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US Magnesium, LLC v. ATI Titanium LLC

United States District Court, D. Utah, Central Division

August 3, 2018

US MAGNESIUM, LLC, a Delaware limited liability company, Plaintiff / Counterclaim Defendant,
ATI TITANIUM LLC, a Delaware limited liability company, Defendant / Counterclaimant.

          Dee Benson District Judge



         District Judge Dee Benson referred this case to Chief Magistrate Judge Paul M. Warner pursuant to 28 U.S.C. § 636(b)(1)(A).[1] Before the court is Plaintiff and Counterclaim Defendant U.S. Magnesium's (“US Mag”) motion to re-designate Attorneys Eyes Only documents as Confidential (the “Motion to Re-designate”), [2] and Defendant and Counterclaimant ATI Titanium LLC's (“ATI”) Motion to Compel Production of Documents Concerning U.S. Magnesium's Sales Prices and Customers (the “Motion to Compel”).[3] The court ordered additional briefing on the Motion to Re-designate[4] and the Motion to Compel.[5] The court has carefully reviewed the written memoranda submitted by the parties. Pursuant to civil rule 7-1(f) of the Rules of Practice for the United States District Court for the District of Utah, the court has concluded that oral argument is not necessary and will determine the motions on the basis of the written memoranda. See DUCivR 7-1(f).


         This case is a commercial dispute arising out of a Supply and Operating Agreement (the “Agreement”) for the sale of magnesium. U.S. Mag 's complaint alleges that ATI breached the Agreement by “wrongfully declaring an Economic Force Majeure” (the “EFM”) and by failing to “negotiate[] revised pricing for the magnesium that would have averted the [EFM].”[6] U.S. Mag seeks damages “exceeding the amount of $92, 000, 000.00.”[7] ATI denies U.S. Mag's allegations and counterclaimed, alleging that U.S. Mag breached the Agreement by, among other things, refusing to negotiate the price of magnesium in good faith and refusing to sell ATI magnesium through 2017.[8]


         The court sets forth the following general legal standards governing discovery. Rule 26(b)(1) provides:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Fed. R. Civ. P. 26(b)(1) (emphasis added). “‘Relevancy is broadly construed at the discovery stage of the litigation and a request for discovery should be considered relevant if there is any possibility the information sought may be relevant to the subject matter of the action.'” Groesbeck v. Bumbo Int'l, No. 1:13-CV-00090, 2015 WL 365922, at *1 (D. Utah Jan. 27, 2015) (quoting Smith v. MCI Telecomm. Corp., 137 F.R.D. 25, 27 (D.Kan.1991)). “The district court has broad discretion over the control of discovery, and [the Tenth Circuit] will not set aside discovery rulings absent an abuse of that discretion.” Sec. & Exch. Comm'n v. Merrill Scott & Assocs., Ltd., 600 F.3d 1262, 1271 (10th Cir. 2010) (quotations and citations omitted).


         The court will first address the Motion to Re-designate, and then the Motion to Compel

         I. Motion to Re-designate

         On March 2, 2018, Judge Benson entered a Stipulated Protective Order that, in addition to other terms, allowed the parties to designate materials produced in discovery as “Confidential Information - Attorneys Eyes Only” (“AEO”).

         Any material designated as AEO can only be disclosed to the receiving party's outside counsel, retained experts, two “litigation managers, ” and the court, and may not be disclosed to the receiving party itself or the directors, officers, and employees of the receiving party. The Stipulated Protective Order limits the use of AEO designation to the following:

The designation CONFIDENTIAL - ATTORNEYS EYES ONLY may be used only for the following types of past, current, or future PROTECTED INFORMATION: (1) sensitive technical information, including current research, development and manufacturing information and patent prosecution information, (2) sensitive business information, including highly sensitive financial or marketing information and the identity of suppliers, distributors and potential or actual customers, (3) competitive technical information, including technical analyses or comparisons of competitor's products, (4) competitive business information, including non-public financial or marketing analyses or comparisons of competitor's products and strategic product planning, or (5) any other PROTECTED INFORMATION the disclosure of which to non-qualified people subject to this Standard Protective Order the producing party reasonably and in good faith believes would likely cause harm.[9]

         US Mag alleges that ATI has designated the “majority” of documents as AEO, and argues that ATI's over-designation of pertinent materials as AEO “will prevent U.S. Mag's principals from any meaningful participation in depositions, motion practice, discussion over strategy, and even trial.”[10]

         ATI defends its designations on the basis that both parties entered into a Stipulated Protective Order which allows for such designations and argues that granting the Motion to Re-designate would render the Stipulated Protective order meaningless.[11] ATI contends that the documents designated as AEO fall within the categories set out in the Stipulated Protective Order. Specifically, ATI argues the designated documents are highly confidential to them and would never be shared with U.S. Mag or any other entity in the ordinary course of business.[12]

         Apart from describing the AEO documents into two categories - past financial information and third-party contracts[13] - neither party specifically identifies the documents at issue. However, although the Stipulated Protective Order permits the parties to designate documents as AEO, the court agrees with U.S. Mag that ATI bears the burden to show that the designations are appropriate. There is no basis for shifting the burden of document-by-document review to the court or opposing counsel.

         Accordingly, U.S. Mag's Motion to Re-designate is granted in part and denied in part. The court declines to make a sweeping ruling re-designating all of ATI's AEO-designated production as Confidential. However, the court grants U.S. Mag the following relief: Within thirty (30) days of the date of this order, ATI shall produce re-designated or de-designated versions of documents previously designated as AEO. At that time, ATI shall also produce a log listing any documents previously designated as AEO that AT I has not ...

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