Sidhi Vinayak Petroleum, Inc. et al v. Hess Corporation et al

Filing 115

RULING denying 102 Motion for Protective Order; granting 103 Cross Motion for Protective Order. Signed by Judge Robert M. Spector on 7/12/2019. (Watson, M.)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
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:
SIDHI VINAYAK PETROLEUM, INC.
:
:
v.
:
:
HESS CORPORATION, et al.
:
:
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3: 16 CV 1792 (WWE)

DATE: JULY 12, 2019

RULING ON PLAINTIFF’S MOTION FOR PROTECTIVE ORDER (DOC. NO. 102) AND
DEFENDANTS’ CROSS MOTION FOR PROTECTIVE ORDER (DOC. NO. 103)
I.

RELEVANT FACTUAL BACKGROUND
The plaintiff Sidhi Vinayak Petroleum, Inc., a franchisee of defendant Hess Corporation

[“Hess”], commenced this litigation on October 31, 2016 (Doc. No. 1), arising out of two
transactions: (1) the transfer of the franchise agreements with Hess to defendant Marathon
Petroleum Company, LP [“Marathon”] 1 when defendant Hess sold its refinery assets in October
2014; and, (2) the plaintiff’s right of first refusal as it applied to defendant Petroleum Marketing
Group, Inc.’s [“PMG”] offer to purchase defendant Marathon, made on May 22, 2017.2
On May 16, 2019, the plaintiff filed a Motion for Protective Order (Doc. No. 102), and the
next day, the defendants Hess, Marathon, and PMG, filed their Cross-Motion for Protective Order,

1

The Court refers herein only to the parties remaining in this action. On February 14, 2018, Ganesh Petroleum, Inc.
and Mercury Fuel Service were dismissed on consent as plaintiffs (Doc. No. 58), and on March 18, 2019, defendants
Hess Retail Corporation and Speedway LLC were dismissed on consent from the case. (Doc. No. 91).

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 Specifically, in the Third Amended Complaint, filed on September 26, 2018, the plaintiff asserts a violation of the
Connecticut Petroleum Franchise Act, CONN. GEN. STAT. § 42-133l(a) against defendant Marathon (Count One); a
violation of the Connecticut Unfair Trade Practices Act, CONN. GEN. STAT. § 42-110b et seq. against defendants
Marathon, Hess, and PMG (Count Two); breach of the Dealer Agreement contract between the plaintiff and defendant
Hess through defendant Hess’s transfers to defendants Marathon and PMG without the plaintiff’s consent (Count
Three); breach of the covenant of good faith and fair dealing by defendants (Count Four); declaratory relief (Count
Five); a violation of the statutory right of refusal or bona fide offer, CONN. GEN. STAT. § 42-133mm (Count Six); a
violation of the plaintiff’s rights under the Franchise Act, CONN. GEN. STAT. § 42-133f (Count Seven); and, a violation
of the Petroleum Marketing Practices Act [“PMPA”], 15 U.S.C. § 2801 et seq. by defendant Marathon (Count Eight).

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and opposition to the plaintiff’s Motion. (Doc. No. 103). On June 11, 2019, the Court (Eginton,
J.) issued an Order finding the Motion for Protective Order moot and granting the Cross Motion
for Protective Order. (Doc. No. 106). Following a Motion for Reconsideration filed by the
plaintiff (Doc. No. 107), the Court reopened the plaintiff’s Motion and the defendants’ Cross
Motion and referred both to this Magistrate Judge. (Doc. No. 108). On June 18, 2019, the plaintiff
filed a brief in opposition to the plaintiff’s Cross Motion (Doc. No. 111), and on July 2, 2019, the
defendants filed their reply brief. (Doc. No. 114).
For the reasons set forth below, the plaintiff’s Motion for Protective Order (Doc. No. 102)
is denied, and the defendants’ Cross Motion for Protective Order (Doc. No. 103) is granted.
II.

DISCUSSION
Both parties have submitted proposed Protective Orders governing the information,

documents, and other materials produced during discovery in this action. Protecting the privacy
of proprietary information is the legitimate purpose of a protective order, and it is undisputed in
this case that a protective order is appropriate and necessary to govern the exchange of confidential
and proprietary business information to be disclosed in discovery. See Burgess v. Town of
Wallingford, No. 3:11 CV 1129(CSH), 2012 WL 4344194, at *9 n.17 (D. Conn. Sept. 21, 2012)
(“Absent a protective order, ‘the discovery rules place no [specific] limitations on what a party
may do with materials obtained during discovery.’”) (quoting 23 Am. Jur. 2d Depositions and
Discovery § 167 (Westlaw update Aug. 2012)). As the United States Supreme Court has
explained, “Rule 26(c) confers broad discretion on the trial court to decide when a protective order
is appropriate and what degree of protection is required[,]” Seattle Times Co v. Rhinehart, 467
U.S. 20, 36, 104 S. Ct. 2199, 81 L. Ed. 2d 17 (1984), and it is this “degree of protection” that is at
issue in the underlying motions.

