Irving H. Picard v. Saul B. Katz et al

Filing 54

MEMORANDUM ORDER: In summary, the Court will adopt defendants' proposed protective order for discovery in this case. The Court hereby orders the defendants to submit a clean copy of their proposed protective order for the Court to sign and docket. (Signed by Judge Jed S. Rakoff on 10/18/2011) (lmb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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IRVING H. PICARD,
Plaintiff,
11 Civ. 3605

(JSR)

-vSAUL B. KATZ et al.,
MEMORANDUM ORDER

Defendants.
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JED S. RAKOFF, U.S.D.J.
In a joint telephonic conference with Chambers on October 6,
2011, the defendants proposed a protective order ("the proposal") to
govern the confidentiality of documents exchanged in discovery.

In

that same conference, the Trustee argued that the Court should rely on
the Litigation Protect

Order ("LPO")

that currently governs

discovery in the underlying proceedings from which this case arose.
The parties submitted letter briefs on October II, 2011 and responded
to each other's letters on October 12, 2011.

As explained below, the

Court hereby adopts defendants' proposal.
With two additions, defendants' proposal is identical to the
Court's model protect

order that the Court has utilized, with great

success, for many years and that maximizes public disclosure at trial.
Defendants' additions are:

(I) the inclusion of a "highly

confidential" designation that, where applicable, would allow only the
parties' attorneys, the Court, and certain support personnel to see
material exchanged in discovery; and (2) a clause providing that any

material classified as confidential in the underlying SIPA proceeding
nis deemed to have been designated as Confidential Discovery Material
pursuant to the terms of this Order."
additions unobjectionable.
confident

If

The Court finds each of these

As to the first addition, the nhighly

designation, in a manner that is pretty much standard,

restricts only the flow of information between the attorneys and their
clients.

For example, potential business partners of the defendants

may not want defendants to see certain financ

information, but

would have no objection to defendants' counsel seeing the information
on an "attorneys' eyes only" basis.

The -highly confidential"

designation accommodates this desire while still allowing the
attorneys to have access to any such information that pertains to the
case.

As to the second addition, the retention of classifications

from the SIPA proceeding promotes efficiency by not requiring the
parties to redo what they have already done.

This is not to say,

however, that any given designation cannot be challenged in this
Court.
The Trustee mounts several objections to defendants' proposal.
First, the Trustee argues that the Court can modify a protective order
only upon a showing of "improvidence in the grant of [the previous]
protective order or some extraordinary circumstance or compelling
need."

Martindell v. Int'l Tel. & Tel. Corp., 594 F.2d 291, 296 (2d

Cir. 1979).

This high standard, however, applies only where, as in

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Martindell, someone has relied on a protective order when submitting
confidential information, and modification of that order threatens to
permit the disclosure of information that the person believed would be
kept confidential.

Here, in contrast, the defendants' proposal keeps

confidential everything that was previously marked confidential and
simply adds some modest, standard, further restrictions.

Thus, the

proposal does not threaten to permit disclosure of any information
that would be confidential under the LPO.
Moreover,

"protective orders that are on their face temporary

or limited may not justify reliance by the parties.
circumstances reliance may be unreasonable."
273 F.3d 222, 231 (2d Cir. 2001).

Indeed,

such

SEC v. TheStreet.Com,

Here, the Trustee could not have

reasonably expected that the LPO, fashioned during his investigative
stage, would necessarily govern all the adversary proceedings he has
brought, especially one like this case, which has been removed from
the Bankruptcy Court.

Just as the Trustee previously argued, with

success, that the Rule 2004 discovery he took at the investigative
stage (and that was governed by the LPO) would not substitute for the
further discovery he wishes to take in this adversary proceeding, so
he should have anticipated that the LPO would not address

1 of the

concerns that his subsequent adversarial discovery would raise.
Next, the Trustee argues that applying multiple protective
orders to the SIPA litigation will impose significant administrative
burdens on him, requiring him to determine which orders apply to which

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documents whenever he has to comply with a discovery request in any of
the proceedings.

This fear appears exaggerated, as the defendants'

proposed protective order appl

s only to this adversary proceeding,

which, as previously mentioned, has been wholly removed from the
Bankruptcy Court and from the rest of the SIPA litigation until the
conclusion of trial.

To be sure, when you have multiple litigations,

problems of the sort the Trustee hypothesizes may occasionally arise,
but experience shows that, in practice, they are easily dealt with.
Finally, the Trustee argues that the Court should not retain
documents' classifications from the SIPA proceeding because the
defendants designated far too much as confidential, and retention will
require the Trustee to spend a large amount of time challenging
defendants' previous designations.

Putting aside the inconsistency of

this argument with some of the Trustee's other arguments, the Court
doubts that any such challenges will involve such effort.

But if

there are such challenges, the Court will deal with them
expeditiously.
In summary, the Court will adopt defendants' proposed
protective order for discovery in this case.

The Court hereby orders

the defendants to submit a clean copy of their proposed protective
order for the Court to sign and docket.

J~~U.S.D.J.

SO ORDERED.

Dated: New York, New York
October f!, 2011
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