Smith v. Bradley Pizza, Inc. et al

Filing 221

ORDER granting in part and denying in part 196 Motion for Sanctions(Written Opinion). See Order for details. Signed by Magistrate Judge Katherine M. Menendez on 2/4/2019. (BJP)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Scott Smith,

Case No. 0:17-cv-2032-ECT-KMM
Plaintiff,

v.

ORDER

Bradley Pizza, Inc., and Pamela M. Dahl,
Defendants.
This matter is before the Court on Plaintiff Scott Smith’s Motion to Enforce
the Court’s Protective Order and For Sanctions Against Defendants and Best &
Flanagan LLP for Violations of the Parties’ Agreed Protective Order. [Pl.’s Mot., ECF
No. 196.] Specifically, Mr. Smith asserts that defense counsel1 violated the terms of
the Protective Order [ECF No. 123] by filing “confidential” documents produced in
this case in support of motions for summary judgment in two other cases pending in
the District of Minnesota. The documents at issue are settlement agreements that this
Court required Mr. Smith to produce to Bradley Pizza and Ms. Dahl in this litigation
and information regarding the income he receives from ADA litigation. Mr. Smith is
the plaintiff in the other two cases and defense counsel represents the defendants in
both.
Mr. Smith argues that defense counsel’s violations of the Protective Order
should result in the following sanctions: (1) defense counsel should reimburse him for
the legal fees and costs incurred in addressing the violations of the protective order;
Mr. Smith’s motion and proposed order ask the Court to impose sanctions on
defense counsel and the defendants in this case, Bradley Pizza, Inc., and Pamela Dahl.
However, none of Mr. Smith’s moving papers suggest that the defendants themselves
are responsible for the alleged failure to comply with the protective order. Rather,
Mr. Smith focuses the attention on defense counsel’s conduct. Accordingly, the Court
finds that neither Bradley Pizza nor Ms. Dahl are responsible for any of the alleged
violations of the protective order.
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(2) defense counsel should be required to revise the summary-judgment motions in
the other cases to remove references to the settlement-agreement information;
(3) defense counsel should be ordered to cease distributing the settlement-agreement
information to their other clients and to ensure that any copies are destroyed; and
(4) defense counsel should be required to pay a $20,000 penalty to the Court.
For the reasons that follow, the Court finds that the filing of the settlement
agreements and related information in the other litigation violated the Protective
Order. However, most of the sanctions Mr. Smith requests are inappropriate given
the history and circumstances of this litigation. The Court requires defense counsel to
pay a penalty of $500 for failure to comply with the Protective Order. Moreover, the
Court modifies the Protective Order to allow the continued use of the settlementagreement information in the other two cases at issue.
I.

Relevant Background

Based on a stipulation filed by the parties, the Court entered a Protective Order
on July 9, 2018. [ECF No. 123.] Under the Protective Order, each party in this case
has the right to designate documents produced during discovery as “confidential.” [Id.
¶ 2(a).] A party can agree to remove a confidential designation from a document, but
if no such agreement can be obtained, a party “may move the court for an order
changing the designation.” [Id. ¶¶ 7(a), 7(c).] A document that has been marked
confidential “may be used only in this action.” [Id. ¶ 3(a).] The Protective Order also
limits the people to whom a confidential document may be revealed. [Id. ¶ 3(b).]
Almost a month after the Protective Order was entered, on August 7, 2018,
counsel for Bradley Pizza and Ms. Dahl asked the Court to allow them to take
Mr. Smith’s deposition in this case simultaneously with his deposition in two other
cases: Smith v. R.W.’s Bierstube, Inc. (“Bierstube”), No. 17cv1866 (PJS/HB), Doc. No. 1
(D. Minn. June 2, 2017) (Compl.), and Smith v. Golden China (“Golden China”),
No. 17cv1862 (JRT/HB), Doc. No. 1 (D. Minn. June 2, 2017) (Compl.).2 In Bierstube
Email from Edward P. Sheu to Menendez, M.J. (Aug. 7, 2018, 02:24 CST) (on
file with the Court) (“Sorry there is one additional issue that is not resolved: whether
Mr. Smith can be asked at his deposition about the other 2 Red Wing cases
(Mr. Smith sued 13 Red Wing/Winona businesses based on the same May 25, 2017
2

