Nike Fights to Keep Lance Armstrong Agreements Confidential

7/23/2019 Nike Fights to Keep Lance Armstrong Agreements Confidential

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Robert C Weaver, Jr., OSB 801350

E-Mail: [email protected]

Paul

H

Trinchero, OSB 014397


Eryn Karpinski Hoerster, OSB 106126


Garvey Schubert Barer

Eleventh Floor

121 SW Morrison Street

Portland, Oregon 97204-3141

Telephone: (503) 228-3939

Facsimile: (503) 226-0259

FILED24

UG 1516:31LISDC·ORP

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

UNITED STATES OF AMERICA, ex rel.

FLOYD LANDIS,

Plaintiff,

V

TAILWIND SPORTS CORP., TAILWIND

SPORTS LLC, LANCE ARMSTRONG, and

JOHAN BRUYNEEL,

Defendants.

15-MC-427

Case No.

PRINCIPAL CASE PENDING IN

THE

UNITED STATES DISTRICT COURT

FOR

THE DISTRICT

OF

COLUMBIA,

CIVIL ACTION NO. 1:10-CV-00976-

CRC

MOTIONS FOR PROTECTIVE

OR ER

AND TO MODIFY

SUBPOENAS ISSUED BY

THE

UNITED STATES OF AMERICA AND

LANCE ARMSTRONG

EXPEDITED HEARING REQUESTED

REQUEST FOR ORAL ARGUMENT

MOTIONS FOR PROTECTIVE ORDER AND TO MODIFY SUBPOENAS

Page 1

of

21

Case 3:15-mc-00427-HZ Document 1 Filed 08/24/15 Page 1 of 22



R7 1 CERTIFICATION

In compliance with Local Rule 7-1, counsel for NIKE, Inc. ( NIKE ) made a good faith

effort through telephone conferences with counsel for Plaintiff United States of America (the

Government ) and Defendant Lance Armstrong ( Armstrong ) to resolve the discovery

disputes raised in these motions, and the parties were unable to do so.

NIKE, the Government and Armstrong have agreed to an expedited briefing schedule and

respectfully request that a hearing on this matter be set for the week

of

September 8, 2015.

NIKE is separately filing an unopposed motion to file this overlength brief and set the agreed

upon expedited briefing schedule.


NIKE brings this miscellaneous action seeking a protective order and to modify the

subpoenas for deposition testimony and document production served upon it by Plaintiff United

States

of

America and Defendant Lance Armstrong in a False Claims Act

qui t m

action pending

in the United States District Court for the District

of

Columbia, Civil Action No. : 10-CV-

00976-CRC (the FCA Litigation ). The FCA Litigation involves claims by the relator and

Government against individuals and entities accused

of

making false statements in conjunction

with the submission of claims for payment under professional cycling team sponsorship

agreements with the United States Postal Service ( USPS ). Specifically, the Government

alleges the Defendants' claims were false because the Defendants failed to disclose widespread

violations of the anti-doping provisions contained in USPS sponsorship agreements for the U.S.

Postal Service Pro Cycling Team ( USPS Team ) and

USPS s

general contracting policies.

Based on Defendants' failure to disclose and false denials of the USPS Team s doping activities,

the Government seeks to recover money the USPS paid under the sponsorship agreements plus

treble damages and penalties. In his defense, Armstrong alleges that the Government suffered no

damages because the USPS realized financial benefits from its sponsorship agreements with


Page 2 of21




Defendants.

Both the Government and Armstrong have now served subpoenas for testimony and

documents on third-party NIKE, a stranger to the USPS sponsorship agreements. Because

NIKE s compliance is required within the District

of

Oregon, jurisdiction over this motion is

proper in this District pursuant to Fed. R Civ. P 45(d)(3) and 26(c)(l). NIKE herein moves for

modification

of

the subpoenas and for a protective order limiting discovery on the following

bases:

1

The information requested from NIKE in the form of deposition testimony and

document production is not relevant to any claim or defense in the FCA Litigation, and therefore

not discoverable under Fed. R Civ.

P

26(b)(l);

2 The information requested from NIKE in the form

of

deposition testimony and

document production is overly broad as to time to the extent is seeks documents and information

after the termination ofUSPS s sponsorship of the USPS Team effective December 31, 2004,

and therefore information and documents after that date is not discoverable under Fed.

R

Civ. P

26(b)(l);

3 Responding to the subpoenas would require NIKE to disclose trade secrets or

highly sensitive proprietary and commercial information, and should therefore be modified to

prevent such disclosure under Fed. R Civ. P 45(d)(3)(B)(i); and

4 Responding to the subpoenas would impose a burden or expense on NIKE that

outweighs its likely benefit, pursuant to Fed. R Civ. P 26(b)(2)(iii) and will subject NIKE to an

undue burden under Fed. R Civ.

P

45(d)(3)(A)(iv).

In the event that this Motion is denied, in whole or in part, as to the subpoena issued on

behalf

of

Armstrong, NIKE request that a protective order be entered setting the date for the

production of responsive documents and deposition at least thirty (30) days after the Court s

ruling on this Motion. This additional time is required for NIKE to review the voluminous


Page 3 of21




documents necessary to respond to Armstrong's subpoena and to designate and prepare

witness( es) for deposition.

