Opinion
Case No. 2D19-3607
07-08-2020
SAMSUNG SDI CO., LTD., Petitioner, v. Scott HILDRETH and Jessica Hildreth, Respondents.
David L. Luck, Todd R. Ehrenreich, Alexander Fumagali and Jenna L. Fischman of Lewis Brisbois Bisgaard & Smith, LLP, Coral Gables, for Petitioner. Joshua D. Moore and Harris I. Yegelwel of Morgan & Morgan, P.A., Orlando, for Respondents.
David L. Luck, Todd R. Ehrenreich, Alexander Fumagali and Jenna L. Fischman of Lewis Brisbois Bisgaard & Smith, LLP, Coral Gables, for Petitioner.
Joshua D. Moore and Harris I. Yegelwel of Morgan & Morgan, P.A., Orlando, for Respondents.
MORRIS, Judge.
Samsung SDI Co., Ltd., petitions for a writ of certiorari to quash the trial court's order that adopted a magistrate's findings and granted in part and denied in part Samsung's motion for protective order in the underlying products liability action brought by Scott and Jessica Hildreth. We conclude that the magistrate failed to properly analyze whether the Hildreths met their burden of proving the necessity for the inclusion of a sharing provision in the protective order, instead improperly shifting the burden to Samsung to establish good cause for why a sharing provision was unnecessary, and that, as a result, the trial court departed from the essential requirements of law in adopting the magistrate's recommendations on this issue. We also conclude that the trial court departed from the essential requirements of the law by adopting the magistrate's recommended order and merely striking through findings which both parties agreed were improperly included, but failing to account for the fact that the remaining substance of the order was based, at least in part, on the improper findings. Because both of these errors will result in irreparable harm to Samsung, we grant the petition for writ of certiorari.
BACKGROUND
The underlying action arose due to injuries that Scott Hildreth received while using a Samsung battery in conjunction with a vaping device. During the course of the litigation, the Hildreths sought discovery materials from Samsung which Samsung alleged implicated its trade secrets and/or confidential business information. Thus Samsung sought a protective order to which the Hildreths agreed. However, the Hildreths wanted to include a sharing provision in the protective order that would allow them to share the discovery information with certain lawyers who were representing similarly situated plaintiffs. Samsung objected to the inclusion of a sharing provision, relying on Wal-Mart Stores East, L.P. v. Endicott, 81 So. 3d 486 (Fla. 1st DCA 2011), and Cordis Corp. v. O'Shea, 988 So. 2d 1163 (Fla. 4th DCA 2008), and arguing that before sharing any confidential information, a plaintiff must demonstrate the relevance of protected discovery materials to the collateral proceedings and the discoverability of the materials under the law of the collateral jurisdiction.
The matter was referred to a magistrate who determined that while a protective order should be granted, it should contain a sharing provision as requested by the Hildreths. The magistrate thus recommended a denial of Samsung's motion for protective order, while allowing for the dissemination of the allegedly protected material under limited circumstances to lawyers who had currently pending litigation against Samsung involving the same batteries and similar facts. Throughout the order, the magistrate referred to public policy considerations and conduct by corporations that results in injuries nationwide, and the order contained an explicit finding that Samsung could not deny that the use of its battery in conjunction with a vaping device was a public hazard. The magistrate distinguished Endicott and Cordis by noting that they involved disclosure of information to either unknown collateral litigants or lawyers who were not involved in collateral litigation and by noting that the plaintiffs in those cases failed to prove a compelling need for sharing the information. However, the magistrate did not address the concern voiced in both the Endicott and Cordis opinions that a plaintiff must establish the relevancy of the protected discovery and its discoverability within the collateral jurisdiction prior to disclosure.
Samsung filed exceptions to the recommended order and asked the trial court to adopt its proposed protective order rather than the Hildreths' proposed order. The trial court then conducted a hearing, at which the Hildreths conceded that the magistrate's determination that Samsung's battery that was at issue was a "public hazard" under Florida's Sunshine in Litigation Act, § 69.081, Florida Statutes (2019), was erroneous due to the magistrate's failure to conduct an evidentiary hearing. However, the Hildreths' counsel asserted that the trial court could just strike through the references to "public hazard" and/or the Sunshine in Litigation Act while still adopting the remainder of the magistrate's recommended order.
