Antitrust Law Daily Wrap Up, ANTITRUST—EDCal: Canning Company Executives Not Permitted Access to Confidential Steel Company Documents in Antitrust Litigation, (Dec 12, 2012)

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

Stanislaus Food Products Company executives cannot obtain access to documents designated as “attorney’s eyes only” in its antitrust litigation against domestic steel producers, the federal district court in Fresno, California has ruled (Stanislaus Food Products Co. v. USS-POSCO Industries, December 11, 2012, McAuliffe, B.). The court’s present order denies reconsideration of its previous order denying access to the designated material.

Stanislaus Food Products is a tomato canning company that purchases tin-plated cans to can its tomatoes. The company buys the tin cans from a third party can manufacturer that purchases tin-plated steel from defendant USS-POSCO Industries (UPI) and produces cans out of the metal. UPI in turn purchases “hot band” steel from defendant U.S. Steel to make its tin mill products.

In its antitrust complaint, Stanislaus had alleged that the defendant steel producers—UPI, U.S. Steel, and POSCO American Steel Corporation—had agreed to allocate the market between them, in a conspiracy to increase prices of tin mill products to monopoly levels.

During discovery, Stanislaus requested a wide range of documents, some of which were produced subject to an “attorney’s eyes only” designation limiting their exposure to Stanlislaus’s attorneys. Stanislaus had requested the court to remove this designation on specified categories of documents, arguing that permitting Stanislaus executives to review the documents would allow them to “evaluate this case and the prospects for settlement.” The categories included eight-year-old tin mill product pricing strategies, historical transactional data, UPI management committee minutes, U.S. Steel tin mill product market reports, U.S. Steel tin mill product pricing communications, and communications regarding negotiations with the third party can manufacturer.

In its motion for de-designation of the discovery materials, Stanislaus had also contended that that the information would not cause competitive harm to the steel producers because the information was “stale” and because Stanislaus did not directly compete with any of the steel producers.

In its initial order refusing to allow access to the documents, the court had found the information to be “not stale,” because “the information can be extrapolated to predict future strategies and practices.” Moreover, the information would grant Stanislaus “significant negotiating leverage against current and potential suppliers,” and “place strain on the relationships between Defendants and their third party customers.”

In contrast, since Stanislaus’s attorneys would have access to the information, Stanislaus had “failed to demonstrate that non-disclosure would prejudice [Stanislaus’s] ability to litigate the case.” The court had cited precedent for the proposition that requiring a plaintiff to rely on its outside counsel did not create the “undue and unnecessary burden” that might have swayed the court. Merely limiting a plaintiff’s ability to manage its outside counsel did not suffice.

The court observed that “[r]econsideration is appropriate if the court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law.” Here, Stanislaus had argued that the court had committed three “clear errors” by failing to conduct a “substantial risk of serious harm” and “good cause” analysis with respect to each individual document, by finding competitive harm despite the fact that Stanislaus did not compete with any of the defendants, and by denying the executives access to documents that were integral to Stanislaus’s case.

The court found no clear error in its previous decision. The court noted that Stanislaus had addressed its arguments in its original motion to categories of documents, and had employed the same arguments with respect to all categories. The court had responded to the arguments by finding good cause to continue the designation, and supporting that finding by discussing the factors it considered. The court observed that mere disagreement with the court’s decision would not be sufficient to constitute clear error. Therefore, the court found no clear error in its previous analysis.

Moreover, the court found the argument that Stanislaus did not compete with the steel producers, and therefore could not cause competitive harm, to be unpersuasive. In the court’s view, revealing the information to Stanislaus’s executives would grant them leverage in negotiations with its suppliers, who were also customers of the defendant steel producers. Therefore, the court found that disclosing the information could harm the steel producers’ relationships with its customers, and no clear error in its previous decision.

In addressing the final argument, that keeping the “attorney’s eyes only” designation would impair Stanislaus’s ability to litigate its case, the court cited precedent stating that a party requesting de-designation of documents must show a protective order “actually prejudice[s] presentation of [that] party’s case, not merely increase[s] the difficulty of managing the litigation.” Here, the court found that Stanislaus had not articulated an adequate reason why providing the information only to its attorneys and not its executives would hamper its ability to litigate its case.

In addition, the court found redaction would not provide a solution to the disclosure problem, since the information Stanislaus sought was the same information that would need to be redacted. Therefore, the court denied Stanislaus’s motion for reconsideration.

The case is No. 1: 09-cv-00560-LJO-BAM.

Dean M. Harvey (Lieff, Cabraser, Heimann & Bernstein, LLP) for Stanislaus Food Products Company. Allan Steyer (Steyer Lowenthal Boodrookas Alvarez & Smith LLP) for USS-POSCO Industries.

Cases: Antitrust CaliforniaNews