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The proposed orders differ in their restriction on the use of the designated materials, the
procedure for challenging designations, and the process for sealing designated material filed with
the Court. In addition, the plaintiff’s Proposed Protective Order does not include language that the
filing of pleadings or other papers disclosing or containing designated material does not waive the
designated status of the material, or language that the Court will determine how that material will
be treated during trial and other proceedings. (Compare Doc. No. 102, at 3 ¶¶ 5, 12, 14 with Doc.
103, Ex. A ¶¶ 5, 12, 14, 15).
A.

USE RESTRICTION

The defendants argue that the plaintiff’s proposed order is “fundamentally improper and
deficient” in that there is no prohibition on the use of confidential information. (Doc. No. 103 at
2). The defendants’ Proposed Protective Order, identical to the Standing Protective Order used by
many of the district judges in this district,3 states that material designated as confidential under the
protective order “shall not be used or disclosed for any purpose other than the litigation of this
action and may be disclosed only” in a stated manner, whereas, the plaintiff’s Proposed Protective
Order states that designated material “shall not be disclosed for any purpose other than the
litigation and may be disclosed only” in the stated manner. (Compare Doc. No. 102, at 2 ¶ 5 with
Doc. No. 103, Ex. A ¶ 5). Counsel for the plaintiff argues that counsel, or their respective firms,
“have had the same dispute over the word ‘use’ for perhaps twenty years[]”4 and that counsel’s
“future compliance with the order could constitute a blatant violation of [Rule 5.6 of the] Rules of

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 The following district judges use the Standing Protective Order that the defendants propose: the Honorable Victor
A. Bolden, the Honorable Robert N. Chatigny, the Honorable Janet C. Hall, the Honorable Jeffrey A. Meyer, the
Honorable Michael P. Shea, and the Honorable Stefan R. Underhill.

4
 Although the plaintiff’s counsel refers to this on-going dispute between counsel, the plaintiff does not cite to any
cases involving these attorneys in which this issue was argued, nor could the Court locate any ruling on this issue
involving these attorneys. 

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Professional Conduct[]” which prohibits restrictions on a lawyer’s right to practice. (Doc. No. 111
at 2).
In response, the defendants argue that the plaintiff’s position is “wrong on all fronts[]” as
the “[m]ere access to information via the discovery process does not give one the right to
appropriate that information for its own use[,]” and that, if the plaintiff and its counsel were
allowed “to assume dominion over the defendants’ confidential and proprietary information simply
because the plaintiff has served discovery in this lawsuit,” Rule 26(c) would be “defeated,” and
the defendants “would be forced to scrutinize all of their discovery compliance with the goal of
maximizing the protection of their confidential and proprietary information.” (Doc. No. 114, at 45) (citation omitted). The Court agrees with the defendants.
First, as the defendants note appropriately, the plaintiff mis-cites Rule 5.6 of the
Connecticut Rules of Professional Conduct. Rule 5.6(2) reads, “A lawyer shall not participate in
offering or making . . . [a]n agreement in which a restriction on the lawyer’s right to practice is
part of the settlement of a client controversy.” CONN. RULES

OF

PROF’L CONDUCT r. 5.6(2)

(emphasis added). Similarly, Model Rule of Professional Conduct 5.6(b) provides: “A lawyer
shall not participate in offering or making an agreement in which a restriction on the lawyer’s right
to practice is part of the settlement of a client controversy.” MODEL RULES OF PROF’L CONDUCT
r. 5.6(b) (9th Ed. 2019). Moreover, ABA Formal Opinion 00-417 explains that:
Rule 5.6(b) applies only to restrictions imposed as part of a settlement of a
controversy. Thus, the rule and this opinion have no application to agreements
restricting the use of information where the agreement is entered into as a condition
of receiving the information. Nor does the rule apply to protective orders imposed
during litigation.
(Doc. No. 114, Ex. A n.4) (emphasis added). This case does not involve a settlement of a client
controversy. Thus, this Rule of Professional Conduct is inapplicable to the protective order at issue.

