Speece v. Speece

[Cite as Speece v. Speece, 2017-Ohio-7950.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
GEAUGA COUNTY, OHIO
MARCIA SPEECE, : OPINION
Plaintiff-Appellee, :
CASE NO. 2016-G-0100
- vs - :
BRYAN SPEECE, :
Defendant-Appellant. :
Civil Appeal from the Geauga County Court of Common Pleas.
Case No. 2015 DC 00460.
Judgment: Affirmed.
Joseph G. Stafford, Stafford Law Co., L.P.A., 55 Erieview Plaza, 5th Floor, Cleveland,
OH 44114 (For Plaintiff-Appellee).
John V. Heutsche, John V. Heutsche Co., L.P.A., Hoyt Block Building, 700 West St.
Clair Avenue, Suite 220, Cleveland, OH 44113-1274; and Elaine Tassi, 34955
Chardon Road, Willoughby Hills, OH 44094 (For Defendant-Appellant).
TIMOTHY P. CANNON, J.
{¶1} Appellant, Bryan Speece, appeals from the October 25, 2016 judgment
entry of the Geauga County Court of Common Pleas, denying his motion for a
protective order, issued in the pending divorce proceedings between appellant and
appellee, Marcia Speece. For the following reasons, the trial court’s judgment is
affirmed.
{¶2} During their marriage, the parties derived most of their income from
EnTech Ltd. Appellant is the sole owner of EnTech. On April 11, 2016, appellee filed a
motion to appoint an expert witness to conduct a business evaluation and forensic
accounting of EnTech. Appellee contended this information was necessary in order to
identify appellant’s income and to have an expert assign a value to the business. The
trial court granted the motion, ordering both parties to cooperate in the evaluation and
accounting. Appellee’s expert witness requested numerous documents from appellant
in order to perform the evaluation and accounting, including EnTech’s financial records,
client lists, and Non-Disclosure Agreements (“NDAs”). Appellant produced some of the
requested documents; he refused, however, to release certain documents until a
protective order was executed by the parties and counsel. Appellant argued those
documents were confidential and their release could expose EnTech to liability.
{¶3} On May 2, 2016, a magistrate’s order was issued, which ordered the
parties to execute an agreed protective order by May 9, 2016, with regard to information
related to EnTech. Within three days of filing the protective order, appellant was to
provide appellee with the requested documents. Appellant was also to provide appellee
with copies of NDAs within seven days of filing the protective order. Appellant was
permitted to redact anything necessary to remain in compliance with the NDAs. If no
agreed protective order was reached on or before May 9, 2016, the magistrate
instructed counsel for appellant to contact the court and request a telephone
conference. The magistrate also ordered appellee to respond to appellant’s request for
production of documents and that the parties be deposed on alternate days. There is
no indication in the record that an agreed protective order was reached by May 9, 2016.
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{¶4} On August 15, 2016, the magistrate ordered that, on or before August 19,
2016, appellant was to produce the requested documents to appellee’s counsel. The
magistrate enumerated the items appellant was to produce and identified which items
were deemed confidential. The magistrate provided protection for the confidential items
by ordering that all documents deemed confidential and any reports generated from
those documents were prohibited from disclosure to individuals other than the parties,
counsel, expert witnesses identified in the matter, and the court. The magistrate further
provided that any additional documents appellant wished to have identified as
confidential would be considered confidential in the event the parties agreed in writing to
keep them confidential. The magistrate also determined there existed NDAs that
contained information appellant was obligated to keep confidential. The magistrate
ordered that, on or before August 25, 2016, appellant was to provide those NDAs, under
seal, to the magistrate, and that they were not to be filed with the clerk of courts. Upon
review of those documents, the trial court would determine whether any portion of the
documents should be redacted and how they could be used. The magistrate ordered
appellant to appear for deposition on September 17, 2016, and ordered appellee to
appear for deposition on September 25, 2016.
