IRREVOCABLE TRUST OF ANTHONY J. ANTONIOUS v. NIKE, INC.
OPINION AND ORDER denying 120 Defendant's Motion to hold Plaintiff in Contempt of the Courts February 28, 2012 Discovery Confidentiality Order; and it is further ORDERED that Defendant be awarded the reasonable attorneys fees and expenses in curred in filing the motion to seal Docket Entry 112 and its motion to hold Plaintiff in contempt; and it is furtherORDERED that NIKE submit appropriate documentation and evidence to support its calculation of attorneys fees within 30 days of this Order, etc.. Signed by Magistrate Judge James B. Clark on 3/2/2016. (seb)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
IRREVOCABLE TRUST OF ANTHONY
Civil Action No. 2:11-cv-06327-KM-JBC
OPINION AND ORDER
NIKE, INC., an Oregon Corporation,
CLARK, Magistrate Judge
This matter having been opened to the Court by way of motion of defendant NIKE, Inc.
(“Defendant” or “NIKE”), seeking an Order holding plaintiff Irrevocable Trust of Anthony J.
Antonious (“Plaintiff” or “Trust”) in contempt of the Discovery Confidentiality Order entered by
this Court on February 28, 2012 [Docket Entry No. 120, 123]; and the Trust having opposed
NIKE’s motion [Docket Entry No. 121]; and the Court having considered the arguments
submitted in support of, and in opposition to, NIKE’s motion; and for the reasons that follow,
NIKE’s motion is DENIED, in part, and GRANTED, in part.
The background of this case was previously set forth in the Court’s Order dated October
15, 2015 [Docket Entry No. 124] and shall not be repeated herein. At present, NIKE moves for
contempt and attorneys’ fees to address the Trust’s alleged violation of the Court’s February 28,
2012 Discovery Confidentiality Order (the “DCO”).
On February 21, 2012, NIKE’s counsel submitted a proposed Discovery Confidentiality
Order—mutually agreed upon by both parties—to address the handling of confidential
information exchanged between them during the case. [Docket Entry No. 22]. In support of the
proposed order, NIKE’s counsel submitted a declaration setting forth the documents it sought to
protect and the harm it would face if such documents were subject to public disclosure. [Docket
Entry No. 23]. In terms of harm, NIKE claimed it would face “serious commercial injury.” [Id.]
NIKE further claimed that its competitive position would be undermined by the public disclosure
of its highly confidential and proprietary commercial information. [Id.] Finding good cause, the
Court entered the DCO on February 28, 2012. [Docket Entry No. 24].
In relevant part, Paragraph 3 of the DCO requires the parties to “file a motion to seal, or
otherwise restrict public access to” any documents designated as confidential, by any party,
which it sought to file “pursuant to Local Civil Rules 5.3(c) and 7.1.” [Docket Entry No. 24 ¶ 3].
Additionally, Paragraph 2 of the DCO provides that “[n]o information or material designated
‘CONFIDENTIAL’ or ‘HIGHLY CONFIDENTIAL’ shall be disclosed to any person or entity
except as set forth in this Discovery Confidentiality Order.” [Id. at ¶ 2(A)]. While a party may
disclose an opposing party’s designated information to its experts, it may only do so after it (1)
“notif(ies) all other parties in writing of the name of the person(s) to whom disclosure is to be
made, providing at that time an executed declaration in the form attached [to the DCO] as
Exhibit A, together with a current copy of the curriculum vitae of the expert(s) to whom
disclosure is made” and (2) waits a period of ten business days after this notification before
disclosing any designated materials to the expert to allow the designating party time to object to
such disclosure. [Id. at ¶ 2(B)(iii))]. The DCO makes clear that a breach of these obligations
“may result in a finding of contempt of court, the imposition of sanctions, and subject the
breaching party to liability for claims of unfair competition and trade secret misappropriation.”
[Id. at ¶ 9(E) (emphasis added)].
