New Ruling Outlines Tests for Right to Privacy During Discovery of Financial Information

A new, comprehensive legal test for discovery of records possibly protected by the right to privacy has been issued by the Colorado Supreme Court.

With discovery requests implicating the right to privacy or confidentiality, the requesting litigant in Colorado must now prove each of the following four elements: 

1. the documents are relevant to the subject matter of the case;
2. disclosure is required to serve a compelling state interest or there is a compelling need for the documents;
3. the requested information is not available from other sources; and, if it is,
4. the requesting party is using the least intrusive means to obtain the information.  

After the requesting party proves the documents are relevant (element #1), the party opposing the discovery must show that it has a legitimate expectation that the requested materials or information are confidential and will not be disclosed.  The case is Cedar St. Venture, LLC v. Judd (In re Dist. Ct., a legal malpractice case).  The Cedar Street court effectively merged the elements of two existing discovery tests, the so-called Martinelli and Stone tests, because choosing which test to apply had proven difficult for the state’s trial courts.  Click here to read an analysis of this case by Grund • Dagner’s Thomas Kranz, who focuses on Colorado construction-defect litigation, business litigation and healthcare liability defense law.