The First Circuit recently issued a helpful reminder on the difficulties in trying to file an interlocutory appeal from a discovery order, even where the order is going to place in the public eye materials for which there is a colorable argument about their status as confidential trade secrets.
In Awuah v. Coverall N. Am., Inc.,No. 09-1284 (1st Cir. Oct. 27, 2009), the defendant sought to keep sealed portions of the deposition of its former CFO, on the ground that the testimony revealed "confidential information about Coverall's business practices including various accounting matters." The district court agreed to keep about half of the identified portions of the transcript under seal, but ruled that the remaining portions would be unsealed. The practical issue from the plaintiffs' perspective was that, even though it had unfettered access to the complete transcripts and could rely upon them in its case (at least as long as they were filed under seal), the sealed status precluded them from sharing the material with experts and using it in other ways.
The defendant filed an interlocutory appeal, arguing that the discovery order imposed immediate harm that could not effectively be raised on appeal after final judgment, because the horse would already be out of the barn. The court began by observing that
Many discovery orders are effectively reviewable on final judgment, but disclosure of allegedly privileged or sensitive information may threaten immediate harm that cannot later be undone on review of the final judgment. The unsealing order in this case meets that test and also definitively resolves the question whether the disputed passages are to be made public.
Nevertheless, the court ultimately rejected the appeal as premature, holding that the appeal failed to "present an important issue meriting immediate review." The court rhetorically asked itself "why such requirements exist at all if an order may cause irreparable harm that cannot be undone by later review," and answered by noting unsympathetically that "the final judgment rule implicitly accepts that some harms may result from deferring appeals." The court seemed most concerned about controlling its own docket, as "piecemeal appeals impose costs of their own by multiplying proceedings and delaying resolution."
As the court framed the "importance" issue, it stated that "cases deemed to qualify usually present a disputable legal issue whose importance turns on the likelihood that it will arise in other cases," where there is a generalized benefit to the "system" in resolving the interlocutory appeal. Where there is no "legal issue presented by the merits of the discovery order," but rather a factual analysis of whether disclosure would or would not implicate confidential trade secrets, the court concluded that the importance step was not met.
The court was careful to carve out situations involving discovery orders against third-parties. "The situation is different where a discovery order is directed to a non-party who is not otherwise part of the litigation ... and thus cannot ordinarily appeal from a final judgment." But that will serve as little consolation to the defendant or to parties challenging disclosure of trade secrets in other cases.
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