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Next, the plaintiff argues that similar use restrictions have been used as the predicate for
attempts to disqualify counsel from subsequent litigation, and “[p]erhaps worse than
disqualification, producing parties also sought contempt orders against opposing counsel in similar
circumstances.” (Doc. No. 111 at 2-3) (citing In re Dual-Deck Video Cassette Recorder Antitrust
Litig., 10 F.3d 693 (9th Cir. 1993); Streck Inc. v. Res. and Diagnostic Sys., 250 F.R.D. 426 (D.
Neb. 2008); Hu-Friedy Mfg. Co., Inc. v. General Elec. Co., No. 99 C 0762, 1999 WL 528545
(N.D. Ill. Jul. 19, 1999)). However, the cases upon which the plaintiff relies do not support the
plaintiff’s position. In fact, in none of the cases relied on by the plaintiff did the court conclude
that the “use” restriction gave rise to a contempt finding, that a “use” restriction violated ethical
rules, or that the “use” restriction improperly restricted counsel’s ability to practice.
In Hu-Friedy Mfg., 1999 WL 528545, at *1, Hu-Friedy brought a fraud action against
General Electric arising out of General Electric’s marketing of plastic ULTEM resin. Hu-Friedy’s
counsel who represented another party, Chevron Chemical Company [“Chevron”], against General
Electric before bringing Hu-Friedy’s case, entered into a protective order in the Chevron case that
provided that all confidential materials would “be used and disclosed solely for purposes of the
preparation and trial of [the] case and [would] not be used or disclosed for any other purpose.” Id.
In connection with the settlement of the Chevron case, those parties also entered into a cooperation
agreement that provided that the confidential materials would “be used by the Parties and their
Counsel solely for the purpose of securing, advancing, and supplying legal representation to the
Parties with respect to Covered Claims.” Id. General Electric argued that the plaintiff’s counsel
“impermissibly [sought] to exploit an unfair advantage . . . by using confidential information
disclosed” to the plaintiff’s counsel in the Chevron case. Id.

The court found that General

Electric’s “strained reading of the word ‘use’ in the protective order and cooperation agreement”

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would prevent the plaintiff’s counsel’s representation of anyone with related claims against
General Electric and would contravene ethical rules that prohibit lawyers from making agreements
in which a restriction on the lawyer’s right to practice is part of the settlement of a controversy
between the parties. Id. at 2-3. General Electric’s interpretation of the “use” restriction is the same
interpretation posited by the plaintiff in this case. The court in Hu-Friedy, however, disagreed with
General Electric’s interpretation of the “use” restriction in that protective order, referred to General
Electric’s argument as “unimpressive,” and held that there is “no unfair advantage” due to HuFriedy’s counsel’s “previous exposure to the confidential information[,]” and that “any merit it
might have is far outweighed by the policy of avoiding unnecessary and unworkable restrictions
on the practice of law.” Id. (emphasis in original). The holding of that case, therefore, does not
support the plaintiff’s argument in this case.
In Streck Inc., 250 F.R.D. at 434, the defendant sought sanctions against the plaintiff for
its “use” of protected documents in a subsequent action. In that case, the defendant “used” the
documents to compel discovery and to draft a statement of facts in the other action. Id. The court,
concluding that the plaintiff’s knowledge and reference to the documents in the other action was
“insufficient . . . to constitute a violation of a protective order[,]” declined to impose sanctions.
Id. at 435. Thus, the court’s holding that a “use” restriction is not violated when counsel relies on
the protected information in subsequent litigation does not support the plaintiff’s argument in this
case that such a “use” restriction would prevent counsel from taking related cases in the future
because of counsel’s knowledge of the protected information.
Additionally, the plaintiff misconstrues the holding of In re Dual-Deck Video Cassette
Recorder Antitrust Litig., 10 F.3d at 695, in its argument that use restrictions would prevent a
lawyer from ever doing “similar legal work again.” (Doc. No. 111 at 3). To the contrary, the

