Capic v Ford Motor Company of Australia Limited (Suppression Orders)
[2020] FCA 982
•10 July 2020
FEDERAL COURT OF AUSTRALIA
Capic v Ford Motor Company of Australia Limited (Suppression Orders) [2020] FCA 982
File number(s): NSD 724 of 2016 Judge(s): PERRAM J Date of judgment: 10 July 2020 Catchwords: PRACTICE AND PROCEDURE – suppression orders under s 37AF of Federal Court of Australia Act 1976 (Cth) – whether interim order should be revoked - whether necessary to suppress documents to prevent prejudice to the proper administration of justice Legislation: Federal Court of Australia Act 1976 (Cth) ss 37AF, 37AG Cases cited: Motorola Solutions, Inc. v Hytera Communications Corporation (No 2) [2018] FCA 17
Steelforce Trading Pty Ltd v Parliamentary Secretary to the Minister for Industry, Innovation and Science (No 2) [2018] FCAFC 47
Date of hearing: 8 July 2020 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 34 Counsel for the First Applicant: Mr I R Pike SC with Ms F Roughley and Mr P Strickland Solicitor for the First Applicant: Corrs Chambers Westgarth Counsel for the Third Party Applicant on the Interlocutory Application: Mr N Kidd SC Solicitor for the Third Party Applicant on the Interlocutory Application: Hogan Lovells Counsel for the Respondent: Mr C Scerri QC with Ms K Anderson and Mr T Farhall Solicitor for the Respondent: Allens ORDERS
NSD 724 of 2016 BETWEEN: BILJANA CAPIC
First Applicant
FORD MOTOR COMPANY
Third Party Applicant on the Interlocutory Application
AND: FORD MOTOR COMPANY OF AUSTRALIA LIMITED ACN 004 116 223
Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
10 JULY 2020
THE COURT ORDERS THAT:
1.Order 1 made in this proceeding on 11 June 2020 be discharged insofar as it applies to the documents identified in Annexure A to these orders.
2.Order 1 of these orders is stayed until 12 pm on 14 July 2020.
3.The parties are to confer in relation to the documents identified in Annexure B to these orders and advise the Court of their position by 9 am on 13 July 2020.
4.The balance of the Applicant’s interlocutory application dated 29 June 2020, including the question of costs, be stood over to a date to be fixed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A
(i)FORD_DPS6-SAC_00035237
(ii)FOR.703.002.6676
(iii)VGS21412776
(iv)FOR.708.001.1432
(v)VGS20208896
(vi)VGS20228572
(vii)VGS20090076
(viii)VGS7-180958
(ix)FOR.708.001.1588
(x)VGS5-00143904
(xi)VGS20090294
(xii)VGS21238769
(xiii)VGS7-182552
Annexure B
(i)FOR.700.001.0001
(ii)FOR.700.005.0001
(iii)FOR.708.001.0008
(iv)FOR.710.007.6727
(v)FOR.712.001.5540
(vi)FOR.725.002.6125
(vii)FOR.725.014.6240
(viii)FOR.730.002.0578
(ix)FOR.700.002.0001
(x)FOR.703.002.6567
(xi)FOR.712.003.8986
(xii)FOR.706.001.0035
(xiii)FOR.708.001.1805
(xiv)FOR.708.001.2061
(xv)FOR.712.002.8368
(xvi)FOR.717.015.0001
(xvii)FOR.708.001.0536
(xviii)FOR.703.002.6592
(xix)FOR.708.001.0667
(xx)FOR.712.003.1134
(xxi)FOR.712.003.1129
(xxii)VGS20214427
(xxiii)VGS20336366
(xxiv)VGS20213493
(xxv)VGS20481759
(xxvi)VGS7-0048076
(xxvii)VGS20213041
(xxviii)VGS20232697
(xxix)VGS5-00192568
(xxx)VGS7-0152977
(xxxi)VGS20015802
(xxxii)VGS20041888
(xxxiii)VGS20044457
(xxxiv)VGS20045119
(xxxv)VGS20132860
(xxxvi)VGS20142994
(xxxvii)VGS20176117
(xxxviii)VGS20176118
(xxxix)VGS20209957
(xl)VGS20426549
(xli)VGS21412693
(xlii)VGS21513654
(xliii)VGS5-00170374
(xliv)VGS5-00264327
(xlv)VGS5-00274525
(xlvi)VGS21360700
(xlvii)FORD_DPS6-SAC_00039267
(xlviii)VGS5-00046647
(xlix)VGS5-00211554
(l)VGS6_0000137
(li)VGS7-0009635
(lii)VGS7-0033125
(liii)FORD_DPS6-SAC_00011382
(liv)VGS7-0021823
(lv)VGS7-0086237
(lvi)VGS7-0146367
(lvii)VGS20190906
(lviii)VGS20208852
(lix)VGS20336060
(lx)VGS20337150
(lxi)VGS20158926
(lxii)VGS20212883
(lxiii)VGS20228411
(lxiv)VGS5-00350992
(lxv)VGS21195217
(lxvi)FORD_DPS6-SAC_00056522
(lxvii)VGS20335895
(lxviii)FORD_DPS6-SAC_00037696
(lxix)VGS20012251
(lxx)VGS20062270
(lxxi)VGS20068641
(lxxii)VGS20346048
