In Sim et al v Motion Specialties et al[i], the Ontario Superior Court of Justice considered a motion by a defendant manufacturer to have documents relevant to a product’s design and manufacturing processes protected from disclosure by a confidentiality order on the basis that production would jeopardize the company’s commercial interests. In deciding the motion, Justice Carey considered both the substance of the defendant’s arguments and the broader context of the litigation. On the merits, he found that the defendant had not met the high bar required to justify the granting of such an order because the product had a low level of uniqueness and the implied undertaking rule would provide sufficient protection from disclosure. In the context of the litigation overall, the Court found that the motion added an unnecessary delay and significant costs to already protracted proceedings, such that it caused serious prejudice to the plaintiff and co-defendants. The Court declined to grant the confidentiality order and required that the information at issue be disclosed.
In February 2019, the plaintiff Jarrett Sim was stepping out of his shower and placed his hand on a safety bar installed on the wall for support. The bar ripped free and gave way, causing Mr. Sim to fall and injure himself. The safety bar was a “Grab Bar System” manufactured by the defendant Moen Incorporated (Moen) and installed by the defendant Motion GP Inc. (Motion).[ii] Mr. Sim sued both Moen and Motion for negligence in the manufacture and installation of the safety bar, as well as product liability under the Ontario Sale of Goods Act. In a pro forma defence, Moen denied that it was the manufacturer of the safety bar, and alleged that the plaintiff was the cause of his own injury. Alternatively, Moen alleged that the co-defendant Motion had failed to properly install the bar.
At the documentary discovery stage, Moen took the position that a number of the relevant records contained proprietary product design and manufacturing information that would put its commercial interests at risk and sought an order protecting the confidentiality of almost 70 designs associated with the Grab Bar System.[iii] Moen argued that the designs were highly proprietary, and that the plumbing accessory business in Canada was so competitive that any disclosure of the designs would seriously impact Moen’s commercial and business viability.[iv] On the other hand, the plaintiff argued that the motion was premature, unnecessary, and that a search of Canada’s Intellectual Property Database found no patent or industrial design applications in Canada pertaining to the Grab Bar System. The plaintiff also argued that the design was so simple that any engineering company could reverse engineer the product if it so wished.[v]
The test for when confidential business information may be sealed from the public record remains the Supreme Court of Canada’s decision in Sierra Club of Canada v Canada (Minister of Finance)[vi]. In Sierra Club, the plaintiff Sierra Club of Canada sought judicial review of a decision of the Minister of Finance to approve a $1.5 billion loan to Atomic Energy of Canada Limited (AECL), a Crown corporation. AECL was granted the loans for the construction and delivery of two CANDU nuclear reactors to China. During the course of proceedings, the plaintiffs requested production of a set of technical documents relating to environmental assessments of the reactors in order to cross-examine an employee of AECL. AECL claimed confidentiality over these documents, as they had been obtained from the Chinese authorities on a condition of confidentiality. Accordingly, AECL moved for an order that the documents be sealed so that they would not be disseminated to the public.[vii] In granting the confidentiality order, Justice Iaccobucci, speaking for the Court, set out a two-part test for whether a confidentiality order was justified:
A confidentiality order under Rule 151 should only be granted when:
(a) such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and
(b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings.[viii]
The test in Sierra Club represents a “high bar,” given that it sets the open court principle against commercial interests. On the first factor, Justice Iaccobucci noted that an “important commercial interest” must “be one which can be expressed in terms of a public interest in confidentiality,” and “cannot merely be specific to the party requesting the order.”[ix]
In support of his analysis in Sim, Justice Carey also cited Letang v Hertz Canada Limited[x]. In that case, Justice Strathy (as he then was) considered a motion for a confidentiality order brought by the plaintiffs, the owners of a group of Tim Hortons franchises. The plaintiff franchisees argued that the disclosure of information about the par baking process for Tim Hortons’ baked goods would give competitors a market advantage.[xi] Justice Strathy rejected this contention in relation to the first factor in the Sierra Club test, noting that the information was “of the most general nature and at the very lowest level of ‘secrecy’.”[xii] Furthermore, there was no evidence that any competitor of Tim Hortons was capable of developing the necessary par baking infrastructure in order to take advantage of any information disclosed.
In applying Sierra Club and Letang to the case at bar, Justice Carey found that Moen had established neither an important commercial interest, nor that there were no reasonable alternative measures to the confidentiality order.[xiii] He accepted the plaintiff’s evidence that the Grab Bar System could be easily duplicated, and concluded that the level of secrecy of the designs fell below the threshold for requiring confidentiality.[xiv] His Honour found that Moen’s assertion that its competitive position would be seriously damaged by the exposure of the designs appeared to be “hyperbole, bordering on fantasy.”[xv] Finally, the protection afforded through the implied undertaking rule, which provides that documents produced in a proceeding are not to be used for purposes collateral to that proceeding, was sufficient to protect the “low level, if any, of uniqueness” that may exist with respect to the impugned designs.[xvi]
Justice Carey was also critical regarding the circumstances surrounding the bringing of the motion. First, it had been three years since the incident that had caused Mr. Sim’s injury. Moen’s objections regarding the allegedly confidential nature of its documents, and Moen’s motion, had caused unnecessary delay that was prejudicial to the plaintiffs and to the co-defendant.[xvii] Delay, as the Court held, is a “serious form of prejudice that undermines affordability and proportionality and rots the uncompromisable goals of fairness and justice.”[xviii] Moreover, Moen had filed a costs outline claiming actual costs on the motion to be in excess of $21,000, which the Court noted “hardly [seemed] to be in the spirit of the guiding principles of the Rules. The Rules are not designed to give advantage to the party with the deepest pockets.”[xix]
This case serves as a caution that a motion for a sealing or confidentiality order with respect to allegedly proprietary information should only be brought in the clearest of cases and supported by compelling evidence. The test for a confidentiality order remains a “high bar” in Ontario. A party seeking a confidentiality order must establish that the disclosure of the information at issue would impact an interest “that goes beyond harm to the private commercial interests of a person or a business.”[xx] By contrast, a party seeking to resist a motion for a confidentiality order can do so effectively by bringing evidence that shows the information in question has a low level of uniqueness or otherwise does not warrant protection greater than that afforded by the deemed undertaking rule.
More broadly, a party who is considering a confidentiality order should keep in mind how it fits into the bigger picture of the litigation and pay particular attention to factors like the duration of the litigation, the complexity of the matter, and the effect on the other parties of added delay. A party seeking a confidentiality order should also consider whether the deemed undertaking rule provides sufficient protection, or if not, whether other reasonable alternatives to a blanket confidentiality order exist, such as redactions, providing summaries of confidential information, or counsel-eyes only reviews.
If you have any questions about this insight or confidentiality orders in product liability cases, please reach out to Amer Pasalic.
[i] 2022 ONSC 1557 [Sim].
[ii] Ibid at para 4.
[iii] Ibid at para 19.
[iv] Ibid at paras 1, 19.
[v] Ibid at para 21.
[vi] 2002 SCC 41 [Sierra Club].
[vii] Ibid at paras 6-10.
[viii] Ibid at para 53.
[ix] Ibid at para 55.
[x] 2015 ONSC 72 at para 19 [Letang].
[xi] Ibid at para 13.
[xii] Ibid at para 66.
[xiii] See Sim, supra note i at para 23.
[xiv] Sim, supra note i at para 24.
[xvi] Ibid at para 25.
[xvii] See ibid at para 26.
[xviii] See ibid at para 27, citing Letang, supra note xi at para 19.
[xix] Ibid at para 21.
[xx] See Letang, supra note xi at para 23.