Jacobs et al v. Lambda Research, Inc et al
Filing
34
ORDER granting in part 29 Motion for Protective Order; denying 26 Motion to Seal Case. Rule 26 Report due 3/19/12 and telephone conference on scheduling set for 3/27/12 @ 2:00 pm. All discovery is STAYED until 3/27/12 pending adoption or modification of the parties' Rule 26 Report. Signed by Magistrate Judge Stephanie K. Bowman on 3/8/12. (jl1)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
TERRY JACOBS, et al.,
Case No. 1:10-cv-536
Plaintiffs,
Bertelsman, J.
Bowman, M.J.
v.
LAMBDA RESEARCH, INC., et al.,
Defendants.
MEMORANDUM ORDER
Plaintiff/Relator Terry Jacobs (hereinafter “Relator”) initiated this lawsuit pursuant
to the False Claims Act, and the United States thereafter filed a Notice of Election to
Decline Intervention. Despite declining to intervene, the United States remains a plaintiff
for purposes of service of all documents filed in this case, and has reserved its right to
intervene at a later date. (See Docs. 7, 8).
I. Background
Cases filed under the qui tam provisions of the False Claims Act are, by statute,
initiated under seal. See 31 U.S.C. § 3730(b)(2). In the case presented, a handful of
documents remain under seal, but the Notice of Election to Decline Intervention filed on
April 22, 2011 and all documents filed thereafter have been filed in the public record
pursuant to the order of the presiding district judge. (Doc. 8).
In August 2011, Defendants filed a motion to dismiss this case, but that motion was
denied on December 20, 2011.
(Doc. 24).
A month later, on January 20, 2012,
Defendants filed a motion seeking to place this entire record back under seal. (Doc. 26).
Both the United States and Relator Jacobs have filed responses in opposition to
Defendants’ motion to seal the entire case. (See Docs. 27, 28). In addition to the motion
to seal the entire record, Defendants have filed a separate motion seeking a protective
order as to specific documents, (Doc. 29), to which Relator has filed a response in
opposition, (Doc. 31), and Defendants, a reply (Doc. 33).
II. Analysis
A. Motion to Seal Case
Defendants seek an order sealing all documents in the present record and requiring
future documents to be filed under seal. In the alternative, Defendants seek an order to
limit or prohibit a nonparty’s remote electronic access to documents.
The basis for Defendants’ motion is that this lawsuit, according to Defendants, is
“retaliatory” and “a slap-suit.” (Doc. 26 at 2). Defendants seek “to minimize” the allegedly
adverse effect “of this scurrilous suit1” on the basis that if the case is not placed under seal,
the Defendants “will continue to suffer direct harm as a result of the unfounded statements
and allegations made by Relator, Terry Jacobs, in this and in previous litigation.” (Id.).
Defendants point out that some months prior to the initiation of this suit, Defendants
obtained a civil judgment in the Hamilton County Court of Common Pleas against Jacobs
and his co-defendants, jointly and severally, for misappropriation of trade secrets, in an
amount in excess of 10 million dollars. However, as Relator is quick to note, that judgment
is currently on appeal.
For the reasons as particularly stated in the response of the United States, and to
1
Both Defendants and Relator em ploy language in their respective m em oranda that, at tim es, com es
close to an ad hominem attack. W hile the key parties in this dispute m ay be bitter enem ies, (see Doc. 26
at 3), the Court expects m ore civility from counsel than the tenor and tone of counsel’s correspondence
has evidenced to date. In short, the Court rem inds counsel that professionalism and civility is expected
from all officers of the court.
2
a lesser degree for the reasons expressed in the response of Relator Jacobs, the Court
does not find the existence of the type of extraordinary circumstances or significant
interests that would justify sealing the entire record of this case. See, generally, In re
Knoxville News-Sentinel Co., Inc., 723 F.2d 470, 476 (6th Cir. 1983)(“Only the most
compelling reasons can justify non-disclosure of judicial records.”); Brown v. Advantage
Engineering, Inc., 960 F.2d 1013, 1015-16 (11th Cir. 1992).
The Sixth Circuit has held that “[o]nly the most compelling reasons can justify nondisclosure of judicial records.” In re Knoxville News-Sentinel , 723 F.2d at 476 (citing
Brown & Williamson Tobacco Corp. v. FTC, 710 F.2d 1165, 1179 (6th Cir. 1983), cert.
denied, 465 U.S. 1100 (1984)).
A litigant’s fear of embarrassment or harm to his
reputation is simply not sufficient to overcome the strong presumption of public access.
See also Mann v. Boatright, 477 F.3d 1140 (10th Cir. 2007); Zurich American Ins. Co. v.
