Products Liability Law Daily ‘Necessity’ of trade-secret evidence in motorcycle crash case not established
Monday, November 12, 2018

‘Necessity’ of trade-secret evidence in motorcycle crash case not established

By Leah S. Poniatowski, J.D.

A state trial court in Texas abused its discretion when it compelled manufacturers of a three-wheel motorcycle to produce trade-secret software programs and related privileged material in a negligence and products liability lawsuit because that evidence was not necessary to ensure fairness, a Texas appellate court ruled (In re Kongsberg Inc., November 8, 2018, per curiam).

In 2014, a mother and her daughter were riding on a 2011 Can-AM Spyder three-wheel motorcycle on a farm-to-market road when the mother lost control of the vehicle when she could not control the steering. They left the roadway and crashed into a tree; the mother died from her injuries and the daughter was injured. The family filed a negligence and products liability lawsuit against Kongsberg Inc., Bombardier Recreational Products, Inc., and Countyline Powersports Corporation. The family specifically alleged that the motorcycle was unreasonably dangerous due to its manufacture, design, or the way it was marketed.

Evidence sought. The family obtained data from the vehicle’s power steering unit as technicians for Kongsberg and Bombardier ran their software programs during inspections of the vehicle, recording the computer screens as the data was being processed. In addition to the raw data, the expert also received spreadsheets of the extracted data, a service report revealing the fault codes in the steering unit, and a raw-data spreadsheet converted into hexadecimal form from computer codes. The motorcycle remained in the possession of the family.

During discovery, the family sought engineering-level access to the proprietary software programs and related materials in order to support their expert witness’ testimony. Although the family’s consulting expert had agreed that all the data he requested had been provided by the technicians, he testified at the evidentiary hearing that without access to the trade-secret protected programs he cannot fully analyze the raw data in his possession, and that he wanted to be able to run additional inspections in order to better understand how the steering units operate and whether there were other performance issues with the vehicle. The consulting expert’s preliminary report, which was considered at the hearing, indicated that he formed an opinion that the motorcycle "failed to perform in a safe and appropriate manner, due to a dangerous and defective condition within the [motorcycle’s] electronic power steering system," in addition to asserting that he needed the additional access to the proprietary material.

Trial court determinations. Following the hearing, the trial court considered the letter briefs filed by the manufacturers and later ordered the manufacturers to produce nine categories of documents—including trade-secret protected materials. The court included a protective order over those proprietary documents. The manufacturers petitioned the state appellate court for mandamus relief to prevent the trial court’s order. The order was stayed pending the appellate court’s review of the petition.

"Necessity" of protected materials. According to the Texas evidentiary rules, parties may refuse to disclose trade secrets "unless the court finds that nondisclosure will tend to conceal fraud or otherwise work injustice." Governing case law holds that after the party asserting the privilege establishes that the discovery invades its right to protect its trade secrets, parties seeking disclosure must prove that the proprietary information is necessary to the fair-resolution of the claims at issue. If an alternate means of proof is available that does not significantly impair the presentation of the merits of the case, then the proprietary information is not necessary.

The appellate court explained that because the manufacturers had demonstrated the information was protected by trade secret, it must consider "whether the evidence in the hearing established, with specificity, that the production of the material the plaintiffs were seeking was material and necessary to the litigation." (emphasis in the original). Based on the evidence from the hearing, the appellate court observed that the family’s expert was able to form an opinion about the steering column, and that the family received all the inspection data and can still access the vehicle, which the manufacturers cannot without the presence of the family. Thus, the family’s expert did not need access to the privileged materials as he was able to form an opinion on the adequacy of the design, manufacture, and marketing of the motorcycle.

Further, there was no evidence from the hearing showing that the manufacturers would have an advantage at trial based on the privilege, and if the manufacturers relied upon such information, the discovery rules require production of those materials. Consequently, there was not enough in the record to support providing access to the trade secret materials in order to conduct a fair trial and, thus, the trial court abused its discretion when it ordered the manufacturers to produce the protected materials. Because the manufacturers were without an adequate remedy through an ordinary appeal, the appellate court granted their mandamus petition on the condition the trial court’s order is not vacated.

The case is No. 09-18-00337-CV.

Attorneys: Paul M. Fukuda (Paul M. Fukuda, Attorney at Law) for Courteney Renee Twiner. Michael T. Bridwell (Strong Pipkin Bissell & Ledyard, LLP) for Kongsberg Inc. J. K. Leonard (Naman, Howell, Smith and Lee, PLLC) for Bombardier Recreational Products, Inc.

Companies: Kongsberg Inc.; Bombardier Recreational Products, Inc.

MainStory: TopStory EvidentiaryNews SportsandRecEquipmentNews MotorVehiclesNews TexasNews

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