I. Procedural Background

Plaintiff Arconic Inc. (f/k/a Alcoa Inc.) and Defendant Universal Alloy Corporation (“UAC”) are each involved in the manufacture of parts for the aerospace industry and compete for business from the Boeing Company. [Doc. 35 at 1]. In its Amended Complaint, Plaintiff alleges that Defendant misappropriated trade secrets in violation of the Georgia Trade Secrets Act (“GTSA”), O.C.G.A. § 10-1-760, et seq. Am. Compl. [Doc. 27]. Specifically, Plaintiff alleges that the “large press stretch form extrusion parts” it manufactures for Boeing are trade secrets, which Defendant misappropriated when Defendant engaged Plaintiff's former employees and consultants. [Doc. 35 at 1]. Defendant filed an Amended Answer and Counterclaim on August 31, 2016. [Doc. 159]. Defendant's counterclaim alleges Plaintiff's suit is “sham litigation;” consequently, it seeks redress pursuant to the Sherman Act, 15 U.S.C. § 2. [Id. at 25, 27].

On July 16, 2018, Defendant filed a motion for summary judgment on three (3) issues: (1) reverse engineering, (2) statute of limitations, and (3) reasonable efforts to preserve secrecy.[1] [Doc. 447]. Because Plaintiff contends two of the three issues had not been properly disclosed in discovery, it filed a “Notice of Objection and Motion to Exclude Defendant Universal Alloy Corporation's Defenses and Evidence Relating to Reverse Engineering and Statute of Limitations.” [Doc. 526].

On March 4, 2019, the Court provided the Parties with written notice of its intent to appoint a special master [Doc. 583], and appointed the Honorable Stanley F. Birch, Jr. to serve as Special Master in this case. [Doc. 592]. After reviewing the briefing, the Special Master filed a Report & Recommendation on Plaintiff's pending motion to exclude (“July 25 R&R”). [Doc. 598]. In the July 25 R&R, the Special Master recommends granting Plaintiff's motion and excluding two (2) of the three (3) defenses raised in Defendant's motion for summary judgment. [Id.] The Special Master also issued an R&R recommending that the Court deny Defendant's pending motion for summary judgment due to the existence of genuine issues of material fact (“August 7 R&R”). [Doc. 603].

Defendant vehemently opposes the Special Master's findings and filed objections to the July 25 R&R [Doc. 611], objections to the August 7 R&R [Doc. 619], and a motion for oral argument on Defendant's objections to the July 25 R&R [Doc. 614]. The Court granted Defendant's motion and oral arguments were held on February 21, 2020. [Doc. 670]. Having been fully briefed, Defendant's objections are now before the Court for review.[2]

II. Standard

*2 An appointed special master may issue orders, reports, or recommendations to the court. FED. R. CIV. P. 53(f). After review, a court may “adopt or affirm, modify, wholly or partly reject or reverse, or resubmit to the master with instructions.” FED. R. CIV. P. 53(f)(1). In assessing a special master's order, report, or recommendation, the court reviews procedural matters for abuse of discretion and objections to legal conclusions and factual findings de novo. FED. R. CIV. P. 53(f)(3)–(5).

III. Discussion

A. Facts

To better understand the analysis herein, the Court provides the following factual background from the July 25 R&R:

July 25 R&R at 4-6.

Having set forth the pertinent factual background, the Court now addresses the July 25 R&R and Defendant's objections thereto before turning to the August 7 R&R.

B. July 25 R&R

Upon review of the submitted briefings on Plaintiff's Motion to Exclude, the Special Master concluded that Defendant failed to timely disclose two of its defenses and supporting evidence, which denied Plaintiff the opportunity to conduct meaningful discovery. July 25 R&R. Judge Birch further concluded that Defendant's failure was neither justified nor harmless and thus, exclusion was warranted.[3] Id.

Defendant objects to the Special Master's July 25 R&R, and requests that the Court reject the R&R, deny Plaintiff's Motion to Exclude, and remand to the Special Master with instructions to rule on the merits of its defenses. [Doc 611 at 1]. Because Defendant's objection relates to a motion to exclude evidence, the Court reviews the R&R for abuse of discretion. FED. R. CIV. P. 53 (f)(3)–(5).

