THE YORK GROUP, INC. et al v. PONTONE et al
Filing
704
OPINION setting forth the reasons: the Motion to Amend the Protective Order 609 will be GRANTED; the Motion to Seal 611 will be GRANTED in part; the Motion for Contempt 613 619 will be GRANTED in part; the Amended Motion to Expedite Discovery 614 will be DENIED without prejudice; the Motion to Compel and for Costs 627 will be DENIED; and the Motion to Seal 628 will be GRANTED in part. An appropriate order will be entered. Signed by Chief Judge Joy Flowers Conti on 8/1/14. (kjm) Modified on 8/1/2014 by adding 613 . (kjm)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
THE YORK GROUP, INC., MILSO
INDUSTRIES CORPORATION, and
MATTHEWS INTERNATIONAL
CORPORATION,
Plaintiffs,
v.
SCOTT PONTONE, HARRY
PONTONE, BATESVILLE CASKET
COMPANY, INC., and PONTONE
CASKET COMPANY, LLC,
Defendants.
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Civil Action No. 10-1078
OPINION
CONTI, Chief District Judge
I. Introduction
Pending before the court are six motions1 relating to alleged violations of a protective
order issued in this case on February 4, 2011 (the “protective order”). (ECF No. 69.) Defendants
Scott Pontone and Pontone Casket Company (together, the “Pontone defendants”) and Batesville
Casket Company, Inc. (“Batesville”) allege plaintiffs The York Group, Inc. (“York”), Milso
Industries Corporation (“Milso”), and Matthews International Corporation (collectively with
York and Milso, “plaintiffs”) violated the protective order when they filed under seal two
documents as exhibits to a motion to dismiss in a case filed by Scott Pontone against York and
Milso in the Court of Chancery of the State of Delaware, Scott Pontone v. Milso Industries Corp.
and The York Grp., Inc., Civ. Action No. 8842-VCP (Del. Ch. Mar. 18, 2014) (“Scott Pontone’s
1
Motion to Amend/Correct Order (“motion to amend the protective order”) (ECF No. 609);
Motion to Seal (ECF No. 611); Motion for Contempt (ECF No. 619); Amended Motion to
Expedite Discovery (ECF No. 614); Motion to Compel and for Costs (ECF No. 627); and
Motion to Seal (ECF No. 628).
1
Delaware Case”), and disclosed “highly confidential” information in their submissions filed on
the docket in this case. This opinion addresses the Pontone defendants’ allegations and the
submissions by the parties with respect to the protective order.
II. Procedural History2
In this diversity action initiated by plaintiffs on August 16, 2010, the court has overseen a
contentious and lengthy fact discovery period and, on March 6, 2014, decided the parties’
voluminous cross-motions for summary judgment. (ECF Nos. 642, 643.) This case is currently in
expert discovery and is scheduled for trial on December 1, 2014. (ECF No. 663.)
On October 15, 2013, plaintiffs filed a motion to amend the protective order. (ECF No.
609.) On October 23, 2013, the Pontone defendants filed a motion to expedite discovery with
respect to plaintiffs’ alleged violations of the protective order (ECF No. 610) and a motion to
seal plaintiffs’ motion to amend the protective order (the “first motion to seal”) (ECF No. 611.)
On October 28, 2013, plaintiffs filed an omnibus response in opposition to the Pontone
defendants’ motion to expedite discovery and motion to seal. (ECF No. 612.) On November 7,
2013, the Pontone defendants filed a motion for contempt against plaintiffs arguing, among other
things, that plaintiffs violated the protective order with respect to a motion to dismiss filed in the
Scott Pontone Delaware case and the disclosure of “highly confidential” information in their
submissions in this case. (ECF No. 619.)3 On November 7, 2013, the Pontone defendants filed an
amended motion to expedite discovery with respect to plaintiffs’ alleged violations of the
2
The procedural history section of this opinion sets forth only the procedural history relevant to
the disposition of the motions listed in footnote 1 supra.
3
The motion for contempt was originally filed on November 7, 2013. (ECF No. 613.) On
November 13, 2013, the Pontone defendants filed an erratum with respect to the motion for
contempt. (ECF No. 619.)
