The Colorado Supreme Court ordered the insurer to produce documents after failing to demonstrate the documents contained were trade secrets. In Re Rumnock v. Anschutz, 2016 Colo. LEXIS 1228 (Colo. Dec. 5, 2016).
Stephen Rumnock was involved in an auto accident with an uninsured driver. Rumnock brought negligence claims against the driver and uninsured/underinsured motorist claims against his insurers, including American Family Insurance Company. American Family initially refused to pay benefits, but eventually paid him policy limits. Rumnock then amended his complaint to add bad faith and abuse of process claims against American Family.
Rumnock requested that American Family produce documents showing, among other things, its procedures, policies, and guidelines for handling uninsured motorist claims. American Family did not request an extension and failed to produce the documents.
A motion to compel hearing was held seven weeks after the discovery responses were due. The trial court ordered American Family to respond fully to the discovery by the close of business on November 6 and ruled, "All objections are waived." At 5:06 p.m. on November 6, American Family provided some of the requested documents. Two hours later, it filed a motion for a protective order. The motion asserted the internal documents governing claims handling were trade secrets, and sought to limit their use and disclosure to the needs of the current litigation.
The trial court conducted another hearing. The court ordered Rumnock not to share the alleged trade secrets with American Family's competitors, but refused to order the broader limitations American Family had requested, including not using the documents beyond the current litigation. The court reasoned that granting the full protection sought would be inconsistent with its earlier order imposing discovery sanctions against American Family.
On appeal the Colorado Supreme Court concluded that American Family failed to present evidence that the documents allegedly in need of protection as trade secrets were, in fact, trade secrets or otherwise confidential information. Whether information was confidential commercial information was a question of fact to be determined by the trial court. Where there was no genuine dispute of fact, however, the court could decide as a matter of law whether the information was a trade secret or otherwise confidential.
Here, American Family had the burden to establish the need for the protective order, yet it presented no evidence from which the court could have determined that the documents were actually trade secrets or otherwise confidential. No affidavits or testimony were submitted. Nor were the alleged documents submitted under seal for in-camera review. So the trial court's partial denial of American Family's request for a protective order was affirmed.