In support of this Motion, NIKE relies upon the record in the FCA Litigation, the

Memorandum ofLaw in Support ofNIKE, Inc.'s Motions for Protective Order and to Modify

Subpoenas below, and the declarations ofRobert C. Weaver, Jr., Mary VanderWeele and

Carolyn Gutsick filed herewith.

MEMORANDUM OF LAW IN SUPPORT OF NIKE, INC.'S

MOTIONS

TO

MODIFY SUBPOENAS

AND FOR

PROTECTIVE ORDER

II. BACKGROUND

A. FCA Litigation.

Defendant Armstrong is a former professional cyclist and athlete who competed actively

between 1992 and 2011. During his career, Armstrong was a member of corporate-sponsored

cycling teams, including as a member

of

the US Postal Service Pro Cycling Team which was

sponsored by the USPS. The USPS, as an independent establishment of the United States

government, began sponsoring the U.S. Postal Service Cycling Team (the USPS Team ) on

October 1 1995, and Armstrongjoined the team in 1998. ee Declaration ofRobert C. Weaver,

Jr. ( Weaver Deel. ), Ex. 1 (Second Amended Complaint),

i i

22, 23, 26.

The USPS ended it

sponsorship of the USPS Team effective December 31, 2004. Id

i

32. Armstrong also secured

corporate sponsorships as an individual athlete throughout his career. As relevant to this motion,

NIKE sponsored Armstrong for many years, ultimately terminating its sponsorship in 2012.

2

The Government alleges that the USPS's sponsorship of the USPS Team was highly

lucrative for its owners and the athletes. For example, the Complaint alleges that [b]etween

1

All references to Exhibits herein ( Ex. ) refer

to

the exhibits to the Declaration

of

Robert

C.

Weaver, Jr., filed herewith.

2

NIKE announced the termination

of

its contract with Armstrong on October 17, 2012 in a

public statement posted on its website, http://news.nike.com/news/nike-statement-on-lance

armstrong (accessed on August 22, 2015).


Page

4of2




January 1 2001 and October 20, 2004, at least $31,442,262.57 was paid by the USPS to

Defendants.

Id. if

33. Defendants were also paid more than $10.9 million in 2000 and earlier,

pursuant to the payment terms

of

the 1995 Sponsorship Agreement. Id. if 35. In response,

Armstrong alleges that the USPS itself realized over $13 5 million in tangible economic benefits

from the sponsorship. Ex. 2 (Armstrong's Answer), p.

1.

The Complaint alleges that both the USPS 1995 Sponsorship Agreement and USPS 2000

Sponsorship Agreement, pursuant to which the United States made payments to Defendants,

prohibited doping by the athletes - i.e. the use

of

prohibited substances or prohibited methods

to increase athletic performance. Ex. 1 iii 36-37.

t

also alleges that the USPS s general

contracting policy applicable to all persons performing services under a USPS contract

prohibited the illegal use of drugs and furthermore stated that persons who knowingly submit

false data or conceal data for the purpose

of

gaining employment are ineligible to perform

services under a USPS contract. Id.

if

38;

see id.

iii 39-40.

The Government's False Claims Act case arises out

of

evidence that Armstrong and the

other defendants secretly violated doping prohibitions, which were material terms to the

sponsorship agreements. This evidence came to light many years after the termination

of

the

agreements. On or about October 10, 2012, the United States Anti-Doping Agency (USADA), a

national anti-doping organization for the Olympic Movement in the United States, issued a

comprehensive Reasoned Decision which concluded that

the

US Postal Service Pro Cycling

Team ran the most sophisticated, professionalized and successful doping program that sport has

ever seen. ' Ex. 1

if

224. In January 2013, after a 20-year professional cycling career,

Armstrong admitted to blood doping and the use of performance enhancing drugs in a televised

interview with Oprah Winfrey. Id. if 225;

see

Ex. 2, if

111

( Defendant admits that he and other

USPS riders used performance enhancing substances from at least 1998 through 2004 ).

The Government, through

qui tam

relator and former USPS Team member Floyd Landis


ORDER

AND TO MODIFY SUBPOENAS

Page 5 of21




( Landis or relater ), filed suit under the False Claims Act seeking civil penalties and damages

from Defendants, including Armstrong in his individual capacity, based on claims made to the

Government with respect to the USPS sponsorship. Relator's initial complaint was filed under

seal on June

10

2010 and the case was unsealed on February 22, 2013, when notice

of

the

Government's intention to intervene was made public. FCA Litigation Docket, ECF Nos. 42

43.

B 2010 Federal Grand Jury Subpoena

In

2010, NIKE received a Federal Grand Jury Subpoena issued by the United States

Attorney for the Central District

of

California seeking contracts, agreements, and similar

documents related

to

NIKE's sponsorship

of

professional cycling teams and riders for

professional cycling teams. Weaver Deel.,

~ 9 .

In addition, the subpoena sought all the

documents relating to the use of performance enhancing drugs by anyone affiliated with certain

professional cycling teams. Id. In response, NIKE produced documents responsive to the

Federal Grand Jury Subpoena with the assurance from the Government that it would keep the

documents confidential. After the Government declined to prosecute Armstrong in 2012, NIKE

requested the return

of

the documents it produced in 2010.

Id. ~ 1 0 .

The Government refused

and in 2014 advised NIKE that at least some

of

the documents were produced to Armstrong in

the FCA Litigation in response to a Motion to Compel.