(lxxiii)VGS20415440
(lxxiv)VGS21355122
(lxxv)VGS5-00018100
(lxxvi)VGS5-00047984
(lxxvii)VGS5-00365586
(lxxviii)VGS5-00365654
(lxxix)VGS5-00365655
(lxxx)VGS5-00365662
(lxxxi)VGS5-00366683
(lxxxii)VGS5-00367159
(lxxxiii)VGS5-00371783
(lxxxiv)VGS7-0124423
(lxxxv)VGS7-0126388
(lxxxvi)VGS7-182369
(lxxxvii)VGS20426521
(lxxxviii)VGS20481752
(lxxxix)VGS21513649
(xc)VGS5-00143903
(xci)VGS5-00264324
REASONS FOR JUDGMENT
PERRAM J:
The question which now arises is whether the Court should lift or continue for a period of time certain suppression orders which have been made in relation to some of the documentary evidence in the trial. These reasons have been prepared under considerable time pressure in the midst of a trial and are therefore somewhat more shortly expressed than might ordinarily be the case.
On 11 June 2020 I made an interim suppression order that any document tendered in the proceeding which had been obtained from the Applicant’s application to the US District Court Central District of California (Western Division) pursuant to 28 USC §1782 not be published or have its contents referred to in open Court.
The Applicant was permitted under the order to make an application to set aside the suppression order on seven days notice to Ford Motor Company of Australia and also to its parent Ford Motor Company (‘Ford US’). Notice to Ford US was necessary as the documents which the Applicant obtained under §1782 were documents which were produced to the US District Court under 28 USC §1782 by Ford US.
On 16 June 2020 the Applicant notified Ford US that she intended to apply to discharge the suppression orders in relation to 85 identified documents. The Applicant has applied to discharge the interim suppression orders and Ford US has applied to make the interim order a final order.
POWER
The power of the Court to make suppression orders is contained in s 37AF of the Federal Court of Australia Act 1976 (Cth). What may be suppressed under that provision is ‘information’ having various characters including, relevantly, ‘information that comprises evidence or information about evidence’. So the Court has the power to suppress evidence which has been tendered before it (cf ‘The Court may suppress reference to or publication of evidence before it’). The grounds on which such an order may be made are set out in s 37AG(1) and include that the order is necessary to prevent prejudice to the proper administration of justice (cf ‘The Court may suppress reference to or publication of evidence before it if it necessary to prevent prejudice to the proper administration of justice’.)
The suppression of evidence is not lightly done given the backdrop of a legal tradition which favours open justice and abhors as repellent the discredited notion of secret trials with its long, dark history. That said, it is accepted that in commercial trials parties should not have their business models destroyed merely because they have become embroiled in litigation. Many businesses depend for their commercial success on the secrecy of their methods. Well-known examples of this phenomenon include the ‘recipe’ for Coca-Cola and the secret blend of herbs and spices in KFC. Neither of these is readily protected by the law of patents, trade marks or copyright and the firms involved typically maintain their exclusive use of the recipes by keeping them completely secret. An area of law exists to protect trade secrets of this kind (the law of confidential information).
It is therefore well established that in a case for the maintenance of a trade secret the Court is astute to ensure that the entire point of the suit is not sacrificed upon the altar of open justice. In a suit to restrain a competitor from using the secret recipe for Coca-Cola on the basis that it had been stolen it would be surprising if the manufacturer of the product was required to disclose in open court what the secret recipe was.