(footnote continued on following page)
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and Golden China, Mr. Smith alleges that he encountered architectural barriers to
access prohibited by the ADA in the parking lots of the defendants’ businesses on the
same day (May 25, 2017) that he encountered barriers to access at Bradley Pizza.
Defense counsel in this case also represents the defendants in Bierstube and Golden
China. The Court held a telephonic conference on August 8, 2018 to discuss
Mr. Smith’s deposition, among several other discovery issues raised by the parties.
[Mins. of Tel. Conf. (Aug. 8, 2018), ECF No. 128.] On September 20, 2018, the Court
amended the Pretrial Scheduling Order here based on the parties’ subsequent
agreement that Mr. Smith’s deposition would cover testimony for this matter, Golden
China, and Bierstube.
The parties also coordinated other aspects of pretrial procedure and discovery
among the three cases. In addition to having a single deposition of Mr. Smith, they
also agreed that each side’s expert depositions would be consolidated for all three
cases. Additionally, site inspections for Bradley Pizza’s location and for the
defendants’ businesses in Golden China and Bierstube were conducted jointly. [Jan. 7,
2019 Sheu Decl. (“1/7 Sheu Decl.”) ¶ 5, Ex. 2, ECF Nos. 204, 204-2.] And the
defendants in all three cases sought to conduct a joint inspection at the apartment
building where Mr. Smith lives. [See 1/7 Sheu Decl., Ex. 3.]
On September 17, 2018, defense counsel took Mr. Smith’s deposition for this
case, Golden China, and Bierstube. During the deposition, defense counsel asked
Mr. Smith questions about settlement agreements he has reached in other ADA cases
he filed as a plaintiff. Mr. Smith testified that he has received money through some of
those settlements. On September 27, 2018, defense counsel sent Mr. Smith’s counsel a
letter regarding all three cases, noting that Mr. Smith, plaintiff’s counsel, and plaintiff’s
expert “refused to provide information about Mr. Smith’s settlements.” [1/7 Sheu
Decl., Ex. 5.] In response, on October 12, 2018, plaintiff’s counsel sent defense
counsel an email, again in reference to all three cases, attaching a settlement
agreement template. [1/7 Sheu Decl., Ex. 6.]

(footnote continued from previous page)
visit). Defendants wish to depose Mr. Smith once rather than 3 times, the same way
[the parties’ experts] are going to be; plaintiff says otherwise.”).

