Goodman et al v. J.P. Morgan Investment Management, Inc.
Filing
44
OPINION AND ORDER re: 43 Joint Motion for Entry of Protective Order Governing Confidentiality of Discovery Material. Signed by Magistrate Judge Norah McCann King on 4/8/2015. (pes1)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
NANCY GOODMAN, et al.,
Plaintiffs,
vs.
Civil Action 2:14-cv-414
Judge Frost
Magistrate Judge King
J.P. MORGAN INVESTMENT
MANAGEMENT, INC.,
Defendant.
OPINION AND ORDER
This is an action under Section 36(b) of the Investment Company
Act of 1940, 15 U.S.C. § 80a-35(b), in which plaintiffs allege that
defendant acted in breach of its fiduciary duty by charging investment
advisory fees disproportionate to the services provided and in excess
of fees negotiated at arm’s length for such services. This matter is
now before the Court on the parties’ Joint Motion for Entry of
Protective Order Governing Confidentiality of Discovery Material
(“Motion for Protective Order”), ECF 43.
The parties have agreed to
the terms of a protective order on all but the following three issues:
(1) whether the order should include a separate category
for “attorneys’ eyes only” confidential information;
(2) who should bear the initial burden of moving to seal
court filings containing confidential information: (a) the
party that seeks to file a document that includes
confidential information, or (b) the party that designated
the information as confidential; and
(3) the process governing waiver of privilege in connection
with disclosed privileged information.
Id. at pp. 1-2.
The parties have submitted a proposed protective
order that includes alternative provisions for each disputed issue.
“The parties jointly request that the Court resolve the three disputed
issues and enter a protective order that reflects the Court’s
resolution.”
Id. at p. 1.
The parties first disagree whether the protective order should
include a provision for designating information for “Attorneys’ Eyes
Only” (“AEO”).
The parties’ proposed protective order contains a
provision for designating discovery materials as confidential:
Any party to this Litigation shall have the right to
designate
as
“CONFIDENTIAL”
any
document,
discovery
response or other information it produces or discloses, or
any testimony given during pretrial proceedings, which the
designating party believes in good faith constitutes,
reflects or discloses a trade secret or other confidential
research,
development,
commercial,
customer
or
other
information subject to protection under Fed. R. Civ. P.
26(c).
Proposed Protective Order, ECF 43-1, § 1.b.
Disclosure of
“CONFIDENTIAL” information would be limited to the named parties or
organizational entities and relevant officers, their counsel of record
and their in-house counsel, outside vendors who provide discovery or
clerical support, outside experts or consultants, fact witnesses whose
testimony depends on the information, persons who otherwise properly
have access to the information and court personnel.
Id. at § 3.a.i –
viii.
Defendant proposes that the following section be added to the
protective order to provide for an AEO designation:
Any party to this Litigation shall have the right to
designate as “ATTORNEYS’ EYES ONLY” any document, discovery
response or other information it produces or discloses, or
any testimony given during pretrial proceedings, if the
designating party believes in good faith: (1) the document,
discovery
response
or
other
information
constitutes,
2
reflects or discloses a trade secret or other confidential
research,
development,
commercial,
customer
or
other
information subject to protection under Fed. R. Civ. P.
26(c); (2) there is a substantial risk that, absent such
designation, its receipt by the receiving party could cause
competitive and/or economic harm to the producing party;
and (3) it would not otherwise be adequately protected
under the procedures set forth herein for documents
designated “CONFIDENTIAL.”
Id. at § 1.c.
Information produced with the AEO designation could not
be disclosed to or accessed by the parties in this action (with
limited exceptions for organizational entities), outside experts or
consultants, and fact witnesses providing testimony at trial or on
deposition.
Id. at §§ 3.a, 3.b.
The person with access to AEO
information could disclose the information to these other persons only
with the advance written consent of the producing party or with leave
of Court.
Id. at § 3.a.ix.
Defendant argues that good cause exists to include a separate
category for AEO designations because plaintiffs intend to depose
defendant’s competitors and “[s]howing them [defendant’s] confidential
financial information and trade secrets could cause [defendant]
competitive harm.”
