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Bridge C.A.T. Scan Associates v. Technicare Corp.

June 20, 1983

BRIDGE C.A.T. SCAN ASSOCIATES, ON BEHALF OF ITSELF AND ALL OTHER PERSONS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
TECHNICARE CORPORATION AND JOHNSON & JOHNSON, INC., DEFENDANTS-APPELLEES, AND EIMAC DIVISION OF VARIAN ASSOCIATES, INC., DEFENDANT.



Appeal from an order of the United States District Court for the Eastern District New York, Henry Bramwell, Judge, prohibiting plaintiffs from disclosing information, considered proprietary by defendant, obtained by plaintiff's counsel prior to commencement of the action. Appeal treated as petition for mandamus; writ granted.

Author: Kearse

Before: MANSFIELD, MESKILL, and KEARSE, Circuit Judges.

KEARSE, Circuit Judge:

Plaintiff Bridge C.A.T. Scan Associates ("Bridge") appeals from an order dated April 11, 1983 ("April 11 Order"), entered in the United States District Court for the Eastern District of New York, Henry Bramwell, Judge, prohibiting Bridge from disclosing information contained in an exhibit to its amended complaint on the ground that the information consists of proprietary data and trade secrets (the "trade data") belonging to defendants Technicare Corporation and Johnson & Johnson, Inc. (collectively "Technicare"). Construing the prohibition as an injunction, Bridge challenges it in this appeal pursuant to 28 U.S.C. § 1292(a)(1) (1976), on the ground that the order improperly abridges its rights under the First Amendment to the Constitution. Technicare, in addition to opposing Bridge's challenge on its merits, contends that the order is not appealable under § 1292(a)(1). For the reasons below we treat the appeal from the prohibition on disclosure as a petition for a writ of mandamus and grant the writ.*fn1

I. BACKGROUND

The present action was commenced by Bridge on behalf of itself and others similarly situated as purchasers or lessees of computerized axial tomograph ("CAT") scanners designed and manufactured by Technicare. The amended complaint asserts claims of breach of contract, breach of warranty, and negligent design of various models of Technicare's CAT scanners. Exhibit "A" to the amended complaint purports to list Technicare's customers for CAT scanners, and to indicate the models of the machine acquired, the dates of installation, and the acquisition prices. The data in Exhibit A were collected by Bridge's counsel prior to the commencement of the action.

Technicare, taking the position that the information in Exhibit A is trade secret information which it has taken great pains to maintain as confidential, moved for a protective order, pursuant to the general equity jurisdiction of the district court, enjoining Bridge from using the trade data for any business or other purpose and from disclosing the data to any person not already a named party to the action, other than counsel for the parties who are working on the action. In support of its motion, Technicare stated that the parties had been in litigation in state court for several months over Bridge's failure to pay for the scanner it had purchased, and charged that the present action was a "spite suit" designed to cause unfavorable publicity, brought exactly as threatened by Bridge in an earlier letter to Technicare's top executive. (Transcript of hearing, March 25, 1983, at 5.) After hearing argument from both sides, the court entered a temporary restraining order on March 25, 1983, enjoining Bridge from disclosing the information in Exhibit A, pending an April 4, 1983 hearing on Technicare's motion for an injunction.

At the April 4 hearing, Technicare supplemented its earlier arguments to the court in support of a protective order, submitting to the court the Bridge letter adverted to on March 25 to support its contention that the present action is a spite suit, and suggesting that the information in Exhibit A had been obtained by Bridge from Technicare by improper means. It argued that dissemination of the data would irreparably injure it in terms of both its customer relations and its competitors' ability to tailor their sales propositions to Technicare's revealed pricing and lead times. Technicare requested discovery into Bridge's source for the Exhibit A data. Bridge opposed the injunction motion, arguing principally (1) that the trade data were not really secret since the names of Technicare's customers, the types of machines installed, and the dates of installation are available from publicly filed documents required by federal and state authorities, and pricing information is required by law to be publicly available; and (2) that because the information in Exhibit A had been compiled by Bridge's counsel prior to institution of the lawsuit and not as part of discovery proceedings in the lawsuit, the requested protective order would violate Bridge's First Amendment rights. Technicare argued that although various data might be gathered from a number of public sources, the convenient compilation in Exhibit A constituted a trade secret, and that trade secrets are a special category of information to which the First Amendment does not apply.

At the close of the April 4 hearing, the court orally granted Technicare's motion for an order prohibiting disclosure of the information in Exhibit A, relying on its authority under Fed. R. Civ. P. 26(c) to issue protective orders.*fn2 Although recognizing that "[t]he information was not obtained from defendants or any of its [sic ] agents within the context of pre-trial discovery," (Transcript of hearing, April 4, 1983 ("Tr."), at 42), the court concluded that it had authority under Rule 26(c)(7) to order the nondisclosure of Technicare's trade secrets.The court rejected Bridge's First Amendment argument on the ground that most of the authorities relied on by Bridge involved freedom of the press (id. at 45-47), and it construed International Products Corp. v. Koons, 325 F.2d 403 (2d Cir. 1963), also relied on by Bridge, as holding "that a prior restraint on information in a case not involving journalists was perfectly appropriate and more importantly for our purposes today, Constitutional." (Tr. 46, emphasis therein.) The court instructed the parties to submit a proposed order in accordance with its rulins.

Following the district court's temporary restraining order on March 25, Bridge had petitioned this Court for a writ of mandamus vacating the temporary restraining order. After being advised of Judge Bramwell's oral ruling of April 4, a panel of this Court denied the mandamus petition, with the notation that "[i]f the parties consider Judge Bramwell's order to be in the nature of a preliminary injunction, they may file a notice of appeal." (Order dated April 6, 1983.)

Upon entry of the April 11 Order, which embodied the district court's April 4 rulings, Bridge instituted the present appeal.

II. DISCUSSION

A. Reviewability

As a general matter we have interpreted § 1292(a)(1) to authorize an appeal only from an injunctive order that gives, or aids in giving, substantive relief sought in the lawsuit in order to preserve the status quo pending trial. See, e.g., Xerox Corp. v. SCM Corp., 534 F.2d 1031 (2d Cir. 1976); International Products Corp. v. Koons, supra, 325 F.2d at 406-07, and cases cited therein; see generally 9 Moore's Federal Practice P110.20[1], at 232-33 (2d ed. 1983). We have held nonappealable under § 1292(a)(1) orders that were unrelated to the ...


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