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1 David S. Gingras, #021097
Gingras Law Office, PLLC
2 4802 E. Ray Road, #23-271
Phoenix, AZ 85044
3 Tel.: (480) 264-1400
Fax: (480) 248-3196
4 David@GingrasLaw.com
5 Attorney for Defendant
Andrew Tuohy
6
UNITED STATES DISTRICT COURT
7
DISTRICT OF ARIZONA
8
FireClean, LLC, et al., Case No: 4:16-cv-00604-JAS-EJM
9
10 Plaintiffs, DEFENDANT’S OBJECTION TO
REPORT AND RECOMMENDATION
11 v. OF THE MAGISTRATE JUDGE DATED
12 APRIL 17, 2018
Andrew Tuohy,
13 (ORAL ARGUMENT REQUESTED)
Defendant.
14
GINGRAS LAW OFFICE, PLLC
4802 E. RAY ROAD, #23-271

15 Pursuant to Fed. R. Civ. P. 72(a), Defendant Andrew Tuohy (“Mr. Tuohy”)
PHOENIX, AZ 85044

16 respectfully submits the following Objection to the Report and Recommendation issued

17 on April 17, 2018 by Magistrate Judge Markovich (ECF Doc. #71).

18 I. INTRODUCTION

19 As explained in prior briefing, this is a defamation case. Among other things,

20 Plaintiffs sued Mr. Tuohy for stating that their product, a gun oil called FireClean, is

21 “probably just vegetable oil”. As a result of this alleged defamation, Plaintiffs seek more

22 than $2.5 million in compensatory damages – an amount more than double the entire

23 gross revenue of their company from its inception in August 2012 to the date Mr.

24 Tuohy’s comments were first published in September 2015.

25 Like any defamation case, the threshold issue is truth – were the challenged

26 statements true? Further, under the “substantial truth” doctrine, even a technically false

27 statement remains protected if “gist” or “sting” of the truth was equally bad. See Sign