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Bradley Pizza and Ms. Dahl also served a request for production of documents
related to Mr. Smith’s past ADA settlements, but Mr. Smith did not agree to produce
those documents.3 [Oct. 13, 2018 Sheu Decl. (“10/13 Sheu Decl.”) ¶ 2, Ex. A, ECF
Nos. 148, 148-1.] Mr. Smith raised several objections to the request, and Bradley Pizza
and Ms. Dahl moved to compel production of the settlement agreements. [10/13
Sheu Decl. ¶ 3, Ex. B (Pl.’s Response); Defs.’ Mot. to Compel, ECF No. 144.] In an
Order dated November 13, 2018, the undersigned granted in part and denied in part
Bradley Pizza’s and Ms. Dahl’s motion to compel production of settlement
agreements. [Order (Nov. 13, 2018), ECF No. 159.] The Order required Mr. Smith
“to produce any non-confidential settlement agreements that he has entered in similar
ADA lawsuits in the two-year period preceding October 30, 2018.” [Id. at 18, ¶ 3a.]
He was also required “to produce documents sufficient to show the total
compensation he has received from settling ADA lawsuits in the two-year period
preceding October 30, 2018.” [Id. at 18 ¶ 3c.] Mr. Smith was not required to produce
settlement agreements that included a confidentiality provision. [Id. at 18 ¶ 3b.]
To comply with the November 13, 2018 Order, Mr. Smith produced eleven
settlement agreements that were not subject to a confidentiality provision. When he
produced these documents, Mr. Smith marked them as “confidential” pursuant to the
Protective Order. [See Pl.’s Mem. at 3, ECF No. 198.] On Friday, December 14, 2018,
the defendants in Golden China filed a motion for summary judgment. [Golden China,
17cv1862, ECF No. 89.] In support of the Golden China summary-judgment motion,
defense counsel filed Sealed Exhibit 14, which includes the eleven settlement
agreements provided pursuant to the undersigned’s November 13, 2018 Order in this
case. [Golden China, 17cv1862, ECF Nos. 91, 94.] In their memorandum, the Golden
China defendants also referenced these settlement agreements and information about
the compensation Mr. Smith has received from ADA lawsuits. [Golden China,
17cv1682, ECF No. 99 at 2 n.1.]
On the following Monday, December 17, 2018, plaintiff’s counsel contacted
defense counsel and asserted that the filing of the settlement agreements in the Golden
The document request for the settlement agreements baers the caption for this
action, with no reference made to the Golden China or Bierstube matters. [10/13 Sheu
Decl., Ex. A, ECF No. 148-1.]
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China case violated the Protective Order in this action. [Dec. 29, 2018 Browne Decl.
(“12/29 Browne Decl.”) ¶ 5, ECF No. 200.] Specifically, Mr. Smith asserted that
defense counsel violated the Protective Order by disclosing the settlement-agreement
information that was marked confidential to the defendants in Golden China, who were
not among those authorized to receive such information. [12/29 Browne Decl., Ex. A
(email string).] Defense counsel took the position that no violation had occurred
because: (1) “Plaintiff waived objections about sharing his responses among discovery
requests in [this case, Golden China, and Bierstube]”; and (2) the coordination of pretrial
matters among the three cases operated as a “de facto modification of the protective
orders, if not an actual agreement on the commonality of all plaintiff’s discovery
responses and documents.” [Id.] The parties were unable to resolve their disagreement
about the propriety of defense counsel’s use of the information in the other two cases.
On December 29, 2018, Mr. Smith filed the pending motion to enforce the
Protective Order and for sanctions against defense counsel for using the settlement
agreements in Golden China. [Pl.’s Mot., ECF No. 196.] In his supporting
memorandum, Mr. Smith noted:
Defendants’ counsel has another summary judgment motion due in the
near future in [Bierstube]. Smith is concerned that Defendants and Best &
Flanagan will continue to violate the protective order by sharing Smith’s
confidential documents and information with Best & Flanagan’s other
clients, thus allowing the use of confidential information in other
proceedings.
[Pl.’s Mem. at 2.] Three days later, the defendants in Bierstube filed a motion for
summary judgment.4 [Bierstube, 17cv1866, ECF No. 96.] The Bierstube motion also
relies upon the settlement agreements that were produced pursuant to the
undersigned’s November 13, 2018 Order on the motions to compel. [Bierstube,
17cv1866, ECF No. 98 at 2 n.2, and ECF No. 104.]
The undersigned held a hearing on the motion to enforce the Protective Order
on January 24, 2019. [ECF No. 217.] Five days after the hearing, on January 29, 2019,
Mr. Smith filed a Notice, asserting that in Golden China, defense counsel again referred
The deadline for having dispositive motions served, filed and heard in Bierstube
is March 1, 2019. [Bierstube, 17cv1866, ECF No. 77 at 9.]
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to the settlement information in their own clients’ summary-judgment reply and their
response to Mr. Smith’s summary-judgment motion. [ECF No. 218.]
II.

Legal Standard

Pursuant to Federal Rule of Civil Procedure 37(b), a court may sanction a party
that violates a discovery order, including a protective order. Sandoval v. Am. Bldg.
Maintenance Indus., Inc., 267 F.R.D. 257, 264 (D. Minn. 2007). When a party fails to
abide by a protective order, the court may impose any sanction available under
Rule 37(b)(2)(A)(i)–(vii) and “issue further just orders.” U.S. ex rel. Johnson v. Golden
Gate Nat’l Sr. Care, LLC, No. 08-cv-1194 (DWF/JJK), 2013 WL 1182095, at *7 (D.
Minn. Mar. 21, 2013). A court may also sanction a party for violating a protective
order under its inherent power when the violation is willful. Id.
III.