{¶5} On August 25, 2016, appellant filed a motion to set aside the magistrate’s
August 15, 2016 order. Appellant argued, in pertinent part, that the magistrate’s order
did not adequately protect confidential information and allowed exposure of confidential
information to appellee’s expert witness without any written agreement from the witness
to keep the information confidential.
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{¶6} The trial court entered judgment on September 12, 2016, denying
appellant’s motion to set aside the August 15, 2016 magistrate’s order. The court
ordered appellant to produce the documents set forth in the magistrate’s order by
September 16, 2016. The court also ordered appellant to provide a copy of any
confidentiality agreements or NDAs he claimed were confidential for an in camera
review on or before September 16, 2016.
{¶7} The materials ordered in the September 12, 2016 judgment entry were
delivered to appellee’s counsel on September 16, 2016. Appellant maintains the NDAs
were delivered to the court.
{¶8} Appellant was deposed on September 17, 2016, but appellant’s counsel
terminated the deposition after appellee’s counsel sought to obtain confidential
information about EnTech.
{¶9} On September 21, 2016, appellant filed a “Motion to Limit Examination,
Motion for Protective Order enjoining the dissemination of Bryan Speece deposition
transcript, video and audio and requiring the same to be filed under seal.” Appellant
requested that the court enter a protective order, and also requested an order (1)
limiting the scope of examination of defendant during his deposition; (2) enjoining any
person from disseminating the September 17, 2016 deposition transcript; (3) requiring
the deposition transcript to be filed under seal and marked “confidential-to be opened
only by court order;” (4) prohibiting questions pertaining to certain subject areas; (5)
adhering to previous orders concerning the time allotted to depose each party; and (6)
stipulating that all depositions be conducted in a manner suitable to the legal profession.
Appellant maintained that a protective order sealing the deposition transcript was
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necessary because during his deposition appellee’s counsel bullied and attempted to
humiliate him in order to extract confidential information about a pending federal lawsuit
between EnTech and appellee. Attached to the motion was an affidavit from appellant;
however, appellant did not provide the trial court with a copy of the September 17, 2016
deposition transcript or a statement showing the efforts made to resolve the dispute.
{¶10} Prior to the trial court’s ruling on his September 21, 2016 motion for a
protective order, appellant filed a second motion for a protective order on October 17,
2016, entitled, “Motion for Protective Order enjoining Plaintiff and her counsel from
inquiring of Bryan Speece any issue covered by his Non-disclosure agreements.” In the
October 17, 2016 motion, appellant stated, “[d]efendant renews the motion for a
protective order filed September 21, 2016.” However, this October motion appears to
be an entirely new request for a protective order, because appellant did not file a motion
to amend his September 21, 2016 motion. Appellant argued that the NDAs prevented
him from discussing certain confidential information, considered trade secrets.
Appellant maintained that discussion of the information could expose him to liability.
{¶11} On October 25, 2016, the trial court entered a decision, stating it denied
the motion “filed by defendant * * * on September 21, 2016.” The judgment entry states
the trial court denies “Mr. Speece’s ‘Motion to Limit Examination Motion for Protective
Order enjoining the dissemination of Bryan Speece deposition transcript, video and
audio and requiring the same to be filed under seal.’” The trial court’s decision and
judgment entry make no reference to appellant’s October 17, 2016 motion. That motion
is still pending in the trial court.
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{¶12} On November 18, 2016, appellant filed a timely appeal from the trial
court’s October 25, 2016 decision.
{¶13} Appellant asserts two assignments of error on appeal:
[1.] The trial court committed error prejudicial to Appellant by failing
to provide any protection from the disclosure of non-parties’
confidential information and trade secrets thereby exposing
Appellant to liability.
[2.] The trial court committed error prejudicial to Appellant in
denying Appellant’s motions for protective order dated September
21, 2016, and dated October 17, 2016.
{¶14} We review appellant’s assignments of error together. Because appellant’s
second motion for a protective order filed October 17, 2016, has not been ruled upon
and is still pending in the trial court, we will not consider appellant’s arguments as they
pertain to that motion. Our analysis is confined to the trial court’s denial of appellant’s
first motion for a protective order, filed September 21, 2016.