28 Here Petitions LLC v. Chavez, 402 P.3d 457, 465 (Ariz. App. 2017).
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1 To prove his words were true, Mr. Tuohy recently propounded a handful of simple
2 discovery requests — three short interrogatories — asking Plaintiffs for extremely
3 limited information about FireClean’s contents. For example, the first interrogatory asked
4 how much of FireClean was vegetable oil and how much was anything else. The second
5 interrogatory asked Plaintiffs to list FireClean’s basic ingredients and the approximate
6 percentage content of each. The third interrogatory asked for the name of each ingredient
7 and the source from which those ingredients were purchased.1
8 Rather than providing answers to these simple and straightforward questions,
9 Plaintiffs vehemently objected to every one. The only substantive information Plaintiffs
10 provided was a partial answer to Mr. Tuohy’s first interrogatory (the one which asked
11 how much of FireClean was vegetable oil and how much was something else). In that
12 partial response, Plaintiffs admitted FireClean contained “over 99%” vegetable oil, but
13 they refused to respond to anything else.
14 The primary basis for Plaintiffs’ objections was that all of the requested
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15 information was either a “trade secret” or otherwise proprietary/confidential in some way.
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16 Plaintiffs thus argued they were excused from providing any response beyond their
17 admission that FireClean contained “over 99%” vegetable oil. After Plaintiffs refused to
18 compromise or consider any alternatives, Mr. Tuohy moved to compel (ECF Doc. #61).
19 After briefing from both sides, on April 17, 2018 Magistrate Judge Markovich
20 issued a report and recommendation (ECF. Doc. #71). The judge held that Plaintiffs’
21 objection to the first interrogatory was without merit, and Plaintiffs were ordered to fully
22 respond to the unanswered part of that question (which they still have not done).
23 Aside from that one minor point, the judge ruled in favor of Plaintiffs on every
24 other issue. In short, the judge held Plaintiffs’ alleged trade secrets trumped Mr. Tuohy’s
25 right to obtain evidence proving that his statements were true.
26 1
The source of ingredients has special relevance here because Plaintiffs accuse Mr.
27 Tuohy of making false statements regarding the source of their raw materials. The list of
ingredients was also relevant because Plaintiffs allege FireClean contains a “proprietary
28
blend” of three oils which makes it materially different than a single type of oil.
2
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1 The effect of this holding is simple – Mr. Tuohy has been denied the right to obtain
2 relevant evidence showing that his statements are true. As explained below, this result is
3 clearly erroneous and contrary to law. Accordingly, pursuant to Fed. R. Civ. P. 72(a), Mr.
4 Tuohy respectfully objects to the report and asks this Court to overrule it.
5 II. ARGUMENT
6 a. Preliminary Comments
7 This much is clear—truth is always relevant in every defamation case. Here, the
8 Magistrate Judge refused to allow Mr. Tuohy to obtain evidence that bears directly on the
9 truth of his statements. As a result, if this recommendation is adopted, the only evidence
10 that a jury would hear on that point are Plaintiffs’ own unverified statements about
11 FireClean’s ingredients and the source(s) from which they were obtained.2
12 This outcome is unprecedented. Despite diligent research, undersigned counsel
13 has been unable to locate any previous decision from any court anywhere in the United
14 States wherein a defamation defendant was denied the right to pursue discovery into the
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15 truth of the disputed statements based on the same “trade secret” arguments. Not
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16 surprisingly, Plaintiffs cited no such authority in their briefing on this point.
17 Not only is this result remarkable, it is also internally inconsistent with Plaintiffs’
18 own arguments. Specifically, on the one hand, Magistrate Judge Markovich determined
19 that based on Plaintiffs’ “trade secret” arguments, Plaintiffs would not be required to
20 provide any specific information about the contents of FireClean, even though this
21 information was highly relevant. Yet on the other hand, the judge ignored a key point –
22 that according to Plaintiffs’ own arguments, the same “trade secret” information which
23 the court refused to require Plaintiffs to produce can be deduced from the report of
24 Plaintiffs’ expert, Dr. Davis (a point which Mr. Tuohy believes is entirely false).
25 2
Plaintiffs intend to present expert testimony from Dr. Davis. However, insofar as Mr.
26 Tuohy can tell from his heavily-redacted report, Dr. Davis has not expressed any opinion
that Mr. Tuohy’s comments about FireClean were false. Further, since Dr. Davis
27 apparently does not know what FireClean’s true ingredients are (or where they were
obtained), it does not appear that Dr. Davis could express any opinion about the veracity
28
of Mr. Tuohy’s comments regarding the source and/or cost of FireClean’s ingredients.
3
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1 Specifically, in addition to raising this argument in opposition to Mr. Tuohy’s
2 Motion to Compel, Plaintiffs also sought a protective order (ECF Doc. #51) relating to a
3 report from Dr. Davis. Mr. Tuohy opposed this request on numerous grounds, including
4 the fact that Plaintiffs failed to provide a copy of Dr. Davis’ report to the Court, and the
5 version Plaintiffs’ provided to undersigned counsel was so heavily redacted that it was
6 impossible to determine what “confidential” information the report contained, if any. Mr.
