South Carolina Recognizes Trade-Secrets Privilege

Answering the 4th Circuit’s certified question, the South Carolina Supreme Court, in a 4–1 decision, adopted a trade-secrets privilege—even though the state’s trade-secrets statute never mentions “privilege.”  The new privilege is qualified, meaning a party may obtain otherwise privileged trade secrets by proving a substantial need for the information.  Hartsock v. Goodyear Dunlop Tires N. Am., Ltd, 2018 WL 1938540 (S.C. Apr. 25, 2018).  You may read the opinion here.

Tragic Accident

While traveling on I–26 in Calhoun County, S.C., a Monaco RV’s tire “blew out,” allegedly causing the RV to cross the median and strike head-on a car in which Sarah Mills Hartsock was a passenger.  Mrs. Hartsock died as a result, and her husband sued Goodyear in federal court under diversity jurisdiction alleging that Goodyear’s tire was defective.

Federal Discovery Rules or State Privilege Law?

Goodyear sought a protective order to preclude plaintiff from obtaining “the design and chemical composition of the allegedly defective tire,” and specifically the tire liner’s butyl content.  The magistrate judge applied a federal-law balancing test, rather than state law, and denied the protective-order request. You may read the magistrate judge’s opinion here.

The district judge adopted the magistrate judge’s ruling without substantive comments, but granted an interlocutory appeal.  The issue before the 4th Circuit is whether federal discovery rules or South Carolina privilege law governs the trade-secrets-disclosure issue.  This issue begs the question that the federal appellate court certified to the South Carolina Supreme Court:

Does South Carolina recognize an evidentiary privilege for trade secrets?

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