In its objections to the R&R, Defendant makes several arguments about the perceived errors in the Special Master's R&R. First, regarding its defenses, Defendant presents both previously presented and new evidence and arguments, a summary of which are as follows:

*4 Second, Defendant argues that any perceived failure to disclose the defenses was justified because Plaintiff already possessed the information—namely, certain scattered documents and excerpts of deposition testimony. [Doc. 611 at 3–4]. Defendant points to this Court's earlier ruling in this case regarding an unrelated discovery dispute as support for this position. [Id.] During that discovery dispute, Defendant filed a motion to compel, asking this Court to order Plaintiff to reveal certain factual contentions within the produced information that supported its misappropriation claim. [Id.]. Plaintiff opposed Defendant's motion arguing that it had no obligation to “tie particular documents and facts to particular legal claims” because “that is fundamentally the work of either a lawyer or an expert witness [.]”[4] [Id. at 4]. The Court agreed and ruled in Plaintiff's favor. [Id.] Defendant contends the Court's ruling on the 2017 discovery matter allowed it to reasonably believe it had no obligation to update its discovery responses and highlight information that was already revealed in discovery. [Id.]

Third, Defendant states its conduct was substantially justified and harmless, making sanctions inappropriate. [Id. at 20]. Defendant suggests that Rule 37 “is not intended to be punitive” and claims it was substantially justified in believing it did not need to provide any supplemental response based on the Court's previous ruling in a discovery matter. [Id. at 21]. Instead of asking for additional discovery, Plaintiff opposed the motion for summary judgment, analyzing the very documents that Defendant used to support its defenses. [Id.] Under these circumstances, Defendant argues that the error was harmless because Plaintiff was not prejudiced. [Id.]

Finally, Defendant contends that if the Court does find sanctions are warranted, then the Court should allow Plaintiff to take limited discovery rather than exclude its defenses. [Id. at 23]. It argues that exclusion is a “drastic remedy reserved for those rare cases where a party's conduct represents flagrant bad faith and callous disregard of the Federal Rules of Civil Procedure[.]” [Id.] Because there is no trial date, and Plaintiff theoretically has ample time to amend its response to Defendant's Motion for Summary Judgment, Defendant requests this Court reopen discovery. [Id.]

Upon review, the Court finds that Defendant's objections are unpersuasive, and the Special Master did not abuse his discretion in excluding Defendant's defenses. First, to the extent that Defendant is raising new evidence and arguments regarding its disclosure of its defenses, those arguments were not raised before the Special Master and the Court need not consider them now. See Williams v. McNeil, 557 F.3d 1287, 1292 (11th Cir. 2009) (a district court need not consider a party's argument when that argument was not first presented to the magistrate judge); Bloodworth v. Colvin, 17 F. Supp. 3d 1245, 1249 (N.D. Ga. 2014) (“The district judge also has discretion to decline to consider arguments that were not raised before the magistrate judge.”). According to the Eleventh Circuit, “allowing parties to litigate fully their case before the magistrate and, if unsuccessful, to change their strategy and present a different theory to the district court would frustrate the purpose” of the magistrate-judge system, “effectively nullify the magistrate judge's consideration of the matter[,] and would not help to relieve the workload of the district court.” Williams, 557 F.3d at 1292 (internal citations omitted); see also Kaplan v. Hezbollah, 213 F. Supp. 3d 27, 43 (D.D.C. 2016) (stating that “the rules governing review of a Special Master's determination are analogous to those which guide federal district courts sitting in an appellate capacity of rulings by magistrates”). Given these principles, the Court finds that considering Defendant's new arguments would be ineffective and defeat the purpose of appointing a Special Master. Thus, the Court declines to consider Defendant's new arguments.

*5 Defendant's second argument about this Court's ruling in a prior unrelated discovery dispute is also unpersuasive. That discovery dispute involved attorney work-product and has no bearing on this later matter. While Defendant argues that it complied with its discovery obligations and points to general disclosures and certain excerpts from deposition testimony as support, that showing is not sufficient. United States v. Proctor, 356 U.S. 677, 682 (1958) (explaining that the purpose of modem discovery is to “make a trial less a game of blindman's buff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent”). As the Special Master noted, “it is not enough to have access to an opponent's witnesses and documents without knowing they relate to particular defenses.” July 25 R&R at 14 (internal citations omitted). This principle seems particularly pertinent here given that Defendant produced over two million documents in discovery. Accordingly, any misunderstanding on Defendant's part does not relieve it of its discovery obligations.