7 Tuohy also noted that it appeared Dr. Davis’s report did not contain any specific
8 information about FireClean’s contents or their source.
9 In response, Plaintiffs admitted that Dr. Davis’ report did not identify the formula
10 for FireClean, nor did it identify any of FireClean’s ingredients. Nevertheless, Plaintiffs
11 argued that Dr. Davis’s report should be subject to a protective order because:
12
[A]lthough FC’s specific formulation is not identified in Dr. Davis’s
13 chemical comparison report, the report contains information on “chemical
comparisons among [FC] and canola oil and soybean oil[,]” and “provides
14 data not generally known to the public that could be used, in combination
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15 with previously disclosed information, to narrow down or identify the
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components of the trade-secret formulation.”
16
17 Report & Recommendation at 4:16–20 ECF Doc. #71 (emphasis added).
18 The Magistrate Judge fully accepted this bizarre argument. As a result, the court
19 refused to order Plaintiffs’ to answer Mr. Tuohy’s interrogatories while also granting
20 Plaintiffs’ request for a protective order relating to Dr. Davis’ report.
21 These conflicting holdings make no sense. If Dr. Davis’s report contains
22 information that could be used to identify the ingredients in FireClean’s formula,3 then
23 disclosing the report is equivalent to disclosing the formula itself. In that case, rather than
24 wasting time paying competing experts to speculate about what FireClean might contain,
25 Plaintiffs should simply be ordered to provide that information directly.
26 3
As noted above, Mr. Tuohy believes this is simply not true. Among other things,
27 Plaintiffs’ pleadings never identified the specific “information” or “data” that they were
referring to, nor did Plaintiffs explain how Dr. Davis obtained that data, nor did Plaintiffs
28
explain how Dr. Davis’s report could be used to identify FireClean’s ingredients.
4
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1 b. Preliminary Comments re: FireClean v. Fennell
2 In his report and recommendation, the Magistrate Judge appeared to place
3 substantial weight on rulings made by another District Court in a different case filed by
4 Plaintiff. See ECF Doc. #71 at 11:16–18. Unfortunately, the Magistrate Judge relied on
5 false and misleading representations by Plaintiffs about that prior case. Accordingly,
6 some extensive clarification is required before discussing other issues.
7 This case was, in fact, preceded by two earlier cases filed by FireClean in the
8 Eastern District of Virginia. The first was styled FireClean, LLC v. George Fennell, et.
9 al, Case No. 1:16-cv-293 (the “Fennell litigation”).4 The other case was FireClean, LLC
10 v. Andrew Tuohy and Everett Baker, Case No. 1:16-cv-294 (the “Baker litigation”).5
11 The Fennell litigation, the Baker litigation, and the instant matter all share some
12 common features, but the cases were also very different. First, the defendants in the
13 Fennell litigation (Mr. Fennell and his company, Steel Shield) were direct competitors of
14 FireClean. See Fennell FAC ¶¶ 38–95. That fact was absent in the Baker litigation, and it
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15 is not present here. Notably, Mr. Tuohy was never a party to the Fennell litigation and he
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16 had no opportunity, and no reason, to participate in that proceeding.6
17 The primary claim at issue in the Fennell litigation was a Lanham Act false
18 advertising claim. The claim was based statements by Mr. Fennell, allegedly made in the
19 context of commercial advertising, stating that FireClean was “Wesson Oil”. Fennell
20 FAC ¶ 39; Gingras Decl. Ex. 6. Mr. Fennell made other specific statements asserting
21 there was “no difference” between FireClean oil and Crisco oil. Id. ¶ 57.
22
4
23 The operative pleading in the Fennell litigation – FireClean’s First Amendment
Complaint; ECF Doc. #295 (the “Fennell FAC”; excluding exhibits) is attached as
24 Exhibit 6 to the declaration of David Gingras (“Gingras Decl.”) submitted herewith.
5
25 The operative pleading in the Baker litigation is FireClean’s original Complaint; ECF
Doc. #1 (the “Baker Complaint”; excluding exhibits). Gingras Decl. Exhibit 7.
26 6
The Virginia Court never reached the underlying merits in the Baker litigation because
27 the case was dismissed for lack of personal jurisdiction. See FireClean, LLC v. Tuohy,
2016 WL 3952093 (E.D.Va. 2016). The Court also never reached the merits in the
28
Fennell litigation because that case was settled in March 2017.
5
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1 In contrast to Mr. Fennell’s relatively narrow and specific statements, Mr. Tuohy’s
2 comments were entirely different. Rather than suggesting FireClean was a specific name-
3 brand product like Crisco-brand oil, after reviewing scientific tests performed by third
4 parties, Mr. Tuohy simply stated that it appeared FireClean was “probably just vegetable
5 oil” – a far more generalized assertion than Mr. Fennell’s, and one which Plaintiffs (and
6 their expert Dr. Davis) appear to now concede is entirely true. More significantly, this
7 Court has already held that the Lanham Act does not apply to Mr. Tuohy’s statements
8 because, inter alia, Mr. Tuohy and FireClean are not competitors, and unlike the Fennell
9 litigation, none of Mr. Tuohy’s comments were made in commercial advertising.
10 These points demonstrate a critical difference between this case and the Fennell
11 litigation. Commercial speech (as in Fennell) is not entitled to the same level of First
12 Amendment protection as non-commercial speech (as in Baker and this case). Because of
