Antitrust Law Daily Wrap Up, ANTITRUST—DColo: Principal of Former DuPont Wholesaler Can View “Highly Confidential” DuPont Documents in Sherman Act Litigation, (Mar 6, 2013)

By Tobias J. Gillett, J.D., LLM.

In Sherman Act litigation, a principal for a former wholesaler for E.I. Du Pont de Nemours and Co. can have access to documents created prior to June 22, 2011 and previously designated for access only by attorneys in the litigation because the documents were highly relevant to the wholesaler’s case, because they no longer reflected DuPont’s present business methods, and because depriving the wholesaler of access to the documents would “seriously cripple” its case, the federal district court in Denver has ruled (JTS Choice Enterprises, Inc. v. E.I. Du Pont de Nemours and Co., March 4, 2013, Tafoya, K.).

According to JTS Choice Enterprises, Inc.’s complaint, Metro Paint Supplies, Inc. and Automotive Coatings & Equipment, LLC (collectively, “Metro/Ace”) and JTS were DuPont’s wholesalers, and were prohibited by DuPont from poaching clients from each other rather than DuPont’s competitors. DuPont allegedly began favoring Metro/Ace, giving it monetary incentives and permitting it to take JTS’s clients without permitting JTS to take Metro/Ace’s clients. JTS sold its assets to a DuPont competitor, National Coating and Supplies (NCS), and its principals entered into non-competition agreements with NCS.

JTS filed suit against DuPont and Metro/Ace, asserting claims for violation of the Sherman Act, among other claims. In preparing for discovery, the parties entered into a protective order, under which some documents were designated “Confidential,” which withheld them from public view, and others “Highly Confidential,” which in effect denied representatives of the companies access to the material or the ability to assist attorneys with the meaning of the document.

JTS objected to DuPont and Metro/Ace’s designation of a variety of documents as “Highly Confidential.” The court noted that the party seeking protection has the burden to establish that the material should be subject to protection. DuPont and Metro/Ace argued that allowing one of JTS’s principals to view the documents would put them “at a competitive disadvantage.” Dupont and Metro/Ace alleged that the principal was an employee of NCS, but the principal declared that his employment had ended in December 2011.

The court determined that denying the principal access to the documents “in light of his long association with DuPont and ownership of JTS, would seriously cripple [JTS’s] ability to present its case.” Documents predating June 2011 were considered “now outdated.” DuPont’s business model had begun to change in 2009, and documents that reflected DuPont’s prior method of conducting business were highly relevant to the case, but had “little to do with the current competitive practices of DuPont and its wholesalers.”

The court concluded that documents predating June 2011 should receive only the “Confidential” designation. However, documents post-dating June 2011 required more protection, because “NCS is an active competitor of DuPont and Metro/Ace,” and because “documents post-dating the sale of JTS to NCS are significantly less relevant to any issue in the case with the exception of damages.” Having reviewed submitted documents, the court set June 22, 2011 as the date to begin application of the “Highly Confidential” designation.

The case is Civil Action No. 11-cv-03142-WJM-KMT.

Attorneys: Lauren Elizabeth Mosse (Theodore W. Rosen, P.C.) for JTS Choice Enterprises, Inc. David Matthew Stauss (Ballard Spahr, LLP) for E.I. Du Pont de Nemours and Co. Meshach Yustine Rhoades (Kutak Rock, LLP) for Metro Paint Supplies, Inc.

Companies: JTS Choice Enterprises, Inc.; E.I. Du Pont de Nemours and Co.; Metro Paint Supplies, Inc.; Automotive Coatings & Equipment, LLC.

Cases: Antitrust ColoradoNews