As for Defendant's third argument, the Court finds that Defendants have not met their burden of showing that any failure to disclose was harmless or substantially justified. See Mitchell v. Ford Motor Co., 318 Fed. Appx. 821, 824 (11th Cir. 2009) (“The burden of establishing that a failure to disclose was substantially justified or harmless rests on the nondisclosing party.”). In this case, the briefings and statements made during the February hearing indicate that these late disclosures prejudiced Plaintiff by denying it the opportunity to properly oppose Defendant's defenses. Although Plaintiff deposed certain key witnesses, “without knowing [Defendant's theory of defense], it could not prepare itself to meet it at summary judgment or at trial.” July 25 R&R at 14. Defendant's claim that Plaintiff already possessed all the information it needed to address Defendant's defenses is similarly unpersuasive. As noted above, isolated, unidentified documents are not equivalent to putting your opponent on notice—especially when there are voluminous records. See Sexton v. United States, No. 6:99CV102ORL3ABI22, 2001 WL 649445, at *1 (M.D. Fla. Apr. 12, 2001) (“The purpose of discovery is to obtain the disclosure of all relevant information so that disputed issues are resolved fairly and justly in the light of a full and accurate understanding of the facts.”) (internal citations omitted).

Finally, as Judge Birch noted, late disclosure warrants exclusion. See FED. R. CIV. P. 37(c)(1) (prohibiting use of improperly disclosed information unless the failure was substantially justified or harmless). This case has been pending for almost five (5) years, and allowing additional limited discovery seems needlessly ineffective and costly. Cf. Williams v. Marinemax of Cent. Fla. LLC, 773 F. Supp. 2d 1265, 1267 (N.D. Fla. 2011) (“A continuance is hardly an effective sanction in this instance since it places the more pronounced burden not on the guilty party but on the Court and the opposing party.”). Thus, the Court declines to reopen discovery at this late stage. See United States v. Undetermined Quantities of All Articles of Finished & In-Process Foods, 936 F.3d 1341, 1351 (11th Cir. 2019) (finding that the district court did not abuse its discretion when it declined to reopen discovery at a late stage in litigation).

In sum, the Court finds Defendant's arguments unpersuasive. Accordingly, the Court overrules Defendant's objections to the July 25 R&R and adopts the R&R as the opinion of this Court.

C. August 7 R&R

Having adopted the July 25 R&R, the Court now turns to Defendant's objections regarding the August 7 R&R addressing Defendant's Motion for Summary Judgment. [Doc. 603]. In the August 7 R&R, Judge Birch determined that there were genuine issues of material facts on Defendant's sole remaining defense—whether the information claimed by Plaintiff as trade secrets were subject to reasonable efforts to maintain its secrecy. August 7 R&R at 1, 7. Consequently, Judge Birch determined that summary judgment was inappropriate. Id. at 18–19.

*6 Defendant objects, arguing the undisputed facts demonstrate that Plaintiff did not use reasonable efforts to protect its claimed trade secrets. [Doc. 619 at 5]. Thus, Defendant contends it is entitled to summary judgment or alternatively, that the Court should remand to the Special Master for reconsideration. [Doc. 619 at 24]. Because Defendant objects to a legal conclusion, the Court's review is de novo. FED. R. CIV. P. 53(f)(3)–(5).

The Court begins by setting forth the relevant legal standards before addressing Defendant's objections.

Summary judgment is appropriate only if the record shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). A factual dispute is genuine if there is sufficient evidence for a reasonable jury to return a verdict in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is material if resolving the factual issue might change the suit's outcome pursuant to the governing law. Id. The motion should be granted only if no rational fact finder could return a verdict in favor of the non-moving party. Id. at 249.

When ruling on a motion for summary judgment, the Court must view all the evidence in the record in the light most favorable to the non-moving party and resolve all factual disputes in the non-moving party's favor. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). The moving party need not positively disprove the opponent's case; rather, the moving party must establish the lack of evidentiary support for the non-moving party's position. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving party meets this initial burden, to survive summary judgment, the non-moving party must then present competent evidence beyond the pleadings to show that there is a genuine issue for trial. Id. at 324–26. The essential question is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251–52.

