State Of New York v. Grand River Enterprises Six Nations, LTD. et al

Filing 198

DECISION AND ORDER re 192 Motion for a Protective Order, filed by State of New York is GRANTED, 191 Motion for a Protective Order filed by Grand River Enterprises Six Nations, Ltd., and Native Wholesale Supply Company Inc. is DENIED. Plaintiff shall promptly submit a protective order in a form consistent with the foregoing for the court's signature. Signed by Hon. Leslie G. Foschio on 07/15/2020. (TAH)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
____________________________________
DECISION
and
ORDER

STATE OF NEW YORK,
Plaintiff,
v.
GRAND RIVER ENTERPRISES SIX NATIONS, LTD.,
NATIVE WHOLESALE SUPPLY COMPANY, INC.,

14-CV-910A(F)

Defendants.
____________________________________

APPEARANCES:

LETITIA A. JAMES
New York State Attorney General
Attorney for the Plaintiff
LESLIEANN E. CACHOLA,
BRANT B. CAMPBELL,
JOHN P. OLESKE,
Assistant Attorneys General, of Counsel
120 Broadway
New York, New York 10271
FRIEDMAN KAPLAN SEILER & ADELMAN LLP
Attorneys for Defendant Grand River Enterprises
ERIC O. CORNGOLD,
JEFFREY R. WANG, of Counsel
7 Times Square, 27th Floor
New York, New York 10036
LIPPES MATHIAS WEXLER FRIEDMAN LLP
Attorneys for Native Wholesale Supply Company
SCOTT S. ALLEN , JR.
MICHAEL G. ROSSETTI,
DENNIS C. VACCO, of Counsel
50 Fountain Plaza, Suite 1700
Buffalo, New York 14202

In this action seeking damages and injunctive relief alleging violations of federal
and state law based on Defendants’ failure to prepay excise taxes on cigarettes

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manufactured, imported into and resold in New York State by Defendants, Plaintiff and
Defendants, by papers filed June 8, 2020, move for a protective order pursuant to
Fed.R.Civ.P. 26(c). (Dkt. 191) (“Defendants’ motion”), (Dkt. 192) (“Plaintiff’s motion”).
The parties’ protective orders (“PPOs”) are nearly identical except that Plaintiff’s
PPO permits disclosure of confidential information obtained in discovery, as defined in
the PPO, to “Any law enforcement, government or other regulatory agency,” Plaintiff’s
PPO ¶ 5g, on condition that such proposed recipient agree to be bound by the Order
with respect to maintaining the confidential status of the Defendants’ information, i.e.,
documents or other material obtained by Plaintiff. Plaintiff’s PPO, Dkt. 192-2 ¶ 6.
Significantly, Plaintiff’s PPO does not limit use of the confidential information by such
agency recipients solely in connection with the instant action, unlike the restriction
placed upon other recipients such as the court, deponents and experts. Dkt. 192-2 ¶ 4.
In contrast, Defendants’ PPO provides for no such ‘carve-out’ permitting Defendants’
confidential information to be provided to such other governmental agencies. See Dkt.
191 ¶¶ 4, 5 a. – g.
Under Fed.R.Civ.P. 26(c), the court may grant relief from discovery in a civil
action for good cause if such discovery protects a party from “annoyance,
embarrassment, oppression, or undue burden.” (“Rule 26(c)(1)”). The party seeking
relief carries the burden to establish the requisite good cause. See Ceglia v.
Zuckerberg, 2012 U.S. Dist. LEXIS 204440, at * 8-9 (W.D.N.Y. Oct. 17, 2012) (citing
Gambale v. Deutsche Bank AG, 377 F.3d 133, 142 (2d Cir. 2004)). The Rule also
allows for “substantial latitude” in granting relief. See Seattle Times Co. v. Rhinehart,
467 U.S. 20, 36 (1984). In the absence of a confidentiality agreement or protective

