Array Technologies, Inc. v. Mitchell et al
Filing
662
MEMORANDUM OPINION AND ORDER by Magistrate Judge Laura Fashing DENYING 657 MOTION to Amend/Correct 236 Order on Motion for Protective Order. (cda)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
ARRAY TECHNOLOGIES, INC.,
Plaintiff,
Case No. 1:17-cv-00087-JCH-LF
v.
COLIN MITCHELL, an individual;
NEXTRACKER, a Delaware corporation;
MARCO GARCIA, an individual;
DANIEL S. SHUGAR, an individual;
SCOTT GRAYBEAL, an individual; and
FLEXTRONICS INTERNATIONAL U.S.A.,
INC., a California corporation,
Defendants.
MEMORANDUM OPINION AND ORDER
THIS MATTER comes before the Court on Flextronics International U.S.A., Inc.’s
(“Flextronics”) Motion to Amend the Second Amended Stipulated Protective Order and
Confidentiality Agreement, filed on November 1, 2023. Doc. 657. Plaintiff Array Technologies,
Inc. (“Array”) filed its response on November 15, 2023. Doc. 658. Flextronics filed its reply on
November 29, 2023. Doc. 660. Having read the submissions of the parties and being fully
advised in the premises, the Court finds that Flextronics’ motion is not well taken and DENIES
it.
I.
Background Facts
Array initiated this case on January 17, 2017. Doc. 1. During the pendency of the
lawsuit, the parties negotiated and reached agreement on specific provisions that would govern
the treatment of confidential and trade secret information produced in the action. Pursuant to the
parties’ agreement, the Court entered a Stipulated Protective Order and Confidentiality
Agreement (“protective order”) on March 29, 2017. Doc. 24. The protective order limited the
dissemination of information under the terms of the agreement and specifically stated that
confidential information:
shall not be used or disclosed for any purpose other than for preparation and trial
of this litigation—No. 1:17-cv-00087-[JCH]-LF—in the United States District
Court for the District of New Mexico, and/or of any appeal therefrom, and shall
not be used for any other purpose, including, but not limited to, business,
governmental, commercial, or administrative proceedings or purposes.
Doc. 24 at 8, ¶ 12. The protective order was amended after additional negotiation and stipulation
of the parties. Docs. 123, 236. The provision limiting disclosure to the instant case was included
in all versions of the protective order. Doc. 123 at 10, ¶ 13; Doc. 236 at 11, ¶ 13.
In July of 2022, after more than five years of litigation, the parties were able to reach a
negotiated resolution. See Docs. 644, 646, The Honorable District Judge Judith C. Herrera
granted the parties’ joint motion to dismiss on September 30, 2022, and retained jurisdiction
“solely to, if necessary, adjudicate an alleged breach, the validity, the enforceability, or the
application, or to interpret any disputed provisions, of the parties’ [settlement] Agreement.”
Doc. 656 at 2. The case was closed with that order. Doc. 656. More than a year later,
Flextronics filed its motion to modify the Second Amended Stipulated Protective Order and
Confidentiality Agreement (Doc. 236), entered in this case on October 25, 2018. Doc. 657.
On March 17, 2023, Flextronics initiated arbitration proceedings against certain of its
insurers seeking coverage for the settlement and defense costs incurred in this case. Id. at 5.
Flextronics contends that the issues in the arbitration are intertwined with the issues raised in this
case, including Array’s actions, the defendants’ alleged liability, and Array’s alleged damages.
Id. Flextronics further contends that “evidence related to these issues will assist with
determining whether Flextronics’ insurers wrongfully failed to provide coverage,” and that “all
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of these issues are impacted by information designated as protected information under the
Protective Order.” Id.
In its motion, Flextronics asks the Court to modify the protective order to allow it to
produce all Array’s documents to its insurers and to use any of Array’s documents in the
arbitration proceedings, subject to a protective order entered in those proceedings. Doc. 657.
Array argues that it will be severely prejudiced if the Court were to grant Flextronics’ motion,
particularly given the huge number of documents produced in this case subject to the protective
order. Doc. 658. For the following reasons, the Court DENIES Flextronics’ motion.
II.
Discussion
“As long as a protective order remains in effect, the court that entered the order retains
the power to modify it, even if the underlying suit has been dismissed.” United Nuclear Corp. v.
