In IDC Financial Publishing Inc. v. BondDesk Group LLC, et al., Case No. 15-cv-1085 (PP), 2017 U.S. Dist. LEXIS 177626 (Oct. 26, 2017), a case involving allegations of copyright infringement, the District Court for the Eastern District of Wisconsin granted the Plaintiff’s motion to compel the production of over 600 documents previously produced by Defendant TradeWeb Markets LLC d/b/a TradeWeb Direct (“TradeWeb”) with extensive redactions.

The Defendants argued that the redactions were necessary because the redacted information was irrelevant to the instant dispute and “…the parameters of this case [did] not allow the plaintiffs to peruse and explore all other aspects of the TradeWeb’s contractual and financial relationships with its customers.” Defendant relied on In re Takata Airbag Prods. Liab. Litig., No. MDL No. 2599, 2016 U.S. Dist. LEXIS 46206 (S.D. Fla. Mar. 1, 2016), a products liability litigation related to the alleged defective manufacturing of airbags, wherein the court allowed the producing party to redact information pertaining to several categories, including, but not limited to, “pricing, profits, non-public financial information” and “marketing and business strategy.”  The court in In re Takata concluded that “[t]his decision balances the producing parties’ desire to protect their competitively sensitive information, with the importance of the issues at stake in this action and the importance of the discovery in resolving the issues at hand.”

The District Court in IDC Financial declined to follow In re Takata and rather followed Burris v. Versa Prods., Inc., No. 07-3938 (JRT/JJK), 2017 U.S. Dist. LEXIS 177626 (D. Minn. Feb. 19, 2013), a personal injury litigation regarding the use of a defective ladder manufactured and distributed by the defendants.  In Burris, the defendants redacted 51 pages of documents produced in response to the plaintiff’s Rule 34 requests on the basis that the documents contained “proprietary trade secrets” and that the redacted information was irrelevant or non-responsive to the dispute.  The court granted the plaintiffs’ request for the removal of the redactions because the defendants failed to demonstrate that the redacted information constituted trade secrets (noting that the defendants failed to demonstrate that the information was “not generally known or readily ascertainable,” “derive[d] independent economic value from secrecy,” or “[was] the subject of reasonable efforts to maintain its secrecy”).  Furthermore, the court reasoned that irrelevant or non-responsive redactions are not explicitly supported by the federal rules, and that the only bases for applying redactions are claims of privilege or work-product protection.  The court reasoned that by allowing such extensive redactions, the court would “improperly incentivize parties to hide as much as they dare.”

Following the reasoning of Burris, the District Court in IDC Financial concluded that the Defendants did not assert any privilege protecting the information they redacted, nor did they provide a compelling reason to allow such extensive redactions.  Notably, the District Court found that the Defendants made no effort to explain why the protective order in place did not adequately protect the Defendants, and that there was no “compelling reason to alter the traditionally broad discovery allowed by the rules” by allowing the Defendants to “unilaterally redact large portions of their responsive documents on relevance grounds.”

While factually dissimilar to the typical employment discrimination litigation, the decision in IDC Financial, if interpreted broadly by subsequent courts, may inhibit a corporate defendant’s ability to withhold confidential business information that may otherwise be irrelevant or non-responsive to the underlying employment dispute if the information is contained in other relevant and discoverable documents.  To avoid disclosure, corporate defendants should exercise caution in relying upon extensive redactions throughout the discovery process and should strive to maintain the secrecy of any confidential business, proprietary, or trade secret information prior to the commencement of any litigation.

Katerina Mantell also contributed to this post.