1st DCA Strikes Significant Blow to Plaintiffs Regarding Sharing Provisions in Wal-Mart v Endicott

In a recent opinion, the Florida First District Court of Appeal (1st DCA) has struck a significant blow to plaintiff's lawyers who routinely demand that sharing provisions be placed in Protective Orderswhich govern the dissemination of a corporate defendant's confidential documents.Essentially, the Court held that a sharing provision which merely identifies the type of case in which sharing is permitted is not enough.Rather, the other litigants with whom sharing is proposed must be identified by name.Moreover, it appears that these other litigants must also personally appear in the trial court and argue that not allowing them access to the documents through a sharing provision will conceal a fraud or otherwise work an injustice upon them.Without question, theFirst DCA has raised the bar which plaintiffs must meet to secure a sharing provision.The Court has also provided corporate defendants sued outside of Florida with potential ammunition to argue for a higher bar in those jurisdictions as well.

The facts ofWal-Mart v Endicott, 81 So.3d 486 (Fla 1st DCA December 9,2011),rehearing denied, January 31, 2012, are straightforward. Plaintiff sued Wal-Mart for alleged negligence in filling a prescription. The parties began the usual negotiations over the terms of a protective order to govern Wal-Mart's confidential information. The stickler was a sharing provision-Plaintiff demanded a sharing agreement, while Wal-Mart did not wish to agree to one. A hearing was held and the trial court agreed with Plaintiff, ordering a sharing provision which permitted the Plaintiff to share confidential documents with litigants involved in other cases in which it was claimed Wal-Mart employees had committed prescription errors.

Wal-Mart petitioned for a writ of certiorari, arguing that the provision allowing dissemination of Wal-Mart's confidential material to non-party litigants departed from the essential requirements of the law.

The Florida 1st DCA strongly agreed with Wal-Martfor two reasons. First, the Court found critical the fact that the sharing provision at issue did not specifically identify the collateral litigants. The Court stated that to an extent a sharing provision is used, it must be both narrowly tailored in scope and balanced with the need to protect confidential materials with the need of known, collateral litigants to view the discovery. This balancing analysis clearly cannot be done when the identity of collateral litigants is unknown. Also, without identification of these other litigants, there exists a danger that foreign litigants could circumvent stricter discovery laws in other jurisdictions and, perhaps even more significantly, that the Florida trial courts could be required to handle enforcement disputes for other jurisdictions. This was simply not a risk the 1st DCA was willing to allow.

Second, the Court found that even if the collateral litigants were appropriately identified, the provision was still improper. The Court cited Florida Statute 90.506, which provides that the holder of a trade secret has the privilegeof preventinganother person from disclosing the trade secret as long as allowance of the privilege will not conceal a fraud or otherwise work injustice. Because the sharing provision at issue allowed dissemination of Wal-Mart's discovery material to third parties who had not made a showing that the trade secrets concealed a fraud or worked an injustice, the Court found that sharing provision, and those like it, to be "per se unlawful."

Because Wal-Mart would suffer irreparable harm once the confidential information was disclosed to these unknown third parties, the 1st DCA quashed the Order in its entirety.

The potential impact of this opinion for the future of sharing provisions is profound. It is now not enough for a plaintiff to simply demand "reasonable" sharing with litigants involved in "substantially similar" litigation involving a "substantially similar" product. At minimum, the other litigants must not only be identified by name, but must, it seems, personally appear in the trial court to try to make a showing that not allowing them access to these documents through a sharing provision will either conceal a fraud or otherwise work an injustice on them. This is a high hurdle to jump, and it is likely many plaintiff's lawyers, when confronted withWal-Mart v Endicott, will be far less inclined to push for a sharing provision.The end result should be fewer sharing provisions and more certain protection for a corporate defendant's confidential, trade secretinformation.

The logic of this opinion is compelling.No court wants to have to maintain control over collateral litigants and, in particular, collateral litigants that bring with them the need to oversee their handling of thousands of pages of confidential documents.This focus on the impact of a sharing provision on the Court is a difference in perspective from how corporate defendants normally resist proposed sharing provisions.The primary argument often advanced is centered on the corporate defendant’s concerns over the security of its confidential materials.InEndicott, the Court seemed at least as concerned with the burden these provisions place on the judiciary.Approaching the issue from this perspective provides another persuasive argument with which defendants may make in opposition to proposed sharing provisions.

The impact ofWal-Mart v. Endicotthas potential to extend beyond the borders of Florida.Therefore, while not binding in other jurisdictions, corporate defendants should consider citingEndicottfor its persuasive value considering that the 1st DCA’s reasoning should be appealing to courts regardless of jurisdiction.