Plaintiff's sole claim is that Defendant violated the GTSA by misappropriating its trade secrets. “A claim for misappropriation of trade secrets under the Georgia Trade Secrets Act requires a plaintiff to prove that ‘(1) it had a trade secret and (2) the opposing party misappropriated the trade secret.’ ” Capital Asset Research Corp. v. Finnegan, 160 F.3d 683, 685 (11th Cir. 1998) (quoting Camp Creek Hosp. Inns, Inc. v. Sheraton Franchise Corp., 139 F.3d 1396, 1410 (11th Cir. 1998)). Whether an item constitutes a trade secret is a question of fact. Insight Tech., Inc. v. FreightCheck, LLC, 633 S.E.2d 373, 380 (Ga. Ct. App. 2006).

To prove the first element, the existence of a trade secret, a plaintiff must show that:

Diamond Power Int'l, Inc. v. Davidson, 540 F. Supp. 2d 1322, 1332 (N.D. Ga. 2007) (internal marks and citation omitted). Simply put, a trade secret is: (1) information not commonly known or available to the public, (2) which derives economic value from not being generally known or ascertainable by proper means, and (3) was subject to reasonable efforts to maintain its secrecy. A claim for trade secrets fails if any of the elements are not shown. Id. (emphasis added).

*7 The Court now turns to Defendant's objections. Defendant claims that the R&R reaches the wrong conclusion because the Special Master did not consider Plaintiff's “demonstrated failures” to take “even the most basi[c] steps to protect what it claims are trade secrets.” [Doc. 619 at 6]. To support this claim, Defendant makes several arguments which are listed below.

In sum, Defendant claims these five arguments demonstrate that Plaintiff's actions were unreasonable as a matter of law. [Id. at 13, 16, 18]

The Court disagrees. After considering the Parties' arguments, and upon careful review, the Court finds that summary judgment is inappropriate. As a general matter, while Defendant may disagree with Plaintiff as to the reasonableness of its methods, “the determination of reasonableness ordinarily represents a question for the jury. Only in an extreme case can what is a reasonable precaution be determined as a matter of law, because the answer depends on a balancing of costs and benefits that will vary from case to case.” DS Waters of Am., Inc. v. Fontis Water, Inc., No. 1:10-CV-0335-SCJ, 2012 WL 12873771, at *27 (N.D. Ga. Sept. 13, 2012), order amended on denial of reconsideration, No. 1:10-CV-0335-SCJ, 2012 WL 12873620 (N.D. Ga. Dec. 4, 2012) (internal marks and citations omitted). Additionally, and more specifically, the Court finds that for each of Defendant's arguments there is conflicting evidence or law that is material in determining what constitutes reasonable efforts to maintain secrecy.

Beginning with Defendant's first argument regarding Plaintiff's failure to mark documents as “confidential,” the Court notes that absolute secrecy is not required. See Tronitec, Inc. v. Shealy, 547 S.E.2d 749, 757 (Ga. Ct. App. 2001) (“The general view is that absolute secrecy is not required for information to retain trade secret status.”). The failure to mark documents alone is not enough. See id. Rather, the determination of what constitutes reasonable efforts is a fact-sensitive inquiry based on reasonableness under the circumstances. See OCGA § 10-1-761(4); Insight Tech, 633 S.E.2d at 380 (“Whether a particular type of information constitutes a trade secret is a question of fact.”) (citation and punctuation omitted); Equifax Servs. v. Examination Mgmt. Servs., 453 S.E.2d 488, 493 (Ga. Ct. App. 1994) (holding that the signing of a confidentiality agreement in that case did not alone demonstrate reasonable efforts to maintain the secrecy of information but explaining that in some circumstances, requiring employees to sign confidentiality agreements may be enough).

*8 Defendant's second argument regarding lack of NDAs and “sunset clauses” is similarly incorrect. Contrary to Defendant's assertion, Plaintiff contends it “had a policy of requiring all new employees to sign NDAs,” and Plaintiff produced more than 400 of such employment agreements as evidence. [Doc. 632 at 11]. Moreover, “confidentiality agreements are not required to gamer protection under the GTSA.” Candy Craft Creations, LLC v. Gartner, No. CV 212-091, 2015 WL 1541507, at *22 (S.D. Ga. Mar. 31, 2015). Finally, regarding Defendant's argument about “sunset clauses,” Plaintiff contends that Defendants are mistaken because all the contractual confidentiality obligations in question “expressly survive termination of the contracts.” [Doc. 632 at 13].

