06252012On Thursday, the U.S. Court of Appeals for the Fifth Circuit affirmed sanctions against a plaintiffs’ law firm, Smith & Fuller, for inadvertently disclosing confidential and trade secrets documents that were covered by a protective order in a lawsuit against Cooper Tire & Rubber Company.  The ruling provides a cautionary tale that should serve as a reminder to every outside lawyer to be very careful about sharing or using information gathered in other lawsuits.  (A copy of the opinion is attached as a PDF below).
Smith & Fuller had represented a family in a products liability lawsuit against Cooper Tire that ultimately resulted in a jury verdict in favor of Cooper Tire.  Prior to the trial, the district court entered a Protective Order to protect Cooper Tire’s trade secrets and confidential information that were produced during discovery.  The Protective Order limited access of protected information to “authorized persons, solely in the performance of their duties in connection with the trial preparation of [that] case.”
In August 2010, Smith and his firm inadvertently disseminated Cooper Tire’s trade secrets and confidential information to a number of other personal injury lawyers during a conference sponsored by the Attorneys Information Exchange Group, Inc. which coordinates the sharing of discovery from, among others, Cooper Tire.  Someone from Smith & Fuller mistakenly copied the confidential information onto compact discs that were then distributed to attorneys attending that conference.  Cooper Tire discovered the violation when its counsel received those documents from a plaintiff’s attorney in another lawsuit against Cooper Tire.
Although it found that Smith & Fuller did not willfully violate the protective order, the district court nevertheless imposed sanctions in the form of attorneys fees of nearly $30,000 for Cooper Tire’s motion practice and follow up on the improperly disclosed documents. The Fifth Circuit affirmed, finding the district court was well within its discretion and noting that Smith & Fuller had been previously sanctioned for willfully violating another protective order.  It probably did not help Smith & Fuller’s cause that it had previously held itself out as a “clearinghouse” for Cooper Tire documents for other firms suing Cooper Tire.
The Takeaway?  For outside counsel, make sure that any time that you are going to use or share a document from another litigation that you (1) double-check whether the document is designated confidential; (2) cross-reference the document against the protective order from that case to make sure you can share it; and (3) personally make sure no documents are inadvertently produced, or have a trusted colleague familiar with the case do so.  The safest course is not to share anything and remove the risk altogether.
On the flip side, if you are going to be producing confidential or trade secret information in a case, insist on a protective order that requires the return of all copies of confidential information when the case ends, or, at minimum, a certification of its destruction when the case is complete.  I prefer the return of all copies to remove any doubt.
As virtually every trade secret and non-compete case involves the discovery of confidential information and a protective order to safeguard that information, these are important lessons for us all to remember.

Smith Fuller v Cooper Tire.pdf (106.53 kb)