Id. ~ 1 1 .

NIKE was not given a formal

opportunity to object to the production

of

those documents.

Id. ~ 1 2 .

Had NIKE had the

opportunity, it would have formally raised the same relevance objections made herein.

Id.

~ ~ 1 2

13.

C FCA Litigation Subpoenas

Counsel for NIKE was served with a deposition and document subpoena by the

Government on July 30, 2015 (the Government Subpoena )-with less than two months

to go


Page 6of21




before the discovery cut-off.

3

Ex. 3 NIKE timely served Responses and Objections to the

Government Subpoena on August 13, 2015. Ex. 4. NIKE was served a deposition and document

subpoena issued by Armstrong's counsel on August 5, 2015 - also critically near the deadline for

discovery in a case that has gone on for years - and NIKE served responses and objections to

that subpoena on August 13, 2015. Weaver D e e l . ~ 5 On August 13, 2015, Armstrong served

NIKE with an amended subpoena ( Amended Armstrong Subpoena ). Ex. 5 The Amended

Armstrong Subpoena replaced the August 5 Subpoena, removing and/or combining several

categories of deposition topics and document requests. Weaver Deel., 6 NIKE served its

Responses and Objections to the Amended Armstrong Subpoena on August 24, 2015. Ex. 6

III.

ARGUMENT

A LEGALSTANDARDS

On timely motion, the court for the district where compliance is required must quash or

modify a subpoena that: (i) fails to allow a reasonable time to comply; or (iv) subjects a

person to undue burden. Fed. R Civ. P 45(d)(3)(A) (emphasis added). To protect a person

subject to or affected by a subpoena, the court for the district where compliance is required may,

on motion, quash or modify the subpoena if it requires: (i) disclosing a trade secret or other

confidential research, development or commercial information Fed.

R

Civ.

P

45(d)(3)(B)

(emphasis added).

Additionally, with respect to matters relating to a deposition, the court where the

deposition will be taken may enter a protective order to protect a party or person from

annoyance, embarrassment, oppression, or undue burden or expense, including one or more of

3

The Government and Armstrong advised NIKE that the discovery cutoff was September 15,

2015, until the parties recently secured an extension until September 25, 2015. For reference,

this case was originally filed on June 10, 2010, unsealed on February 22, 2013, and and

Government intervened on April 23, 2013. The parties have had years to request documents and

information from NIKE but have waited until the last minute for reasons unknown. Now those

same parties are demanding documents and a 30(b)(6) deposition from NIKE with minimal

notice and time to respond.


Page

7of2




the following: (B) specifying terms, including time and place, for the disclosure or discovery;

(D) forbidding inquiry into certain matters, or limiting the scope

of

disclosure or discovery to

certain matters; [or] (G) requiring that a trade secret or other confidential research,

development, or commercial information not be revealed or be revealed only in a specified way . .

Fed. R Civ. P. 26(c)(l).

Modification of a subpoena and the issuance of a protective order is particularly

appropriate where the subpoena requests information that is not within the scope of discovery

allowed under Rule 26, which limits discovery to relevant information.

Further, it is well established that the scope

of

discovery under a subpoena issued

pursuant to Rule 45 is the same as the scope of discovery allowed under Rule

26(b) 1 ). Rule 26(b)(1) provides that [p]arties may obtain discovery regarding

any nonprivileged matter that is relevant to any party's claim or defense.

However, the court must limit such discovery if the burden

of

the proposed

discovery outweighs its likely benefit. Fed.

R.

Civ.

P.

26(b)(2)(C)(iii).

In

re Suzuki

Civ. No. 14-00516 JMS-KSC, 2014 WL 6908384, *1 (D. Haw. Dec. 5, 2014)

(citations, quotation marks and brackets omitted).

In the Ninth Circuit, the relevance

of

a particular discovery request must be established

by the propounding party in the face

of

a motion to quash or modify subpoena. While it is

generally well established that the party [moving to quash a subpoena] bears the burden

of

showing why a discovery request should be denied,

4

the party issuing the subpoena must [first]

demonstrate the discovery sought is relevant.

5

4

Wells Fargo Bank

NA v. Jny No. 2:13-cv-01561-MMD-NJK, 2014 WL 1796216, *4 (D. Nev.

May 6, 2014) (quoting

Painters Joint Comm. V Emp. Painters Trust Health Welfare Fund

No. 2:10-cv-01385-JCM-PAL, 2011WL4573349 *5 (D. Nev. Sept. 29, 2011) (citing

Blankenship

v.

Hearst Corp.

519 F.2d 418, 429 (9th Cir. 1975))).

5

Chevron Corp.

v.

Danziger

No. 12-mc-80237 CRB (NC), 2013 WL 4536808, *4 (N.D. Cal.

Aug. 22, 2013); see Refco Grp. Ltd. v. Cantor Fitzgerald L.P. No. 13 Civ. 1654 (RA)(HBP),

2014 WL 5420225, *6 (S.D.N.Y. Oct. 24, 2014) ( Once the party seeking production

of

the

materials meets its burden of showing relevance sufficient to justify discovery, the burden shifts


Page 8of21




B THE AMENDED ARMSTRONG SUBPOENA SHOULD BE MODIFIED

AND A PROTECTIVE ORDER ENTERED

The Court should significantly modify the Amended Armstrong Subpoena, and enter a

protective order forbidding inquiry into certain matters, or limiting the scope of disclosure or

discovery to certain matters. Fed. R Civ. P. 26(c)(l)(D). Many

of

the requested documents

and topics identified for tesiimony are not relevant to the claims and defenses raised in the

litigation. Moreover, the requested documents are overbroad to the extent they seek information

beyond December 31, 2004 - the date USPS terminated its sponsorship of the USPS Team.