Cranford Ins. Co., 905 F.2d 1424, 1427 (10th Cir. 1990). A modification of a protective order is
appropriate when it can “place private litigants in a position they would otherwise reach only
after repetition of another’s discovery,” but should not be made where “it would tangibly
prejudice substantial rights of the party opposing modification.” Id. (internal citation and
quotation omitted). Any modification of a protective order is left to the discretion of the district
court. Id.
A. Modification of the Protective Order is not Appropriate.
Flextronics does not show that a modification to the protective order would avoid
duplicative discovery. In support of their motion, Flextronics cites United Nuclear Corp. v.
Cranford Ins. Co., 905 F.2d 1424 (10th Cir. 1990). In United Nuclear, the Tenth Circuit
affirmed the district court’s decision to allow additional parties to intervene and modify the
protective order to allow intervenors access to discovery for use in collateral federal and state
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litigation with the same defendants. Id. at 1426. In United Nuclear, the intervening parties were
seeking the same relief from the same defendants as the plaintiff in the settled lawsuit. Id. The
Court explained that “when a collateral litigant seeks access to discovery produced under a
protective order, there is a countervailing efficiency consideration—saving time and effort in the
collateral case by avoiding duplicative discovery.” Id. at 1428. In other words, the modification
would place the litigants in a position they would otherwise reach only after repetition of
another’s discovery. Id. Under the circumstances in United Nuclear, modifying the protective
order in the settled case allowed the intervenors access to discovery they would have obtained in
their collateral lawsuits against the same defendants. This approach was less burdensome and
protected the defendants’ interest in continued secrecy against the public at large. Id. The Tenth
Circuit, therefore, found that the district court did not abuse its discretion by modifying the
protective order. Id.
United Nuclear is distinguishable from this case. Here, Flextronics is involved in a
dispute with its insurers and is currently in arbitration proceedings. The modification proposed
by Flextronics would allow it to disclose all Array’s confidential documents and information in
the private arbitration, an arbitration to which Array is not a party. Importantly, it is not obvious
that the insurers would be entitled to discover all the confidential information Array produced in
this case in the arbitration proceedings. The issue in the arbitration is whether Flextronics is
entitled to insurance coverage related to the defense and settlement of this lawsuit. The issues in
this lawsuit were far broader—including allegations that defendants, or some of them, violated
federal and state trade secrets acts, breached or encouraged a breach of contract and the covenant
of good faith and fair dealing, committed fraud or constructive fraud, were unjustly enriched, etc.
Further, the claims involved multiple defendants, not just Flextronics. Allowing the
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modification of the protective order might be easier for Flextronics and its insurers, but it is not
clear that the modification would simply provide discovery to Flextronics’ insurers that they
otherwise would be entitled to. Indeed, on its face, it seems like Flextronics’ insurers would
receive thousands, if not hundreds of thousands, of documents that are simply irrelevant to the
arbitration proceedings. Consequently, Flextronics has not made an initial showing that the
modification is appropriate.
B. The Modification Sought by Flextronics is Prejudicial to Array.
Array produced over 300 gigabytes of electronic information and over 600,000 pages of
business records and company documents in this case, which include Array’s trade secrets and
confidential materials. Doc. 658 at 4. Flextronics is requesting that it be permitted to provide
third parties with access to all the materials produced by Array in a proceeding that does not
include Array as a party. The modification would leave Array without the ability to object to the
scope of any document requests by Flextronics’ insurers. As the Honorable Magistrate Judge
Lorenzo F. Garcia explained, “[i]n United Nuclear, the Tenth Circuit permitted modification in
part because the defendants ‘are parties to the collateral suits’ and therefore ‘have both the
interest and standing to raise in those courts [here, in arbitration proceedings] any relevancy or
privilege objections to the production of any materials.’” Four Corners Nephrology Associates,
P.C. v. Mercy Med. Ctr. Of Durango, 2009 WL 4730471, at *4 (D. Colo. Dec. 7, 2009)
(unpublished) (quoting United Nuclear, 905 F.2d at 1428–29).1 Because Array is not a party to
the arbitration, Array does not have standing to object to any disclosures. Further, Array would
1
Judge Garcia’s decision was affirmed on appeal by District Judge James A. Parker. Four
Corners Nephrology Asso., P.C. v. Mercy Med. Ctr., 1:05-cv-02084-JAP-LFG, Doc. 250 (D.
Colo. 2010). Flextronics points out that Four Corners is an “out-of-district” opinion. Doc. 660
at 6. The Court notes, however, that both Judge Parker and Judge Garcia were judges in the
District of New Mexico. Further, the Court finds Four Corners persuasive.