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order restricting the scope of a recipient’s disposition of information produced in
response to a discovery request, a recipient is free to provide such information to nonparties. See Sampel v. Livingston Cty, 2019 WL 6695916, at *3 (W.D.N.Y. Dec. 9,
2019) (“Nevertheless, parties are free to disseminate discovery materials that are not
placed under a protective order as they see fit.”) (citing Schiller v. City of New York,
2007 WL 136149, at *2 (S.D.N.Y. Jan. 19, 2007)). See also Jepson, Inc. v. Makita
Electric Works, Limited, 30 F.3d 854, 858 (7th Cir. 1994) (“Absent a protective order,
parties to a law suit may disseminate materials obtained during discovery as they see
fit.”) (citing Oklahoma Hosp. Ass'n v. Oklahoma Pub. Co., 748 F.2d 1421, 1424 (10th
Cir.1984), cert. denied, 473 U.S. 905 (1985)). The purpose of Rule 26(c) protective
orders is to prevent abuses of the otherwise open federal discovery process. See
Seattle Times Co. v. Rhinehart, 467 U.S. 20, 35 (1984) (“[W]e have no question as to
the court’s jurisdiction to [enter a protective order pursuant to Rule 26(c)] under the
inherent equitable powers of courts of law over their own process, to prevent abuses,
oppression, and injustices.”) (internal quotation marks and citation omitted); 10A FED.
PROC. L. ED. § 26:260 (citing caselaw). Good cause for a Rule 26(c) protective order
exists when the requesting party “‘shows that disclosure will result in a clearly defined
specific and serious injury.’” Pitsiladi v. Guerrero, 2008 WL 5454234, at *3 (S.D.N.Y.
Dec. 30, 2008) (quoting In re Terrorist Attacks on September 11, 2011, 454 F.Supp.2d
220, 222 (S.D.N.Y. 2006) (quoting Shingara v. Skiles, 420 F.3d 301, 306 (3d Cir. 2005))
(underlining added).
Here, Defendants’ objections to Plaintiff’s ‘carve-out’ and assertion of good cause
for deletion of Plaintiff’s request in Plaintiff’s PPO to permit dissemination to sister

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agencies turn on Defendants’ asserted “wish to maintain the current balance between
the existing instruments that regulators and law enforcement agencies possess and
Defendants’ entitlement to due process.” Dkt. 191 at 4. However, the court fails to see
how such rhetorical assertions equate to any “clearly defined, specific and serious
injury,” Pitsiladi, 2008 WL 5454234, at *2, that Plaintiff’s putative dissemination, if any,
could conceivably inflict on Defendants sufficient actual harm to constitute good cause
for Defendants’ proposed limitation. On the other hand, courts within this Circuit have
recognized “[t]hat information obtained in discovery might reveal other wrongdoing for
which [defendant] could be liable does not constitute the good cause required by Rule
26(c),” EEOC v. United Parcel Service, Inc. (“UPS”), 2018 U.S. Dist. LEXIS 37646, at
*13 (E.D.NY. Mar. 5, 2018) (rejecting defendant’s assertion that plaintiff’s use of
discovery information obtained by plaintiff from defendant should be limited to instant
litigation only), and that sharing of information obtained during a civil investigation by an
agency with the federal prosecutor was not prohibited. See United States v. Fields, 592
F.2d 638, 644-46 (2d Cir. 1978), cert. denied, 442 U.S. 917 (1979) (SEC
communications of evidence obtained by agency in course of civil investigation to U.S.
Attorney did not warrant dismissal of subsequent indictment). In the instant case,
Plaintiff seeks to prohibit further violations of federal and state law with respect to
Defendants’ alleged continued importation of untaxed cigarettes thereby contributing to
the well-documented public health hazard associated with excessive consumption,
purchased free of applicable excise taxes, of such cigarettes and related compensatory
damages for Defendants’ past violations. That other agencies may have a valid interest
in pursuing similar actions against Defendants and benefit from any sharing of

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Defendants’ confidential information by Plaintiff does not represent abuse of the
discovery process and can be readily justified as in the public interest. Such motives
attributable to Plaintiff can therefore hardly be characterized as a form of discovery
abuse warranting Rule 26(c) relief.
Based on its review of the parties’ respective submissions, the court therefore
finds Defendants have failed to demonstrate good cause to delete paragraphs 4 and 5g
as included in Plaintiff’s PPO. Accordingly, Defendants’ motion for a protective order
without such provision should be DENIED; Plaintiff’s PPO including such provisions
should be GRANTED.
As to the court’s inquiry concerning the need to communicate with this District’s
United States Attorney regarding Defendants’ involvement in importing and resale of
untaxed cigarettes, the court notes that its findings are contained within the Report and
Recommendation (Dkt. 160) pending before Judge Arcara. As such, in the absence of
Judge Arcara’s determination of this issue based on the R&R, it would be premature to
provide it to the U.S. Attorney at this time. Moreover, Defendants represent that senior
officials of that office have been apprised about this case. See Dkt. 191 at 9.
Accordingly, the court will defer further action in regard to this subject matter.

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CONCLUSION
Plaintiff’s motion (Dkt. 192) for a protective order is GRANTED; Defendants’
motion (Dkt. 191) is DENIED. Plaintiff shall promptly submit a protective order in a form
consistent with the foregoing for the court’s signature.
SO ORDERED.
/s/ Leslie G. Foschio
_________________________________
LESLIE G. FOSCHIO
UNITED STATES MAGISTRATE JUDGE
Dates: July 15th, 2020
Buffalo, New York

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