I accept that it is not necessary in every case that a trade secret in that sense should be established. I have previously explained the approach of this Court to claims for suppression orders in Motorola Solutions, Inc. v Hytera Communications Corporation (No 2) [2018] FCA 17 at [8] and [9] (‘Motorola’). This was approved by the Full Court in Steelforce Trading Pty Ltd v Parliamentary Secretary to the Minister for Industry, Innovation and Science (No 2) [2018] FCAFC 47. In Motorola the Court counselled against ‘carte blanche’ claims for confidentiality. And many cases have established the need for the suppression to be explained in clear terms specifying what the information to be protected is and why it needs protection. Generalisations and assertions will not suffice.
Ford US submits that the documents to which the application relate are of the requisite quality, that is to say, the documents contain information which are trade secrets or proprietary information which it should be entitled to keep out of the public domain and, more particularly, out of the hands of its competitors. I accept that if Ford US establishes that the documents have that quality then the Court should make a suppression order.
When the matter came on for hearing the parties submitted that I should make a determination in respect of 13 of the documents and this would be likely to provide them sufficient guidance to determine what should happen with the balance or, at the very least, substantially to narrow the ambit of the debate which remained between them.
EVIDENCE
The Applicant relied upon two affidavits of Christopher Pagent of 29 June 2020 and 5 July 2020. The first affidavit explained in general terms the nature of the documents in respect of which she now sought to have the interim suppression order lifted. In it, Mr Pagent says that the Ford US documents fell into four categories. First, documents which are referred to in the expert reports of Dr Jurgen Greiner and Mr Robert Kuhn. These gentlemen are engineering experts and will give evidence about the adequacy of the DPS6 transmission. Secondly, documents which according to Mr Pagent were made publicly available online in a publication known as the Detroit Free Press on 11 July 2019 and 6 December 2019. Thirdly, a document entitled ‘Lessons Learned’ which is a Ford US document which refers to difficulties which had been internally identified with the DPS6. Fourthly, system design documents prepared by Ford US to inform its production partners (such as Getrag, the manufacturer of the DPS6) on how the transmission should perform including tolerance and design requirements. The Applicant’s submission about this evidence was that it showed that the documents in question either lacked the necessary quality of confidentiality or had been publicly disclosed.
In response to this material, Ford US relied upon the affidavit of Mr Matthew Fyie of 3 July 2020. Mr Fyie is a designs analysis engineer with Ford US and works at its world headquarters in Michigan. Mr Fyie’s background is in mechanical engineering and it would be fair to say that he has spent a considerable portion of his professional life working with various Ford transmissions including, at present, investigating product concerns in relation to them. He also gave evidence that he was familiar with the various types of documents that Ford generated in the normal course of its business including engineering documents, root cause analysis, supplier communications, customer relations, price and finance data and dealer information. He also explained that he was ‘familiar with…why such documents are considered by Ford to be confidential’ and with the automotive market in which Ford operates including its competitors (§6).
Mr Fyie then gave some background to the documents in question. In his evidence he referred to 114 documents which he set out in Schedule 1 but, this was narrowed to 106 by the time of the hearing. The documents had all been created by Ford and had been produced by it pursuant to a subpoena issued by the US District Court in the Applicant’s §1782 proceeding in that Court. He observed, correctly, that these documents have, over time, been subject to confidentiality regimes put in place by this Court. Mr Fyie said that Ford US claimed confidentiality over only 80 of the 114 documents.
I have found Mr Fyie’s evidence to be of little assistance. Although it is long (122 paragraphs) and uses the words ‘proprietary’, ‘confidential’, ‘methodology’ and ‘trade secret’ at every turn, it is thin on detail about any particular piece of information or the nature of the risks posed by the release of that information. I do accept that it establishes these propositions:
·The work of Ford US’s engineers is important to it and the company would prefer for their work to remain confidential;
·How it processes concerns about the performance of its cars involves engineers and it would prefer for this kind of work to be kept confidential;
·It has procedures for dealing with product concerns which it has developed over the years and it would prefer for these to be kept confidential;
·It has spent a lot of time and money on these matters.
But none of that is the present question. The present question is why the publication of the documents in open Court would damage Ford US’s business such that the unusual step of suppressing evidence in a public trial is necessary. What is involved here is not a confidentiality order in relation to discovered documents but an order departing from the model of open justice. As I have explained, the power of the Court to do so certainly exists but it is not lightly to be exercised. It must be necessary for the proper administration of justice. A party seeking the exercise of this power must do more than deal in platitudes about confidentiality. It must descend into the material and explain what it is about the material which means that if it is not suppressed its business will be damaged. It must identify the information which it seeks to protect and it must explain the harm which will flow if that information is not suppressed. Mr Fyie’s evidence does not do this.
