Preventing Disclosure of Trade Secrets and Other Confidential Business Information to Competitors
With its decision in this case, issued on August 10, 2010, the Connecticut Supreme Court has provided much-needed clarity on an issue of great concern to all who do business in the state, namely the scope of protection provided under state law for confidential business information subpoenaed by the state’s Attorney General (“AG”) during an antitrust investigation.
Connecticut Antitrust Statute § 35-42 authorizes the AG to demand, prior to filing a lawsuit, written and oral discovery from “any person” (including, as in this case, third parties not suspected of violating the law) when the AG has “reason to believe” that an antitrust violation has occurred. The statute also provides that any subpoenaed materials “shall not be available to the public.” In this case, in an insurance industry investigation, the AG subpoenaed as a witness Brown & Brown, an insurance intermediary that provides insurance and reinsurance products and services. Seeking to protect its subpoenaed confidential information from disclosure, Brown & Brown attempted to negotiate with the AG for a protective order. The AG, however, asserted that, despite the express language of the statute, he was not prevented from disclosing a subpoenaed business’s confidential information to third parties in the course of his investigation (e.g., as an exhibit shown to a witness at a deposition). In the face of the AG’s refusal to agree to any protection for its subpoenaed information, Brown & Brown sued the AG in state court, seeking a declaration that the statute barred the AG from disclosing any of its subpoenaed materials to anyone outside the AG’s office. The trial court denied Brown & Brown’s motion for summary judgment, and Brown & Brown appealed to the Connecticut Supreme Court.
NELF filed an amicus briefs in support of Brown & Brown both at the trial and appellate levels, arguing that the plain meaning of the statute’s injunction that subpoenaed materials “shall not be available to the public” is that custody of and access to the materials are restricted solely to the AG’s office and that, therefore, the statute bars anyone else from gaining access to the materials without the targeted business’s consent. NELF pointed out that this reading of the statute strikes a reasonable balance by allowing the AG broad access to confidential information in the broad exercise of its unreviewable, pre-suit investigatory powers, but precluding the AG from sharing that information with others, thereby preventing potentially irreversible damage to a business’s stability and growth.
In its decision, the Connecticut Supreme Court, embracing many of NELF’s arguments, reversed the trial court’s decision and held that the Act bars the AG from disclosing subpoenaed materials to anyone else (other than federal or state law enforcement officials, as provided by the Act, so long as they agree to maintain the strict confidentiality of the materials). The Court agreed with NELF that the clear meaning of the statutory language restricted both custody and access exclusively to the AG, and further agreed with NELF that this legislative choice reflected a careful balance between the needs of government investigations and the proprietary concerns of the business community. The court explained: “[A]lthough [the legislature] granted broad investigatory powers to the [AG] to pursue antitrust violators, [it] also intended to afford counterbalancing protections to investigatory targets in recognition of the potential sensitivity of internal business information and the fact that the defendant's investigation need not be founded on any specified level of suspicion and, ultimately, might result in no allegations of wrongdoing.”
With its decision in this case, issued on August 10, 2010, the Connecticut Supreme Court has provided much-needed clarity on an issue of great concern to all who do business in the state, namely the scope of protection provided under state law for confidential business information subpoenaed by the state’s Attorney General (“AG”) during an antitrust investigation.
Connecticut Antitrust Statute § 35-42 authorizes the AG to demand, prior to filing a lawsuit, written and oral discovery from “any person” (including, as in this case, third parties not suspected of violating the law) when the AG has “reason to believe” that an antitrust violation has occurred. The statute also provides that any subpoenaed materials “shall not be available to the public.” In this case, in an insurance industry investigation, the AG subpoenaed as a witness Brown & Brown, an insurance intermediary that provides insurance and reinsurance products and services. Seeking to protect its subpoenaed confidential information from disclosure, Brown & Brown attempted to negotiate with the AG for a protective order. The AG, however, asserted that, despite the express language of the statute, he was not prevented from disclosing a subpoenaed business’s confidential information to third parties in the course of his investigation (e.g., as an exhibit shown to a witness at a deposition). In the face of the AG’s refusal to agree to any protection for its subpoenaed information, Brown & Brown sued the AG in state court, seeking a declaration that the statute barred the AG from disclosing any of its subpoenaed materials to anyone outside the AG’s office. The trial court denied Brown & Brown’s motion for summary judgment, and Brown & Brown appealed to the Connecticut Supreme Court.
NELF filed an amicus briefs in support of Brown & Brown both at the trial and appellate levels, arguing that the plain meaning of the statute’s injunction that subpoenaed materials “shall not be available to the public” is that custody of and access to the materials are restricted solely to the AG’s office and that, therefore, the statute bars anyone else from gaining access to the materials without the targeted business’s consent. NELF pointed out that this reading of the statute strikes a reasonable balance by allowing the AG broad access to confidential information in the broad exercise of its unreviewable, pre-suit investigatory powers, but precluding the AG from sharing that information with others, thereby preventing potentially irreversible damage to a business’s stability and growth.
In its decision, the Connecticut Supreme Court, embracing many of NELF’s arguments, reversed the trial court’s decision and held that the Act bars the AG from disclosing subpoenaed materials to anyone else (other than federal or state law enforcement officials, as provided by the Act, so long as they agree to maintain the strict confidentiality of the materials). The Court agreed with NELF that the clear meaning of the statutory language restricted both custody and access exclusively to the AG, and further agreed with NELF that this legislative choice reflected a careful balance between the needs of government investigations and the proprietary concerns of the business community. The court explained: “[A]lthough [the legislature] granted broad investigatory powers to the [AG] to pursue antitrust violators, [it] also intended to afford counterbalancing protections to investigatory targets in recognition of the potential sensitivity of internal business information and the fact that the defendant's investigation need not be founded on any specified level of suspicion and, ultimately, might result in no allegations of wrongdoing.”
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