R.j. Reynolds Tobacco v. PHILIP MORRIS, INC., PHILIP MORRIS, INCORPORATED WaWa, Inc

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-4226
R.J. REYNOLDS TOBACCO
v.
PHILIP MORRIS, INC.,
PHILIP MORRIS, INCORPORATED
WaWa, Inc.,
Appellant
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 01-mc-00193)
District Judge: Honorable Marvin Katz
Argued January 17, 2002
Before: ALITO and ROTH, Circuit Judges
SCHW ARZER*, District Judge
(Opinion filed : February 28, 2002)
* Honorable William W Schwarzer, Senior District Judge for the Northern
District of California, sitting by designation.
Nicholas J. Lisi, Esquire

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1 The underlying action in this case is pending in the U.S. District Court for the
Middle District of North Carolina. There, R.J. Reynolds and two other tobacco producers
sued Phillip Morris, alleging that its Retail Leaders Program violates federal antitrust and
state unfair trade practices laws.
2
Jason Miles Levien, Esquire (Argued)
Padova & Lisi
1900 Spruce Street
Philadelphia, PA 19103
Attorney for Appellee
Robert G. Devine, Esquire (Argued)
Michael W. Horner, Esquire
White & Williams
222 Haddon Avenue, Suite 300
Westmont, NJ 08108
Attorney for Appellant
O P I N I O N
ROTH, Circuit Judge
Wawa, a non-party and retail distributor of defendant Phillip Morris’s tobacco
products, appeals two discovery orders issued by the District Court for the Eastern
District of Pennsylvania.1 The first order, entered on November 15, 2000, directed Wawa
to produce certain documents requested in plaintiff R.J. Reynolds’ subpoena. The second
order, entered on November 20, 2000, directed Wawa to pay its own expenses in
complying with the subpoena. We will affirm the first order and reverse the second.
JURISDICTION AND STANDARD OF REVIEW

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2
1
Cf. Mycogen Plant Science, Inc. v. Monsanto Co., 164 F.R.D. 623, 625-26 (E.D.
3
As a non-party, Wawa cannot appeal the District Court’s orders at the conclusion
of R.J. Reynolds’ suit against Phillip Morris in North Carolina. Thus, these orders are
final orders over which we have appellate jurisdiction. 28 U.S.C. § 1291; In re: Mark
Madden, 151 F.3d 125, 127 (3d Cir. 1998). Our standard of review is whether the
District Court abused its discretion. James Wm. Moore, 9 Moore’s Federal Practice §
45.04[8][b] (3d ed. 2001).
NOVEMBER 15 ORDER
R.J. Reynolds’ subpoena requests documents and information concerning W awa’s
cigarette business, especially its dealings with Phillip Morris and Phillip Morris’s Retail
Leaders Program. The documents and information that R.J. Reynolds seeks under this
subpoena are subject to a protective order entered in the North Carolina action. The
protective order provides that the “information and documents provided shall be used
only for purposes of the instant litigation and shall not be otherwise disclosed.”
Nevertheless, Wawa refused to produce certain documents requested by R.J. Reynolds on
the ground that they are privileged trade secrets.
Wawa advances two main arguments on appeal. First, it argues that R.J.
Reynolds’ subpoena exceeds the scope of relevant discovery permitted under Fed. R. Civ.
P. 26(b)(1). Although the Federal Rule governing subpoenas is Rule 45, and not Rule
26,2 it is not necessary to resolve this distinction here. R.J. Reynolds’ subpoena meets the

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Pa. 1996) (applying Rule 26 on a motion to quash a third party subpoena).
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requirements of Rule 26 in any event. Rule 26(b)(1) allows discovery regarding “any
matter, not privileged, that is relevant to the claim or defense of any party.” Here, R.J.
Reynolds has requested documents related to Wawa’s retail cigarette business and
dealings with Phillip Morris. This information plainly relates to R.J. Reynolds’ antitrust
claims challenging Phillip Morris’s Retail Leaders program.
Second, Wawa argues that its documents are privileged as trade secrets and, thus,
not obtainable under Fed. R. Civ. P. 45(c)(3)(B)(i). Wawa has the burden of establishing
that its documents are privileged. See Charles Alan Wright & Arthur R. Miller, 9A Fed.
Prac. & Proc. § 2458 (1995); Fed. R. Civ. P. 45(d)(2) (when information subject to a
subpoena is withheld under a claim of privilege, it must be supported by a sufficient
description of the nature of the documents produced). Although Wawa has assembled a
privilege log listing certain documents as trade secrets, the skeletal descriptions in its
privilege log do not support a trade secret privilege for many documents. See, e.g. A118
(listing “various daily log entries” as trade secrets); A119 (listing “interoffice emails”
with “various” authors and “various” addressees as trade secrets); A121 (listing “various
miscell. Wawa notes/correspondence” as trade secrets).
Even if Wawa’s privilege log did establish that certain documents were trade
secrets, however, Wawa’s argument would still fail. This is because Wawa cannot meet
the additional showing of good cause for restricting dissemination on the ground that it

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would be harmed by its disclosures. Charles Alan Wright, Arthur R. Miller & Richard L.
Marcus, 8 Fed. Prac. & Proc. § 2043 (1994). The disclosure required by R.J. Reynolds’
subpoena would be made under the limitations of the protective order entered in North
Carolina. That order restricts the use of information gained from Wawa to the pending
antitrust and unfair trade practices litigation between R.J. Reynolds, Phillip Morris and
other tobacco producers. In light of this protective order, Wawa has not presented
sufficient showing of harm to establish that the District Court abused its discretion in
ordering production.
Therefore, we find that the District Court did not abuse its discretion in requiring
Wawa to comply with R.J. Reynolds’ subpoena.
NOVEMBER 20 ORDER
The District Court also denied Wawa fees and costs incurred as a result of its
compliance with R.J. Reynolds’ subpoena. We find that the court abused its discretion
when it summarily denied compensation without considering evidence of the expenses
Wawa incurred.
Fed. R. Civ. P. 45(c)(2)(B) imposes mandatory fee shifting and directs the court to
“protect” a nonparty from “significant expense resulting from inspection and copying
commanded.” Thus, district courts must determine whether the subpoena imposes
expenses on a non-party and whether those expenses are significant. James Wm. Moore,
9 Moore’s Federal Practice § 45.04[2] (3d ed. 2001). Significant expenses must be borne

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by the party seeking discovery. Id. The District Court abused its discretion when it
denied Wawa compensation without determining the existence and magnitude of Wawa’s
expenses.
CONCLUSION
We will affirm the District Court’s November 15, 2000, order requiring Wawa to
comply with R.J. Reynolds’ subpoena. We will reverse the District Court’s November
20, 2000, order and remand this case to the District Court to make findings regarding
Wawa’s expenses and to award any expenses required by Fed. R. Civ. P. 45(c)(2)(B).
/s/ Jane R. Roth
Circuit Judge

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