Analysis

There is no dispute in this case that defense counsel used the settlement
agreements Smith was ordered to produce in this case in other litigation. Nor is there
any dispute that the defendants in Golden China and Bierstube received the settlementagreement information. However, the parties dispute whether the use in the other
cases violated the Protective Order and whether any sanctions are warranted. The
Court finds that defense counsel’s use of the settlement information in Golden China
and Bierstube constituted a failure to comply with the Protective Order’s explicit
provision limiting the use of documents marked confidential to this case. Defense
counsel’s initial use of the information in Golden China was largely defensible under the
circumstances, but their use of the settlement agreements in Bierstube is more
problematic. Accordingly, the Court imposes a sanction on defense counsel for their
use of the information in Bierstube. However, Mr. Smith has failed to demonstrate that
he has suffered any prejudice from either violation, so the Court declines to impose
the majority of the sanctions he requested. [ECF No. 201.]
A. The Initial Golden China Filing
The record in this case provides some support for the straightforward story
that Mr. Smith tells in support of his motion for sanctions. The Protective Order
explicitly provides that a party can only use a document that is marked as confidential
in this action and that disclosure of the information is limited to certain people
associated with this proceeding. Mr. Smith marked the settlement agreements
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confidential.5 Defense counsel never asked the Court to modify the Protective Order
to permit use of settlement information in Golden China or Bierstube, and Mr. Smith did
not stipulate to the use of the information he was ordered to produce in any other
case. Moreover, the Protective Order establishes a procedure by which the defendants
or defense counsel could have challenged any confidentiality designations, but they
never invoked that procedure. Because the Protective Order was not modified and the
confidentiality designations were not challenged, Mr. Smith contends that defense
counsel’s use of the settlement agreement in Golden China and Bierstube violated the
Protective Order.
Though the description of events in Mr. Smith’s argument is not inaccurate, it
is incomplete. The undersigned’s management of pretrial matters in this case has
substantially overlapped with Magistrate Judge Hildy Bowbeer’s management of
Golden China and Bierstube. In addition, the parties themselves have coordinated several
aspects of discovery among the three cases, including Mr. Smith’s deposition. During
that deposition, Mr. Smith testified generally regarding his settlement of the many
other ADA cases he has filed over the years. He did not treat any portion of the
deposition transcript as confidential, nor specify that any of his answers could be used
in one case and not others. Moreover, counsel for both sides have exchanged
correspondence bearing the case numbers for this case, Golden China, and Bierstube in
the subject headings. Perhaps most notably, when defense counsel sought production
of Mr. Smith’s settlement agreements from prior ADA cases, Mr. Smith’s counsel
At the hearing on the motion for sanctions, defense counsel stated that they are
not challenging the propriety of the confidentiality designations, but also suggested
that sanctions are inappropriate because plaintiff failed to properly mark the
documents as confidential. Plaintiff’s cover letter producing the settlement
agreements indicated the documents are confidential, but the documents themselves
were not individually marked as required by the Protective Order. [ECF No. 123
¶ 2(b) (“A party ... may designate a document as confidential by conspicuously
marking each page with the word ‘confidential.’”).] This argument is unpersuasive.
The purpose of the Protective Order’s requirement that each page of a document gets
marked confidential is so that the parties are not confused as to the extent of a
confidentiality designation. There was no confusion here. When they filed the
documents in Golden China and Bierstube, defense counsel treated the documents as
though they had been properly marked confidential.
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emailed a settlement agreement template bearing the caption for all three cases.
Against this backdrop, it was not unreasonable for defense counsel to believe that
discovery had been jointly coordinated among the three cases and their use of the
settlement information in Golden China was permitted. Specifically, at the time of the
initial Golden China filing, the record suggests that the parties may have had at least an
implicit agreement that the settlement-agreement information could be used in all
three cases. Defense counsel’s belief that there had been a “de facto modification” of
the Protective Order was not unreasonable at the outset. [See Defs.’ Mem. at 8.]
However, the Court finds that there had, in fact, been no modification, de facto
or otherwise, of the Protective Order as defense counsel suggests. First, there is no
question the Protective Order was never modified by the Court. Only the judges
assigned to this case have the authority to modify the Protective Order, and neither
the undersigned nor District Judge Eric Tostrud has done that here. The Court’s
discussion with the parties surrounding coordinating discovery for purposes of the
depositions did not specifically address the propriety of using confidential documents
across all three cases. The undersigned became involved in coordinating Mr. Smith’s
deposition and the depositions of two expert witnesses to assist the parties in
efficiently completing that aspect of discovery. To the extent defense counsel assumed
that this coordination operated as a modification of the Protective Order, they bear
the risk that such an assumption was wrong. Because the Court never weighed in on
the issue presented here, the Court finds that the use of the information in Golden
China was not in compliance with the Protective Order.6