Even ifthe requests sought relevant information, responding to the Amended Subpoena would

require the disclosure

of

trade secrets or confidential commercial information, and would be

unduly burdensome to NIKE.

The Amended Armstrong Subpoena on NIKE consists of a command to designate a

person or persons to testify at a deposition on NIKE s behalf on seven topics and a

corresponding request for seven categories of documents. See Ex 5. The categories of

information requested by Armstrong include:

• Financial benefits, revenue, profits or sales of merchandise realized by NIKE from its

sponsorship

of

Armstrong, Livestrong, or the USPS Team, or use of Armstrong's name

or likeness or the USPS Team logo (Deposition Topics No.

1,

2, 6,

7;

Request for

Production Nos. 1, 2, 3 ;

• NIKE's internal financial evaluations of such sponsorships or sponsored entities

(Deposition Topic No. 3;

Request for Production No. 4);

• Communications relating to NIKE's sponsorship agreements with Armstrong,

Livestrong, or Tail Wind, Inc. (Request for Production No. 5);

to the movant to show why discovery should not be had. ) (citations, quotation marks and

brackets omitted). [W]hile discovery is a valuable right and should not be unnecessarily

restricted the 'necessary' restriction may be broader when a nonparty is the target

of

discovery. Dart Indus. Co v Westwood Chem. Co. 649 F.2d 646, 649 (9th Cir. 1980); See

also

R

Prasad Indus. V Flat Irons Envtl. Solutions Corp. No. CV-12-08261-PCT-JAT, 2014

WL 2804276,

*2

(D. Ariz. June 20, 2014) ( To obtain discovery from a nonparty, a party must

demonstrate that its need for discovery outweighs the nonparty's interest in nondisclosure. ).


Page 9 of21




• Contracts and agreements between NIKE and the USPS or payments made by NIKE to

the USPS relating to the USPS Team (Deposition Topics No. 4, 5; Request for

Production No. 6

6

; and

• Documents previously produced by NIKE in response to any other subpoena, civil

investigative demand or request in connection with this case (Request for Production No.

7).

NIKE served its responses and objections to the Amended Armstrong Subpoena on

August 24, 2015. Ex. 6.

1

The Amended Armstrong Subpoena Requests Information Not

Relevant t any Claim or Defense Raised in the FCA Litigation

The deposition topics and document requests related to (1) financial benefits realized by

NIKE from its sponsorship of Armstrong, Livestrong, and the USPS Team, or use of

Armstrong's name or likeness or the USPS Team logo, (2) NIKE s internal financial evaluations

of

such sponsorships or sponsored entities, and (3) communications relating to NIKE's

sponsorship of Armstrong and his related entities, are not relevant to any claim or defense raised

in the FCA Litigation. Because Armstrong will not be able to demonstrate any relevance as to

these categories of deposition topics, the Amended Armstrong Subpoena should be modified to

remove these categories - specifically, Deposition Topics Nos. 1, 2, 3, 6 and 7, and Requests for

Production Nos. 1-5.

See Chevron Corp.

2013 WL 4536808 at *4 ( the party issuing the

subpoena must [first] demonstrate the discovery sought is relevant. ).

The Amended Armstrong Subpoena seeks NIKE s financial information, evaluations, and

sponsorship-related communications to support his defense that the Government did not suffer

any financial damage as a result of its Sponsorship Agreements with the USPS Team

notwithstanding the alleged false statements or omissions regarding doping by Armstrong or

other members

of

the USPS Team. See Ex. 2, p. 1 ( [the] tangible economic benefits to the

6

As stated in its responses and objections to the Amended Armstrong Subpoena, NIKE does not

have any record reflecting any contract with USPS or any royalty payments made to USPS

relating to its sponsorship USPS Team. See Ex., 6.


Page

10 of21




USPS exceeded $135 million - representing more than a 3X return on the investment, and

rendering the USPS' s current claim of economic harm arising from the sponsorship spurious and

false. ); see also id. p. 33

(Armstrong's Eighth and Ninth Affirmative Defense alleging that the

Relator and the Government have suffered no injury). However,

NIKE s

financial benefit,

if

any, gained from its sponsorship of the USPS Team, Armstrong or his related entities has no

factual or logical relationship to the financial benefit USPS may have enjoyed from its

sponsorship of the USPS Team. As a general matter, information related to one sponsor's return

on investment is not relevant to a second sponsor's return on investment because the success of

the campaign relies on the actions and individual characteristics of each sponsor. More

specifically, NIKE is in the business

of

selling athletic apparel and merchandise, and relies on

sponsorship of athletes and product placement as part of its business model. USPS, on the other

hand, is in the business of postal delivery services and sponsorship of an athletic team is not part

of its core business model. Any comparison between

USPS s

and

NIKE s

experience related to

sponsorship of Armstrong or the USPS is simply not relevant to any claim or defense raised by

the parties in the FCA Litigation. Put another way, nothing discovered from NIKE pursuant to

Armstrong's requests will tend to make its defense that the USPS reaped a benefit from its own

sponsorship of Armstrong or the USPS Team more or less probable. An analogy of benefits is

simply of no consequence here.

