A Florida federal court recently entered an order which required certain plaintiffs to provide a particularized statement of the trade secrets allegedly misappropriated by the defendants before the defendants were obligated to respond to the plaintiffs’ written discovery in the case. See Veitch et al. v. Virgin Management USA, Inv., Case No. 5-20989-CIV-Moore/McAliley (S.D. Fla. July 10, 2015). In Veitch, the Court ordered the plaintiffs to “provide a writing … that identifies with reasonably particularity each and every alleged trade secret and novel business idea that Plaintiffs claim they disclosed to Defendants and/or that Defendants used, took or misappropriated.” The Court further ordered that neither the defendants nor any third party were required to respond to the plaintiffs’ discovery requests until after the plaintiffs provided the defendants with the particularized statement of the trade secrets and alleged misappropriations by the defendants.
The defendants’ argument was made in the context of defending claims alleging violations of Florida’s Uniform Trade Secrets Act (“FUTSA”). §688.001, et seq. (Fla. Stat.). In such cases, a plaintiff has the burden to describe the alleged trade secrets at issue with “reasonable particularity.” It is insufficient to “describe [a] trade secret by generic category,” but instead a plaintiff must “identify the specific characteristics of each trade secret.” While this burden is not novel, the effect of the Court’s order in Veitch suggests that a plaintiff may be obligated to satisfy its burden before it can take discovery of the defendant in such an action. This obligation stands out given that the Federal Rules of Civil Procedure provide that, in most cases, “methods of discovery may be used in any sequence” and a plaintiff is normally only obligated to make “a short and plain statement of the claim showing that the pleader is entitled to relief.” See Fed. R. Civ. P., Rule 26(d)(3) & Rule 8(a)(2).
Indeed, the plaintiffs in Veitch argued that the Court “should not graft an ad hoc discovery rule onto the Federal Rules or Local Rules, by requiring a plaintiff to identify trade secrets to the defendant’s satisfaction.” The plaintiffs contended that “[s]uperimposing such a rule would also lead to unnecessary litigation that unfairly favors defendants and undermines judicial economy.” Interestingly, the plaintiffs also argued that the defendants’ motion should have been denied because the defendants “never moved under Rule 12(e) for a more definite statement concerning trade secrets.” While the plaintiffs final argument relating to Rule 12(e) does not appear to have been addressed in the Court’s written order, it stands to reason that plaintiffs in other cases may continue to raise this argument in response to similar motions which demand that the plaintiff satisfy the burden of stating a FUTSA claim with “reasonable particularity” before issuing discovery to a defendant or a third party.
In any event, it appears that the Court was persuaded by the defendants’ policy arguments that “if a plaintiff is not required to identify its trade secrets prior to obtaining discovery from a defendant, it may vaguely allege a trade secret claim, take discovery, then identify as trade secrets what it finds in defendants’ files.” The defendants bolstered their argument by referencing a sister court which held “requiring the plaintiff to state its claimed trade secrets prior to engaging in discovery ensures that it will not mold its cause of action around the discovery it receives.” DeRubeis v. Witten Technologies, Inc., 244 F.R.D. 676, 681 (N.D. Ga. 2007).
In short, the Court’s order in Veitch strongly suggests that plaintiffs who fail to adequately state the substance and nature of their trade secrets with the requisite “reasonable particularity” at the start of a case are likely to have a more difficult time obtaining meaningful discovery from defendants until they do so.