On June 5, 2015, NIKE filed its motion for summary judgment claiming noninfringement of U.S. Patent No. 5,735,754. [Docket Entry No. 100]. Plaintiff filed its
opposition on June 26, 2015, including a declaration from its expert, Douglas Winfield. [Docket
Entry No. 108-109]. In the present motion, NIKE contends that Exhibits A-D to the Trust’s
Opposition brief [Docket Entry No. 108 at 13-21] and Exhibit B to Mr. Winfield’s declaration
[Docket Entry No. 109 at 17-19] were copies of NIKE’s production documents that were marked
and/or designated as confidential. (See Def.’s Br. at 2). These documents were neither filed
under seal nor was NIKE provided a declaration for Mr. Winfield as required by the DCO.
Accordingly, NIKE notified the Trust on June 29, 2015 of its alleged violations of the DCO and
requested that the Trust take the proper steps to rectify them. 1 (See Declaration of Victoria
Webb (“Webb Dec.”), Ex. 1). After several weeks of inaction, NIKE advised the Trust on July
18, 2015 that it would be filing a motion to permanently seal the documents allegedly designated
as confidential. (See id.) In response, the Trust indicated that it would not oppose the motion to
seal. (See id.)
On July 22, 2015, NIKE filed its motion to seal Exhibits A-D of the Trust’s Opposition
brief and Exhibit B to Mr. Winfield’s declaration. [Docket Entry No. 112]. The Court granted
NIKE’s motion on August 4, 2015, requiring the Trust to “file Exs. A-D of the brief under seal
and Ex. B to the Winfield Decl. under seal” without a set date. [Docket Entry No. 116]. After
two weeks, the Court directed the Trust to comply with the August 4, 2015 Order by August 21,
2015. (See Webb Dec., Ex. 3). On August 19, 2015, the Trust complied with the Court’s August
4, 2015 Order. [Docket Entry No. 117-118].
NIKE also contacted the Court on June 27, 2015 by e-mail, requesting that the Court seal the
allegedly confidential documents. (See Webb Dec., Ex. 2).
Believing that the Trust had violated the DCO, NIKE filed the instant motion. The Trust
opposes on several grounds. First, the Trust contends that Exhibits A and B of its Opposition
brief, and Exhibit B of the Winfield Declaration, lack the appropriate confidentiality
designations. See Pl.’s Opp. at 2-3. The Trust argues that this is in large part due to NIKE’s
servers, which deleted many markings of confidentiality from the documents. See id. at 1-2.
The Trust also points to Nike’s production DVD’s, two of which it claims were defective. See
id. at 1-2. Second, the Trust claims that Exhibits C and D contain only the “upper one-third of
the phrase ‘HIGHLY CONFIDENTIAL,” but acknowledges that the phrase “CONFIDENTIALFOR INTERNAL AND R&D USE ONLY” is visible. See id. at 3. Notwithstanding the cut-off
language, the Trust agrees that “counsel for Plaintiff should have recognized the attempted
marking of these documents as confidential within the scope of the DCO . . .” See id. Third, the
Trust represents that it will provide the required DCO declaration of Dr. Winfield “[i]n a matter
of days.” Fourth and finally, the Trust contends that it fully cooperated with NIKE when the
alleged breach was brought to its attention.
“Courts have inherent power to hold parties in civil contempt in order to enforce
compliance with any order of the court or to compensate for losses or damages.” U.S. v.
Ciampitti, 669 F. Supp. 684, 687 (D.N.J. 1987) (citing McComb v. Jacksonville Paper Co., 336
U.S. 187 (1949)). The Federal Rules also grant the court authority to impose sanctions “if a
party or its attorney: . . . fails to obey a scheduling or other pretrial order.” Fed. R. Civ. P.
16(f)(1)(C). “Instead of or in addition to any other sanction, the court must order the party, its
attorney, or both to pay the reasonable expenses — including attorney's fees — incurred because
of any noncompliance with this rule, unless the noncompliance was substantially justified or
other circumstances make an award of expenses unjust." Fed. R. Civ. P. 16(f)(2).