Defense counsel also argues that no violation of the Protective Order occurred
because “parties in collateral litigation are entitled to obtain discovery protected by a
confidentiality designation to avoid duplicative discovery.” [Defs.’ Mem. at 11.] In
support of this proposition, they cite Blum v. Merrill Lynch Pierce Fenner & Smith Inc.,
712 F.3d 1349 (9th Cir. 2013), and Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d
1122 (9th Cir. 2003), but neither decision validates their conduct in this case. In Foltz,
the district court denied the request of several non-parties who were involved in
collateral litigation to modify a protective order so they could access discovery, and
the Ninth Circuit remanded for reconsideration given the similarity of the issues in
both cases. 331 F.3d at 1128–299, 1133–34. In Blum, the court affirmed a decision to
modify a protective order in earlier litigation to allow use of a deposition in a
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(footnote continued on following page)
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Second, even if defense counsel originally believed the parties had agreed to a
de facto modification, and despite the objective reasonableness of that belief, they
were quickly put on notice that no such agreement existed. Shortly after defense
counsel’s initial use of the information in Golden China, plaintiff’s counsel notified
them that Mr. Smith objected to the use of the settlement agreements in other cases.
At that point, defense counsel could not reasonably continue to believe that there was
a mutual understanding that the settlement agreements could be used in all three
cases. The correspondence following the Golden China filing clearly shows that the
parties disagreed on that issue. Mr. Smith then filed his motion to enforce the
protective order and seeking sanctions, further crystallizing the extent of that
disagreement and specifically noting the concern that the defendants in Bierstube
would use the same settlement agreements in that case. Defense counsel was now on
notice that, whatever their initial belief may have been, no de facto modification of
the Protective Order had in fact occurred by agreement of the parties.
Nevertheless, imposition of a sanction for defense counsel’s contravention of
the Protective Order in the initial Golden China filing would be inappropriate for two
reasons. First, as explored, defense counsel’s belief that the Protective Order had been
modified by joint agreement was reasonable, if wrong. Though there was no actual
meeting of the minds about the use of discovery in all three cases at the time of the
initial Golden China filing, that reality had not yet been clarified. It would serve little
purpose for the Court to impose a financial or other penalty because defense counsel
had a reasonable misunderstanding about the implications of the coordinated
discovery when it made that initial filing.
Second, Mr. Smith has failed to identify any prejudice caused by the use of the
information in Golden China or the disclosure of the information to the defendants in
that case. In part, he argues that the filing in Golden China harmed him because Judge
(footnote continued from previous page)
substantially related case. 712 F.3d at 1354–55. In both cases, the party seeking
information covered by a protective order sought leave from the court. Here, by
contrast, defense counsel acted unilaterally. They never asked the Court to modify the
Protective Order to allow use of the settlement agreements in collateral litigation
involving Mr. Smith.