Defendant's third argument is also misleading. While Plaintiff allowed former employees to keep certain information, Plaintiff contends that these former employees had “continuing work obligations” that justified the retention of information. [Id. at 17]. Furthermore, these employees “acknowledged that they had ongoing duties of confidentiality.” [Id.]

As for Defendant's remaining arguments, the Court finds the record is replete with numerous disputes over genuine issues of material fact. Plaintiff supplied evidence that it had document control policies in place, communicated confidentiality obligations to employees, provided trainings, and maintained reasonable efforts to maintain secrecy after 2008. [See Docs. 442, 448-11, 448-37, 528-1, 529-11, 529-13, 531-4]. Plaintiff argues that these measures were sufficient to demonstrate that it took reasonable steps to maintain secrecy. [Doc. 632 at 5-6, 8–10]. Defendant disagrees. As the Eleventh Circuit explained, in these circumstances, it is the function of jury to make credibility determinations, weigh evidence, and draw inferences from the facts. See Graham v. State Farm Mut. Ins. Co., 193 F.3d 1274, 1282 (11th Cir. 1999). Thus, the Court overrules Defendant's objections. [Doc. 619].

D. Summary

In sum, the Court finds Defendant's arguments unpersuasive and overrules Defendant's objections to the July 25 R&R and the August 7 R&R. [Docs. 611, 619]. Consequently, the Court adopts the July 25 R&R [Doc. 598] and the August 7 R&R [Doc. 603] as the opinions of this Court, grants Plaintiff's motion to exclude [Doc. 526], and denies Defendant's motion for summary judgment. [Doc. 446].

IV. Conclusion

For the foregoing reasons, the Court OVERRULES Defendant's Objections to the July 25 R&R [Doc. 611] and OVERRULES Defendant's Objections to the August 7 R&R. [Doc. 619]. Accordingly, the Court ADOPTS the July 25 R&R [Doc. 598] and the August 7 R&R [Doc. 603] as the opinions of this Court. For the reasons stated in the July 25 R&R, the Court GRANTS Plaintiff's “Motion to Exclude Defendant Universal Alloy Corporation's Defenses and Evidence” [Doc. 526] and excludes Defendant's statute of limitations defense and its reverse engineering defense. For the reasons stated in the August 7 R&R, the Court DENIES Defendant's Motion for Summary Judgment. [Doc. 446]. Further, the Court GRANTS Defendant's “Motion for Leave to File Corrected Brief in Support of Motion for Summary Judgment, Statement of Material Facts as to Which There is No Genuine Issue, and Exhibit Index.” [Doc. 454]. The Court DENIES AS MOOT Defendant's “Motion for Amended Scheduling Order or, in the Alternative, a Continuance.” [Doc 641].

Finally, because there are no other pretrial matters presently pending in this case, the Court DIRECTS the Parties to confer and submit a proposed consolidated pretrial order within thirty (30) days from the date of entry of this order.[5] See LR 16.4, NDGa.

*9 SO ORDERED, this 30th day of March, 2020.

On July 27, 2018, Defendant also filed a “Motion for Leave to File Corrected Brief in Support of Motion for Summary Judgment, Statement of Material Facts as to Which There is No Genuine Issue, and Exhibit Index.” [Doc. 454]. Noting no opposition, and for good cause shown, the Court grants Defendant's motion.

Also pending is Defendant's “Motion for Amended Scheduling Order, or, in the Alternative, a Continuance.” [Doc. 641], Given the time that has passed, Defendant's motion is denied as moot with leave to renew.

“Late disclosure of information, witnesses, and theories—particularly after the deposition phase of discovery—undermines the purposes of discovery and warrants exclusion at summary judgment or trial.” July 25 R&R at 4 (citations omitted).

Here, Defendant is quoting Plaintiff's “Opposition to UAC's Motion to Compel. [See Doc. 370].

The Court is aware that the Special Master's September 25, 2019 R&R pertaining to attorney's fees and expenses is currently pending. [See Doc. 635]. However, because the Court's ruling regarding that R&R is separate from any trial matters, the Court retains the above instruction concerning the Parties' consolidated pretrial order.