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Ninth Circuit explained that the plaintiff in that case, who was accused of violating the protective
order’s “use” restriction, did not violate the protective order by using information that, admittedly,
“it would not have discovered so easily[,]” as the plaintiff “went to great lengths to avoid revealing
in public filings anything it had learned in discovery[.]” Id. The court explained that,“[b]ecause
[the plaintiff’s] lawyers cannot achieve total amnesia[,]” their subsequent work in antitrust
litigation against the defendants . . . would be informed by what they learned during the discovery
[in the earlier] suit[,]” and any order with such use restrictions, “if taken literally,” would be
“absurd[]” because it would require that “lawyers who learn from and use their experience obtained
in discovery under such an order would have to change fields, and never do antitrust work again,
lest they ‘use’ what they learned in a prior case[.]” Id. Thus, the court concluded that “[f]or the
protective order to comply with common sense, a reasonable reading must connect its prohibitions
to its purpose––protection against disclosure of commercial secrets.” Id. The court held that the
plaintiff’s use of discovery from the first lawsuit in the second lawsuit, “substantially complied
with a reasonable interpretation of the protective order[,]” and thus, declined to hold the plaintiff
in contempt. Id.
Moreover, to the extent that the plaintiff relies on these cases for the general proposition
that, when a protective order exists, a party may move for sanctions or contempt for violations of
that order, the mere fact of an enforcement proceeding when a party violates the terms of a
protective order does not give rise to a finding that the terms of a protective order cannot stand.
Consistent with the foregoing case law and the Standing Protective Orders used by many of the
district judges in this district, which include identical language governing use, this Court concludes
that the use provision included in the defendants’ Proposed Protective Order is appropriate.

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B.

REMAINING PROVISIONS

In paragraph twelve, the plaintiff’s Proposed Protective Order reduces from fifteen days to
ten days the length of time to consult with an opposing party who contests a confidentiality
designation. (Doc. No. 111 at 5). Although the plaintiff argues that fifteen days will cause
significant delay in the movement of this case, the fifteen-day dispute resolution timeframe is
standard in the Standing Protective Orders used in this district, and the Court finds no strong
countervailing interest in reducing this timeframe. Additionally, the Court notes that, despite Rule
26(c)’s requirement for counsel to confer in good faith prior to filing a motion for a protective
order, and for counsel to include a certification that such efforts were made, the plaintiff’s counsel
did not include such a certification in his underlying motion. The Court reminds counsel of the
importance of the obligation to confer in good faith in discovery, and specifically, regarding the
designations governed by this Protective Order.
The plaintiff next argues that the procedure it sets out in paragraph fourteen of its proposed
protective order “merely sets out a reasonable procedure to give the designating party notice of an
intent to file confidential documents with the Court[]” (Doc. No. 111 at 5-6). The plaintiff’s
proposed language, however, deviates from the sealing procedures set forth under Local Rule 5(e).
The proposed language from the defendants, which differs from the plaintiff’s language in that it
specifies that documents must be sealed in the manner set forth in the Local Rules, is appropriate
and is identical to the language in the Standing Protective Order used in this district.
Moreover, the plaintiff’s Proposed Protective Order does not include what is in the
defendants’ paragraph fifteen, which reads: “Filing pleadings or other papers disclosing or
containing Designated Material does not waive the designated status of the material. The Court
will determine how Designated Material will be treated during trial and other proceedings as it

8 

deems appropriate.” The plaintiff deletes this paragraph because the paragraph “merely reflects a
fact. If a document is publicly filed, it is public.” (Doc. No. 111 at 6). The defendants argue that
the deletion of this paragraph is important as paragraph fifteen “provides crucial limitations on the
waiver” of designated material. (Doc. No. 103 at 4). The defendants also acknowledge that, had
the parties conferred prior to the filing of the plaintiff’s motion, the defendant “likely would have
been willing to accommodate some of the plaintiff’s concerns[.]” (Doc. No. 114 at 10). The issue
of waiver is significant, and the omission of paragraph fifteen omits any protections for the waiver
of confidentiality. This provision is included in the Standing Protective Order utilized in this
district and shall apply in this case.
III.

CONCLUSION
Accordingly, this Court concludes that the plaintiff’s Motion for Protective Order (Doc.

No. 102) must be denied, and the defendants’ Cross Motion for Protective Order (Doc. No. 103)
is granted.5 The defendants shall submit their Proposed Protective Order for this Court’s signature.
This is not a Recommended Ruling. This Ruling is reviewable pursuant to the “clearly
erroneous” statutory standard of review. See 28 U.S.C. § 636(b)(1)(A); FED. R. CIV. P. 72(a); and
D. CONN. L. CIV. R. 72.2. As such, it is an order of the Court unless reversed or modified by the
district judge upon timely made objection.
Dated at New Haven, Connecticut, this 12th day of July, 2019.
__/s/ Robert M. Spector_____________
Robert M. Spector
United States Magistrate Judge

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 If the parties believe that a settlement conference would be productive, they should contact Chambers. 

9