2
protective order (the “amended motion to expedite discovery”). (ECF No. 614.)4 On the same
day, the Pontone defendants filed a response in opposition to plaintiffs’ motion to amend the
protective order. (ECF No. 615.) On November 13, 2013, the Pontone defendants with leave of
court filed a reply brief with respect to their first motion to seal. (ECF No. 618.) On the same
day, the Pontone defendants filed an erratum with respect to the motion for contempt. (ECF No.
619.)
On November 15, 2013, Batesville filed a response to plaintiffs’ motion to amend the
protective order and a motion for joinder with respect to the Pontone defendants’ motion for
contempt.5 (ECF Nos. 620, 621.) On the same day, plaintiffs filed a response in opposition to the
Pontone defendants’ motion to expedite discovery with respect to plaintiffs’ alleged violations of
the protective order. (ECF No. 622.) On November 26, 2013, plaintiffs with leave of court filed a
reply brief with respect to their motion to amend the protective order. (ECF No. 626.) On
December 2, 2013, plaintiffs filed a response in opposition to the motion for contempt. (ECF No.
627.) Plaintiffs, as part of their response to the motion for contempt, requested the court to
compel the production of an agreement dated April 7, 2013, between Scott Pontone and
Batesville and requested their costs for responding to the motion for contempt. (Id.)
On December 4, 2013, the Pontone defendants filed a motion to seal (the “second motion
to seal”) plaintiffs’ response in opposition to the motion for contempt. (ECF No. 628.) On
December 13, 2013, plaintiffs filed a response in opposition to the second motion to seal. (ECF
No. 631.) On December 16, 2013, the Pontone defendants filed a response in opposition to the
4
On June 2014, the court denied as moot the motion to expedite discovery (ECF No. 610) in
light of the amended motion to expedite discovery (ECF No. 614).
5
On June 4, 2014, the court granted Batesville’s motion for joinder with respect to the Pontone
defendants’ motion for contempt.
3
motion to compel contained in plaintiffs’ response to the motion for contempt. (ECF No. 633.)6
On December 16, 2013, Batesville filed a response in opposition to the motion to compel
contained in plaintiffs’ response to the motion for contempt. (ECF No. 637.) On December 23,
2013, the Pontone defendants with leave of court filed a reply brief in further support of their
motion for contempt. (ECF No. 638.)
The following motions, which relate to plaintiffs’ alleged breaches of the protective
order, having been fully briefed are now ripe to be decided by the court:
Plaintiffs’ Motion to Amend the Protective Order (ECF No. 609);
Pontone defendants’ First Motion to Seal (ECF No. 611);
Pontone defendants’ Motion for Contempt (ECF No. 619);
Pontone defendants’ Amended Motion to Expedite Discovery (ECF No. 614);
Plaintiffs’ Motion to Compel and for Costs (ECF No. 627); and
Pontone defendants’ Second Motion to Seal (ECF No. 628).
III. Factual Background
A. The Protective Order
Paragraph two of the protective order provides:
2. This Stipulated Protective Order shall govern the disclosure and use of
"Confidential” information and documents and "Attorneys Eyes Only"
information and documents, as defined in Paragraph 5, produced in connection
with this litigation (collectively, "Protected Material"). All information which is or has been - produced or discovered in this litigation, regardless of whether
designated "Confidential" or "Attorneys' Eyes Only," shall be used solely for the
prosecution or defense of this litigation unless the information is available to
the general public without a breach of the terms of this Stipulated Protective
Order. The measures designated by the parties in this Stipulated Protective Order
are reasonable and will not prejudice anyone or unduly burden the Court.
6
On June 5, 2014, the Pontone defendants with leave of court filed an unredacted version of
their response in opposition to the motion to compel. (ECF No. 688.)
4
(ECF No. 69 ¶ 2 (emphasis added).) With respect to the disclosure of protected information
under the protective order, paragraphs nine, ten and eleven of the protective order, in pertinent
part, provide:
9. Protected Material shall not be exhibited, disseminated, copied, or in any way
communicated to anyone for any purpose whatsoever, other than in conjunction
with the above-captioned litigation. Except as provided for in this Stipulated
Protective Order, the parties shall keep all Protected Material from all persons
except as provided for by the terms of Stipulated Protective Order.
