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Video Gaming Technologies, Inc. v. Castle Hill Studios LLC

United States District Court, N.D. Oklahoma

June 18, 2019

VIDEO GAMING TECHNOLOGIES, INC., Plaintiff,
v.
CASTLE HILL STUDIOS LLC; CASTLE HILL HOLDING LLC; and IRONWORKS DEVELOPMENT, LLC, Defendants.

          OPINION AND ORDER [1]

          JODI F. JAYNE, MAGISTRATE JUDGE UNITED STATES DISTRICT COURT

         Before the Court is Defendants' Motion Challenging Plaintiff's Designations Under the Protective Order (“Motion”), which requests that the Court “issue an Order removing Plaintiff's ‘Highly Confidential' or ‘Confidential' designations” from the challenged pretrial discovery materials. ECF No. 285 at 14.[2] For reasons explained below, the Motion is denied.

         I. Relevant Background

         A. Claims and Defenses

         Plaintiff Video Gaming Technology, Inc. (“VGT”) alleges that VGT and Defendants Castle Hill Studios, LLC, d/b/a Castle Hill Gaming, Castle Holdings, LLC, and Ironworks Development, LLC (“Castle Hill”) are competitors who distribute Class II bingo-based player terminals. VGT alleges Castle Hill, which was founded by former VGT employees, copied VGT's games and improperly used its trade secrets. VGT sued Castle Hill for (1) trademark infringement, trade dress infringement, and unfair competition; (2) misappropriation of trade secrets; and (3) misappropriation of confidential business information. Relevant to this Motion, Castle Hill asserts the affirmative defenses of unclean hands and illegality. Castle Hill argues VGT should not be permitted to recover its requested equitable remedy of disgorgement, due in part to VGT's non-compliance with Minimum Technical Standards (“Standards”) set by the National Indian Gaming Commission (“NIGC”). See 25 C.F.R. § 547.1, et seq. Castle Hill contends many of VGT's games are not eligible for “grandfathered” status under these regulations.[3] VGT has moved for summary judgment on both affirmative defenses.

         B. Stipulated Protective Order

         Upon joint motion of the parties (ECF No. 53), the Court entered a Stipulated Protective Order (“SPO”) (ECF No. 55), which is a blanket protective order in the standard form utilized by this Court.[4] The SPO permits each party to designate pretrial discovery as “confidential, ” “highly confidential, ” or “highly confidential source code, ”[5] ECF No. 55 at ¶¶ 1, 2, and creates a process whereby a party challenging a designation can file a motion with the Court, id. at ¶ 9. The SPO restricts disclosure of designated materials to specific individuals, depending on the designation. See, e.g, id. at ¶ 4(b), 5(b). The SPO further provides that discovery produced in the litigation, whether designated as confidential or not, may not be used for purposes other than the litigation. Id. ¶ 1(g). All designated materials under the SPO may be filed with the Court under seal, in accordance with the Court's General Order 08-11 and with Court permission. Id. at ¶ 2(f). Any use of designated materials at trial is determined by the Court at the pretrial conference. Id. at ¶ 8.

         C. Challenged Designations and Parties' Arguments

         In the pending Motion, Castle Hill seeks de-designation of pretrial discovery materials designated by VGT as “confidential” and “highly confidential” under the SPO. Specifically, the Motion challenges: (1) designations of deposition testimony provided by Richard Williamson (“Williamson”), both in his capacity as VGT's Vice President of Gaming Compliance and as VGT's Rule 30(b)(6) corporate designee as to compliance issues, see ECF No. 284 at Ex. G (6/4/18 Depo.), Ex. H (10/2/18 Depo.); and (2) documents related to or referenced during Williamson's testimony, see Id. at Exs. B-F (collectively, “Compliance Discovery”). All challenged materials relate to VGT's regulatory compliance and grandfathered systems. Regulatory compliance is not the general subject of this litigation and is relevant only to two equitable defenses raised by Castle Hill.

         The challenged documents consist of: (1) XXXXX which were labeled at the time of their creation as “highly proprietary and confidential, ” ECF No. 284 at Exs. B, E; (2) XXXXX id. at Exs. C, F;[6] and (3) XXXXX during Williamson's deposition, id. at Ex. D. All documents were labeled by VGT as “Highly Confidential” under the SPO. All challenged testimony can be categorized as: (1) testimony inquiring about data contained on the above-listed exhibits, Nos. 3-5, 16-19, 20;[7] (2) testimony regarding VGT's submissions to regulatory testing labs or other regulatory certification efforts for grandfathered games; see Nos. 8, 9, 10, 12, 15, 22, 23, 24, 25, 26; (3) numbers of three-reel mechanical games on casino floors from year to year and whether they qualify as grandfathered, Nos. 22, 23, 24; and (4) VGT's interpretation and application of “grandfathered” status to its gaming systems; see Nos. 1, 12, 14.[8] VGT designated most testimony as “Highly Confidential, ” Nos. 1, 3, 4, 5, 7, 14, 15, 16-19, 20, 22, 23-26, and labeled some as “Confidential, ” No. 8, 9, 10, 12.

         Castle Hill argues that none of the Compliance Discovery satisfies even the “Confidential” definition under the SPO, and that VGT is abusing the SPO to hide “illegal activity.” ECF No. 285 at 3. Castle Hill argues that the “true purpose of VGT's designations is to prevent disclosure of its flouting federal regulations.” Id. at 8. This theme is continued throughout the Motion. See, e.g., Id. at 10 (arguing that upgrade information “does not compromise or jeopardize VGT's competitive business interests” and that “VGT wants to keep this information confidential because it reveals VGT's illegal activity”). Castle Hill has not articulated any need for greater access to the Compliance Discovery and argues that its motives are irrelevant.

         VGT argues that the designations satisfy the definitions in the SPO and has submitted a declaration by Williamson in support of the designation. VGT also argues Castle Hill has no need for greater access to the information to defend this case, and that the Motion is merely an “attempt to smear VGT in the public eye” and “support its separate efforts to lobby NIGC on the same issues [related to regulatory compliance and grandfathered games].” ECF No. 289 at 10. VGT attaches letters to NGIC from an entity known as The Coalition for Fair Gaming (“CFG”), which VGT contends has ties to Castle Hill's lawyers and officials. These letters discuss the grandfathering issues under the regulations and urge NIGC to take certain actions in relation to grandfathered games. See ECF No. 290 at Exs. 1, 6.

         II. Analysis

         A. ...


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