Motion for Protective Order, p. 6.
Plaintiffs
argue that the proposed AEO provision “allows [defendant] unfettered
discretion to designate documents as Attorneys’ Eyes Only (and thereby
limit the persons to whom the documents can be shown, including
experts) without [showing good cause or a clearly defined and serious
injury] — either to Plaintiffs or the Court.”
Id. at pp. 3-4.
Plaintiffs further argue that defendant’s proposal “puts the onus on
Plaintiffs to challenge any questionable AEO designation before
Defendant makes the requisite showing – without any knowledge about
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the information sought to be restricted” and “precludes Plaintiffs’
experts from receiving AEO-designated documents.”
Id. at p. 4.
“An AEO designation is ʽthe most restrictive possible protective
order,’ as it confines dissemination of discovery materials only to
the opposing party's attorneys and other consultants/experts specified
in the agreement.”
Penn, LLC v. Prosper Bus. Dev. Corp., No. 2:10-CV-
0993, 2012 WL 5948363, at *4 (S.D. Ohio Nov. 28, 2012) (quoting Waite,
Schneider, Bayless & Chesley Co., LPA v. Davis, No. 1:11–cv–0851, 2012
WL 3600106 (S.D. Ohio Aug. 21, 2012)).
“A party seeking this
designation must describe the alleged harm it will suffer from any
disclosure ‘with a particular and specific demonstration of fact, as
distinguished from stereotyped and conclusory statements.’”
Id.
(quoting Davis, 2012 WL 3600106 at *5) (internal quotations omitted).
“In the business context, such a showing requires ‘specific
demonstrations of fact, supported where possible by affidavits and
concrete examples.’”
Id. (quoting Davis, 2012 WL 3600106 at *5)
(internal quotations omitted).
In the case presently before the Court, defendant has failed to
justify the AEO provision as presently formulated in the proposed
protective order.
Defendant argues that a provision for AEO
designations is necessary to prevent plaintiffs from disclosing
information to defendant’s competitors during depositions.
Protective Order, pp. 6-7.
Motion for
Defendant has not, however, offered any
justification for the proposed restriction on disclosure to the
parties or outside experts or consultants, nor has defendant
described, with a particular and specific demonstration of fact, the
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alleged harm that it will suffer from disclosure to such persons.
Moreover, the literal language of defendant’s proposal does not even
directly address the danger feared by it and is unnecessarily
restrictive; for example, plaintiffs are not themselves defendant’s
competitors, see Motion for Protective Order, p. 6, yet defendant’s
proposal would prohibit disclosure of AEO information to them. Id. at
§ 1.c.
In short, the Court concludes that defendant’s proposal, as
presently formulated, cannot be justified. The Court recognizes,
however, that situations might arise that implicate defendant’s
legitimate competitive interests and which warrant greater protection.
The Court DIRECTS the parties to consult further with a view to
protecting these interests without restricting, to an unreasonable
degree, the parties’ access to discovery materials.
The parties next disagree on the proper procedure to be used in
connection with the filing of documents under seal.
Plaintiffs
suggest the following procedure:
a. If a party files any document that contains or
incorporates the substance of Confidential Information,
that party shall electronically file redacted copies of any
such document, and provide a non-redacted version to the
Court and to all parties.
b. The party that produced the Confidential Information
contained in the filed document must obtain express leave
of Court in order to file it under seal. Such leave will be
granted only upon a showing of good cause, and only to the
extent necessary to preserve legitimate confidentiality
concerns, in accordance with the Order of the Court entered
August 6, 2014.
c. The party seeking to have the document sealed shall have
fourteen (14) days from the filing of the document to file
a motion to seal. If no such motion is filed, or if such
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motion is denied, the filing party will re-file unredacted
copies of the document.
Proposed Protective Order, § 4, p. 6.
Plaintiffs argue that their
proposal correctly assigns the burden of seeking leave to file
documents under seal to the producing party.
Order, p. 8.