10. Neither the receiving party, its counsel, nor its representatives shall disclose
documents designated as CONFIDENTIAL as defined by paragraph 5(a) herein,
other than to the following persons (hereinafter referred to as "Qualified Persons Confidential"):
…
(e) Designated representatives of Plaintiffs assigned to and necessary to
assist counsel in the prosecution of this litigation, who expressly agree to
comply with the terms of this Stipulated Protective Order, and whose
identity(ies) are first disclosed to the party that produced the subject
Protected Material;
(f) Plaintiffs' designated counsel of record in this action and employees of
Plaintiffs' counsel acting at the direction of counsel, and assigned to and
necessary to assist such counsel in the preparation or trial of this action;
(g) All attorneys for the parties in this action, including in-house attorneys,
and their assistants, associates, paralegals, clerks, stenographic personnel,
and other individuals specifically acting at the direction of counsel, and
assigned to and necessary to assist such counsel in the preparation or trial
of this action[.]
…
11. The parties and their designated representatives are precluded from sharing
and/or disclosing CONFIDENTIAL information or documents to anyone other
than a "Qualified Person - Confidential" as defined in Paragraph 10, herein.
Accordingly, the parties and their designated representatives expressly agree to
maintain the confidentiality associated with those documents designated as
CONFIDENTIAL and agree that they will not disclose or otherwise share such
information with anyone other than a "Qualified Person - Confidential" at any
time
(Id. ¶¶ 9-11.)
With respect to the disclosure of documents labeled as “Attorneys’ Eyes Only,”
paragraph twelve of the protective order, in pertinent part, provides:
5
12. Upon receipt of documents designated as ATTORNEYS EYES ONLY, as
defined by paragraphs 5(b)(i) and (ll) herein, counsel for the receiving party shall
not disclose such documents other than to the following persons (hereinafter
referred to as "Qualified Persons - Attorneys Eyes Only"):
…
(c) Plaintiffs' designated counsel of record in this action and other
attorneys at the firm of such counsel[.]
(Id. ¶ 12.)
Paragraph thirteen of the protective order provides further instruction with respect to
whom the documents labeled “Confidential” and “Attorneys’ Eyes Only” may be disclosed. (Id.
¶ 13.) Paragraph thirteen provides:
13. Disclosure of CONFIDENTIAL or ATTORNEYS EYES ONLY information
and documents shall be made to persons identified in Paragraphs 10 and 12 above,
as applicable, only as necessary for this litigation, and, with respect to
individuals identified in subparagraphs 10(a), (c), (e), (h) and (D and 12(1), only
after the person to whom disclosure is made has been informed of this Stipulated
Protective Order, and has agreed in writing to be bound by it, by signing the form
of acknowledgment attached to this Stipulated Protective Order as Exhibit A Acknowledgment. The terms of this Stipulated Protective Order shall be
explained to such persons by the persons disclosing the Protected Material. The
executed acknowledgment shall be retained by counsel disclosing the Protected
Material. Protected Material shall not be disclosed to any person in any manner
not specified in this Protective Order.
(ECF No. 69 ¶ 13 (emphasis added).)
Paragraph eight of the protective order sets forth a process for the parties to use to
challenge designations of the documents labeled “Confidential” or “Attorneys’ Eyes Only.”
(ECF No. 69 ¶ 8.) Paragraph eight provides:
A party challenging a confidentiality designation must request in writing that the
designation be changed. The writing shall set forth the receiving party's basis for
the challenge. The parties shall then meet and confer within 10 days of service of
the written challenge in a good faith effort to resolve the challenge. If the parties
are unable to resolve the challenge through the meet and confer, the challenging
party may, within 10 days of the meet and confer, proceed to move the Court to
resolve the dispute. Until the Court rules on the challenge, all parties shall
continue to afford the material in question the level of protection to which it
would be entitled under the challenged designation.
6
(ECF No. 69 ¶ 8.)
B. Harry Pontone’s Delaware Case
On June 12, 2012, defendant Harry Pontone filed a complaint in the Court of Chancery of
the State of Delaware against Milso Industries Corporation and The York Group, Inc. seeking
advancement, indemnification, and attorneys’ fees, and asserting a claim for breach of contract.