13 this, the legal standards for a Lanham Act false advertising claim are categorically
14 different from the standards for a defamation claim. For example, in a defamation case a
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15 statement must be factually false to be actionable, and even when a statement is literally
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16 false, it is not defamatory provided that the “gist” or “sting” is substantially true; “A
17 factual statement need only be substantially true in order to be protected from a suit for
18 defamation.” Unelko Corp. v. Rooney, 912 F.2d 1049, 1057 (9th Cir. 1990).
19 The Lanham Act’s legal standards are completely different. Most notably, the
20 Lanham Act allows relief even when the defendant’s statement is literally true; “Even if
21 an advertisement is not literally false, relief is available under Lanham Act § 43(a) if it
22 can be shown that the advertisement has misled, confused, or deceived the consuming
23 public.” Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1140 (9th Cir. 1997).
24 This is, of course, exactly why Plaintiffs tried (unsuccessfully) to bring a Lanham Act
25 claim in this case – because the standards for false advertising are much less protective of
26 speech making it far easier for a plaintiff to prevail.
27 In sum, Fennell was primarily a Lanham Act false advertising case arising from
28 relatively narrow and specific statements made by Mr. Fennell in commercial advertising
6
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1 asserting that FireClean was “Wesson” or “Crisco” oil. Due to the highly-specific nature
2 of those statements and the lower level of First Amendment protection applied to
3 commercial speech, the District Court in Virginia initially took a somewhat narrow and
4 restrictive view of the allowable scope of discovery. However, the Virginia court still
5 allowed Mr. Fennell to pursue discovery into FireClean’s ingredients while Magistrate
6 Judge Markovich denied all such discovery in this case.
7 Judge Markovich’s decision was based, at least in part, on an erroneous belief that
8 the Virginia court denied the same discovery in the Fennell litigation. In fact, although
9 the Virginia court initially refused to require Plaintiffs to divulge FireClean’s complete
10 formula (which Mr. Tuohy has not requested here), the court did allow Mr. Fennell to
11 obtain other discovery regarding FireClean’s ingredients such as credit card statements
12 showing purchases of raw materials used by Plaintiffs. Those statements revealed
13 purchases from a restaurant supply store called “Restaurant Depot”. Upon learning this,
14 Mr. Fennell served a subpoena on Restaurant Depot seeking more information about
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15 Plaintiffs’ purchases including the specific raw materials used to make FireClean.
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16 FireClean moved to quash Mr. Fennell’s subpoena, arguing that it sought
17 confidential trade secret information. This is exactly the same argument that Plaintiffs
18 made here, and it is the same argument accepted by Magistrate Judge Markovich.
19 But contrary to Plaintiffs’ representations to this Court, the Virginia court denied
20 Plaintiffs’ Motion to Quash Mr. Fennell’s subpoena to Restaurant Depot. The
21 relevant pleadings are submitted herewith -- FireClean’s Motion to Quash; see Gingras
22 Decl. Exhibit 8; Mr. Fennell’s Opposition is Exhibit 9; and the District Court’s order
23 denying FireClean’s motion is Exhibit 11. For purposes of clarification – the name
24 “Restaurant Depot” does not appear in these exhibits because the parties in the Fennell
25 litigation initially stipulated to the entry of a blanket protective order. Because Mr. Tuohy
26 was not a party to the case, he is unaware of exactly which documents (or information)
27 the parties agreed to mark confidential and/or the extent to which those agreements were
28 affected by later rulings from the Court or by subsequent agreements of the parties.
7
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1 However, after reviewing pleadings on PACER from the Fennell litigation, it was
2 discovered that some documents were incorrectly redacted in a way that allows the
3 redacted text to be seen. One example is shown below using the caption and first
4 paragraph from Mr. Fennell’s Opposition to FireClean’s Motion to Quash:
5 “Redacted” Version of Fennell Opposition to Motion to Quash; Gingras Decl. Ex 9
6
7
8
9
10
11
12 “Unredacted” Version; Gingras Decl. Ex 10
13
14
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17
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19 As it relates to the name “Restaurant Depot”, this discovery does not reveal
20 anything that was not already known. This is so because the Virginia Court subsequently
21 determined the name “Restaurant Depot” was not confidential or proprietary in any way.
22 For instance, on February 23, 2017, the Virginia Court denied a motion by FireClean
23 seeking to seal records containing the name “Restaurant Depot”. That denial was based
24 on the fact that “the information sought to be sealed [the name “Restaurant Depot”] [is]
25 now in the public record (Docket no. 468) and portions of that information have been in
26 the public record for months based on previous rulings by the court involving credit card
27 statements.” Gingras Decl. Exhibit 13. Accordingly, the Virginia Court refused to seal
28 this information or remove it from other pleadings where it appeared.
8
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1 However, a review of other pleadings from the Fennell case (conducted after the
2 receipt of the report and recommendation from the Magistrate Judge in this case) has
3 revealed new and troubling information which appears to directly contradict the sworn