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Bowbeer might have determined, contrary to this Court’s conclusion, that the
settlement information at issue is irrelevant and not required its production in the two
other cases. While true, that possibility does not show prejudice because Mr. Smith
has not been deprived of making any arguments in Golden China regarding the
relevance of the information at the summary-judgment stage in that case. Indeed, he
has made that very argument to Chief Judge John R. Tunheim. [Golden China,
17cv1862, ECF No. 104 at 22–23.] Nor has Mr. Smith shown that the filing or the
disclosure to the other defendants revealed information that is truly confidential.
Defense counsel filed the purportedly confidential information under seal in both of
the other cases, and Mr. Smith has made no showing that defense counsel’s actions
have caused any harm to a legitimate privacy interest.7 Accordingly, it would not be
just to require defense counsel to withdraw the information used in Golden China or
pay a financial sanction for the filing in that case.
Mr. Smith also argues that an order shifting the attorney’s fees he incurred in
bringing the motion to enforce the Protective Order is an appropriate compensatory
sanction. Such a payment of expenses is mandatory under Fed. R. Civ. P. 37(b)(2)(C),
unless the failure to obey a discovery order was “substantially justified or other
circumstances make an award of expenses unjust.” As explained above, at the time of
the initial filing of the settlement-agreement information in Golden China, defense
counsel reasonably believed that the parties had agreed to coordinate discovery among
the three cases, including the use of “confidential” documents produced by
Mr. Smith. The fact that defense counsel’s understanding later proved to be wrong
does not mean that the use of the information was unjustified when the initial Golden
At the hearing, plaintiff’s counsel suggested that the information contained in
the settlement agreements was akin to a trade secret or other proprietary information
that deserves protection under Rule 26(c). Though the Court has not been asked to
rule upon the propriety of any confidentiality designation at this time, this argument
borders on the frivolous. Nothing in the settlement agreements Mr. Smith was
ordered to produce could reasonably be considered a trade secret, and they do not
contain “other confidential research, development, or commercial information.” Fed.
R. Civ. P. 26(c)(1)(G). Moreover, the specific settlement agreements at issue contain
no confidentiality provision, indicating that neither Mr. Smith nor the parties with
whom he resolved those previous ADA disputes believed that the terms of their
settlements warranted protection from disclosure.
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China filing occurred. Thus, the violation of the Protective Order in the initial Golden
China filing was substantially justified and no fee-shifting is called for.
B. The Bierstube Filing
Defense counsel’s subsequent use of the information in Bierstube (and the
additional references to the information in subsequent summary-judgment briefing in
Golden China) was not as defensible. Although it was clear by this point the parties had
no mutual understanding that the settlement agreements could be used in all three
cases, defense counsel then used the information in Bierstube anyway. Defense counsel
forged ahead with its summary-judgment filing in Bierstube based on their unilateral
determination that Mr. Smith and his counsel had taken an unreasonable position
regarding the Protective Order. Instead, defense counsel should have sought an
extension of the summary-judgment briefing deadlines in the other two cases and
asked this Court to modify the Protective Order.8 Without making such a request,
defense counsel used the information in Bierstube, which is expressly prohibited by the
Protective Order.
The question remains: what should be done about the violation of the
Protective Order through the Bierstube filing? The same reasons the Court found no
prejudice in the context of the Golden China filing apply equally here. Mr. Smith has
not been deprived of any opportunity to argue in Bierstube that the settlement
information is irrelevant to the defendants’ summary-judgment motion, and he has
It is true, as defense counsel argue, that this Court had by this point
discouraged the parties from bringing matters before it using the informal-disputeresolution process that was employed early and often in this litigation. The Court did
so to push the attorneys to work out their many disagreements about minor issues
without the frequent need for the Court’s intervention. However, the Court did not
prohibit any party from bringing a formal motion, and defense counsel certainly could
have filed a formal request for modification of the Protective Order prior to going
forward with its chosen course of action in Bierstube. The Court notes that defense
counsel again referred to the information in Golden China in its subsequent summaryjudgment briefing even after the hearing on the motion for sanctions in this case,
despite being on notice from the tenor of the hearing that counsel’s conduct had been
less than ideal. Defense counsel did not ask for permission to do so at that time
either.
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made that very argument to District Judge Patrick Schiltz. [Bierstube, 17cv1866, ECF
No. 115 at 24.] Because the Court determines below that a modification of the
Protective Order is appropriate, it would elevate form over substance for the Court to
require defense counsel to withdraw the information from that docket and refile it
later. To do so would only increase the burden and expense for the defendants in this
case and in Bierstube, complicate matters for Mr. Smith’s own summary-judgment
briefing, and do nothing to bring Bierstube to an efficient and just resolution.
Moreover, as described above, he has identified no harm by the disclosure of the
settlement information to the Bierstube defendants. And because the information has
not been publicly filed, Mr. Smith’s concern that public attention to his ongoing ADA
litigation will hamper his future settlement efforts is illusory.
As for the fee-shifting component of the sanctions Mr. Smith has requested,
the Court cannot find that defense counsel’s use of the information in Bierstube while
this motion was pending was “substantially justified” as was the case with the initial
Golden China filing. As explained above, there had been no modification of the
Protective Order, “de facto” or otherwise, and it was no longer reasonable for defense
counsel to presume such a modification had occurred. The Court recognizes that the
March 1, 2019 deadline for having a dispositive motion served, filed, and heard in
Bierstube created some time pressures for defense counsel and that they may have been
reluctant to bring a request for modification of the Protective Order to the
undersigned. However, that time pressure and reluctance cannot form the basis of a
finding that the failure to comply with the Protective Order was “substantially
justified” because to do so would encourage parties faced with inconvenience to
resort to self-help.
Though defense counsel’s violation of the Protective Order in Bierstube was not
substantially justified, this does not automatically make it appropriate to award
Mr. Smith the attorney’s fees incurred in bringing his motion to enforce the protective
order. Rule 37(b)(2)(C) provides that a court must order the party that fails to abide
by a discovery order to pay the reasonable expenses and attorney’s fees “caused by the
failure.” Mr. Smith filed his motion to enforce the protective order before the Bierstube
filing occurred. The subsequent filing in Bierstube did not cause him to incur any of the
fees he had already incurred in making that submission. The record makes clear he
would have persisted in his motion regardless of what happened in Bierstube because
he believed the filing in Golden China was a sanctionable violation of the Protective
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Order on its own. And, as explored above, defense counsel’s conduct with respect to
that first filing was substantially justified.
Moreover, the Court finds that awarding Mr. Smith fees in connection with
bringing this motion would be unjust under the circumstances of this case. Fed. R.
Civ. P. 37(b)(2)(C) (providing that an award of expenses and fees is inappropriate if
“other circumstances make an award of expenses unjust”). As discussed above,
Mr. Smith’s motion does not seek to remedy any real prejudice sustained in
connection with either filing made by defense counsel in this case. Given that the
settlement agreements themselves are not subject to any confidentiality provision,
were filed under seal in the other cases, and Mr. Smith can challenge their relevance to
all three cases, the purpose served by this motion is difficult to pin down. The history
of this litigation suggests that it is at least plausible that the reason the motion was
filed is an attempt to monetize a misunderstanding between the parties about the
propriety of defense counsel’s outside use of the settlement agreements and to make
defense counsel’s management of the cases more difficult. This possibility does not
excuse defense counsel’s actions in making the Bierstube filing without seeking
permission, but it does support a finding that awarding fees to Mr. Smith would
operate as an unwarranted windfall.
Finally, Mr. Smith has requested that defense counsel be sanctioned with a
$20,000 fine to be paid to the Court. “[A] just order [under Rule 37(b)] may include
the imposition of a sanction in the form of a monetary fine to be paid to the Court,”
even without a finding of contempt. See U.S. ex rel. Johnson, 2013 WL 1182905, at *7
(citing Pereira v. Narragonsett Fishing Corp., 135 F.R.D. 24, 27 (D. Mass. 1991)). Under
the circumstances of this case, the Court finds that a monetary fine is appropriate, but
the request for a $20,000 penalty against defense counsel is neither commensurate to
any harm suffered by the plaintiff nor necessary to deter future violations of the
Protective Order. Here, the Court concludes that defense counsel shall pay to the
Court the sum of $500 as a monetary sanction for their violation of the Protective
Order in connection with the Bierstube filing.
C