Ultimately, the trial court adopted the majority of the magistrate's recommended order. While the trial court granted Samsung's exceptions regarding the public hazard finding and struck through various paragraphs either in whole or in part, it adopted the remainder of the magistrate's recommended order, thereby denying the rest of Samsung's exceptions and including the sharing provision in the protective order.
ANALYSIS
In order to obtain certiorari review over this nonfinal and nonappealable order, Samsung is required to demonstrate that the order departed from the essential requirements of the law resulting in irreparable harm. See Endicott, 81 So. 3d at 488 ; Cordis, 988 So. 2d at 1165. Certiorari is the appropriate review mechanism for orders compelling production of trade secrets or other confidential information. Cordis, 988 So. 2d at 1165.
Release of the type of protected information involved in this case can result in irreparable harm because it is "cat out of the bag" discovery, meaning that once it has been released, Samsung's privacy or trade secret interest has been invaded and such harm cannot be remedied on direct appeal. Id. at 1166. Thus our focus is on whether the trial court, in adopting the magistrate's recommendation to include the sharing provision, departed from the essential requirements of the law. We conclude that it did.
We first note that while the parties cite numerous federal cases that have either permitted or rejected sharing provisions in protective orders, both the petitioner and respondents have focused most of their argument on the Endicott and Cordis decisions as they are the only Florida appellate court cases to directly address the requirements for inclusion of sharing provisions. We are not persuaded that any of the federal cases provide a firmer foundation for our decision especially in light of the seemingly conflicting opinions among the federal courts as to whether sharing provisions are favored or discouraged. Thus our disposition is guided by the approach taken by the First and Fourth Districts in Endicott and Cordis, respectively, regarding the requirements for inclusion of sharing provisions.
Ostensibly, both Endicott and Cordis have some factual distinctions from this case. For instance, in Cordis, the petitioner challenged disclosure of discovery to lawyers who were not part of the underlying action and who did not represent a litigant in pending collateral litigation. 988 So. 2d at 1166. Thus the petitioner argued that such lawyers did not have a legitimate interest in obtaining the discovery. Id. The Fourth District acknowledged that there were competing interests at play in discovery requests and that "[a] party seeking confidential information must show a need for that information which outweighs the opposing party's need to keep the information confidential." Id. (citing Higgs v. Kampgrounds of Am., 526 So. 2d 980, 981 (Fla. 3d DCA 1988) ). And in Endicott, the petitioner challenged disclosure of discovery to unnamed collateral litigants whose need to view the discovery was only proffered through the assertion of the respondent's counsel. 81 So. 3d at 488, 490. The First District explained that when there is no established collateral litigant, it is impossible to balance the need to protect the confidential material with the need of the person seeking to discover it. Id. at 490.
In this case, the Hildreths want to share the discovery materials with lawyers involved in pending collateral litigation. Thus, to that extent, this case is factually distinguishable from both Endicott and Cordis. But neither the Fourth nor the First Districts' analyses were based solely on the fact that the collateral litigants were unknown or did not have currently pending litigation. Rather, in Cordis, the Fourth District cited Foltz v. State Farm Mutual Automobile Insurance Co., 331 F.3d 1122 (9th Cir. 2003), for the proposition that while courts sometimes favor access to discovery materials for parties engaged in collateral litigation, such access should not be automatically granted but rather should be based on whether a collateral litigant has established "relevance of the protected discovery to the collateral proceedings and its discoverability therein." Cordis, 988 So. 2d at 1167. The Fourth District explained that such a procedure would prevent collateral litigants in states with narrower discovery laws from evading their state law discovery requirements by merely obtaining the protected discovery from a Florida lawyer or court. Id. The Fourth District further explained that even if a party receiving the protected discovery signed an agreement to abide by a Florida court order, Florida judicial resources would be strained because a Florida trial judge would become "a lightning rod for [discovery] enforcement disputes with parties from all over the country." Id. at 1167-68. And in Endicott, the First District relied heavily on the Cordis decision for these same propositions, ultimately concluding that certiorari relief was appropriate to quash the orders under review due to the dangers of having foreign litigants circumvent their own stricter discovery laws by relying on the sharing provisions and of trial courts having to handle discovery enforcement disputes for foreign jurisdictions. Endicott, 81 So. 3d at 490.
