Wausau Underwriters Insurance Company v. Reliable Transportation Specialists, Inc. et al

Filing 63

ORDER Overruling Plaintiff Wausau's 55 Objections to Magistrate Judge's 54 Order Denying 48 Motion for Protective Order. Signed by District Judge George Caram Steeh. (DPar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

WAUSAU UNDERWRITERS
INSURANCE COMPANY,
Plaintiff,
Case No. 15-12954
vs.
HON. GEORGE CARAM STEEH
RELIABLE TRANSPORTATION
SPECIALISTS, INC., AMARILD
USHE and BURT HOLT,
Defendants.
____________________________/
ORDER OVERRULING PLAINTIFF WAUSAU’S OBJECTIONS TO MAGISTRATE
JUDGE’S ORDER DENYING MOTION FOR PROTECTIVE ORDER [DOC. 55]
This case stems from an underlying lawsuit (the “Holt Litigation”) filed by Burt
Holt against Reliable Transportation, Amarild Ushe and a co-defendant who is not a
party to this action, related to injuries sustained by Holt when he was struck by a tractor
trailer operated by Ushe. The present litigation arises out of plaintiff Wausau
Underwriters Insurance Company’s (“Wausau”) declaratory judgment complaint seeking
a declaration from this court that it is responsible for no more than the policy limit under
the commercial insurance policy issued to Reliable. Reliable Transportation and Ushe
filed a counterclaim alleging that Wausau acted in bad faith against its insured by
refusing to negotiate a settlement within the policy limits in the Holt Litigation.
On June 7, 2016, Wausau moved for a protective order setting forth a procedure
for filing confidential material with the court under seal, and seeking to preclude
confidential information disclosed in this action from being used in the Holt Litigation or
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any other litigation. The magistrate judge directed the parties to review Shane Group,
Inc. v. Blue Cross Blue Shield of Michigan, 825 F.3d 299 (6th Cir. 2016), stressing the
“high burden for overcoming the strong presumption that records filed with the court be
done so openly.” Wausau revised the proposed protective order by providing that a
party may only use confidential material in a filing if, contemporaneously with the use of
such information in the filing, the party “files the confidential material provisionally under
seal”, files in the court record a redacted version of the document that contains the
confidential material, and files a motion or stipulated order to authorize sealing the
confidential information. The proposed order provides that the “Confidential Material
shall remain under seal and/or redacted in any filing until the Court and/or the Parties
reach a decision or agreement regarding whether the Confidential Material shall remain
outside of the public record.” R. 53-1. Finally, the proposed protective order seeks to
enjoin any party from using material marked confidential “for any other purpose,
including, without limitation, in the Underlying Action or in any other litigation or
arbitration proceeding, or for any business or commercial purpose.” Id.
The magistrate judge denied the proposed protective order after concluding that
it did not comport with Shane Group or E.D. Mich. LR 5.3(b). The magistrate judge was
concerned with the order’s requirement that materials designated confidential would be
temporarily sealed without any preliminary showing of a compelling reason to seal and
without first requesting an order to have the items sealed. Furthermore, the items would
remain under seal for an unspecified period of time while the court reviews the motion
or stipulation requesting that the documents be maintained under seal permanently.

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Wausau describes its proposal as an efficient logistical procedure which does not bind
the court to a particular time period to conduct its review.
Federal Rule of Civil Procedure 72(a) provides that “[t]he district judge in the
case must consider timely objections and modify or set aside any part of the
[Magistrate’s] order that is clearly erroneous or is contrary to law.” Wausau first objects
to the magistrate judge’s finding that the proposed protective order does not comply
with Shane Group and Local Rule 5.3(b) as being contrary to law.
The Sixth Circuit recognizes a distinction between protective orders entered
pursuant to the discovery provisions of Fed. R. Civ. P. 26 and orders to seal court
records. Shane Group, 825 F.3d at 305. Secrecy is acceptable at the discovery stage,
where a court may enter a protective order limiting use or disclosure upon a showing of
good cause. Id. (citation omitted). However, different considerations apply when the
parties place material in the court record because the public has a strong interest in
having access to such information. Id. There is a “‘strong presumption in favor of
openness’ as to court records” with a heavy “burden of overcoming that presumption . . .
borne by the party that seeks to seal them.” Id. “‘Only the most compelling reasons can
justify non-disclosure of judicial records.’” Id.
Local Rule 5.3(b) sets forth the procedure as to sealed documents, requiring a
party filing documents under seal to first secure an order to do so. The order must be
preceded by a motion or stipulation that states the authority for sealing, states why
sealing the item is necessary, and states why an alternative to sealing is unsatisfactory.
Rule 5.3(b).

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The procedure proposed by Wausau’s protective order presumes non-disclosure
by requiring items designated as confidential in discovery to be filed under seal, albeit
temporarily, without first obtaining an order from the court and with only a
contemporaneous showing of a compelling reason by the party seeking to have the
items sealed. A district court that determines to seal court records is required to set
forth specific findings and conclusions “which justify nondisclosure to the public.” Id. at
306 (citation omitted). The proposed protective order changes the procedure set forth
in Local Rule 5.3(b), and does not comply with Shane Group. Wausau does not provide
any compelling reason for altering the established procedure for filing documents under
seal, and the court does not find that one exists in this case. The court finds that the
magistrate judge’s order is not contrary to law and thus overrules Wausau’s first
objection.
Wausau’s second objection is that the magistrate judge’s finding that the
proposed protective order improperly seeks to limit use of discovery to the current
litigation is contrary to law. The proposed protective order provides:
The Parties may use Confidential Material in the prosecution, defense or
settlement of this Action only. The Parties may not use or reference
Confidential Material for any other purpose, including, without limitation, in
the Underlying Action or in any other litigation or arbitration proceeding, or
for any business or commercial purpose.
The magistrate judge’s order states that the proposed protective order “aims, without
any supporting authority, to have this Court dictate whether a party may admit evidence
in a proceeding over which this Court has no jurisdiction.” R. 54.
This quoted provision of the proposed protective order would purportedly bind
other courts from deciding whether or not portions of discovery in this case are useable
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in another forum. As found by the magistrate judge, plaintiff cites no authority for such a
request in the absence of an agreement between the parties. Plaintiff’s second
objection to the magistrate judge’s order is overruled.
IT IS SO ORDERED.

Dated: October 21, 2016

s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE

CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
October 21, 2016, by electronic and/or ordinary mail.
s/David Parker
Deputy Clerk

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