To return to the example of the secret herbs and spices used by KFC, no doubt the way KFC processes and cooks its chickens is something which it would prefer its competitors not to know, but the only trade secret which this Court would protect would be the 11 herbs and spices. It would not be enough for KFC to come to Court and say that it has spent a lot of time and money learning how to cook chickens and it would be advantageous to its competitors to know about its culinary processes. Instead, it would need to submit that the herbs and spices were a significant part of its flavour experience that competitors could not replicate and that public release of the recipe would allow others to cook chickens the same way and thereby to erode its market share. What Mr Fyie’s affidavit is missing is the 11 herbs and spices although it has, if I may say, plenty on cooking chickens.
THE 13 DOCUMENTS
Turning then to the 13 documents upon which a ruling is sought it transpires that these may be grouped into 11 sets.
6 Panel Reports: documents VGS 21412776 and FOR 708.001.1432
Ford US put its case on these documents on two bases. First, it was said that the 6 Panel Reports involved a particular methodology which Ford US had generated for solving problems and that it had put a lot of effort into this. I reject this submission. The 6 Panel Reports are examples of a famous problem solving methodology known as 6 Sigma which was not developed by Ford US and about which one can find a book in most bookstores. It has been around for several decades. There is nothing confidential about it and it is not the work of Ford US.
Secondly, it was said that the 6 Panel Reports contained protectable technical information. I invited counsel to take me to some particular item of information in these reports and explain to me precisely what the difficulty with the release of that information would be. The invitation was not accepted. Close perusal of Mr Fyie’s affidavit does not reveal the identification of any information which is protectable or other than to say in a meaninglessly generalised way what the problem with public release would be. I reject the claim.
8D Reports: document FOR 703.002.6672
Ford US made the same submissions for these documents claiming that it had developed the 8D methodology which it was entitled to protect. However, as with 6 Sigma Ford US did not invent the 8D methodology either. It too is an internationally well-known methodology for problem solving. As with the 6 Panel Reports Mr Fyie’s evidence does not establish what it is in relation to the technical material which would damage Ford US’s business if it were made public.
14D Reports: document Ford DPS6-SAC_00035237
Ford US made the same submissions about these documents. In this case it is true that Ford US appears to have created the 14D methodology but it has done this only by six further D’s. To my mind, having looked at the D’s (ie disciplines) which have been added there is nothing remotely sufficient in them to justify the extreme step of suppressing evidence in a trial in open court. And, as with the 6 Panel and 8D Reports, Mr Fyie’s evidence does not identify any information in them which ought not to be disclosed in open Court.
DPS6 Lessons Learned Papers 22 August 2012: documents VGS20208896 and VGS20228572
These are internal Ford US documents. They were produced for executives to understand the issues which had arisen by 2012 with the DPS6. They contain a detailed analysis of the difficulties which had been encountered, the likely causes of those difficulties and the production processes which had led to them. They are certainly important and, if I may say, somewhat sensitive documents. Mr Fyie said that these documents, taken together, identified milestones developed and measured by Ford over time. The first of these documents makes five references to milestones. Mr Fyie did not make any reference to these in his affidavit beyond what I have mentioned. He did not say what the milestones were and he did not say what each of their commercial significance was.
Ford US’s submissions also did not do this. Against the possibility that there might be something in what Ford US was saying even if no-one was saying it on its behalf, I have examined each of the milestones. The first is a graph which indicates that its discovery of software and hardware problems did not meet an ‘ideal trajectory’. It would appear that on the graph it is the ideal trajectory which is the milestone. I cannot see how this line is useful information. Mr Fyie did not explain why it was.
The second reference to a milestone was a reference to adhere to processes at ‘each’ milestone. There is nothing confidential about this. The third reference is similar. The fourth reference identifies milestones. It is a table. Four processes were identified and the milestone was that they were meant to be complete by 2012. Two were; one was in-process and one was developing. I do not understand what a competitor would do with this information. The final reference to milestones was in a table and did no more than identify that they had not been achieved. Again, I do not understand what possible use this would be to a competitor.
Mr Fyie then said each of these milestones were trade secrets because they revealed Ford US’s proprietary business strategies and the processes by which it measured success over time. It was said that much time and money had been expended on developing them and competitors would want to know them. This evidence is not credible by reference to what the document actually says about milestones.
The same is true of the second document. I reject the claim. In any event, it appears that these documents have already found their way into the public domain in the Detroit Free Press which on two occasions has published articles about them including quotations from them so it is doubtful that they are even confidential any more. However, I do not base my decision on that matter.