See Micro Motion Inc. v. Kane Steel Co. Inc.

894 F.2d 1318,

1323 (F.C. 1990)(quashing subpoena to nonparty competitor on grounds competitor 's financial

records were not relevant to prove

plaintiffs

claim for lost profits in patent infringement case).

Nor will prying into

NIKE s

negotiation, evaluation and financial return from its sponsorship of

the USPS Team, Armstrong and his related entities lead to the discovery of admissible evidence

relevant to any claim or defense. Therefore, NIKE should be relieved from the obligation to

respond to Deposition Topics Nos. 1 2, 3, 6 and 7 and Requests for Production Nos. 1-5 in the

Armstrong Subpoena pursuant to Fed. R Civ.

P.

26(c)(l)(D) and 45(c)(3).


Page 11 of

21




2. The Amended Armstrong Subpoena is Overbroad as to Time.

The Amended Armstrong Subpoena is overbroad as to time to the extent it seeks

documents or information beyond December 31, 2004. Although the requests seek all

responsive information and documents from 1995

to the present,

the USPS sponsorship

agreements with the USPS Team were only in effect from October 1 1995 through December

31, 2004. Ex. 1 23, 32. A request for the financial, evaluative, and sponsorship-related

documents and communications requested by the Armstrong Amended Subpoena beyond

December 31, 2004, is overbroad by more than a decade, and Armstrong knows this. Indeed, in

a 2014 filing in the FCA Litigation, Armstrong opposed the relator's attempt to discover

information and documents relating to events after 2004, arguing that the requests were

overbroad because they sought information from a time when the government was ot even

sponsoring a U.S. Postal Service team. Ex. 7 (Armstrong's Response to Relator's Request for

Issuance

of

Letters Rogatory), p. 2 (emphasis added). Even

if

Armstrong's argument - that

NIKE's purported benefit from its sponsorship of Armstrong is relevant to whether the USPS

gained a benefit - was valid, which it is not, there is nothing outside the 1995-2004 time period

that is even related to Armstrong's benefit by analogy position.

3. Responding to the Amended Armstrong Subpoena Would Require

NIKE to Disclose Its Trade Secrets

and/or

Confidential Commercial

Information.

Pursuant to Fed.

R.

Civ. P. 45(d)(3)(B)(i), the Court may modify a subpoena

if

it requires

the responding party to disclos[e] a trade secret or other confidential research, development, or

commercial information. Responding to the Amended Armstrong Subpoena's requests seeking

NIKE's financial information, internal evaluations, and communications relating to NIKE s

sponsorship

of

the USPS Team, Armstrong and his affiliates (Deposition Topic Nos.

1 2

3,

6

and 7; Request for Production Nos. 1-5) would require NIKE to disclose trade secrets or other


Page 12of21




highly sensitive proprietary and commercial information. The Oregon Uniform Trade Secrets

Act defines a trade secret as

information, including a drawing, cost data, customer list, formula, pattern,

compilation, program, device, method, technique or process that: (a) Derives

independent economic value, actual or potential, from not being generally known

to the public or to other persons who can obtain economic value from its

disclosure or use; and (b)

Is

the subject

of

efforts that are reasonable under the

circumstances to maintain its secrecy.

ORS 646.461(4). The information sought by the Armstrong Amended Subpoena would

necessarily disclose if and how NIKE tracks financial returns and benefits from sponsorship

agreements with athletes, which constitute trade secrets under Oregon law. NIKE takes

considerable effort to maintain the secrecy of its records regarding athlete sponsorships and the

value derived therefrom, and those records are not generally known to other industry-members,

members who could obtain economic value from their disclosure or use. See Vesta Corp. v.

Amdocs Mgmt. Ltd. No. 3:14-cv-1142-HZ, 2015 WL 163384, 11 (D. Or. Jan. 13, 2015)

( Plaintiffs Risk Information description

of

'detailed statistical information' about the

'prevalence

of

fraudulent payment transactions in the prepaid mobile device marketplace' that

Plaintiff had compiled over 20 years reflects the kind of compilation that courts in this district

and

in

Oregon state court have recognized as a trade secret. ).

NIKE s

information, documents,

and communications related to its financial performance resulting from sponsorship agreements,

and internal evaluations thereof, constitute trade secrets because such information contains the

confidential strategies and processes that NIKE utilizes in acquiring athlete endorsements and in

contracting with those athletes. See Declaration of Mary VanderWeele ( VanderWeele Deel. ),

7-8. A response to Armstrong's subpoena would contain organizational, funding, strategic,

and other operating information regarding the proprietary business model NIKE uses in its

sponsorship efforts. Id. 7-8,

10

This information is a trade secret because NIKE s ability to

capitalize on sponsorship agreements with athletes has been a source of tremendous investment


Page 13of21




over a matter

of

decades, and is kept highly confidential. Id. iii 9-11.

Even if the Court were not inclined to find the requested information to consist

of

trade

secrets, such information should still not be disclosed because it contains confidential

commercial information that would indisputably: (1) harm NIKE s

competitive standing in the

athlete endorsement industry; (2) represent a windfall to NIKE s competitors; and (3) has little,

if

any, probative value to the underlying dispute between the Government and Armstrong. Id. iii

7-11. In this case, where NIKE is neither a party nor even has any active involvement in the

dispute, the lack of probative value far outweighs Armstrong's need for the evidence. See Dart

Indus.

