Newmark Realty Capital, Inc. v. BGC Partners, Inc. et al

Filing 69

ORDER ON 68 PARTIES' JOINT DISCOVERY LETTER BRIEF. Signed by Magistrate Judge Susan van Keulen on 6/15/2017. (ofr, COURT STAFF) (Filed on 6/15/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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NEWMARK REALTY CAPITAL, INC.,

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Plaintiff,

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v.

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ORDER ON PARTIES' JOINT
DISCOVERY LETTER BRIEF
Re: Dkt. No. 68

BGC PARTNERS, INC., et al.,

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Defendants.

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United States District Court
Northern District of California

Case No.16-cv-01702-BLF (SVK)

The parties have submitted a joint discovery letter brief setting forth their dispute over

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whether the protective order in this case should permit in-house counsel to have access to

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materials designated as “HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY” (“AEO

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materials”). ECF 68. Plaintiff1 Newmark Realty Capital, Inc. requests that the Court enter this

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district’s Model Protective Order for Litigation Involving Patents, Highly Sensitive Confidential

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Information and/or Trade Secrets (the “Model Order”) without the optional provisions regarding

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“Designated House Counsel.” Id. at 1. The result would be to prohibit any of defendants’ in-

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house counsel from accessing materials designated AEO by plaintiff. Defendants BCG Partners,

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Inc. and Newmark & Company Real Estate, Inc. are generally in agreement with using the Model

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Order, provided it includes the optional provisions permitting in-house counsel to access AEO

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materials under specified conditions. Id. at 3. Defendants also seek permission for three of their

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in-house counsel to have access to plaintiff’s AEO materials under the “House Counsel”

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provisions. Id. at 4.

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As discussed below, the Court finds that plaintiff has failed to demonstrate good cause to

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exclude all access by in-house counsel to AEO information, and thus the protective order in this

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In their joint letter brief, each party refers to itself as “Newmark.” To avoid confusion, this
Order instead refers to the parties as “Plaintiff” and “Defendants.”

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case should include the Model Order’s optional “House Counsel” provisions, which permit such

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access under specified conditions. However, the parties have not presented the Court with

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sufficient information to determine whether the three in-house counsel designated by defendants

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should be given access to plaintiff’s AEO information, and the Court orders the parties to provide

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further submissions on that issue.

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I.

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Form of protective order
As the party seeking an order that would limit the disclosure of discovery material to

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certain persons, plaintiff bears the burden of showing good cause. See Fed. R. Civ. P. 26(c)(1);

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see also Model Order ¶ 7.4(c). Plaintiff argues that the parties are direct competitors in the
commercial mortgage banking industry and that “[t]his alone means access by defendants’ in-

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United States District Court
Northern District of California

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house counsel to [plaintiff’s] competitively sensitive information would create a substantial risk of

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serious harm to [plaintiff].” ECF 68 at 1. In particular, plaintiff asserts that the designated in-

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house counsel to whom defendants want to provide access to plaintiff’s AEO information are

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involved in competitive decision-making. Id. at 2. Plaintiff expresses concern about the

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disclosure of plaintiff’s client information, business and strategy documents, and private financial

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information to such individuals. Id.

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Defendants, on the other hand, argue that the designated in-house counsel are part of an in-

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house trial team maintained by defendants’ ultimate parent, Cantor Fitzgerald, and are not

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involved in competitive decision-making for defendants. Id. at 4.

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Each party has submitted a proposed protective order that appears to be based largely on

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the Model Order, which suggests that the Model Order is the appropriate starting point for a

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protective order in this case. The optional “House Counsel” provisions of the Model Order

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address plaintiff’s stated concern about disclosure of AEO information to in-house counsel with

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competitive decision-making responsibilities. Paragraph 7.3(b) of the Model Order permits

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disclosure of AO materials only to Designated House Counsel: “(1) who has no involvement in

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competitive decision-making, (2) to whom disclosure is reasonably necessary for this litigation,

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(3) who has signed the ‘Acknowledgment and Agreement to Be Bound’ (Exhibit A), and (4) as to

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whom the procedures set forth in paragraph 7.4(a)(1) . . . have been followed.” Model Order ¶
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7.3(b) (emphasis added).

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Under the foregoing provision, in-house counsel who are involved in competitive decision-

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making are not entitled to access AEO materials. The safeguards of Paragraph 7.3 are designed to

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address the concerns raised by plaintiff specifically where, as here, the designating party has not

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demonstrated good cause for a blanket prohibition on access by in-house counsel to AEO

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information. Accordingly, the Court ORDERS that the protective order will include the optional

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“House Counsel” provisions of the Model Order. The parties are required to present the Court

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with a single, joint proposed protective order that complies with this directive within 14 days of

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the date of this order.
Because the parties submitted separate proposed protective orders in connection with the

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United States District Court
Northern District of California

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current joint discovery letter brief, it is unclear whether they have additional disagreements about

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the form of the protective order in this case. If there are any remaining disagreements, they must

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be identified in the joint proposed protective order by redlining, highlighting, or another manner

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that informs the Court of each party’s position on each disputed issue.

