June 2007
South Carolina Supreme Court Vacates Order for Disclosure of a Tire Maker's Trade Secret
By Lisa Moran McMurdo
The South Carolina Supreme Court recently granted a motion to vacate a trial court's discovery order requiring Bridgestone Firestone North American Tire, LLC ("Firestone") to disclose its trade secret formula for a certain rubber compound used in the manufacture of its tires.
Plaintiffs in a product liability action filed in Sumter County, South Carolina alleged that defects in the manufacture and/or design of a Firestone tire led to a single vehicle accident on August 1, 2002. During discovery in that action, plaintiffs asked Firestone to produce the formula for the rubber compound used to form the steel belts ("skim stock") in the Firestone tire that failed. Firestone objected to plaintiffs' request, arguing that plaintiffs had not met their burden under the South Carolina Trade Secrets Act, S.C. Code Ann. §§ 39-8-10, et. seq., to warrant disclosure of that trade secret formula.
Following an evidentiary hearing on the matter, the Honorable Howard P. King adopted Firestone's argument that the South Carolina Trade Secrets Act ("the Act") applied to the pending discovery dispute, despite a contrary decision by the U.S. District Court for the District of South Carolina. Under § 39-8-60(B) of the Act, plaintiffs were required to satisfy a four-part part test to demonstrate a substantial need for the trade secret information before disclosure could be required. Among other things, plaintiffs needed to show that the trade secret information was directly relevant to particularized allegations of liability, and that they would be substantially prejudiced without access to that information. Judge King held that plaintiffs had met their burden under the Act and ordered Firestone to produce its trade secret rubber formula.
The South Carolina Supreme Court granted Firestone's petition for a Writ of Certiorari, and scheduled oral argument on the appeal. In the meantime, the parties reached a settlement in the pending product liability action. As a result, they jointly moved the Court to dismiss the Writ of Certiorari and vacate the trial court's discovery order. The Court, however, refused to grant the parties' motion without first hearing oral argument on the motion to dismiss and vacate, as well as argument on the merits of the underlying appeal.
After oral argument, the South Carolina Supreme Court granted the parties' motion to dismiss the writ of certiorari and to vacate the order requiring disclosure of Firestone's trade secret rubber formula. Kenneth J. Moran and Lisa Moran McMurdo assisted Firestone, along with Henry Smythe, Jr. of Charleston, South Carolina, on the appeal, and Wallace Lightsey of Greenville, South Carolina presented the successful argument to the South Carolina Supreme Court.
For further information, please contact the author, Lisa Moran McMurdo.