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Gateway Logistics, Inc. v. Smay - 2013 CO 25, 302 P.3d 235

Rule:

The scope of discovery is very broad. Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party. Colo. R. Civ. P. 26(b)(1). The information sought need not be admissible at trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. Nevertheless, parties do not have an unlimited right to discovery of all available information. When a party invokes the right to confidentiality or privacy, the trial court must balance the policy in favor of broad disclosure with the individual's right to keep personal information private.

Facts:

Defendant Christopher Smay worked for two related transportation and logistics companies, Gateway Logistics, Inc. and Gateway Freight Solutions, Inc. (collectively, “Gateway”), the plaintiffs in this case. In July 2010, Smay resigned and started two competing transportation companies, defendants Republic Cargo and Republic Freight, LLC. Alleging that Smay had contacted their customers before he resigned in an attempt to take the customers to his new businesses and that he had taken documents including Gateway’s price lists and customer contact information, Gateway sued Smay for breach of loyalty, breach of fiduciary duty, and misappropriation of trade secrets. At trial, the plaintiffs sought to inspect computers, smartphones, and other electronic storage devices belonging to defendant and his wife, as well as telephone records. The trial court ordered the inspection and production. The defendants challenged the decision.

Issue:

Did the trial court commit an abuse of discretion by granting a motion to compel discovery?

Answer:

Yes.

Conclusion:

The Supreme Court held that the scope of discovery under Colo. R. Civ. P. 26(b)(1) was very broad. However, when a party invoked the right to privacy or confidentiality, the trial court had to balance the policy in favor of broad disclosure with an individual's right to keep personal information private. Here, the trial court abused its discretion by granting a motion to compel discovery without making findings of fact balancing the defendants' asserted privacy interest with the plaintiffs' need for the information sought as required by In re District Court. It failed to take into account the nonparty status of defendant's wife, which weighed against the disclosure of her information.

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