Moving Forward

The Golden China and Bierstube cases are ongoing. Defense counsel have used
the settlement information in those cases, and as of January 29, 2019, Mr. Smith
persists in his position that they should be prevented from continuing that use. Failure
13

to address what the parties should do moving forward will only ensure that additional
motion practice takes place, distracting even further from the underlying merits of the
litigation. Based on the entire history of this case and its frequent coordination with
Golden China and Bierstube, the Court sees no reason that the Protective Order should
continue to preclude defense counsel’s use of and reliance on the settlementagreement information in all three cases. Accordingly, the Protective Order is
modified in this case to allow the use in Golden China and Bierstube of the settlement
information that this Court ordered Mr. Smith to produce. This conclusion should
not be read to preclude any of the judges handling the other two cases from making
any ruling concerning the relevance or admissibility of that information to the
disputes pending before them. Moreover, nothing about this ruling should be read to
suggest that defense counsel can use the information at issue in any other litigation or
share it with any other clients or counsel.
IV.

Order
Consistent with the discussion above, IT IS HEREBY ORDERED THAT:

1. Plaintiff’s Motion to Enforce Protective Order and for Sanctions (ECF
No. 196) is GRANTED IN PART and DENIED IN PART.
2. The motion is granted in part to the extent that Defense counsel shall pay a
$500 monetary fine to the Court based on the violation of the Protective Order
that occurred when it filed “confidential” materials in Bierstube.
3. The motion is denied in all other respects.
4. The Protective Order (ECF No. 123) is MODIFIED as set forth in Part III.C.
of this Order.
Date: February 4, 2019

s/Katherine Menendez
Katherine Menendez
United States Magistrate Judge

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