Motion for Protective
Defendant suggests the following procedure for filing
documents under seal:
a. Any party (the “Filing Party”) intending to file another
party’s Confidential Information (in any form whatsoever)
shall file a motion seeking leave to file the Confidential
Information under seal.
The Filing Party shall state in
the motion to seal that (i) the producing party has
designated the information in question as Confidential
Information, (ii) this Protective Order requires the Filing
Party to seek to file the Confidential Information under
seal, and (iii) the non-Filing Party may file pursuant to
this Protective Order a response providing additional good
cause for granting the motion to seal.
The Filing Party
may not oppose the granting of its own motion to seal, but
shall be under no obligation to provide additional
substantiation of good cause for the granting of the
motion.
b. When a Filing Party files a motion to file documents
under seal, the documents at issue shall be placed
provisionally under seal by the Clerk until such time as
the Court rules on the motion to file under seal.
c. The non-Filing Party and/or the producing party (if the
producing party is not a party to the Litigation) may file
a response to the Filing Party’s motion to file under seal
within the time permitted for an opposing memorandum under
Local Rule 7.2(a)(2).
Any such response may provide
additional substantiation of good cause for granting the
motion to seal.
d. Any motion to file a document under seal, including a
motion
for
entry
of
a
protective
order
containing
provisions for filing documents under seal, must comply
with all local rules.
e. In deciding whether good cause exists to grant a motion
to seal, the Court will take into account any basis
proffered in both the motion to seal and any response
thereto.
No pleadings, motions memoranda, documents or
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other materials shall be filed permanently under seal in
the absence of a court order allowing it.
f. Nothing in this paragraph 4 shall be construed to limit
a receiving party’s ability to challenge another party’s
designation
of
Confidential
Information
pursuant
to
paragraph 8(d) of this Protective Order. Further, filing a
motion to seal shall not waive the Filing Party’s right to
challenge the designation of Confidential Information,
pursuant to paragraph 8(d) of this Protective Order, of
material subject to the motion to seal.
Proposed Protective Order, § 4, pp. 7-8.
Plaintiffs argue that
defendant’s proposal, which places the burden on the filing party,
could “put Plaintiffs in the position of arguing that ‘good cause’
exists to seal documents in order to preserve Defendant’s purported
privacy interests — privacy interests with which Plaintiffs may
disagree.”
Motion for Protective Order, p. 8.
The Court concludes that both proposals fail to comply with the
local rules of this Court, see S.D. Ohio Civ. R. 79.3, and could
result in significant, unnecessary delay of the proceedings.
The
Court DIRECTS that, if a party intends to file under seal a document
that it has denominated as “CONFIDENTIAL,” that party must seek leave
of Court for the filing under seal prior to the filing of the
document; if a party intends to file a document that has been
denominated as “CONFIDENTIAL” by another party, the filing party must
so advise the denominating party, who will have seven (7) days in
which to seek leave of Court for filing the document under seal. The
motion for leave to file under seal should indicate whether the motion
is unopposed. See S.D. Ohio Civ. R. 7.3. The parties are reminded that
the Court will authorize the filing of materials under seal only upon
express leave of Court, only upon a showing good cause, and only to
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the extent necessary to preserve legitimate confidentiality concerns.
See Proctor & Gamble Co. v. Bankers Trust Co., 78 F.3d 219, 227 (6th
Cir. 1996); Brown & Williamson Tobacco Corp. v. FTC, 710 F.2d 1165,
1177 (6th Cir. 1983).
Finally, the parties disagree on “the process for waiver of
privilege for disclosed privileged information.”
Protective Order, p. 2.
Motion for
Plaintiffs propose the following provision:
If a producing party produces or discloses information
which it claims is subject to attorney-client privilege,
attorney work product protection, or other applicable
privilege or protection from disclosure, the procedures
shall be governed by Federal Rule of Civil Procedure
26(b)(5)(B).
The production or disclosure of such
information shall not operate as a waiver of the applicable
privilege or protection if the producing party demonstrates
to the Court that the requirements of Federal Rule of
Evidence 502(b) have been met, or the parties agree that
the production or disclosure was inadvertent.
Proposed Protective Order, § 6,b, p. 9.