4 statements by Plaintiffs made in this case. For example, below is an excerpt from a
5 pleading filed by Mr. Fennell discussing the records he subsequently obtained from
6 Restaurant Depot. According to Mr. Fennell’s brief, those records showed Plaintiffs
7 purchased precisely two raw materials for the production of FireClean – “Chef’s Quality
8 and Fry n Fry canola oil.” Gingras Decl. Exhibit 12.
9
10
11
12
13
14
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16 This evidence directly contradicts the sworn statement of Plaintiff Edward Sugg
17 submitted in this case in which he denied that FireClean contained repackaged canola oil.
18 Indeed, Mr. Sugg represented to this Court that Mr. Tuohy “has falsely stated or implied
19 that FIREClean® is a repackaged bottle of a single brand-name or common canola or
20 common soybean oil.” ECF Doc. 51–2 at ¶ 16 (emphasis added). This evidence also
21 clearly illustrates the misunderstanding expressed by Magistrate Judge Markovich when
22 he mistakenly accepted Plaintiffs’ assertion that “they have already disclosed test results
23 to Defendant showing that [FireClean] is not the same or substantially the same as canola
24 or soybean oil.” ECF Doc. #71 at 13:6–8 (emphasis added). Not only have Plaintiffs not
25 disclosed any such information, the new evidence from the Fennell case suggests that
26 Plaintiffs’ sworn statements to this Court regarding the contents of FireClean were
27 completely false. Importantly, that same concern was shared and noted by the District
28 Court in Virginia – before Mr. Fennell obtained this evidence from Restaurant Depot.
9
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1 Specifically, although the Virginia Court allowed Mr. Fennell to pursue some
2 discovery into FireClean’s contents, the judge initially refused to order Plaintiffs to
3 produce the complete formula for FireClean. Despite this, at an early hearing held on
4 September 23, 2016, the Court expressed a willingness to change that decision “If other
5 evidence comes up and we find out that Mr. Sugg was less than truthful in his declaration
6 [about the FIREClean formula], I certainly would reconsider that and have this – the
7 formula produced, if there is other information that may come up.” Gingras Decl.
8 Exhibit 9 at 1–2 (emphasis added).
9 After the Virginia Court made this statement (in September 2016), Mr. Fennell
10 obtained records from Restaurant Depot which appear to prove that FireClean is, in fact,
11 repackaged canola oil – thus confirming that Mr. Sugg was “less than truthful” about this
12 point. That information was not known to the Virginia Court at the time it refused to
13 order Plaintiffs to produce the complete formula for FireClean, nor was this information
14 available to Mr. Tuohy or to Magistrate Judge Markovich.
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15 Not surprisingly, faced with the knowledge that Mr. Fennell had obtained
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16 evidence showing Mr. Sugg was not truthful about the contents of FireClean, Plaintiffs
17 agreed to dismiss all claims against Mr. Fennell in March 2017 almost immediately after
18 this discovery. As a result, the Virginia Court was never asked to revisit the issue of
19 whether Plaintiffs should be ordered to disclose FireClean’s formula, even though the
20 court indicated that it would change its ruling if evidence was obtained showing that Mr.
21 Sugg was not truthful about this point. That is, of course, exactly what has now occurred.
22 Under these circumstances, and for the additional reasons explained below,
23 Magistrate Judge Markovich clearly erred when he relied on Plaintiffs’ false
24 representations regarding the Fennell case as justification to deny any discovery into
25 FireClean’s contents or raw ingredients. Indeed, Mr. Tuohy’s third interrogatory (which
26 simply asked Plaintiffs to state the name of each ingredient and the name of the vendor
27 from which that ingredient was purchased) asked for nothing more than the same type of
28 information which Virginia court allowed Mr. Fennell to obtain.
10
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1 Given the far greater First Amendment protection afforded to non-commercial
2 speech in a case arising from a matter of public concern (like this one), and particularly in
3 light of the newly-discovered evidence showing that Plaintiffs have not been truthful
4 regarding FireClean’s contents, there is no reason to permit less discovery into
5 FireClean’s ingredients than was allowed in Fennell. On the contrary, this Court should
6 do exactly what the Virginia Court said it would do – order Plaintiffs to disclose
7 information that will conclusively reveal which party is telling the truth and which is not.
8 c. Trade Secrets Are “Virtually Always” Discoverable When Relevant
9 Other issues aside, the Magistrate Judge’s refusal to order Plaintiffs to disclose
10 information about FireClean’s contents was clearly contrary to law. It is beyond dispute
11 that, “There is no privilege excepting trade secrets from discovery ... .” BioD, LLC v.
12 Amnio Tech., LLC, 2014 WL 3864658, at *4 (D. Ariz. Aug. 6, 2014) (emphasis added);
13 see also Fed. Open Market Comm. of Fed. Reserve Sys. v. Merrill, 443 U.S. 340, 362, 99
14 S.Ct. 2800, 61 L.Ed.2d 587 (1979) (explaining, “there is no absolute privilege for trade
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15 secrets and similar confidential information ... The courts have not given trade secrets
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16 automatic and complete immunity against disclosure, but have in each case weighed their
17 claim to privacy against the need for disclosure. Frequently, they have been afforded a
18 limited protection.”)
19 Because there is no special privilege allowing a party to withhold relevant