{¶15} Appellant argues the trial court erred in denying his motion for a protective
order because the deposition testimony he sought to protect included discussion of
trade secrets, which should have been protected pursuant to Civ.R. 26(C)(7). In
opposition, appellee argues that appellant has failed to provide evidence to support his
claim that the information constitutes trade secrets under R.C. 1333.61.
{¶16} Civ.R. 26(C) governs protective orders and provides, in pertinent part:
Upon motion by any party or by the person from whom discovery is
sought, and for good cause shown, the court in which the action is
pending may make any order that justice requires to protect a party
or person from annoyance, embarrassment, oppression, or undue
burden or expense, including one or more of the following: * * * (7)
that a trade secret or other confidential research, development, or
commercial information not be disclosed or be disclosed only in a
designated way; (8) that the parties simultaneously file specified
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documents or information enclosed in sealed envelopes to be
opened as directed by the court.
***
Before any person moves for a protective order under this rule, that
person shall make a reasonable effort to resolve the matter through
discussion with the attorney or unrepresented party seeking
discovery. A motion for a protective order shall be accompanied by
a statement reciting the effort made to resolve the matter in
accordance with this paragraph.
{¶17} The trial court has discretionary power in the regulation of discovery, and
its decisions will not be overturned absent an abuse of that discretion. Mauzy v. Kelly
Servs., Inc., 75 Ohio St.3d 578, 592 (1996) (citations omitted). “Such discretion,
however, is not without limits.” Id. “‘An appellate court will reverse the decision of a trial
court that extinguishes a party’s right to discovery if the trial court’s decision is
improvident and affects the discovering party’s substantial rights.’” Id., quoting
Rossman v. Rossman, 47 Ohio App.2d 103, 110 (8th Dist.1975).
{¶18} R.C. 1333.61(D) defines a trade secret, in relevant part, as:
[I]nformation, including * * * any business information or plans,
financial information, or listing of names, addresses, or telephone
numbers, that satisfies both of the following:
(1) It derives independent economic value, actual or potential, from
not being generally known to, and not being readily ascertainable
by proper means by, other persons who can obtain economic value
from its disclosure or use.
(2) It is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
Pursuant to R.C. 1333.65, “a court shall preserve the secrecy of an alleged trade secret
by reasonable means that may include granting protective orders in connection with
discovery proceedings, holding in-camera hearings, sealing the records of the action,
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and ordering any person involved in the litigation not to disclose an alleged trade secret
without prior court approval.”
{¶19} The Supreme Court of Ohio has established a six-factor test for
determining whether information constitutes a trade secret pursuant to R.C. 1333.61:
(1) The extent to which the information is known outside the
business; (2) the extent to which it is known to those inside the
business, i.e., by the employees; (3) the precautions taken by the
holder of the trade secret to guard the secrecy of the information;
(4) the savings effected and the value of the holder in having the
information as against competitors; (5) the amount of effort or
money expended in obtaining and developing the information; (6)
the amount of time and expense it would take for others to acquire
and duplicate the information.
State ex rel. The Plain Dealer v. Ohio Dept. of Ins., 80 Ohio St.3d 513, 524-525 (1997);
see also 84 Lumber Co., L.P. v. Houser, 188 Ohio App.3d 581, 2010-Ohio-3683, ¶63
(11th Dist.).
{¶20} “A possessor of a potential trade secret must take some active steps to
maintain its secrecy in order to enjoy presumptive trade secret status, and a claimant
asserting trade secret status has the burden to identify and demonstrate that the
material is included in categories of protected information under the statute.” Fred
Siegel Co., L.P.A. v. Arter & Hadden, 85 Ohio St.3d 171, 181 (1999), citing Plain
Dealer, supra, at 525; see also Ramun v. Ramun, 7th Dist. Mahoning No. 08 MA 185,
2009-Ohio-6405, ¶31 (citations omitted) (“The burden of showing that testimony or
documents are confidential or privileged rests with the party seeking to exclude it.”).
