Rodo Inc. v. Guimaraes

Background

This order resolves a discovery dispute between Rodo Inc. and Ari Cohen concerning expedited discovery. Cohen’s Document Demand 7(a) sought Rodo’s logs of automobile sales deals Cohen completed during the 12 months before his departure from Rodo. He particularly sought the prices generated by Rodo’s Pricing Engine throughout each sales process and the final prices at which the vehicles were sold.

Cohen argued that this information could help determine whether Rodo’s Pricing Engine provided economic value that others could not easily acquire or duplicate, which is relevant to whether the software qualifies as a trade secret. He also argued that the information should not be designated attorneys’ eyes only because it was important to his defenses against Rodo’s request for a preliminary injunction.

Rodo responded that the Pricing Engine’s earlier prices were not retained for more than a brief period and therefore did not exist and could not be reconstructed. Rodo acknowledged that it had some information about Cohen’s sales, including final sales prices, but argued that the information was irrelevant because customers’ purchases through Rodo already showed the Pricing Engine’s value. Rodo also argued that the available information should be protected as attorneys’ eyes only under the protective order.

Legal standard and analysis

Federal Rule of Civil Procedure 26 permits discovery of nonprivileged information that is relevant to a claim or defense and proportional to the needs of the case. The court noted that this relevance standard is broad, but it does not require a party to produce material that does not exist. A party seeking such material must make an adequate showing to overcome the responding party’s assertion that it lacks the material.

Rodo asserted that the prices generated throughout each sales process were no longer retained, and Cohen did not contest that assertion. The court therefore denied that component of the discovery request.

The court granted the remainder of the request. Rodo’s claims against Cohen under the Defend Trade Secrets Act and New York common law alleged misappropriation of trade secrets, and whether the Pricing Engine was a trade secret was a key issue. The court explained that determining trade-secret status is fact-intensive. Under the federal statute and New York common law, the economic value of the information and the ease with which others could independently develop or obtain it are relevant considerations. The available sales data could help Cohen argue that the Pricing Engine’s prices were easily duplicated or publicly ascertainable.

Ruling

The court held that Rodo did not need to produce the Pricing Engine’s pricing information for each vehicle throughout the sales process, but Rodo had to produce the other information covered by Cohen’s request. The court granted attorneys’-eyes-only protection for the information at this stage because it fell within the category covered by the protective order. The court stated that Cohen could revisit the protection if reviewing the information revealed specific and concrete reasons why he personally needed access to it. The Clerk of Court was directed to terminate the motion at Document 47.