We are not unmindful that in this case, the Hildreths presented affidavits from lawyers representing collateral litigants who had pending cases against Samsung for injuries allegedly incurred while the collateral litigants used the same type of Samsung battery in conjunction with a vaping device. We note this point because in Cordis, the Fourth District emphasized that case did not involve a plaintiff's lawyer "seeking to disseminate discovery ... in order to facilitate preparation of other pending cases involving the same company and [product], such that an argument could be made that dissemination would facilitate case preparation and avoid wasteful duplication of discovery." 988 So. 2d at 1168. Thus the court concluded that the plaintiff failed to show a need for the sharing provision at issue. Id. But while it could be argued that the Hildreths demonstrated relevancy by establishing that they wanted to share discovery with identifiable collateral litigants involved in pending litigation with the same company and product, that is not enough by itself to establish that a sharing provision is necessary. As both the Cordis and Endicott opinions explained, there remains the issue of discoverability in the foreign jurisdiction. And on that issue, the Hildreths proffered nothing to establish whether the protected materials in this case would be discoverable in the jurisdictions of the collateral litigants with whom they would share the protected materials. Nor did any of the collateral litigants' lawyers intervene in this action to establish their need for the protected materials which necessarily includes consideration of whether the materials would be discoverable in the collateral litigants' jurisdictions, a point that was made in Cordis. 988 So. 2d at 1168.
The Hildreths argue in this proceeding that discoverability was established via the affidavits they filed. They then recite general propositions of law regarding relevancy and admissibility as it relates to discoverability. Finally, they assert that "[t]he threshold showing of relevancy (and therefore at least discoverability) of information relating to Samsung's exploding 18650 lithium ion batteries is manifest" based on the magistrate's conclusion that the collateral litigants were engaged in pending similar litigation involving the same product. But these conclusory assertions do nothing to prove the discoverability of the protected materials in foreign jurisdictions.
While we do not hold that intervention is required, had the collateral litigants intervened, they presumably could have provided their own explanation on the discoverability in their respective jurisdictions, a matter for which they would be better suited than the Hildreths. Thus, their failure to do so is at least a factor that should be considered in determining whether the Hildreths met their burden.
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If all that was required for a sharing provision to be included in a protective order was for a plaintiff to demonstrate that the discovery would be disseminated to collateral litigants in pending actions against the same defendant and involving the same product, then Samsung's petition for writ of certiorari could be denied. But that argument completely overlooks the discussion in Cordis, and later repeated in Endicott, about the necessity for proof of relevance of the protected discovery to the collateral litigation as well as the discoverability of the protected materials in the collateral jurisdiction. Imposing such a requirement necessarily helps to ensure that collateral litigants are not merely trying to evade their own state's discovery laws while at the same time providing a Florida trial court a basis on which to rule should a discovery dispute later arise. See Cordis, 988 So. 2d at 1167-68 (discussing how requirements prevent subversion of other states' discovery laws and explaining that allowing unlimited discovery could force Florida trial courts to investigate discovery disputes and enforcement efforts in other states thereby taxing Florida judicial resources); see also Endicott, 81 So. 3d at 489.
Of course, beyond the fact that the Hildreths failed to make any showing regarding the discoverability of the protected materials in the collateral litigants' jurisdictions is the fact that the magistrate's order completely failed to include any finding that the Hildreths established that the protected materials were relevant to the collateral litigation or any finding relating to the discoverability of such material in the collateral litigants' jurisdictions. Instead, the magistrate, without any citation to legal authority, concluded that Samsung failed to prove good cause to exclude the sharing provision. But as we have explained, both the First and Fourth Districts place the burden of proving a need for a sharing provision—via demonstrating proof of relevancy to collateral litigation and discoverability in the foreign jurisdiction—on the party seeking the sharing provision. Thus to the extent that the magistrate shifted the burden onto Samsung to disprove the Hildreths' need for the sharing provision, that was in error.