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not have the ability to control and monitor the use of its confidential documents and information.
It would not be able to determine how its confidential and trade secret information is being
handled or used, and it would have no recourse if the confidential materials were mishandled.
Flextronics argues that Array’s confidential information would be protected by a similar
protective order entered by the arbitrator. Doc. 657 at 2; Doc. 660 at 1, 3. “The fact that
released documents would be subject to any protective order entered by [the arbitrator] is no
guarantee of confidentiality because, just as this Court has authority to modify its protective
order even after the case is closed, so, too, [the arbitrator] has the authority to modify his [or her]
order.” Four Corners, 2009 WL 4730471, at *3. And because Array is not a party to the
arbitration, it would not have an opportunity to object to any such modification or even receive
notice of a modification. Similarly, Array would not have any recourse if the protective order is
violated by the parties to the arbitration.
Flextronics argues that if Array discovers that a third party has not complied with the
protective order, it can seek this Court’s enforcement of the protective order and pursue all other
remedies available to it. Doc. 660 at 5. This is exactly the type of prejudice that is avoided if the
Court refuses to modify the protective order. Array already has been prejudiced by having to
incur new expenses and fees to protect interests it thought were secured by its prior agreements
with Flextronics. If the protective order is modified, Array will be forced to monitor the
arbitration proceedings and potentially be put to further expense and attorney time to oppose
potential disclosures or violations of the protective order. For example, the protective order
entered in the arbitration proceeding permits objections to designation of confidential documents
that are produced in that proceeding. If the objection is not resolved, any of the parties may
submit a formal motion to the arbitration panel. Doc. 657-1 at 20. Array does not have standing
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to file any such motion and, even if it did, should not have to incur the expense to do so. Array
and defendants, including Flextronics, carefully and extensively negotiated the protective order
in this case, and they settled the case on the eve of trial with the intention of putting a complete
end to the parties’ controversies. Array should be able to rely on the benefit it bargained for in
the protective order and the settlement.
Flextronics contends that any recipient of protected information will execute an
acknowledgement that subjects them to this Court’s jurisdiction for the enforcement of the
protective order. The Court is not interested in inserting itself into the arbitration proceeding or
forcing non-parties to subject themselves to the jurisdiction of this Court for the purpose of
enforcing an agreement in a case that is long dismissed.2 Flextronics also has not demonstrated
that the Court has such authority. Judge Garcia noted that there are sound public policy reasons
for enforcing the parties’ bargain:
A court should be hesitant to modify protective orders for matters unrelated to the
litigation in front of it because otherwise, in the long run, parties may begin to
distrust protective orders. Discovery, in turn, will become more complicated and
expensive and settlements will be more difficult. A natural feeling of unfairness
arises when the rules are modified during the middle of the game, especially
without very good cause.
Four Corners, 2009 WL 4730471, at *4 (quoting SmithKline Beecham Corp v. Sython
Pharmaceuticals, Ltd., 210 F.R.D. 163, 166 (M.D.N.C. 2002) (internal citations omitted)).
In addition, the Tenth Circuit has noted that a district court’s continuing jurisdiction over
a closed case is limited. See United Nuclear, 905 F.2d at 1428. While the district court has the
2
Indeed, my guidelines for protective orders state that “[t]he protective order should refrain from
stating that it is binding on non-parties or that the Court has jurisdiction over non-parties to
enforce the protective order’s provisions. The Court will not order a non-party to consent to the
Court’s jurisdiction or to abide by the protective order’s terms.”
https://www.nmd.uscourts.gov/sites/nmd/files/Judge%20Fashing%20Guidelines%20for%20Prop
osed%20Protective%20Orders%209-2-2015_0.pdf (last visited 1/4/24).
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power and discretion to modify a protective order, “because the underlying controversy [is] no
longer alive, the court simply lack[s] power to impose any new, affirmative requirements on the
parties relating to discovery.” Id. (quotation and citations omitted). Further,
the district court must refrain from issuing discovery orders applicable only to
collateral litigation. Federal civil discovery may not be used merely to subvert
limitations on discovery in another proceeding . . . . [A] collateral litigant has no
right to obtain discovery materials that are privileged or otherwise immune from
eventual involuntary discovery in the collateral litigation.
Id. (internal quotation marks and citation omitted). Should Array seek to enforce this Court’s
protective order as against the parties to the arbitration or limit their access to certain materials,
Array necessarily would be asking this Court to issue discovery orders applicable to the
collateral litigation, which it cannot do.