Rite Aid Corp., 345 F. Supp.2d 497 (E.D. Pa. 2004). The “natural desire” of parties to
safeguard their reputations against potentially prejudicial information “cannot be
accommodated by courts without seriously undermining the tradition of an open judicial
system.” Brown & Williamson Tobacco Corp., 710 F.2d at 1179-80. Thus, ordinarily courts
“should not seal records unless public access would reveal legitimate trade secrets, a
recognized exception to the right of public access to judicial records.” Id. “Simply showing
that the information would harm the company’s reputation is not sufficient to overcome the
strong common law presumption in favor of public access to court proceeding and
records.” Id. Because Defendants have failed to satisfy their burden to show the need for
sealing the entire record in this case, their motion will be denied.
B. Defendants’ Motion for Protective Order
Defendants also have filed a motion for a protective order in order to protect trade
3
secrets and other confidential business records. Relator Jacobs opposes the entry of any
protective order.
1. Background Leading to Motion for Protective Order
Presumably because Defendants originally moved to dismiss for failure to state a
claim, the parties did not initially meet and confer to determine the scope of discovery, nor
did they file a Rule 26(f) report with the court. However, when Judge Bertelsman denied
Defendants’ motion to dismiss, he simultaneously entered an abbreviated scheduling
order. That order directed the parties to complete all discovery on or before December 21,
2012, and to file any dispositive motions on or before January 25, 2013. (Doc. 24). The
same order further referred the case to the undersigned magistrate judge to “supervise
discovery and pretrial proceedings,” including establishing or extending all pretrial
deadlines, and ruling on all non-dispositive motions with the exception of motions in limine.
Generally, a party may not seek discovery prior to the time that the parties have
conferred under Rule 26(f), except when, as here, the parties have been authorized to
proceed with discovery pursuant to a scheduling order. See Rule 26(d), Fed. R. Civ. P.
Based on Judge Bertelsman’s order, Relator Jacobs served on Defendants a set of
Requests for Production of Documents on December 21, 2011, and followed up with a set
of interrogatories on December 23, 2011.2
Given Defendants’ position that Relator’s
requests seek confidential business materials including trade secrets, defense counsel first
telephonically contacted Relator’s counsel with a request to seal the entire record, which
Relator promptly declined. Defendants alternatively sought Relator’s agreement to a
2
Relator describes the discovery as “narrowly tailored” requests “seeking inform ation...directly relevant to
this case,” (Doc. 31 at 1), whereas Defendants characterizes the requests as “overly broad requests [that]
are no m ore than a fishing expedition into all m atters well beyond the scope of Relator’s Com plaint.”
(Doc. 29 at 2).
4
protective order. (Doc. 31 at 2). Relator declined to agree to a protective order without first
reviewing it, so Defense counsel followed up with a cover letter and draft protective order
to Relator’s counsel, inviting counsel to notify him “should you have any suggested
changes.” The January 20, 2011 letter further explained that responses to the outstanding
discovery requests would be provided once Defendants had received a signed protective
order. Since the discovery responses were due on January 20, the letter also requested
an extension of time to respond. (Doc. 29-5).
On January 28, 2012, Relator transmitted an email suggesting that since
Defendants had not filed responses to any of the discovery requests within thirty days,
“Defendants have waived any and all objections to those discovery requests.” (Doc. 31-1).
Relator demanded that Defendants “provide complete, substantive responses without
objections by February 3, 2012, or we will be forced to file a motion to compel and for
sanctions.” (Id.). On January 30, 2012, defense counsel responded, referencing counsel’s
prior discussions of a protective order (as well as the rebuffed request for agreement to
seal the entire record), the prior request for extension of time, and the lack of any response
from Relator.
Later that same day, Relator’s counsel wrote again, arguing that Defendants’
“mentioning the idea of a protective order on a brief telephone call is no excuse for
Defendants’ failure to timely respond to discovery,” and complaining that Defendants’
decision to send the protective order by regular mail rather than via email “is a
questionable practice” which “raises questions of intent to delay discovery in this case.” In
his email, Relator describes Defendants’ delay as “inexcusable,” and reiterates his position
that Defendants have “waived any and all objections” due to their failure to produce
responses within thirty days. Relator’s counsel closes by adamantly stating that, given
5
Relator’s position that Defendants had waived all objections, “there is no reason for the
entry of a stipulated protective order in this case.” (Doc. 31-3 at 1).
At 8:18 p.m. the same evening, defense counsel responded by succinctly
disagreeing with the case law relied upon by Relator’s counsel and the proposition that all
objections had been waived, and by expressing Defendants’ intention to seek a protective
order from the court if Relator remained unwilling to discuss the issues “to resolve
discovery disputes without the Court’s involvement.”
On January 31, 2012, Relator’s
counsel again responded, suggesting that Defendants were required to explain in detail
their disagreement with Relator’s assertion that objections had been waived prior to filing
any motion with the court, and explaining that the reason Relator would not agree to a
“blanket protective order is that it is invariably abused by the defense to make the case
more complicated and costly.” (Doc. 31-5 at 1).3 Finally, by letter dated February 9, 2012,
Relator’s counsel followed up with a “second good faith attempt under Local Rule 37.1 to
informally encourage Defendants’ compliance with the rules,” reiterating Relator’s position
that Defendants had waived all objections under Rules 33 and 34. (Doc. 31-6).