Harry Pontone v. Milso Industries Corp. and The York Grp., Inc., Civ. Action No. 7615-VCP
(Del. Ch. June 12, 2012) (“Harry Pontone’s Delaware Case”); (ECF No. 609-1.) In July 2012,
Harry Pontone, Milso, and York agreed to the following stipulation:
[M]aterial designated by either Plaintiffs or Harry Pontone as “Confidential” or
“Attorneys’ Eyes Only,” including any such documents that have been filed by
either Plaintiffs or Harry Pontone in the Western District of Pennsylvania under
seal in the Underlying Action may be submitted to the Court and/or the Special
Master in the Delaware Action, and be disclosed to Harry Pontone’s counsel of
record in the Delaware Action. It is further stipulated and agreed that such
Protected Material will be designated “Confidential Discovery Material” pursuant
to the Stipulation and Order for the Production and Exchange of Confidential
Information entered on May 13, 2013 in the Delaware Action and may only be
used by Milso to object to fees and expenses for which Harry Pontone seeks to be
advanced or indemnified and/or by Harry Pontone to address, challenge or rebut
any such objection by Milso.
(ECF Nos. 609-2 at 3; 609-3 at 2.)
C. Scott Pontone’s Delaware Case
On August 26, 2013, Scott Pontone filed a complaint in the Court of Chancery of the
State of Delaware against Milso and York seeking advancement and attorneys’ fees and asserting
a claim for breach of contract. (ECF No. 609 ¶ 4; ECF No. 609-1; ECF No. 615 at 1.) Milso and
York moved to dismiss Scott Pontone’s complaint, arguing Scott Pontone was not entitled to
advancement of his attorneys’ fees because he did not have standing to seek advancement and
had not incurred any fees or expenses. (ECF No. 609-5; ECF No. 609 ¶ 9.) Milso’s and York’s
argument was based upon their position that Batesville is required to advance and indemnify
7
Scott Pontone for any fees or expenses pursuant to a consulting agreement entered into between
Scott Pontone and Batesville (the “consulting agreement”). (ECF No. 609 ¶ 10.) In support of
their argument, Milso and York filed a redacted version of their motion to dismiss with the court.
(Id.) Milso and York filed under seal an unredacted version of the motion to dismiss. (Id.)
Attached under seal to the unredacted version of the motion to dismiss was a copy of the
consulting agreement, together with attached customer lists, among other exhibits, and a
transcript of the deposition of Scott Pontone taken in relation to this case. (Id.)
In this case, the consulting agreement was designated “Attorneys’ Eyes Only” and the
Pontone defendants attempted to designate the entirety of Scott Pontone’s deposition as
“Attorneys’ Eyes Only” and “Confidential.” (ECF No. 619.) Counsel for Scott Pontone
requested that counsel for York and Milso in the Scott Pontone Delaware case withdraw the
consulting agreement and the transcript of Scott Pontone’s deposition arguing the use of those
documents in Scott Pontone’s Delaware case violated the protective order entered in this
litigation. (ECF No. 609-6.) As of the date of this opinion, counsel for York and Milso in the
Scott Pontone Delaware case have not complied with counsel for Scott Pontone’s request.
D. Attorneys for Milso and York
In this case, plaintiffs, including Milso and York, are represented by Reed Smith, LLP
(“Reed Smith”). The following attorneys of Reed Smith appear or have appeared on behalf of
plaintiffs in this case: Brian T. Himmel, Danielle J. Marlow, David B. Fawcett, III, Steven I.
Cooper, and W. Thomas McGough, Jr. In Scott Pontone’s Delaware case, Milso and York are
represented by Reed Smith attorneys Brian Rostocki (“Rostocki”) and John Cordrey
(“Cordrey”). (ECF No. 629 at 6.)
IV. Motion for Contempt
8
The Pontone defendants joined by Batesville seek an order of contempt, pursuant to
Federal Rule of Civil Procedure 37(b)(2) and 18 U.S.C. § 401(3), based upon counsel for
plaintiffs in this case (1) providing counsel for Milso and York in the Scott Pontone Delaware
case the consulting agreement and a transcript of Scott Pontone’s deposition taken in connection
with this case, which resulted in those documents being filed under seal in the Scott Pontone
Delaware case; and (2) filing in this court “highly confidential information obtained by Plaintiffs
under the protection of the Protective Order in this case and Rule 5.1 of the Delaware Court of
Chancery rules.” (ECF No. 619, 621.) Plaintiffs argue the motion for contempt is baseless
because the Pontone defendants have not shown by clear and convincing evidence that plaintiffs
intentionally violated the protective order or the alleged violations resulted in “significant
prejudice to the Pontone defendants.” (ECF No. 627.)