20 information on trade secret grounds, “orders forbidding any disclosure of trade secrets or
21 confidential commercial information are rare.” Federal Open Market Comm. 443 U.S. at
22 362 n. 24, 99 S.Ct. at 2813 n. 24 (emphasis added). Indeed, “A survey of the relevant
23 case law reveals that discovery is virtually always ordered once the movant has
24 established that the secret information is relevant and necessary.” Coca-Cola Bottling Co.
25 of Shreveport, Inc. v. Coca-Cola Co., 107 F.R.D. 288, 293 (D.Del. 1985).
26 No case illustrates these points better than the classic decision in Coca-Cola
27 Bottling Co. of Shreveport. That case involved a dispute between The Coca-Cola
28 Company and several of its bottlers over the pricing of the syrup used to make Coke.
11
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1 As the case explains, “most of the ingredients [in Coke] are public knowledge ...”,
2 however “the ingredient that gives Coca-Cola its distinctive taste is a secret combination
3 of flavoring oils and ingredients known as ‘Merchandise 7X.’ The formula ... has been
4 tightly guarded since Coca-Cola was first invented and is known by only two persons
5 within The Coca-Cola Company.” Coca-Cola Bottling Co., 107 F.R.D. at 289.
6 In 1921, The Coca-Cola Company entered into an agreement with its bottlers to
7 sell syrup containing Merchandise 7X at a variable price depending on the cost of sugar.
8 Years later in 1982, the company introduced a new product – diet Coke – which became
9 a huge success. That success immediately sparked a pricing dispute between The Coca-
10 Cola Company and its bottlers. The central question was whether the new product (diet
11 Coke) contained the same ingredients as ‘Merchandise 7X’ and was therefore subject to
12 the same pricing agreement as original Coke.
13 To prove that diet Coke and original Coke contained the same ingredients, the
14 plaintiffs (bottlers of original Coca-Cola and diet Coke) asked The Coca-Cola Company
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15 to “produce the complete formulae, including secret ingredients, for Coca-Cola, diet
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16 Coke ... [and other Coke products].” Id. at 291–92. Exactly as FireClean has done here,
17 The Coca-Cola Company refused to disclose this information on the basis that the
18 formula for ‘Merchandise 7X’ was a closely-guarded trade secret.
19 Like Mr. Tuohy, the bottlers moved to compel, arguing that they needed the
20 formula to ‘Merchandise 7X’ to refute arguments by Coca-Cola asserting “that Coca-
21 Cola and diet Coke are two different products.” Id. at 292 (emphasis added). This is
22 virtually the same purpose and posture as this case. Here, Plaintiffs have argued that
23 FireClean oil and vegetable oil are two different substances, and Mr. Tuohy believes that
24 assertion is false and is seeking evidence to refute Plaintiffs’ claim.
25 Without question, the formula for Coke’s ‘Merchandise 7X’ is an enormously
26 valuable trade secret – arguably the single most valuable trade secret in the world. To
27 underscore that point, in 2017 The Coca-Cola Company earned a gross profit of $22
28 billion on sales of $35 billion, and the company employs more than 700,000 people
12
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1 worldwide.7 By comparison, FireClean employs just two people (Plaintiffs Edward and
2 David Sugg), and although Plaintiffs have refused to disclose any of their more recent
3 data, records from the Fennell litigation show FireClean’s gross sales averaged about
4 $25,000/mo. or $300,000/yr. total during the 49 months between the inception of the
5 company in August 2012 and the end of August 2016.8
6 While FireClean’s modest sales numbers are not inconsequential, it is clear the
7 value of Coca-Cola’s secret formula for ‘Merchandise 7X’ far exceeds the value of
8 FireClean’s formula. Despite this, the Delaware District Court agreed the bottler’s right
9 to discover the truth, and their right to challenge Coke’s claim that diet Coke did not
10 contain Merchandise 7x, was more important than Coke’s interest in safeguarding its
11 secrets; “Except for a few privileged matters, nothing is sacred in civil litigation; even the
12 legendary barriers erected by The Coca-Cola Company to keep its formulae from the
13 world must fall if the formulae are needed to allow plaintiffs and the Court to determine
14 the truth in these disputes.” 107 F.R.D. at 290 (emphasis added).
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15 The same principles apply equally here. As the party seeking to avoid discovery,
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16 Plaintiffs bear the initial burden of proving the information sought qualifies as a trade
17 secret or is otherwise sufficiently confidential to warrant either limited or complete
18 protection. If (and only if) that showing is made, the burden shifts to Mr. Tuohy to show
19 that the requested information is relevant and necessary to the claim or defense. If both
20 showings are made, the Court may then balance the risk of harm against the need for
21 disclosure, but “[o]nce the moving party has established relevance and necessity, the
22 discovery is virtually always ordered.” Hyundai Motor Am., Inc. v. Pinnacle Grp., LLC,
23 2016 WL 6156213, at *3 (C.D. Cal. 2016) (emphasis added) (citing extensive authority).
24 Of course, the Magistrate Judge reached the opposite conclusion in this case based on a
25 clearly erroneous application of the law to the facts.
26
7
27 See: https://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/2018/2017-10K.pdf
8
This financial data was publicly disclosed by Plaintiffs in ECF Doc. #354-5 filed on
28
January 13, 2017 in the Fennell litigation.
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Case 4:16-cv-00604-JAS-EJM Document 74 Filed 05/01/18 Page 14 of 18

