Advanced Reimbursement Solutions LLC et al v. Aetna Life Insurance Company et al

Filing 453

ORDER - IT IS ORDERED that Aetna's Motion to Limit Application of ARS & ASD's Non-Disclosure Agreements (Doc. #419 ) is DENIED. (See document for further details). Signed by Judge Douglas L Rayes on 7/15/2021. (LAD)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Advanced Reimbursement Solutions LLC, et
al.,

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Plaintiffs,

No. CV-19-05395-PHX-DLR
ORDER

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v.
Aetna Life Insurance Company, et al.,
Defendants.

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Before the Court is Aetna’s Motion to Limit Application of ARS & ASD’s Non-

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Disclosure Agreements. (Doc. 419.) These issues were first raised in a discovery dispute

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memorandum (Doc. 404)1 and discussed at a telephonic discovery dispute hearing on May

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21, 2021 (Doc. 408). After the parties argued diametrically opposed positions on the state

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of the law regarding informal discovery implicating non-disclosure agreements (“NDAs”),

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the Court ordered supplemental briefing. The motion has been fully briefed and for the

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reasons set forth below is denied.

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The NDAs in dispute are those signed by the out-patient treatment centers (“OTCs”)

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and third parties. ARS and ASD do not dispute that, despite the NDAs, the information

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covered by the NDA’s may be disclosed to Aetna in formal discovery. However, Aetna

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seeks an order permitting the signatories to the NDAs to speak freely with Aetna outside

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of a deposition. (Doc. 419 at 2.) Aetna argues that the NDAs are exceptionally broad and

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hamper its ability to obtain even basic information about ARS’s and ASD’s conduct outside

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Samples of the NDAs were attached as exhibits to Doc. 404.

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of formal discovery. The issue before the Court is how the NDAs impact Aetna’s request

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to interview, outside formal discovery, the OTCs and third parties who signed them.

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In its supplemental briefing, Aetna cites no case holding that NDAs are void as a

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matter of law because they interfere with informal discovery in a civil case between private

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parties. In Chambers v. Capital Cities/ABC, 159 F.R.D. 441, 444 (S.D.N.Y. 1995), the

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district court found that public policy favors employees voluntarily participating in

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investigations of federal law violations, despite an NDA, so long as the investigation of the

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wrongdoing has nothing to do with trade secrets or other confidential business information.

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The court refused, however, to adopt the plaintiff’s counsel’s proposal that he be allowed

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to tell former employees “that they need not be concerned about any untoward

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consequences of violating any agreement to keep silent which they may have entered into

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with [the defendant].” Id. at 445. The court explained that “such a remedy . . . would

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make plaintiff’s counsel the decisionmaker concerning what confidentiality requirements

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were related to genuine trade secrets [and] other legitimately privileged information, and

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which dealt with concealment of information relating to potential improprieties on the part

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of the employer. . . . To permit such assurances to be given would put legitimate as well as

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illegitimate confidentiality arrangements at risk.” Id.

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The cases that have dealt with the question of the enforcement of NDAs during civil

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litigation have generally found them enforceable. Although it did not find a public policy

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exception to the enforcement of an NDA, the Ninth Circuit in United States ex rel. Cafasso

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v. Gen. Dynamics C4 Sys., Inc. 637 F.3d 1047, 1062 (9th Cir. 2011), discussed what

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protections for an employee removing documents in violation of a confidentiality

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agreement in the context of a False Claims Act claim might look like. It noted that

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protection of the employee violating the NDA would be limited and would require a

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showing of justification, i.e., the necessity of the documents removed by the employee to

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pursue the claim. The Court also noted that the protection would be limited to only those

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necessary documents.

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Agreements requiring a person to remain silent about the events leading up to a

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dispute or illegal practice, absent an otherwise valid reason to protect that information, are

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against public policy. However, NDAs that protect against disclosures of legitimately

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confidential information, such as trade secrets, may be enforced, despite the interference

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or inconvenience they create to an investigation into a civil lawsuit. The burden is on the

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party seeking to interview those bound by the NDA to show need for the information, that

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the information sought is not outside the scope of that need and does not involve areas of

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legitimate confidential business information. Aetna has not met that burden.

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IT IS ORDERED that Aetna’s Motion to Limit Application of ARS & ASD’s Non-

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Disclosure Agreements (Doc. 419) is DENIED.

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Dated this 15th day of July, 2021.

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Douglas L. Rayes
United States District Judge

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