To establish civil contempt, the moving party “must show by clear and convincing
evidence: (1) that a valid court order existed; (2) that [the alleged contemnor] had knowledge of
the order; and (3) that [the alleged contemnor] disobeyed the order.” Andrews v. Holloway, 256
F.R.D. 136, 141 (D.N.J. 2009) (citing Roe v. Operation Rescue, 919 F.2d 857, 871 (3d Cir.
Pursuant to the DCO, a breach “may result in a finding of contempt of court, the
imposition of sanctions, and subject the breaching party to liability for claims of unfair
competition and trade secret misappropriation.” [Id. at ¶ 9(E) (emphasis added).] Based on the
facts presented, the Court declines to certify contempt. Nevertheless, the Court finds that an
award of attorney fees is warranted.
Upon review of Exhibits A and B of the Trust’s opposition brief, and Exhibit B of the
Winfield Declaration, there appears to be no clear designation of confidentiality on the
documents themselves. While these documents may have been designated as confidential in
their file name, the Trust contends that a server error removed these designations when they were
retrieved by their outside IT professional. NIKE has provided screenshots of the FTP site used
to retrieve these documents, but this alone is insufficient to prove that those designations were in
place when the documents were downloaded. Similarly, it is unclear whether the documents
reviewed by Dr. Winfield were appropriately marked as confidential. Nevertheless, the Trust has
advised that it would comply with the DCO by providing NIKE with the requested declaration.
Accordingly, the foregoing facts do not warrant a finding of contempt or sanctions.
On the other hand, Exhibits C and D of the Trust’s opposition brief are marked as
“CONFIDENTIAL-FOR INTERNAL AND R&D USE ONLY.” There is also a “HIGHLY
CONFIDENTIAL” designation in the lower left hand corner, albeit partially cut-off. The Trust
concedes that “it should have recognized the attempted marking of these documents as
confidential within the scope of the DCO.” The Court agrees. Where a party fails to comply
with a pretrial order, the Court must enter an order requiring the party or its attorney “to pay the
reasonable expenses — including attorney's fees — incurred because of any noncompliance . . .
unless the noncompliance was substantially justified or other circumstances make an award of
expenses unjust.” Fed. R. Civ. P. 16(f)(2). Here, the trust concedes that these documents were
confidential and should have been treated as such. At the very least, the Trust should have
conferred with NIKE prior to filing these documents on the electronic docketing system, to
confirm whether they were indeed confidential. Moreover, the Trust failed to take any
affirmative step to rectify the issue after being notified by NIKE. It did not seal the documents
nor did it make an effort to provide the declaration of Dr. Winfield. Instead, NIKE’s counsel
was forced to contact the Court to temporarily seal the documents, file a motion to permanently
seal the documents, and then file the instant motion to ensure the Trust’s compliance with
DCO—actions that should have been taken by the Trust. As such, this Court awards NIKE the
reasonable attorneys’ fees and expenses incurred in filing the motion to seal [Docket Entry No.
112] and the present motion [Docket Entry No. 120].
In light of the foregoing, and the Court having considered this matter pursuant to FED. R.
CIV. P. 78;
IT IS on this 2nd day of March, 2016,
ORDERED that Defendant’s motion to hold Plaintiff in contempt of the Court’s
February 28, 2012 Discovery Confidentiality Order is DENIED; and it is further
ORDERED that Defendant be awarded the reasonable attorneys’ fees and expenses
incurred in filing the motion to seal [Docket Entry No. 112] and its motion to hold Plaintiff in
contempt [Docket Entry No. 120]; and it is further
ORDERED that NIKE submit appropriate documentation and evidence to support its
calculation of attorneys’ fees within 30 days of this Order; and it is further
ORDERED that Plaintiff provide Defendant, if it has not already done so, with a copy of
the declaration attached as Exhibit A to the Discovery Confidentiality Order that is executed by
Mr. Douglas Winfield, within seven (7) days of this Order, together with Mr. Winfield’s current
[THIS ORDER TERMINATES DOCKET ENTRY NO. 120.]
Dated: March 2, 2016
s/ James B. Clark, III
HONORABLE JAMES B. CLARK, III
UNITED STATES MAGISTRATE JUDGE
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