*1 Before the Court is Defendants Jeffrey Gruber, Renaissance Sales South LLC (“Renaissance”), Terry Gruber and Jessica Gruber's Joint Motion to Compel Plaintiff to Review, Re-Designate, and Produce Documents. ECF Doc. 170. Defendants Avenel Financial Group Inc., Norman Waid and Mitchell Giles joined in support of the motion. ECF Docs. 171, 172, 175. Plaintiff Water Tree Ventures LLC (“Water Tree”) responded in opposition (ECF Doc. 179), and the Grubers and Renaissance submitted a reply (ECF Doc. 189). After holding a telephonic hearing on the motion on April 22, 2019, the Court concludes the motion should be granted.

In this action, Plaintiff alleges its sales consultants and competitors misappropriated Plaintiff's confidential information and trade secrets to gain an unfair competitive advantage in the market for prescription drug benefit cards. In anticipation of discovery, the parties negotiated a Confidentiality Stipulation (ECF Doc. 170-2) designed to protect all parties' sensitive and proprietary information from unnecessary disclosure. The Stipulation states that any party may designate documents produced during discovery as “attorneys' eyes only” (“AEO”) if the documents “contain trade secrets, proprietary business information, competitively sensitive information, or other information the disclosure of which would, in the good faith judgment of the party designating the material ..., be detrimental to the conduct of that party's business or the business of any of that party's customers or clients.” ECF Doc. 170-2, p. 4. Under the Stipulation, a party receiving documents marked AEO may challenge the designation by notifying the producing party in writing. If the producing party does not respond or agree to declassify the challenged documents within fourteen (14) days, the receiving party may file a motion asking the Court to conduct an in camera inspection to determine whether the documents should be declassified.

During discovery, several Defendants served Plaintiff with requests for production. In response to the requests, Plaintiff produced over 10,000 pages of documents, a portion of which were designated AEO. Defendants' counsel emailed Plaintiff's counsel on January 11, 2019, and requested that Plaintiff remove the AEO designations, change all AEO designations to “confidential” or provide an explanation as to why the AEO designation is needed for each document within seven (7) days.[1] ECF Doc. 170-1, p. 5-6. Attached to the email was a list of documents Defendants' counsel asserted were improperly designated AEO, as well as copies of some of those documents.

Plaintiff's counsel responded to the email and conceded “[i]t is possible there was a mistake or two” with the AEO designations. ECF Doc. 170-1, p. 4. Plaintiff's counsel also asked Defendants' counsel to identify the specific documents they did not believe warranted the AEO designation. ECF Doc. 170-1, p. 4. Defendants' counsel resent the list of 1,833 documents they believed were inappropriately designated as AEO. ECF Doc. 170-1, p. 3. Within thirteen (13) minutes of receiving the list, Plaintiff's counsel responded, stating she would “take a look and get back to [defendants' counsel] in detail[,]” but “[f]rom [her] brief review ..., [she was] likely going to invite [counsel] to file a motion with the court on most of these.” ECF Doc. 170-1, p. 2. Plaintiff's counsel added, “Your clients are currently even now competing with ours and the documents on this list contain some of the very trade secrets we allege your clients used to unfairly compete.” Id.

*2 On January 25, 2019, the parties' attorneys discussed the AEO designations in person following a deposition. Plaintiff's counsel requested an additional week to review the designations and determine if any could be removed. By February 6, 2019, the date Defendants filed the subject motion, Plaintiff's counsel had not responded to Defendants' counsel, re-designated any documents or provided any explanation for the AEO designations.

After Defendants filed the motion, the parties engaged in additional discussions regarding the AEO designations. Plaintiff agreed to remove the AEO designation for several hundred documents.[2] ECF Doc. 179-1, p. 76-118. Plaintiff's response to the motion argues it is moot in light of Plaintiff's decision to review and remove the AEO designation from some of the challenged documents. Plaintiff maintains the remaining documents designated as AEO “contain information relating to Water Tree's business and marketing strategy[,] customer addresses, contact information and historical Water Tree prescription discount card use[,] as well as Water Tree's historical prescription discount drug pricing and marketing lists.” ECF Doc. 179, p. 1-2. Plaintiff also argues Defendants have failed to explain why Defendants, rather than Defendants' counsel, need access to the AEO-designated documents or why limiting Defendants' access hinders the presentation of their case.

