion to compel is granted under Rule 37(a)(3)(B)(iii) for Archer's failure to answer the interrogatory concerning its customer list. Plaintiff is instructed to respond with its confidential information subsequent to the entry of “Stipulated and Qualified Protective Order.” Plaintiff is correct that it had no obligation to withdraw its motion to compel after Archer agreed to respond to the interrogatory.

Insurance Documents:

Plaintiff adds to the motion to compel a demand for “documents demonstrating insurance or other benefits offered to employees of Archer Interiors at any time between January 1, 2007 and the present” demanded in its Request for Production No. 7. Archer is correct that plaintiff was not instructed to move to compel on this issue., and the undersigned does not recall any discussion at the discovery conference regarding employee benefit contracts. This dispute was mentioned, though, in plaintiff counsel's January 22, 2009 letter.

Plaintiff maintains that employee benefit insurance is relevant to its alter ego argument citing NLRB v. Palmer Donavin Mfg. Co., 369 F.3d 954, 954 (6th Cir. 2004), and Pipe Fitters Union Local No. 392 v. Aggressive Piping Corp., 841 F. Supp. 224 (S.D. Ohio 1991). Palmer is distinguishable since it involved a parent-subsidiary arrangement, and not a double-breasted operation. However, that difference is insignificant. The NLRB in assessing whether there is a single employer has long considered whether each entity carries separate employee benefit policies as indicative of common control. See Gerace Constr., Inc. 193 NLRB 645, 645 -646, 1971 WL 32312 (1971). In Gerace Constr., Inc., a double-breasted operation was created which shared common stockholders and directors, but the companies did not constitute a single employer. One of the factors indicating a lack of “actual common control” was that the companies carried separate health and welfare and workers’ compensation contracts. Id. This information is relevant to plaintiff's contention and to expedite matters, Archer is also ordered to respond to Request for Production No. 7 subsequent to the entry of the “Stipulated and Qualified Protective Order.”

Instructions to Parties:

*5 Archer has opportunity to be heard under Rule 37(a)(5)(A). The parties have the option of a hearing or submitting briefs on the issues of substantial justification or other circumstances that would make the award unjust and plaintiff's itemized reasonable expenses including attorneys fees necessitated by the motion to compel. Counsel are to notify Gloria Waytes, courtroom deputy, at 216-357-7181 with their choice by February 23, 2009.

Motion to Compel is Granted.

IT IS SO ORDERED.