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II.

Access to AEO information by defendants’ designated in-house counsel
The Court’s decision that the protective order will include the Model Order’s “House

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Counsel” provisions does not answer the questions of which of defendants’ in-house counsel, and

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how many,2 may access plaintiff’s AEO information. A dispute remains as to whether the

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particular in-house counsel to whom defendants want to give access to AEO information—

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Michael Popok, Nirav S. Shah, and Miguel Lopez—are in fact involved in competitive decision-

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making.
The Model Order sets forth a reasonable procedure to be followed in such a situation. The

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party that seeks to disclose AEO information to Designated House Counsel (in this case,

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defendants) must make a written request to the Designating Party (in this case, plaintiff) that sets

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forth identifying information about the Designated House Counsel and describes that person’s

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The Model Order states that “[i]t may be appropriate under certain circumstances to limit the
number of Designated House Counsel who may access ‘HIGHLY CONFIDENTIAL –
ATTORNEYS’ EYES ONLY’ information.” Model Order at n.3. The parties may address in
their upcoming submissions whether such a limitation is appropriate in this case.
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“currently and reasonably foreseeable future primary job duties and responsibilities in sufficient

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detail to determine if House Counsel is involved, or may become involved, in any competitive

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decision-making.” Model Order ¶ 7.4(a)(1). The Designating Party must then make a written

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objection to the disclosure that “set[s] forth in detail the grounds on which it is based.” Id. at

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¶ 7.4(b). If the parties are unable to resolve the matter after meeting and conferring, the party

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seeking to make the disclosure may file a motion seeking permission from the Court to do so. Id.

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at ¶ 7.4(c). “Any such motion must describe the circumstances with specificity, set forth in detail

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the reasons why the disclosure to Designated House Counsel … is reasonably necessary, assess

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the risk of harm that the disclosure would entail, and suggest any additional means that could be

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used to reduce that risk.” Id. at ¶ 7.4(c). The motion must also be accompanied by a declaration

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United States District Court
Northern District of California

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describing the parties’ meet and confer efforts and the reasons advanced by the Designating Party

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for its refusal to approve the disclosure.” Id. The burden of proof on such a motion is on the party

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opposing disclosure to Designated House Counsel. Id.

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The parties have apparently already engaged in some of the steps required under Paragraph

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7.4. Defendant has identified the House Counsel to whom it wants to disclose AEO information,

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the parties have met and conferred about plaintiff’s objection to that disclosure, and the parties

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have presented the dispute to the Court, albeit framed as a dispute over the form of the protective

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order to be entered in this case. The parties, however, have not provided the Court with adequate

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information to enable it to conduct “the counsel-by-counsel, fact-specific analysis necessary to

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determine if [defendants’] in-house counsel engage[] in competitive decisionmaking.” See Amgen

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Inc. v. Sandoz Inc., No. 16-cv-02581-RS (MEJ), 2017 U.S. Dist. LEXIS 397, at *5 (N.D. Cal. Jan.

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3, 2017). As a result, the Court is presently unable to analyze the factors necessary to determine

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whether plaintiff has carried its burden of proving “that the risk of harm that the disclosure would

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entail (under the safeguards proposed) outweighs the Receiving Party’s need to disclose” AEO

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information to the designated in-house counsel. See Model Order ¶ 7.4(c).

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Accordingly, if the parties remain unable to resolve their dispute over in-house counsel

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access to plaintiff’s AEO information, the parties are ordered to submit additional information to

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enable the Court to make the necessary determinations in light of factors such as those discussed
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in Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1469-72 (9th Cir. 1992) and other

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relevant authorities. Defendants are ordered to make their submission, which should include

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declarations that contain the information about the designated in-house counsel’s current and

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reasonable foreseeable future primary job duties and responsibilities required by Paragraph

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7.4(a)(1) of the Model Order and should address the factors identified in Paragraph 7.4(c) of the

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Model Order, within 7 days of entry of this order. Plaintiff is ordered to respond within 7 days

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of defendants’ submission; plaintiff’s response should address the factors identified in

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Paragraphs 7.4(b) and 7.4(c) of the Model Order.

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III.

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Other issues
In the joint discovery letter brief, defendants also express concern that based on plaintiff’s

United States District Court
Northern District of California

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objections to discovery requests, plaintiff has or will overdesignate information as confidential.

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ECF 68 at 5-6. The Model Order requires the parties to exercise restraint in designated material

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for protection. Model Order ¶ 5.1. If any party believes the other has inappropriately designated

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material as confidential or AEO, Paragraphs 6.1 to 6.3 of the Model Order set forth a procedure

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for challenging the designation of discovery material. If it becomes necessary, the parties should

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follow that procedure.

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SO ORDERED.
Dated: June 15, 2017

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SUSAN VAN KEULEN
United States Magistrate Judge

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