Flextronics further contends that it seeks only a narrow modification of the protective
order. Doc. 657 at 2. As Array points out, however, the declarations submitted by Flextronics
insurance carriers indicate broad-ranging disclosure. For example, in the declaration of Steven
James Fleming, Mr. Fleming indicates that The Chubb European Group SE (“CEGSE”) has
“disclosure obligations to auditors and regulatory agencies under the laws of the European
Union, France, and the United Kingdom to provide claims-related records and information.”
CEGSE, therefore, is proposing revisions to the current protective order in the arbitration
proceeding that would allow it to disclose documents received in the arbitration to entities across
the Europe. Doc. 657-4 at 4, ¶¶ 14–17. Similarly, the declaration submitted by Stewart Ping
states that Allianz Global Corporate & Specialty SE (“Allianz”) has contractual obligations to
disclose information to “reinsurers or retrocessionaires” and also has regulatory disclosure
obligations under the laws of the United Kingdom and Germany which would include documents
or information produced in arbitration. Doc. 657-3 at 4, ¶¶ 7–10. Allianz also is supporting
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proposed revisions to the protective order in the arbitration that would allow the disclosure of
confidential information to “any reinsurer, retrocessionaire, or regulatory agencies.” Id. at 4,
¶¶ 11–12. Array has an interest in protecting its confidential and trade secret information, and
the modification requested by Flextronics potentially would allow for disclosure to countless
entities and individuals, both in the United States and in Europe.
Flextronics argues that Array would not be harmed by the disclosure because it
previously agreed that one of Flextronics’ insurers could view Array’s confidential documents.
Doc. 657 at 7. Array points out that it agreed to a limited disclosure while the case was still
pending to facilitate settlement, which is not the current situation. In that instance, Array was a
party to the proceedings and had control over which documents were disclosed, and had the
means to enforce the protective order, should that become necessary. Here, as discussed above,
Array will not have the benefit of those protections. Simply because Array gave consent to
disclose in one instance does not eliminate the potential harm if its confidential information is
disclosed to Flextronics’ insurers (and reinsurers, retrocessionaires, and regulatory agencies) in
the arbitration proceedings.
Flextronics complains that Array “has not established that its documents or information
produced in the case still constitutes trade secrets.” Doc. 660 at 2. This argument has no merit.
Array previously demonstrated that the information produced in this lawsuit was confidential
trade secrets as demonstrated by the entry of an extensive protective order. Further, Flextronics
“does not dispute for purposes of its motion that [Array’s] documents and information still
constitute trade secrets.” Id.
Finally, Flextronics complains that Array has requested that it destroy or return Array’s
confidential information so that there is no potential for the information to be disclosed during
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the arbitration proceeding. Doc. 66 at 11. The protective order requires the parties to return or
destroy any confidential material designated under its terms within sixty days after the
conclusion of the action. Doc. 236 at 17, ¶ 27. It is well past 60 days, and it appears that
Flextronics has not destroyed or returned Array’s confidential information in violation of the
protective order. To the extent Flextronics has not complied with this provision, the Court will
require Flextronics’ compliance.
III.
Conclusion
For the reasons stated above, the Court finds that Flextronics has not demonstrated that a
modification to the protective order is appropriate. It also finds that Array would be prejudiced
by the proposed modification. The Court further finds that Flextronics is in violation of the
protective order to the extent it is has failed to return or destroy Array’s documents or
information designated and protected pursuant to the terms of the protective order.
IT IS THEREFORE ORDERED as follows:
1. Flextronics International U.S.A., Inc.’s Motion to Amend the Second Amended
Stipulated Protective Order and Confidentiality Agreement (Doc. 657), filed on
November 1, 2023, is DENIED; and
2. To the extent a party has not already done so pursuant to Doc. 236 at 17, ¶ 27, all
Confidential, Highly Confidential, or Highly Confidential – Outside Counsel Eyes
Only Documents disclosed or produced in this litigation (other than documents filed
in the official court record) shall be returned to the Producing Party or destroyed no
later than 30 days from the date of this order; and
3. To the extent a party has not already done so, counsel for any party that received
Confidential, Highly Confidential, or Highly Confidential – Outside Counsel Eyes
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Only Documents shall make written certification of compliance with Doc. 236 at 17,
¶ 27, and shall deliver the same to counsel for each Producing Party no later than 60
days from the date of this order.
___________________________________
Laura Fashing
United States Magistrate Judge
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