Co.

649 F.2d at 649 ( while discovery is a valuable right and should not be unnecessarily

restricted the 'necessary' restriction may be broader when a nonparty is the target

of

discovery. ;

R. Prasad Indus.

2014 WL 2804276 at 2 ( To obtain discovery from a nonparty, a

party must demonstrate that its need for discovery outweighs the nonparty's interest in

nondisclosure. ). Even with the Protective Order that is in place to prevent public disclosure,

NIKE will not be sufficiently involved in future stages

of

litigation to monitor and enforce the

Protective Order to ensure that its trade secrets or valuable confidential commercial information

is not disclosed inadvertently by the parties in the FCA Litigation.

See Allen v. Howmedica

Leibeinger GmhH 190 F.R.D. 518, 526 (W.D. Tenn. 1999)(finding that a protective order

would be insufficient to protect nonparty's interests in trade secrets where parties would have

little incentive to protect nonparty's interests).

Therefore, under Fed. R. Civ. P. 45(d)(3)(B)(i), the Court should modify the Amended

Armstrong Subpoena to remove Deposition Topic Nos. 1, 2, 3, 6, and 7 and Request for

Production Nos.

1-5

on the grounds that they seek the disclosure of trade secrets and/or

confidential commercial information. In addition, NIKE requests that a protective order be

entered under Fed. R. Civ.

P.

26(c)(l)(D) and (G) so limiting the scope of allowable discovery as

to these matters.


Page 14 of21




4 Responding

t

the Amended Armstrong Subpoena Will Subject NIKE

t

an Undue Burden that Outweighs its Likely Benefit

t

Armstrong

Under Fed. R

Civ. P. 45(d)(3)(A)(iv), a court must modify a subpoena that subjects a

person to undue burden. In this case, the Armstrong's financial, evaluative, and communication

requests are temporally overbroad, seeking information and documents over a 20-year period

from at least 1995 to present. Responding to the Amended Armstrong Subpoena will subject

NIKE to an undue burden in that it will require NIKE to search for and review large volumes of

communications and documents relating to day-to-day operations and administration

of

the

sponsorship agreements. Declaration

of

Carolyn Gutsick ( Gutsick Deel. ), 3. This burden -

both in time and expense - upon a non-party to the underlying action is unwarranted.

Further, responding to the Amended Armstrong Subpoena will impose a burden or

expense on NIKE that outweighs its likely benefit to Armstrong. As discussed above, the

information related to

NIKE s

financial benefits from the sponsorship

of

Armstrong, its internal

evaluations thereof, and communications related thereto, have no relevance to Armstrong's

defenses in the underlying litigation. Therefore, under Fed.

R.

Civ.

P.

45(d)(3)(A)(iv) and Fed.

R. Civ. P. 26(b)(2)(C)(iii), the Court should modify the Amended Armstrong Subpoena to

remove Deposition Topic Nos.

1

2

3, 6 and 7 and Request for Production Nos. 1-5 as imposing

an undue burden on non-party NIKE. NIKE also requests that a protective order be entered

under Fed. R Civ.

P.

26(c)(l)(D) limiting the scope

of

allowable discovery as to these matters.

C THE GOVERNMENT SUBPOENA SHOULD LIKEWISE BE MODIFIED

Although the Government Subpoena is narrower than the Amended Armstrong

Subpoena, it likewise seeks irrelevant and trade secret information not subject to discovery under

Rules 26 and 45. The Court should significantly modify the Government Subpoena and enter a

protective order forbidding inquiry into certain matters, or limiting the scope

of

disclosure or

discovery to certain matters. Fed. R Civ. P. 26(c)(l)(D). With the exception ofrequests

related to NIKE's search for and authenticity

of

documents previously produced, the requested


Page 15of21




documents and deposition topics should be modified for three reasons. First, the documents

sought and designated topics are not relevant to any claim

or

defense raised in the FCA

Litigation. Second, the requests are overly broad to the extent they seek documents and

information beyond December 31, 2004 - the date USPS terminated its sponsorship of the USPS

Team. Third, even ifthe requests sought relevant information, responding to the Government

Subpoena would unnecessarily require the disclosure of trade secrets or confidential commercial

information.

On July 30, 2015, the Government served its subpoena on NIKE, consisting of a

command to designate a person or persons to testify at a deposit ion on

NIKE s behalf

on eight

topics, and a corresponding request for six categories

of

documents.

ee

Ex. 3 (Government

Subpoena). The categories of information requested by the Government include:

• Information, documents, communications with Armstrong, and statements to the media

related to NIKE s sponsorship of Armstrong, including those related to the negotiation

and termination

of

the sponsorship (Deposition Topic Nos. 1-5; Request for Production

Nos.

1

3, and 6);

• Documents related to payments from NIKE to Armstrong (Request for Production No.

2);

• Communications between NIKE and Armstrong related to Armstrong s use

or

allegations

of

his use

of

performance enhancing or prohibited substances (Deposition Topic No. 6;

Request for Production Nos. 4 and 5); and

• NIKE s search for documents responsive to the Government Subpoena

or

the 2010 Grand

Jury subpoena in a criminal investigation into Armstrong, and the authenticity of the

documents produced in response to the Grand Jury subpoena (Deposition Topic Nos. 7

and 8).

