Kendall State Bank et al v. Archway Insurance Services, LLC et al

Filing 57

MEMORANDUM AND ORDER granting in part and denying in part 40 Defendants Archway Insurance Services, LLC, Nevada Investments Partners, LLC, and Union One Insurance Group, LLC's Motion for Protective Order. See Memorandum and Order entered herein. Signed by Magistrate Judge David J. Waxse on 11/29/2011. (aam)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

KENDALL STATE BANK,
et al.,
Plaintiffs,
v.
ARCHWAY INSURANCE SERVICES, LLC,
et al,
Defendants.
_____________________________________
ARCHWAY INSURANCE SERVICES, LLC,
et al.,
Plaintiffs,
v.
HARRIS,
et al.,
Defendants.

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Civil Action
No. 10-CV-2617-KHV-DJW

Civil Action
No. 11-CV-2403-KHV-DJW

MEMORANDUM AND ORDER
This matter is before the Court on the Motion for Protective Order (ECF No. 40) filed by
Defendants Archway Insurance Services, LLC, Nevada Investments Partners, LLC, and Union One
Insurance Group, LLC (hereinafter collectively referred to as “Defendants”). Plaintiffs Kendall
State Bank, Garden City State Bank, Peabody State Bank, First United Bank and Trust, and Bank
of Commerce and Trust (hereinafter collectively referred to as “Plaintiffs”) oppose the motion. For
the reasons set forth below, the motion is granted in part and denied in part.
I.

Background Information

On July 27, 2011, this Court held a hearing on Plaintiffs’ Renewed Motion for Expedited
Discovery (ECF No. 34). In addition to granting the motion, this Court granted Defendants’ oral
request for a protective order limiting Plaintiffs’ use of documents, including production analysis
reports, that Defendants were to produce in discovery. The Clerk’s Courtroom Minute Sheet of the
proceedings further memorialized this Court’s ruling. The Minute Sheet entry states:
Other than appropriate use in this litigation, Plaintiffs are prohibit[ed] from using
non-public information obtained from the production analysis reports and other
documents Defendants produce in discovery until such time as the Court can take up
the issue of the appropriate use of the information. To that end, Defendants shall file
a motion for protective order with supporting authority no later than August 5, 2011.
Plaintiffs shall file their response by August 15, 2011.
Minute Entry for Telephone Motion Hearing held on 7/27/2011 before Magistrate Judge David J.
Waxse, (ECF No. 38). Thus, the minute entry directed Defendants to file a motion for protective
order briefing the issue of appropriate use of the Defendants’ discovery production and including
supporting authority on the issue.
Defendants do not submit a proposed protective order. Rather, defendants broadly state in
their motion that they seek a protective order “govern[ing] all documents produced by Defendants
in the course of discovery in this case.” They assert the protective order should prohibit Plaintiffs
from using information gained through discovery “to identify and/or communicate with third parties
or disclose this information to third parties,” and that the information “may only be used by Plaintiffs
in the litigation of this case.” Lastly, Defendants propose the protective order include the following
language: “Pursuant to the Court’s ruling of July 27, 2011, the court may determine what constitutes
appropriate use of the confidential information and/or may modify this protective order.”
Defendants’ Motion for Protective Order at 2.

2

Plaintiffs contend that this Court should not impose any restriction on Plaintiffs’ use of the
information contained in the documents, as Defendants have failed their burden to demonstrate good
cause. Plaintiffs’ Memorandum in Opposition at 3. Plaintiffs further argue that a protective order
limiting use to this case should only be entered where particular abuse is proved, which they assert
Defendants have not identified, let alone proved. Plaintiffs argue Defendants’ motion rests purely
on speculation.
Plaintiffs further state:
Given that Plaintiffs do not intend to make such use of this information any way
[sic], and to avoid the expense of fighting about the issue, the undersigned made an
offer to defense counsel that Plaintiffs would have stipulated to entry of an agreed
protective order preventing Plaintiffs’ use of the information set forth in these
financial documents “to attempt to collect money from third parties associated with
Defendants” (the only particular harm that Defendants identified in their motion).
Defendants never responded to the offer. If this Court does not deny the motion
outright, it should at most direct these parties to confer and attempt to agree to an
order that would prohibit the only remotely-specific harm Defendants have alleged
– use to send collection letters – rather than the vague, open-ended prohibition
Defendants seek against any “inappropriate” use ([to be] determined later by this
Court).
Plaintiffs’ Memorandum in Opposition, at 4-5.
A party may request the court to enter a protective order pursuant to Fed. R. Civ. P. 26(a)
as a means to protect the confidential information from disclosure to individuals or entities not
connected with the litigation.1 The decision whether to enter a protective order is within the court's
discretion.2 Rule 26 (c) nevertheless requires that the party seeking the protective order establish