Defendant proposes the
following provision:
If, in connection with this Litigation, a producing party
inadvertently produces or discloses information subject to
a claim of attorney-client privilege, attorney work product
protection, or other applicable privilege or protection
from disclosure (“Inadvertently Produced Information”),
then in accordance with Federal Rule of Evidence 502(b) and
(d), the production or disclosure of the Inadvertently
Produced Information shall “not operate as a waiver” of the
applicable privilege or protection in any “federal or state
proceeding” except as provided herein.
If a receiving
party receives discovery that appears to be subject to the
attorney-client privilege, the work product doctrine, or
other applicable privilege or protection from disclosure,
the receiving party must refrain from further examination
of the discovery and shall immediately notify the producing
party in writing that the receiving party possesses
discovery that appears to be privileged or protected from
disclosure.
The procedure for dealing with Inadvertently
Produced Information shall be governed by Federal Rule of
Civil Procedure 26(b)(5)(B).
Nothing herein shall prevent
the receiving party from challenging the privileged or
protected status of any inadvertently or unintentionally
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produced documents under Rule 26(b)(5)(B), except that no
party or non-party may assert that the inadvertent
production of any Confidential Information, documents or
information
constitutes
a
waiver
of
any
applicable
privilege or protection against disclosure.
Proposed Protective Order, § 6.b, pp. 9-10.
Under defendant’s
proposal, “the inadvertent production of privileged information does
not waive the privilege in this or other proceedings.
The receiving
party may challenge the privileged status of the document, but may not
argue that inadvertent production waived the privilege.”
Protective Order, p. 14.
Motion for
Defendant argues that its proposal should be
adopted because plaintiffs’ proposal
(i) unfairly attempts to increase [defendant’s] discovery
costs
and
burdens,
(ii)
would
unjustifiably
limit
[defendant’s] access to the significant protections of Rule
502, (iii) would apparently permit Plaintiffs to argue that
inadvertent production operated as a waiver of the
privilege, eviscerating the protection of Rule 502 and
disrupting the discovery process, and (iv) would permit
Plaintiffs to take advantage of inadvertently produced
privileged
material
until
[defendant]
discovered
the
inadvertent disclosure.
Id. at p. 15.
Defendant’s arguments are not well taken.
Defendant’s
proposal assumes that every production of privileged information is
inadvertent and would not require the producing party to prove that
the disclosure was truly inadvertent. Cf. Fox v. Massey–Ferguson,
Inc., 172 F.R.D. 653, 671 (E.D. Mich. 1995) (“When a producing party
claims inadvertent disclosure, it has the burden of proving that the
disclosure was truly inadvertent.”) (citing Golden Valley Microwave
Foods, Inc. v. Weaver Popcorn Co., 132 F.R.D. 204, 207 (N.D. Ind.
1990)). Defendant’s proposal also fails to take into account the
requirements of Rule 502(b) of the Federal Rules of Evidence.
See
Inhalation Plastics, Inc. v. Medex Cardio-Pulmonary, Inc., No. 2:07-
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CV-116, 2012 WL 3731483, at *3 (S.D. Ohio Aug. 28, 2012); Evenflo Co.,
Inc., v. Hantec Agents Ltd., No. 3:05-CV-346, 2006 WL 2945440, at *5-6
(S.D. Ohio Oct. 13, 2006).
In contrast, plaintiffs’ proposal merely –
and properly – recognizes the applicability of Federal Rule of Civil
Procedure 26(b)(5)(B) and Federal Rule of Evidence 502(b) and makes
clear that the parties can agree that a production or disclosure was
inadvertent.
This Opinion and Order resolves the disputes presented by the
parties’ Joint Motion for Entry of Protective Order Governing
Confidentiality of Discovery Material (“Motion for Protective Order”),
ECF 43.
The parties shall forthwith present for the Court’s
consideration and approval a proposed protective order consistent with
the foregoing.
The Clerk is DIRECTED to remove ECF 43 from the Court’s pending
motions list.
April 8, 2015
s/Norah McCann King_______
Norah McCann King
United States Magistrate Judge
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