NIKE served its responses and objections to the Government Subpoena on August 13,

2015. Ex. 4.

NIKE has agreed to produce a deposition witness to testify

on

Deposition Topic Nos. 7 and 8

related to NIKE s search for documents responsive to the Government Subpoena or the 2010

Grand Jury subpoena, and regarding the authenticity of the documents produced in response to

the Grand Jury subpoena. ee Ex. 4 (Response to Government Subpoena).


ORDER

AND

TO

MODIFY SUBPOENAS

Page

16 of21




1 The Government Subpoena Requests Information Not Relevant to

any Claim or Defense n the Parties Underlying Action.

NIKE s agreements with Armstrong, including without limitation communications

relating to the negotiation and termination

of NIKE s

agreements with Armstrong, are not

relevant to any claim or defense raised in the FCA Litigation.

ee

Ex. 3, Deposition Topics 1-4;

Document Requests 1

3

The FCA Litigation centers on the USPS sponsorship agreements for

the USPS Team. NIKE is not a party to those agreements, nor is USPS a party to NIKE s

agreements with Armstrong. NIKE s communications with Armstrong exchanged in

negotiating, executing and terminating NIKE s separate agreements with Armstrong bear no

relationship to the issues in FCA Litigation.

8

As these communications are not relevant to the

FCA Litigation, the Government Subpoena should be modified to strike Deposition Topics 1-4

and Document Requests 1

3

Likewise, the Government s requests for documents reflecting payments to Armstrong

pursuant to NIKE s sponsorship agreements with Armstrong have no bearing on whether

Armstrong presented a false claim to the Government.

ee

Ex. 3, Deposition Topic No.1,

Document Request No.

2

There is simply no probative value in the documents sought by the

Government in these requests, and nothing produced would tend to support or undercut the

Government s theory ofliability. Thus, the Government Subpoena should be modified to strike

Deposition Topic 1 and Document Request No. 2.

The Government also seeks testimony and documents reflecting any communications

between NIKE and Armstrong regarding Armstrong s alleged or actual use of prohibited

8

As explained in Section II.B, the Government is in possession

of

the documents NIKE

produced in response to the 2010 Federal Grand Jury Subpoena. Because NIKE s production in

the criminal investigation was for a different purpose and with an agreement with the

Government that the documents would remain confidential, NIKE has not waived its position

herein that the documents previously produced are not relevant to the claims and defenses in the

FCA Litigation, nor that the produced documents continue to constitute protectable trade secrets.


Page

17of21




substances or methods. Ex. 3, Deposition Topic 6, Document Requests 4 5. These requests

are not relevant to the FCA Litigation because NIKE s lack of knowledge of Armstrong s doping

activities during the term of the USPS sponsorship agreement - 1995-2004 - does not make it

more or less probable that the USPS was aware of Armstrong s doping during that same time

period. Moreover, Armstrong has admitted to using performance enhancing drugs and to

publicly denying his use

of

performance enhancing drugs in past public statements. Ans., 88-

89, 110-112,

121

130. For this reason the Government Subpoena should be modified to strike

Deposition Topic 6 and Document Request No. 4

5.

2 The Government Subpoena Requests for Information and Documents

are Overly Broad as

t

Time

The Government Subpoena covers information and documents created, used or relied

upon from January 1 1998 through the present. The USPS sponsorship of the USPS Team

ended on December 31, 2004. The Government s requests are overly broad to the extent that

they seek information and documents beyond December 31, 2004.

NIKE s

agreements and

communications with Armstrong after 2004

do

not have any relevance to USPS s claims arising

from sponsorship of the USPS Team and, therefore, are not discoverable under Fed.

R.

Civ.

P.

26(b

) 1 ).

For these reasons,

ifthe

Court requires NIKE to provide any testimony and documents in

response to Deposition Topic Nos. 1-6 and/or Document Request Nos. 1-6 in the Government

Subpoena, the relevant time period for such discovery should be limited to January 1, 1998

through December 31, 2004. Fed. R Civ. P. 26(b)(l) and 26(c)(l)(D).

3 Responding to the Government Subpoena Would Require NIKE t

Disclose Its Trade Secrets and/or Confidential Commercial

Information

Disclosure

of

the terms, negotiations, communications, and payments related to NIKE s

sponsorship agreements with Armstrong would require NIKE to reveal its valuable trade secrets

and/or confidential commercial information. See infra Section III.B.3; VanderWeele D e e l . ~ ~


Page

18of21




6 8-11. Therefore, under Fed.

R.

Civ. P. 45(d)(3)(B)(i), the court should issue an order

modifying the Government Subpoena to remove Deposition Topic Nos. 1-4 and Requests for

Production Nos. 1-3. These categories

of

requests seek the confidential terms ofNIKE s

sponsorship agreements with Armstrong, together with related confidential communications and

negotiations between the contracting parties.

NIKE s

business strategies, pricing, and

contracting methods related to sponsorship agreements with athletes constitute highly valuable

trade secrets. Nike takes considerable effort to maintain the secrecy

of

its records regarding

athlete sponsorships and the value derived therefrom, and those records are not generally known

to other industry-members, members who could obtain economic value from their disclosure or

use.

Id.

iii

10-11.