1

Stewart v. Mitchell Transport, 2002 WL 1558210 (D. Kan. July 8, 2002) at *5.

2

Id. (citing Thomas v. Int’l Bus. Mach., 48 F.3d 478, 482 (10th Cir. 1995)).
3

“good cause” for the protective order.3 In determining whether good cause exists for the court to
issue a protective order that prohibits partial or complete dissemination of documents or other
materials obtained in discovery to non-parties, “the initial inquiry is whether the moving party has
shown that disclosure of the information will result in a ‘clearly defined and very serious injury.’”4
The Court finds Defendants’ motion sidesteps the Court’s directive in its July 27, 2011
minute order. The Court specifically directed Defendants to file a motion for protective order with
supporting authority briefing the issue of the “appropriate use” of the non-public information
obtained from the production analysis reports and other documents, to enable the Court to
specifically construct a protective order narrowly tailored to meet this criteria. Although Defendants
have asked the Court to enter a protective order, they have failed to show how the disclosure of the
alleged confidential information to any non-parties would result in “clearly defined” or “serious
injury.” Instead, Defendants simply make the circular assertion that the protective order shall include
the ability for the Court to determine what constitutes appropriate use.
Without the requisite briefing, the Court is hampered in making a factually supported finding
of good cause. Nonetheless, Plaintiffs have conceded that they would be willing to “confer and
attempt to agree” to an order that would prohibit “the only remotely-specific harm Defendants have
alleged – use to send collection letters – rather than the vague, open-ended prohibition Defendants
seek against any ‘inappropriate’ use ([to be] determined later by this Court.)” Thus, the Court orders
that the parties are hereby prohibited from using discovery for collection attempts.

3

Id. (citing Johnson v. Gmeinder, 191 F.R.D. 638, 642 (D. Kan. 2000)).

4

Id. (citing Zapata v. IBP, Inc., 160 F.R.D. 625, 627 (D. Kan. 1995)(quoting Koster v. Chase
Manhattan Bank, 93 F.R.D. 471, 480 (S.D.N.Y. 1982)(internal quotations omitted)).
4

To the extent Defendants seek further protections on the use of discovery in this litigation,
counsel shall confer with opposing counsel regarding submission of a proposed protective order.5
Within ten (10) days of the date of filing of this Order, counsel for the parties shall confer and
attempt to agree upon such a protective order. If the parties are unable to reach an agreement, the
Court will allow Defendants five (5) days thereafter to move for a protective order prohibiting the
disclosure of these documents to non-parties and prohibiting the use of these documents outside of
this lawsuit. Plaintiffs shall file their response to the motion for protective order within five (5) days
after service of the motion.
IT IS THEREFORE ORDERED that Defendant's Motion for Protective Order (ECF
No. 40) is granted in part and denied in part as set forth herein.
Dated in Kansas City, Kansas on this 29th day of November, 2011.

s/ David J. Waxse
David J. Waxse
U.S. Magistrate Judge

cc:

All counsel

5

In the interest of justice, the Court will direct the parties to submit an agreed protective order
prohibiting disclosure of the alleged confidential documents/information to non-parties and
prohibiting the use of these documents/information outside of this lawsuit. See Hill v. Dillard’s, Inc.,
2001 WL 1718367 (D. Kan. Oct. 9, 2001) at *5 (directing parties to attempt to draft a protective
order to prevent disclosure of requested documents to non-parties).
5