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Ctr. for Auto Safety v. Goodyear Tire & Rubber Co. - 11/26/2019

Arizona Court of Appeals Division One holds that a court may unseal or expose trade secrets to the public only in extraordinary circumstances.

Goodyear Tire became embroiled in years of litigation over the disclosure of certain internal documents.  In the course of litigation, the company produced many documents designated as “confidential” under protective orders and the court allowed certain information to be protected from disclosure and filed under seal.  Those matters eventually settled but, after the settlements, two parties sought to intervene in the state court action and challenge the confidentiality order.  During those arguments, Goodyear withdrew many of its confidentiality designations.  The court found that many of the remaining “confidential” documents were trade secrets but held that Goodyear’s interests did not outweigh the public’s need for access.  The court vacated the protective order and ordered the filings unsealed but then immediately stayed those orders pending appeal. 

The court of appeals reversed, finding that the trial court failed to apply the Rule 5.4’s standard for unsealing.  Under Rule 5.4, before a court may seal or unseal a filing it must issue a written order finding whether there is an overriding interest in sealing that overcomes the public’s right of access and a substantial probability of prejudice if not sealed.  Arizona’s Uniform Trade Secrets Act (“AUTSA”) defines trade secrets as information that derives economic value from remaining confidential.  Under the AUTSA, courts must preserve trade secrets through reasonable means including protective orders.  Parties seeking to unseal trade secrets have a heavy burden and courts may expose trade secrets only in extraordinary circumstances.  Those might include when the value from secrecy is lost or when the secrecy creates a significant threat to public welfare. 

Here the trial court found that the documents were trade secrets but did not apply the Rule 5.4 standard.  The trial court found that the value of the trade secrets had diminished but they remained trade secrets.  Unsealing such documents creates a particularized harm because it is tantamount to destroying trade secret protection.  The public was already generally aware of the alleged issues with the tires and so the trial court should have considered the incremental value on public safety of allowing additional disclosures of trade secrets.  The court of appeals reversed and remanded for application of the Rule 5.4 standard.

Judge Swann authored and Judges Morse and McMurdie concurred.

Posted by: Brian K. Mosley

Posted On: 1/3/2020