On September 21, 2015, the Federal Register published a notice in which the National Highway Traffic Safety Association ("NHTSA") requested comments from the public regarding its proposed Enforcement Guidance Bulletin 2015-01: Recommended Best Practices for Protective Orders and Settlement Agreements in Civil Litigation, 80 Fed. Reg. 57047. We summarize the notice below, and recommend that manufacturers provide comments against the issuance of this bulletin.
In the notice, NHTSA suggests that protective orders, settlement agreements, and other confidentiality provisions entered into in private civil cases should include an exception that allows for the disclosure of relevant safety-related information to NHTSA. NHTSA states that safety-related information that may be discovered or developed during civil cases is an important resource to NHTSA, but the confidentiality provisions included in protective orders and settlement agreements are keeping such information from being provided to NHTSA. The notice refers to Rule 26 of the Federal Rules of Civil Procedure and cites federal case law in asserting that public policy dictates any safety-related documents and information discovered in the course of litigation should be provided to NHTSA, and that protective orders should provide for such disclosure.
Although any final document issued by NHTSA would be a "recommended best practice," rather than a new federal regulation,the bulletin, if finalized, still has the potential to encourage courts and plaintiffs' counsel to disseminate documents containing manufacturers' trade secret information to NHTSA, and, through NHTSA, potentially to the general public at large. The notice states that the bulletin is being created because the early detection of motor vehicle defects is important to the safety of the American public. However, NHTSA already has procedures in place to provide it with this early detection, including manufacturers' TREAD reporting and consumer reports of incidents to NHTSA's Office of Defects Investigation.
Encouraging plaintiffs' attorneys to inundate NHTSA with documents that contain trade secret or confidential information under the often-mistaken belief that an individual lawsuit is evidence of a "safety defect" is not the way to improve NHTSA's access to safety-related information. NHTSA's notice fails to account for the significant risk that widespread dissemination of confidential documents could facilitate theft of manufacturers' intellectual property.
Additional points that may be made in any comment filed against the proposed bulletin include the following:
- Rule 26(b)(5)(c), which governs protective orders, does not explicitly require courts to consider public policy in determining whether to issue a protective order. On the contrary, the rule specifically states that protective orders should be allowed if they protect "trade secret or other confidential research, development, or commercial information." Fed. R. Civ. Proc. 26(b)(5)(c)(2).
- NHTSA's proposed recommend practice contravenes the federal government's established position in favor of protecting manufacturers' trade secrets. For example, in February 2013 the Office of the President of the United States issued an "Administration Strategy on Mitigating the Theft of U.S. Trade Secrets." Although this document did not expressly discuss protective orders or settlement agreements, it favored the protection of trade secret and other confidential and proprietary business information. The document provided examples of instances in which trade secret information had been stolen from American automobile manufacturers and sold to Chinese automotive manufacturers.
- The notice cites Phillips v. General Motors Corp., 367 F.3d 1206, 1210 (9th Cir. 2002), for the proposition that "the public is permitted 'access to litigation documents and information produced during discovery.' " 80 Fed. Reg. 57047. Though not quoted in NHTSA's notice, the Phillips court went on to state that the public may not be permitted such access if "the party opposing discovery shows good cause for protection." Phillips, 367 F.3d at 1210. More generally, the notice cites numerous federal cases that stand for the proposition that the issuance and scope of a protective order must be determined on a case-by-case basis. This precedent does not support a bright-line rule that NHTSA should always be given copies of protected documents that a plaintiffs' lawyer may consider "safety-related." 80 Fed. Reg. 57047.
The deadline for submission of comments is October 19, 2015. Comments regarding the proposed bulletin may be submitted to Docket No. NHTSA-2015-0095; Notice 1, online or via mail, fax, or hand delivery.
Read the full text of the notice here.