DPS6 NVH Task Force Status 20 August 2012: document VGS20090076
Mr Fyie identified this document as a Powerpoint presentation concerned with root cause analysis for the DPS6. He said they disclosed Ford US’s strategy for diagnosing problems with those of its cars which had the DPS6 in them. Mr Fyie said this was confidential because it identified Ford US’s engineering analysis for understanding NVH issues that were specific to the DPS6 and would reveal the problem solving approaches of its engineers. Mr Fyie said that competitors would be able to use these to their advantage. He did not identify any particular thought process he had in mind and he did not explain exactly what a competitor would do with it. I reject the claim.
DPS6 Evidence Book 22 November 2013: document VGS7-180958
This document is a book containing an analysis of the root cause of the difficulties with the DPS6. The document is 335 pages in length. Mr Fyie did not identify any particular information in this book as giving rise to a problem. Instead he said that it revealed Ford US’s problem solving and analytical framework for its root cause analysis. Its disclosure would reveal ‘specific’ information regarding ‘the thought process and problem-solving skills’ of Ford engineers. Its release would allow competitors to benefit by developing similar methodologies. However, Mr Fyie did not identify any of the ‘specific’ information and I am not going to read 335 pages trying to find it. Mr Fyie also said that the book contained warranty projections and the financial investment Ford US had made on corrective and preventative measures. He said that the formula used to do this was proprietary to Ford US and that competitors could use it. He did not however identify the formula or tell me where I might find it in the 335 pages or explain what advantage a competitor would obtain at Ford US’s expense if it started using the same formula although he did say it would give them an ‘unfair’ advantage. This is not sufficient. I reject the claim.
DPS6 Task Force PD-Status 9 April 2013: document FOR 708.0011588
This is a 2013 document generated by Getrag which deals with various problems with the DPS6. It is not clear that Mr Fyie dealt with this document although this may be due to aberrant numbering in the evidence. I have examined the document. It explains in detail the problems with the DPS6. I do not apprehend anything approaching a trade secret within it and I struggle to see what a competitor would do with it. To the extent that Ford US says that it is a trade secret because Getrag gave it to Ford US, I reject the suggestion.
DPS6 Related Complaints 2 December 2013: document VGS5-00143904
This document did not appear to be dealt with in Mr Fyie’s affidavit. This document collects in tabular form data about complaints. I do not see how it could contain trade secrets.
Dual Dry Clutch Cooling 5 January 2012: document VGS20090294
This is an article generated within Ford. It contains the suggestion that equipping the DPS6 with a cooling system would have ‘significantly improved with external fan air flow’ (which appears to be the gravamen of Dr Greiner’s evidence on one view). Mr Fyie said that this article is confidential because it demonstrates Ford US’s engineering techniques and that Ford US’s processes of developing and improving the design and performance of its vehicle systems is a trade secret. Whilst I would accept that an identified process could be a trade secret with appropriate evidence this is not what Mr Fyie has said.
System Engineering Statement of Work for PS195 Twin-Dry Powershift Transmission: document VGS21238769
This is a document issued to Getrag telling it what Ford US wanted Getrag to make. For example, it said that Ford US wanted a transmission and clutch system that was 90% reliable for 10 years or 150,000 kms and that certain fuel targets were to be met. Mr Fyie said that this document contained proprietary information about Ford US’s processes for bidding, analysing and considering supplier selection, overall project timing, milestones, gateways and requirements. He thought it was ‘important’ for supplier relations. Mr Fyie said that competitors could use it to their advantage. He did not identify which parts of what advantage. He said that Ford US liked to keep its dealings with suppliers confidential. That may be accepted. What may not be accepted is that anything approaching the standard required under s 37AG has been established.
Deposition of Mr Fyie 22 November 2016: document VGS7-182552
This was Mr Fyie’s deposition in related proceedings in the US. He gave testimony about the 14D Reports and Ford US’s root cause analyses. For reasons already given this information does not warrant a suppression order.
CONCLUSIONS
None of the 13 documents is shown to require a suppression order. I will therefore lift the interim confidentiality order in relation to the 13 documents. I will direct the parties to confer in relation to the balance of the documents. Ford US sought a stay of these orders so that it could consider seeking leave to appeal. Were leave sought from me I would reject the application. The Court is in the midst of a public trial and the continued suppression of this material is inimical to open justice. Nevertheless I will grant a stay until noon next Tuesday so that it can approach another judge if it should be so advised. I make the orders contained in the email sent to my chambers at 1.56 pm (after I had announced the result).
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 10 July 2020
0
2
1