Niagara Industries, Inc. v. Giaquinto Electric LLC

         Not final until disposition of timely filed motion for rehearing.

         Petition for writ of certiorari to the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Patti Englander-Henning, Judge; L.T. Case No. CACE 16-11632 05.

          Diane H. Tutt, Thomas J. McCausland, and Evan Roberts of Conroy Simberg, Hollywood, for Petitioners.

          Daniel M. Schwarz of Cole, Scott & Kissane, P.A., Plantation, for Respondent H20 Plumbing Services, Inc.

          Glen R. Goldsmith of Glen R. Goldsmith, P.A., Miami, for Respondent Giaquinto Electric, LLC. Armando P. Rubio of Fields Howell LLP, Miami, for Respondent Guardian American Properties, LLC.

          Kuntz, J.

         In this proceeding, the Petitioners-Niagara Industries, Inc. and Rheem Sales Company-challenge the second prong of the two-part test for disclosure of trade secrets. The issue before us is whether the production of material containing trade secrets was "reasonably necessary." We conclude the circuit court departed from the essential requirements of law when it ordered the Petitioners to disclose their trade secrets, because the party requesting the disclosure failed to present any evidence to establish that the production of the privileged information was reasonably necessary. We therefore quash the order.

         Background

         Scott Wesley Frank, Sr. purchased a tankless water heater from Rheem Sales Company, and designed by Niagara Industries, Inc. At some point later, Mr. Frank experienced problems with the water heater and hired H2O Plumbing Services, Inc. While an employee of H20 repaired the water heater, it exploded, causing Mr. Frank physical injury. As a result of the injuries, he filed a four-count complaint against the Petitioners, asserting claims of negligence and strict liability against both.

         During the pendency of Mr. Frank's lawsuit against the Petitioners, the court required them to disclose what they describe as "their confidential and highly confidential documents, including Niagara's trade secrets, relating to the manufacturing and testing of the subject tankless water heater." Pursuant to a protective order that permitted only certain people to view them, the Petitioners disclosed the documents. Testimony indicates the documents were disclosed to a total of four people. The case proceeded to a jury trial; however, the documents were not presented to the jury. Prior to the jury returning a verdict, the parties filed a stipulation of dismissal, which the court accepted. At the conclusion of the case, the previously-disclosed documents were returned to the Petitioners.

         After the dismissal of the lawsuit against the Petitioners, Mr. Frank filed a new lawsuit against Giaquinto Electric, which he later amended to add claims against Guardian American Properties, LLC, H20 Plumbing Services, Inc., Fuenmayor & Linda Enterprises, LLC, and Mark Beckerman.

         Guardian American Properties, LLC, one of the defendants in the second lawsuit, served a notice of production from non-parties and a subpoena duces tecum without deposition, indicating they intended to seek various documents from the Petitioners. Among the documents at issue were those contained in the seventy-ninth category of documents sought, which asked for those documents from Mr. Frank's first lawsuit: "Any and all documents received pursuant to any subpoenas and/or request for copies in the case Scott Wesley Frank v. Niagara Industries, Inc. and Rheem Sales, Case. No. CACE 15-002998 (03)." Later, H2O Plumbing, another defendant in the second lawsuit, served a notice of intent to subpoena similar information.

         The Petitioners timely objected to the notices of production and the subpoenas. In their objections, they argued that: the documents contained trade secrets; the water heater's failure was not the result of a defectively-manufactured or defectively-designed product; and that Guardian and H2O, the requesting parties, was merely on a "fishing expedition" to escape an incident resulting from its installation of the water heater.

         The court held an evidentiary hearing on the Petitioners' objections. The only witness to testify at the hearing was the owner of Niagara Industries, who testified that the release of the trade secrets "would be devastating" to his company. He also answered questions regarding the Petitioners' belief as to the cause of the water heater's explosion. Guardian and H2O relied ...