Furthermore, while the magistrate included in his findings of fact a discussion noting that the collateral litigants were known in this case and involved in pending similar litigation, thereby making the protective order narrow in scope, the actual text of the protective order (incorporated within the magistrate's recommended order) does not read so restrictively. Rather, the text of the protective order provides in relevant part that the protected materials may be shared with
[a]ttorneys involved in active pending litigation against Samsung SDI Co., Ltd., or its wholly owned subsidiary Samsung SDI America, Inc.[,] in which it is alleged that consumers were injured or killed in fires or explosions allegedly caused by a defect or unreasonably dangerous condition in Samsung SDI 18650 lithium-ion batteries during the use, or storage for use, of such battery with an e-cigarette or personal vaping device.
Thus to the extent that the protective order can be construed to mean that the protected materials may be shared with unknown lawyers for collateral litigants beyond those named lawyers who submitted affidavits in support of the Hildreths' sharing provision, this case is more factually on point with Endicott, and it cannot be said that the Hildreths adequately established their need to share the protected materials with such unknown collateral litigants and/or their lawyers.
Thus for all these reasons, by adopting this portion of the magistrate's recommended order, the trial court departed from the essential requirements of the law resulting in irreparable harm to Samsung.
We likewise conclude that the trial court committed another departure from the essential requirements of the law by adopting the magistrate's recommended order, even though the trial court properly struck a few paragraphs and provisions that impermissibly referred to Samsung's battery as a "public hazard" or referred explicitly to the Sunshine in Litigation Act. The Hildreths conceded below that the public hazard finding was erroneous because no evidentiary hearing had been conducted. See E.I. DuPont de Nemours & Co. v. Lambert, 654 So. 2d 226, 227-28 (Fla. 2d DCA 1995) (noting the necessity for a hearing on the merits of Sunshine in Litigation Act issues). Furthermore, the Sunshine in Litigation Act issue was beyond the scope of the order of referral to the magistrate. See Lackner v. Cent. Fla. Invs., Inc., 14 So. 3d 1050, 1054 (Fla. 5th DCA 2009) (explaining that any actions taken by a magistrate that are beyond the scope of referral are nullities); see also Koenig v. Watsco, Inc., 261 So. 2d 851, 854 (Fla. 3d DCA 1972). Thus any findings related to the Sunshine in Litigation Act or "public hazard" label are nullities.
While the trial court attempted to rectify the problem by removing specific references to that issue, the problem here is that the remaining substance of the order was based, at least in part, on the public hazard findings. For example, in paragraph four of the recommended order, the magistrate referred to situations where a company's product continues to injure customers not just in Florida, but nationwide. In other paragraphs, there were references to Samsung attempting to shield itself from liability and the necessity for a sharing provision to "level[ ] the playing field by giving the economically challenged underdog a fighting chance." Finally, and perhaps most glaringly, paragraphs thirteen, seventeen, eighteen, and nineteen not only discuss how similar litigation is pending against Samsung throughout the country, but in paragraph eighteen, there is a finding that the magistrate "was particularly persuaded by the pervasiveness of national dangers posed by [Samsung's] 18650 cylindrical rechargeable lithium-ion batteries" in determining that a sharing provision should be included. (Emphasis added.) Thus it is clear that the magistrate's recommended order was based at least in part—if not almost entirely—on its erroneous public hazard findings. And the attempt to excise a few explicit references to that finding or to the Sunshine in Litigation Act did not transform the order into an acceptable one. Thus even if the sharing provision had been appropriately included, the adoption of the remaining portion of the magistrate's recommended order would have constituted a departure from the essential requirements of the law resulting in irreparable harm to Samsung.
Accordingly, we grant the petition for writ of certiorari and quash the order under review.
NORTHCUTT and ROTHSTEIN-YOUAKIM, JJ., Concur.