1 d. Mr. Tuohy Never Asked Plaintiffs To Produce The “Complete
2 Formula” to FireClean And None Of The Other Information
Requested Was Confidential or Proprietary In Any Way
3
4 Here, based solely on cursory declarations from Plaintiffs, the Magistrate Judge

5 found that FireClean’s formula constituted a trade secret. On that basis, the judge refused

6 to allow Mr. Tuohy to obtain any information about FireClean’s ingredients other than

7 requiring Plaintiffs to identify the total percentage of the product which is not vegetable

8 oil (something Plaintiffs have still refused to do). This holding was contrary to law

9 because even assuming the complete formula was a trade secret, Mr. Tuohy met his

10 burden of showing that this information was highly relevant and necessary to the case.

11 But separate and apart from that point, the Magistrate Judge also erred for a

12 completely different reason – because Mr. Tuohy never asked Plaintiffs to disclose their

13 complete formula. Rather, Mr. Tuohy only asked for extremely basic information such as

14 the name of each ingredient and the name of the vendor(s) from which those ingredients
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15 were purchased. As noted above, this request sought essentially the same information
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16 which the Virginia Court allowed Mr. Fennell to obtain. That result was not surprising

17 given that the information requested was not proprietary, nor would it compromise the

18 value of Plaintiffs’ complete trade secrets.

19 Indeed, Plaintiffs have admitted as much in this case. Specifically, in an email

20 dated January 31, 2018 (Gingras Decl. Exhibit 3) Plaintiffs’ counsel confirmed that the

21 information sought by Mr. Tuohy was not the complete formula to FireClean and was

22 not sufficient to allow someone to duplicate the product. Specifically, Ms. Tracy-Ramirez

23 stated “the trade secret information includes more than the components and their

24 percentages and yes, folks would need to know more than those two things to get to the

25 finished product.” Gingras Decl. Ex. 3 (emphasis added). Plaintiffs offered no other

26 explanation to show that the information was confidential or proprietary in any way.

27 In his report and recommendation, the Magistrate Judge recognized this point, see

28 ECF Doc. #71 at 9:13–15, but then simply ignored it. It appears this decision was swayed
14
Case 4:16-cv-00604-JAS-EJM Document 74 Filed 05/01/18 Page 15 of 18

1 by Plaintiffs’ false claim that Mr. Tuohy was engaged in a conspiracy with Mr. Fennell
2 and that as a result, Mr. Tuohy may attempt to disclose Plaintiffs’ formula to Mr. Fennell
3 or others. Indeed, the Magistrate Judge expressly “found” that based on that unproven
4 allegation, a protective order would not be sufficient because Mr. Tuohy might violate
5 that order and share confidential information with others. See ECF Doc. #71 at 10:12–18.
6 Putting aside the fact that Plaintiffs have offered no evidence whatsoever to
7 support their “conspiracy” (or aiding and betting) claim,9 and putting aside the fact that it
8 is clear Mr. Fennell has already obtained most, if not all, of the same information at issue
9 here, the evidence plainly shows that Mr. Tuohy is not seeking to learn Plaintiffs’
10 formula for any nefarious purpose. On the contrary, while meeting and conferring with
11 Plaintiffs’ counsel, undersigned counsel attempted to resolve this dispute by allowing
12 Plaintiffs to provide some basic information about FireClean without even disclosing the
13 names of the actual ingredients involved. See Gingras Decl. Exhibit 2. One suggestion
14 was to have Plaintiffs provide a very basic chart that listed only the number of ingredients
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15 and their relative percentages using generic names such as “Ingredient 1” and so forth.
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16 Plaintiffs rejected that offer without any meaningful explanation or excuse.
17 The information sought by Mr. Tuohy’s interrogatories (if provided) would be no
18 more specific than the list of basic ingredients provided on the side of every bottle and
19 can of Coca-Cola sold in the United States. Despite this, without any legitimate
20 explanation, Plaintiffs rejected this compromise and refused to provide any information
21 about the contents of their product other than an irrelevant list of fatty acid content. This
22 refusal strongly suggests that Plaintiffs are not attempting to protect a legitimate trade
23 secret; they are attempting to conceal the truth.
24
9
Notably, FireClean also attempted – unsuccessfully – to allege a similar “conspiracy”
25 between Mr. Tuohy and Mr. Baker in the Baker litigation. The Virginia Court rejected
26 this claim, finding that FireClean failed show a plausible conspiracy; “Plaintiff’s
conspiracy allegations do not satisfy the plausibility pleading requirement ... . Although
27 such a conspiracy is logically possible, it is not plausible based on the facts in this
record.” FireClean, LLC v. Tuohy, 2016 WL 3952093, *8 (E.D.Va. 2016) (emphasis
28
added).
15
Case 4:16-cv-00604-JAS-EJM Document 74 Filed 05/01/18 Page 16 of 18

1 e. The Magistrate Judge’s “Finding” That A Protective Order Would Not
2 Be Sufficient Was Clearly Erroneous