With the Court's permission, Defendants filed a reply to Plaintiff's response. ECF Doc. 189. Defendants claim between 400 and 500 documents are still inappropriately designated AEO. ECF Doc. 189, p. 2. During oral argument, Defendants represented the number of documents that remain in dispute is 440. Defendants assert the burden is on Plaintiff to justify each AEO designation, and Plaintiff has not done so. Defendants' counsel argue their failure to consult with their clients regarding the documents “handcuffs” their ability to adequately represent their clients.

*3 Layne Christensen Co. v. Purolite Co., 271 F.R.D. 240, 248-49 (D. Kan. 2010) (footnotes omitted).

Here, Plaintiff alleges Defendants misappropriated its trade secrets to gain an unfair competitive advantage in the market for prescription drug benefit cards. Plaintiff further contends that the “categories” of documents over which they seek AEO protection constitute the very trade secrets that were misappropriated. Those categories of documents include a Best Practices Toolkit used to train employees, historical pricing information and daily activity reports. According to Plaintiff, this information includes, for example, the names of Plaintiff's contacts at various pharmacies, information about those contacts and the frequency of visits. The time period covered in the documents at issue is 2015-2018 and the information may have been updated or changed since that time. Defendants do not agree that those categories of documents contain proprietary information or that they amount to trade secrets.

Since neither party provided any of the disputed documents to the Court, the undersigned cannot find that the documents contain confidential or proprietary information. Regardless, taking Plaintiffs' assertion as true – that the documents contain confidential commercial information, which conceivably could be helpful to its competitors – “[t]he mere presence of ‘trade secrets’ does not automatically entitle the producing party to an AEO protective order. The burden remains on the producing party to show that AEO protection is warranted.” Penn, LLC v. Prosper Bus. Dev. Corp., No. 2:10-cv-0993, 2012 WL 5948363, at *4 (S.D. Ohio Nov. 28, 2012) (citations omitted); see also MGP Ingredients, Inc. v. Mars, Inc., 245 F.R.D. 497, 500 (D. Kan. 2007) (“There is no absolute privilege for trade secrets and similar confidential information.”) (citation omitted).

That is where the Plaintiff's position falters. The Court agrees with Defendants' attorneys that their inability to consult with their clients about the very information Plaintiff contends was misappropriated prevents Defendants from properly defending against Plaintiff's allegations.[3] The attorneys note they need to show the documents to their clients to ascertain: (1) whether their clients have seen the documents before; (2) whether the documents contain information that is indeed confidential or a trade secret; (3) whether their clients used the information contained in the documents; (4) whether the information could have been or was obtained elsewhere; and (5) the significance of the documents in the context of the prescription drug benefit card market. See Defazio v. Hollister, Inc., No. CIV S-04-1358 DFL GGH, 2007 WL 2580633, at *2 (E.D. Cal. Sept. 5, 2007) (“[T]his is not a case where the clients have no real, meaningful input to make into tactical decisions, or where their input would not be helpful in determining the bona fides of the information submitted by defendants. Moreover, the very real specter of over-designation of “attorneys' eyes only” information exists, and plaintiffs should not be put in a position where they are essentially kept in the dark about the important facts of the case.”) (footnote omitted). It is unreasonable for Plaintiff to allege Defendants misappropriated information, then deny Defendants access to the information allegedly misappropriated. Cf. K & M Int'l, Inc. v. NDY Toy, L.L.C., No. 1:13CV771, 2015 WL 520969, at *5 (N.D. Ohio Feb. 9, 2015) (“Moreover, it strikes the Court as unreasonable to place K & M in a position where it is advised by counsel that Defendants may have infringed on hundreds of K & M's copyrights, but is not permitted to view photographs of any of these potentially infringing products.”). Furthermore, as Defendants' counsel noted during the hearing, denying Defendants access to AEO documents and allowing Plaintiff to remove the AEO designations on the eve of trial would be extremely prejudicial to the Defendants, as Defendants would not have had sufficient opportunity to prepare their clients on the documents.

