Special Master Boyer Grants Motion to Compel, Allowing Broad Discovery
February 21, 2020
In Smart Sand, Inc. v. US Well Services LLC, C.A. No. N19C-01-144 PRW [CCLD], Special Master Boyer granted a defendant/counterclaim plaintiff’s motion to compel several requests for production (“RFPs”), with certain limitations. The instant dispute traced its origins back to the plaintiff/counterclaim defendant’s motion to dismiss. There, Judge Wallace had allowed the defendant/counterclaim plaintiff’s contract claims concerning the misuse or misappropriation of confidential information to proceed, while dismissing duplicative tort claims. The plaintiff/counterclaim defendant subsequently opposed 12 RFPs, arguing that these document requests concerned dismissed counterclaims or otherwise needed to be narrowed to only concern certain specifically pled allegations within the remaining claim. The defendant/counterclaim plaintiff disagreed and argued that all the document requests were relevant to its surviving claims concerning the misuse or misappropriation of confidential information and prior material breach.
Special Master Boyer likened the discovery dispute to those commonly brought in trade secret litigation. In such litigation, courts needed to be cognizant of the defendants’ legitimate interest in avoiding unfettered discovery into their own confidential and technical trade secret information. Trade secret statements, however, balance those concerns, as the plaintiffs must first identify with reasonable particularity the purported trade secret at issue. Special Master Boyer noted that courts traditionally provide leeway in assessing such trade secret statements, as litigants can only provide so much specificity regarding suspected misuse of information prior to discovery. Special Master Boyer likened the broadened allegations in the second amended counterclaim as providing the equivalent of such a “trade secret statement” by identifying the confidential information shared with Smart Sand and allegedly misused or improperly disclosed. Therefore, the requests were proper, although one or two were narrowed to more specifically align with the allegations within the counterclaim.
Analysis: In some CCLD cases, discovery disputes are assigned to a special master, who can quickly resolve disputes and keep cases moving. This particular opinion highlights Delaware’s liberal discovery standards. Rule 26 permits discovery “if there is a good faith belief that the discovery may reveal evidence.” Sufficiently plausible allegations that have survived a motion to dismiss most likely will open the door to extensive discovery, even of highly sensitive business information. This decision shows that discovery is more likely to be limited based on traditional concerns that the discovery is disproportionate to the needs of the case or unduly burdensome, rather than raising concerns about the sufficiency of allegations within the complaint.