9

See Vesta Corp.

2015 WL 163384

at*

11.

Even

if

not considered trade

secrets, the terms, negotiations, communications, and payments related to NIKE s sponsorship

agreements with Armstrong consist of highly value commercial information. For all the reasons

set forth in Section III.B.3 above, the Court should modify the Government Subpoena to remove

Deposition Topic Nos. 1-4 and Request for Production Nos. 1-3 as requiring the disclosure of

trade secrets and/or confidential commercial information. In addition, NIKE requests that a

protective order be entered under Fed. R. Civ. P. 26(c)(l)(D) and (G) limiting the scope

of

allowable discovery as to these matters.

D PROTECTIVE ORDER S TO TIMING OF DEPOSITION ND

PRODUCTION OF DOCUMENTS

f he Court denies

NIKE s

Motion as to the Amended Armstrong Subpoena, in whole or

in part, NIKE respectfully requests that the deadline for NIKE to produce documents and

designate and provide witnesses be set at least thirty (30) days after the Court s ruling on this

9

As discussed in footnote 8 above, the fact NIKE provided the Government with sponsorship

related information pursuant to a Federal Grand Jury Subpoena in 2010 did not waive NIKE s

right to claim trade secret protection over those materials under Oregon law.


Page 19

of21




matter.

° Counsel for Armstrong and the Government have represented that

if

the trial judge in

the underlying action in the District of Columbia allows discovery from NIKE to be continued

into the first week of October, 2015, they will not object to such a protective order. However,

regardless of the parties' consent or the trial judge s allowance of discovery to continue, NIKE

should not be required to comply with a subpoena that does not provide for sufficient time to

respond, and a protective order should issue.

As for the urgency the Government and Armstrong feel as a result

of

the September 25,

2015 discovery cut-off, the urgency is of their own making. The FCA Litigation was unsealed

on February 22, 2013. The fact that the Government and Armstrong waited until this late date to

seek discovery from NIKE - nearly two and a half years after the case was unsealed - should not

impinge on

NIKE s

right to have a sufficient period

ohime

to respond. t will take considerable

time for NIKE to gather responsive documents, designate witnesses and prepare those witnesses

to testify at deposition. Under Fed. R Civ. P 45(d)(3)(A)(i), the Court must quash or modify a

subpoena that fails to allow a reasonable time to comply. ee also Fed. R Civ. P 26(c)(l)

( The court may, for good cause, issue an order to protect a party or person from undue

burden or expense, including one or more of the following: (B) specifying terms, including

time and place, for the disclosure or discovery ).

IV.

ON LUSION

At the eleventh hour, Armstrong and the Government have dragged non-party NIKE into

litigation that has been going on for years and for which NIKE can provide essentially no

relevant information. More importantly, much

of

the information sought by the parties

comprises trade secrets or, at the very least, confidential commercial information, including

proprietary sponsorship agreements, financial results and evaluations, and related

10

IfNIKE s Motion is granted as to the Amended Armstrong Subpoena, NIKE is capable

of

complying with the Government's request to have a deposition held and documents produced in

response to the Government Subpoena by September 25, 2015.


Page

20of21




communications. This information should not be disclosed under any circumstance, and

especially in this case, where the vast majority of documents sought will provide little to no

probative value to the litigants.

NIKE therefore respectfully requests that the court modify the Amended Armstrong

Subpoena and Government Subpoena and enter a protective order forbidding inquiry into certain

matters, limiting the scope of disclosure or discovery, and specifying the terms, including time

and place, for the disclosure or discovery.

DATED this 24th day of August, 2015.

Respectfully submitted,

GARVEY SCHUBERT BARER

~

__

By

I ~

Robert C. Weaver, Jr., OSB 801350

Telephone: (503) 228-3939

Fax: (503) 226-0259


Paul H. Trinchero, OSB 014397


ertificate

o

ompliance

This brief complies with the applicable word count limit under LR 26-3(b) because

NIKE, Inc. has moved for an extension of the page limit and/or word count applicable to

Discovery Motions. The memorandum of law contains 5,790 words, including headings,

footnotes, and quotations, but excluding the caption, table, of contents, table of cases and

authorities, signature block, exhibits, and any certificates

of

counsel.

~ ~ ~

obert C. Weaver, Jr., OSB 801350

Telephone: (503) 228-3939

Fax: (503) 226-0259




Attorneys

or

NIKE

Inc

MOTIONS FOR PROTECTIVE ORDER

AND TO

MODIFY SUBPOENAS

Page 2 of2




CERTIFICATE OF SERVICE

I certify that I served a copy of

NIKE, INC. S MOTIONS FOR PROTECTIVE

ORDER AND TO MODIFY SUBPOENAS ISSUED BY THE UNITED STATES OF

AMERICA AND LANCE ARMSTRONG

upon the recipients below via electronic mail and

US mail, on this 24th day ofAugust, 2015.

Gregory A. Mason

U.S. Department of Justice

601

D Street NW, Room 9543

Washington, DC 20004

[email protected]

Attorneys or Plaintiff United States o

America

GSB:725873 l

6

Elizabeth McCloskey

Keker Van Nest LLP

633 Battery Street

San Francisco, C 94111

[email protected]

Attorneys

or

Defendant Lance Armstrong


Attorneys or NIKE Inc.

CERTIFICATE OF SERVICE

Page 1 of 1