*4 Additionally, the potential harm Plaintiff could experience from disclosure of the documents with the less restrictive confidential designation appears to be minimal. In its complaint, Plaintiff alleges it is entitled to damages due to Defendants' use of the information contained within the AEO documents. ECF Doc. 195; see also ECF Doc. 170-1, p. 2 (Plaintiff's counsel advising Defendants' counsel that “the documents on [the AEO] list contain some of the very trade secrets we allege your clients used to unfairly compete”). Thus, disclosure of that same information to Defendants during discovery does not appear to pose some new or significant risk of harm to Plaintiff. Cf. Nix v. Sword, 11 F. App'x 498, 500 (6th Cir. 2001) (“To show good cause, a movant for a protective order must articulate specific facts showing ‘clearly defined and serious injury’ resulting from the discovery sought and cannot rely on mere conclusory statements.”) (quoting Avirgan v. Hull, 118 F.R.D. 252, 254 (D.D.C. 1987)). In other words, at least some of the Defendants already had access to the information that Plaintiff is seeking to protect. Additionally, much of the information is several years old, which lessens its potential value to competitors.

Finally, according to the Confidentiality Stipulation, documents designated as confidential may “be utilized by the Receiving Party and its counsel only for purposes of this litigation and for no other purposes.” ECF Doc. 170-2, p. 7. Thus, attempts by the Defendants to use information designated as confidential for competitive advantage could subject them to liability or sanctions.

Based on the foregoing considerations, Defendants' motion to compel will be granted. See Gillespie v. Charter Commc'ns, 133 F. Supp. 3d 1195, 1201-02 (E.D. Mo. 2015) (“Requiring an ‘attorneys' eyes only’ designation is a drastic remedy given its impact on the party entitled to the information, in that it prevents a party from reviewing documents with counsel, and can hamper the ability of the party to present his or her case.”) (citations and quotations omitted). Plaintiff will be required to change the designation on the challenged documents from AEO to confidential.

Accordingly, it is ORDERED:

1. Defendants Jeffrey Gruber, Renaissance Sales South LLC (“Renaissance”), Terry Gruber and Jessica Gruber's Joint Motion to Compel Plaintiff to Review, Re-Designate, and Produce Documents (ECF Doc. 170) is GRANTED.

2. Plaintiff is directed to re-designate the documents currently designated as “attorney's eyes only” to “confidential,” as that term is used in the parties' Confidentiality Stipulation (ECF Doc. 170-2).

3. The Court is not insensitive to concerns over unfair competition and the distrust that the parties likely have for one another given the very nature of this suit. Thus, this ruling is without prejudice to the right of Plaintiff to seek to establish the necessity of an “attorney's eyes only” designation for a particular document. Such a request will be considered by the Court only if: (1) made within seven (7) days from the date of this order; (2) none of the Defendants previously had access to the document; (3) Plaintiff can establish the potential harm from disclosure with a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements; (4) the document contains information that will give the receiving party a current competitive advantage; (5) there are no other less burdensome limitations which can be placed on the production; and (6) the document is submitted for in camera inspection by the Court.

DONE AND ORDERED this 26th day of April, 2019.

Under the less restrictive confidential designation, the Defendants would be permitted to view the documents and discuss them with counsel.

Plaintiff states it conducted a limited review of the documents from Jessica and Terry Gruber's email accounts before production and designated those documents AEO to provide Defendants with the discovery before the depositions of Plaintiff's corporate representatives. ECF Doc. 179, p. 7. After Defendants challenged the AEO designations, however, Plaintiff did not promptly re-designate the documents; instead, Plaintiff waited until after Defendants filed their motion to compel. Plaintiff's removal of the AEO designation from hundreds of documents following the filing of Defendants' Motion raises a question as to whether Plaintiff's initial designation was in “good faith.”

For example, Defendants note: (1) Plaintiff alleges “the Gruber Defendants breached their contracts with Plaintiff by marketing prescription discount cards within certain territories designated by Plaintiff as being off-limits,” but “the documents that Plaintiff produced which purportedly define those territories were marked as AEO”; and (2) “Plaintiff alleges that the Gruber Defendants shared ‘confidential and trade secret’ documents with other third parties, [but] the Gruber Defendants are not allowed to review the very same documents they are now being accused of sharing.” ECF Doc. 189, p. 7.