The Fifth Circuit ruled that Trinity Industries Inc. cannot prevent a district court from unsealing documents that the company claims contain its trade secrets.
Trinity lost a lawsuit under the False Claims Act and was ordered to pay $663 million in damages.
The suit against Trinity, which makes highway guardrails, was based on “undisclosed and improper modifications to guardrail ends” which “led to malfunctions and safety issues.”
Whistleblower Joshua Harman claimed that Trinity secretly changed a guardrail design that had been approved by the Federal Highway Administration (FHA). Harman was awarded a $199 million commission based on the verdict, plus legal fees and expenses, for a total of $217 million. The US government was awarded the balance.
Trinity has announced its intent to appeal the verdict, saying that its guardrails complied with federal safety standards. However, it did not dispute that it changed the design without notifying the government.
The Center for Auto Safety and the Safety Institute moved to intervene in the case for the purpose of seeking to unseal 65 documents filed in the case.
The district court denied the motion and the safety groups appealed. A Fifth Circuit panel ruled in favor of the release of the documents, and in its latest ruling the court denied Trinity’s motion for reconsideration.
Trinity argued that its rights to its trade secrets and confidential information outweighed the public’s right to inspect the documents at issue.
However, Harman argued that Trinity had failed to show what specific harm would result from the release of the documents.
The 5th Circuit panel agreed that Trinity had not shown that the contents of the documents were not already in the public domain.
The case is U.S. ex rel. Harman v. Trinity Industries Inc.
Often, NDAs will have language like this:
The receiving party may disclose confidential information when required by law, for example in response to a subpoena or a search warrant or in a securities filing.
If the confidential information is at risk of being released by a government entity (such as a court), the party that owns it can seek a protective order, as in this case. However, as in this case, courts will not always grant such orders.
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Photo Attribution: “Autobahnleitplanke nach LKW Unfall” by Wusel007 – Own work. Licensed under CC BY-SA 3.0 via Commons.