Cerco Bridge Loans 6 LLC v. Schenker

Background

Cerco Bridge Loans 6 LLC filed a letter-motion under Federal Rule of Civil Procedure 26(c) seeking a protective order. The requested order would create confidentiality protections for discovery materials and include an “Attorney’s Eyes Only” (AEO) designation, which would limit access to designated materials to attorneys rather than allowing the parties themselves to view them. The parties could not agree on the terms of a confidentiality order. After the court directed the defendants to respond, the defendants opposed including the AEO provision.

Legal standard

Rule 26(c) allows a court, for good cause, to protect a party or person from harm such as annoyance, embarrassment, oppression, or undue burden or expense. The party seeking protection must show a clearly defined, specific, and serious injury that disclosure would cause. The court explained that AEO designations generally protect a party from business-related harm that could occur if information were disclosed to a competitor. General or unsupported claims of harm are not enough.

Parties’ arguments

The plaintiff argued that the parties operated in the same industry and that its sources of collateral funding and analysis of loan risk were confidential business practices. It expressed concern that the defendants would learn the “secret sauce” behind its funding decisions and other proprietary information. The plaintiff also acknowledged that the defendants were not direct competitors.

Court’s ruling

The court determined that the plaintiff had not demonstrated the existence of trade secrets or shown why an AEO designation was necessary. It found that the plaintiff’s generalized assertions did not identify a specific, serious harm or show that the alternative confidentiality order would be inadequate. The court therefore denied the plaintiff’s letter-motion for a confidentiality order and stated that it would enter the defendants’ proposed form of confidentiality order.