3 As noted above, Magistrate Judge Markovich refused to require Plaintiffs to
4 release any specific information regarding FireClean’s contents – not even a basic list of
5 ingredients. In doing so, the judge bestowed greater protection upon FireClean than The
6 Coca-Cola Company has received for its multi-billion dollar formula for Coke (the basic
7 ingredients in Coke are listed on the side of every can). That fact underscores the truly
8 extraordinary nature of the error here.
9 Putting that issue aside, the judge made another even more serious error. As the
10 District Court noted in Coca-Cola, even when a trade secret is sought, the appropriate
11 result is not to deny discovery completely. Rather, the proper result is to order the
12 information disclosed subject to a protective order; “Because protective orders are
13 available to limit the extent to which disclosure is made, the relevant injury to be weighed
14 in the balance is not the injury that would be caused by public disclosure, but the injury
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15 that would result from disclosure under an appropriate protective order. In this regard, it
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16 is presumed that disclosure to a party who is not in competition with the holder of the
17 trade secret will be less harmful than disclosure to a competitor.” Coca-Cola Bottling,
18 107 F.R.D. at 293 (emphasis added).
19 Here, rather than ordering Plaintiffs to provide discovery subject to a protective
20 order, the Magistrate Judge did something extraordinary – he determined that a protective
21 order would not “adequately protect the trade secret information in this case.” ECF Doc.
22 #15:13–14. To reach that result, the judge determined that Mr. Tuohy would likely
23 violate any protective order issued by this court for two reasons: 1.) because Mr. Tuohy
24 has made public comments on his personal website about this case and has posted a
25 handful of pleadings such as dispositive motions; and 2.) because Plaintiffs allege that
26 Mr. Tuohy previously “aided and abetted” a competitor -- Mr. Fennell.
27 Neither of these points justified the Magistrate Judge’s extraordinary decision here.
28 First, like Mr. Tuohy, Plaintiffs have also published comments about this case online.
16
Case 4:16-cv-00604-JAS-EJM Document 74 Filed 05/01/18 Page 17 of 18

1 See, e.g., http://www.thefirearmblog.com/blog/2016/04/11/fireclean-releases-statement-
2 on-vuurwapen-lawsuit/. Of course, litigants have a First Amendment right to comment on
3 pending litigation and any order restricting or (as occurred here) punishing a litigant for
4 expressing such views raises serious First Amendment concerns. See In re Dan Farr
5 Productions, 874 F.3d 590, 591 (9th Cir. 2017) (reversing as per se unconstitutional
6 “‘suppression orders’ prohibiting Petitioners from expressing their views on the pending
7 litigation and from republishing public documents over social media platforms.”)
8 Second, there was no factual basis of any kind for the Magistrate Judge to conclude
9 that Mr. Tuohy was likely to violate a protective order by disclosing information to Mr.
10 Fennell or anyone else. Plaintiffs have provided no evidence whatsoever to show that
11 their allegations regarding the aiding and abetting claim have any evidentiary support
12 and, as noted above, the Virginia Court previously found that FireClean had failed to
13 present any plausible basis for this type of claim in the Baker litigation. See FireClean,
14 LLC v. Tuohy, 2016 WL 3952093, *8 (E.D.Va. 2016) (“Plaintiff’s conspiracy allegations
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15 do not satisfy the plausibility pleading requirement ... . Although such a conspiracy is
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16 logically possible, it is not plausible based on the facts in this record.”)
17 III. CONCLUSION
18 This Court should find that Plaintiffs have failed to show that any of the
19 information requested by Mr. Tuohy’s interrogatories is confidential and/or a trade secret.
20 However, even if the Court agreed that this information is confidential, it should
21 nevertheless find that Mr. Tuohy is entitled to this disclosure, subject to an appropriate
22 protective order. The Court should also award Mr. Tuohy his fees incurred in bringing the
23 original motion and this objection pursuant to Fed. R. Civ. P. 37(a)(5)(A).
24 DATED May 1, 2018.
25
GINGRAS LAW OFFICE, PLLC
26
/S/ David S. Gingras
27 David S. Gingras
28 Attorney for Defendant
17
Case 4:16-cv-00604-JAS-EJM Document 74 Filed 05/01/18 Page 18 of 18

1 CERTIFICATE OF SERVICE
2
3 I hereby certify that on May 1, 2018 I electronically transmitted the attached document to
4 the Clerk’s Office using the CM/ECF System for filing, and for transmittal of a Notice of
5 Electronic Filing to the following:
6
7
Edward C. Hopkins Jr., Esq.
8 Alexandra Tracy-Ramirez Esq.
9 HOPKINSWAY PLLC
7900 E. Union Ave., Ste. 1100
10 Denver, Colorado 80237
11
/s/David S. Gingras
12
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GINGRAS LAW OFFICE, PLLC
4802 E. RAY ROAD, #23-271

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PHOENIX, AZ 85044

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