2. Analysis
First, it must be noted that the published Civil Trial Procedures of the undersigned
magistrate judge require counsel to contact the Court to request an informal telephonic
conference prior to filing any formal discovery motion, including a motion for a protective
order. See www.ohsd.uscourts.gov/judges/fpbowman.htm.; see also generally Federal
3
The Court declines to review Defendants’ tendered Protective Order in detail at this tim e, pending further
good faith negotiation of the parties. However, as another m agistrate judge observed in rejecting a sim ilar
argum ent, inform ation m ay be designated Confidential only upon a good-faith belief that the inform ation
falls within the scope of protection perm itted by the court. See Lattimore v. W ild Flavors, Inc., Covington
Civil Action No. 2:09-cv-23-W OB-JGW , (Doc. 22, Mem orandum Order of 10/19/09). Protective Orders will
not be sanctioned by this Court absent a provision for challenging an opposing party’s designation of
m aterial as “Confidential.”
6
Rule of Civil Procedure 37 and Local Rule 37.1 (requiring parties to fully exhaust good faith
efforts to resolve any disputes extrajudicially prior to filing any motion).
To say that the parties have clearly gotten off on the wrong foot in initiating
discovery in this case would be an understatement. While this Court lacks the power to
police conduct that, while not exemplary, does not violate professional standards, the Court
can and will exercise its authority to rule on discovery disputes in compliance with the
Federal Rules of Civil Procedure and the Civil Procedures of the undersigned.
Based on the record presented, the Court concludes that a “reboot” of sorts is
necessary in this case. Therefore, the Court will require counsel to fully comply with Rule
26(f) at this juncture, in hopes that future disputes will be mitigated by agreement on the
issues listed under Rule 26(f)(3). If the parties are unable to telephonically conduct their
conference and jointly file a Rule 26(f) report on or before March 19, 2012, they will be
required to attend a Rule 26(f) conference in person, pursuant to Federal Rule of Civil
Procedure 26(f)(2). For purposes of the joint report, the parties shall use as a model the
Joint Discovery Plan form prescribed by United States District Judge Michael R. Barrett at
www.ohsd.uscourts.gov/judges and are encouraged to fully address all conceivable issues.
In light of what the Court hopes will prove a fruitful Rule 26(f) conference that will
resolve many preliminary discovery issues, including but not limited to issues concerning
the production of ESI (see Rule 26(f)(3)(C)), the Court finds no cause to address the
parties’ initial dispute concerning the production of electronically stored information.
On the other hand, despite the failure of Defendants to first contact the Court
telephonically, in the interest of justice and on this one occasion, the Court briefly will
address the Defendants’ motion for a protective order and the Relator’s refusal to enter into
one on the basis that it is unnecessary. In a nutshell, the Court concludes that a protective
7
order is both appropriate and necessary to prevent the disclosure of Defendants’ asserted
trade secrets and/or other proprietary and confidential business information. The Court
further concludes that Defendants have not waived all objections, given the legitimate
request for a protective order and request for extension of response time made to Relator
within the requisite thirty-day time period. Last but not least, the Court will stay further
discovery until the filing of the parties’ Rule 26(f) report and the Agreed Protective Order.
On March 27, 2012, following review of the parties’ Rule 26(f) report, the undersigned will
conduct a preliminary pretrial conference.
III. Conclusion and Order
Accordingly, IT IS ORDERED:
1. All counsel shall meet and confer, and shall file a Joint Discovery Plan on or
before March 19, 2012 that includes all relevant Rule 26(f) information, using the form
published at www.ohsd.uscourts.gov.; see also generally, Civil Pretrial Procedures
published at www.ohsd.uscourts.gov/judges/fpbowman.htm;
2. In the event that counsel are unable to jointly file a Rule 26(f) report on or before
March 19, 2012, all counsel of record shall personally appear before the undersigned
magistrate judge at 2 p.m. on March 27, 2012. If the parties have timely filed their Rule
26(f) report, they shall appear telephonically at the same date and time for a preliminary
pretrial conference in accordance with instructions provided by the Court’s deputy clerk;
3. Defendants’ motion to seal this entire case (Doc. 26) is DENIED;
4. Defendants’ motion for a protective order (Doc. 29) is GRANTED IN PART.
Defendants are entitled to entry of a protective order prior to being required to being
required to respond to the outstanding discovery requests, but the Court declines to review
or enter the order tendered solely by Defendants without input from Relator and/or the
8
United States.
The parties shall transmit an Agreed Protective order via email to
bowman_chambers@ohsd.uscourts.gov on or before March 19, 2012;
5. All discovery is stayed until March 27, 2012, pending adoption or modification
of the parties’ Rule 26(f) report.
s/ Stephanie K. Bowman
Stephanie K. Bowman
United States Magistrate Judge
9
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?