{¶21} Appellant’s September 21, 2016 motion for protective order requested that
the trial court file appellant’s September 17, 2016 deposition testimony under seal.
However, appellant did not provide the trial court with a copy of the deposition transcript
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or any other evidence to support that the information sought to be protected constitutes
information that should be protected. Appellant provided the trial court with an affidavit,
but none of the sworn testimony supports appellant’s contention that the information he
seeks to protect constitutes information that should be protected. Appellant has failed,
both in the trial court and on appeal, to offer any evidence or argument in support of his
claim.
{¶22} Appellant maintains that filing the deposition transcript unsealed would
have amounted to dissemination and publication of the confidential information he was
seeking to protect. However, there is no indication in the record that appellant
requested an in camera review of the deposition transcript or provided any other
evidence in support of his claim. Without any evidence before it, the trial court was
unable to determine whether to grant the relief sought by appellant. Accordingly, the
trial court found that appellant “failed to provide a transcript or other evidence showing
the information sought was a trade secret and entitled to protection.” The trial court did
not abuse its discretion when it denied appellant’s September 21, 2016 motion for a
protective order.
{¶23} Moreover, pursuant to Civ.R. 26(C), appellant failed to provide “a
statement reciting the effort made to resolve the matter[.]” This failure alone was
sufficient reason for the trial court to deny appellant’s September 21, 2016 motion for a
protective order. See Dennis v. State Farm Ins. Co., 143 Ohio App.3d 196, 200 (7th
Dist.2001).
{¶24} While appellant may not have provided the trial court or this court with the
appropriate information essential to establish the need for a protective order, there are a
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few principles to keep in mind when assessing the propriety of issuing a protective
order.
{¶25} First, “[d]iscovery has historically never been open to the public. Indeed,
noting that discovery proceedings were not open to the public at common law, the
United States Supreme Court has held that ‘pretrial depositions are not public
components of a civil trial.’” Adams v. Metallica, Inc., 143 Ohio App.3d 482, 487 (1st
Dist.2001), quoting Seattle Times Co. v. Rhinehart 467 U.S. 20, 33 (1984).
“‘Jurisdictions that require filing of discovery materials customarily provide that trial
courts may order materials not be filed or that they be filed under seal.’” Id., quoting
Seattle Times, supra, at 33, fn. 19.
{¶26} Second, the focus of attention in the trial court and the briefing in this case
has been on information that might constitute a trade secret. See Civ.R. 26(C)(7) (the
proponent’s obligation is to set forth a basis to establish that the information sought to
be protected is “a trade secret or other confidential research, development, or
commercial information”). However, Civ.R. 26(C) anticipates application of a protective
order to a broad range of information, not just to trade secrets.
{¶27} Third, while the burden is initially on the party proposing the need for the
order, the “trial court must balance the competing interests to be served by allowing
discovery to proceed against the harm which may result.” Arnold v. Am. Natl. Red
Cross, 93 Ohio App.3d 564, 576 (8th Dist.1994) (citation omitted). In this case, while
appellee and her expert may be entitled to the information from EnTech in order to
arrive at a value for the marital asset, appellee has not provided a reason that suggests
a need for her, her expert, or her attorney to view the information without restriction.
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{¶28} The trial court ordered the parties to reach an agreement regarding the
protective order. While it is not clear from the record why the parties failed to reach an
agreement in this regard, that failure should not impede the court’s consideration.
Otherwise, an opposing party could always thwart the objective simply by refusing to
agree to otherwise reasonable terms. Here, while it appears the competing interests
would weigh heavily in favor of granting a protective order, as there does not appear to
be any harm that would be caused to appellee in doing so, the record does not contain
sufficient information for this court to determine appellant is entitled to the order he
seeks. Absent such information, we cannot say the trial court abused its discretion.
{¶29} Appellant’s assignments of error are without merit.
{¶30} For the foregoing reasons, the judgment of the Geauga County Court of
Common Pleas is affirmed.
CYNTHIA WESTCOTT RICE, P.J.,
THOMAS R. WRIGHT, J.,
concur.
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