A. Applicable Law
A party must prove three elements by clear and convincing evidence to establish that an
opposing party is liable for civil contempt: (1) a valid order of the court existed; (2) the opposing
party had knowledge of the order; and (3) the opposing party disobeyed the order. John T. ex.
rel. Paul T. v. Del. Cnty., 318 F.3d 545, 552 (3d Cir. 2003) (citing Harris v. Phila., 47 F.3d 1342,
1349 (3d Cir. 1995)); see Roe v. Operation Rescue, 54 F.3d 133, 137 (3d Cir. 1995). The
elements of civil contempt must be proved by clear and convincing evidence, and ambiguities
must be resolved in favor of the party charged with contempt. John T., 318 F.3d at 552.
A plaintiff, however, is not required to prove that the defendant willfully violated a court
order in order to establish civil contempt. Robin Woods Inc. v. Woods, 28 F.3d 396, 400 (3d Cir.
1994). “‘[W]illfulness is not a necessary element of civil contempt,’ and, accordingly, that
‘evidence ... regarding ... good faith does not bar the conclusion ... that [the defendant] acted in
contempt.’” Id. at 398 (quoting Harley-Davidson, Inc. v. Morris, 19 F.3d 142, 148-49 (3d
9
Cir.1994)). Indeed, “good faith is not a defense to civil contempt.” Robin Woods, 28 F.3d at
399.
Civil contempt sanctions are remedial not punitive in nature. As such, “[d]istrict courts
hearing civil contempt proceedings are afforded broad discretion to fashion a sanction that will
achieve full remedial relief.” John T., 318 F.3d at 554 (citing McComb v. Jacksonville Paper,
336 U.S. 187, 193-94 (1949)). Often, the district court’s discretion involves ordering payment for
the costs of past non-compliance. John T., 318 F.3d at 554 (“‘Civil contempt is remedial in
nature, serving to coerce compliance with a court order or to compensate the other party for
losses sustained due to noncompliance.’”) (quoting United States v. Pozsgai, 999 F.2d 719 (3d
Cir. 1993) (emphasis in original)).
Attorneys’ fees may be awarded against a party that is held in contempt. Robin Woods,
28 F.3d 396 at 400. The Third Circuit Court of Appeals recognized in Robin Woods:
“It matters not whether the disobedience is willful[;] the cost of bringing the
violation to the attention of the court is part of the damages suffered by the
prevailing party and those costs would reduce any benefits gained by the
prevailing party from the court's violated order. Because damages assessed in
civil contempt cases are oftentimes compensatory (instead of coercive) the mental
state of the violator should not determine the level of compensation due.”
…
Only with an award of attorneys' fees can [the plaintiff] be restored to the position
it would have occupied had [the defendants] complied with the district court's
injunction. Accordingly, accepting both the district court's findings regarding
good faith and advice of counsel and the [defendants’] assertion that they intended
no harm to [the plaintiff], we find no basis for disturbing the award of attorneys'
fees.
Id. (quoting Cook v. Ochsner Found. Hosp., 559 F.2d 270, 272 (5th Cir. 1977) (emphasis
added)).
B. Discussion
1. Alleged Violations of the Protective Order
10
i.
Disclosure of the consulting agreement and transcript of Scott
Pontone’s deposition to Rostocki and Cordrey
Here, plaintiffs do not dispute that (1) a valid order of the court existed, i.e., the
protective order; and (2) they had knowledge of the protective order. With respect to the third
element of civil contempt, i.e., plaintiffs violated the court order, the Pontone defendants showed
by clear and convincing evidence that plaintiffs violated the protective order by their counsel in
this case disclosing the consulting agreement to Rostocki and Cordrey, which resulted in
Rostocki and Cordrey filing under seal on the docket in the Scott Pontone Delaware case the
consulting agreement. The Pontone defendants did not, however, show by clear and convincing
evidence that plaintiffs violated the protective order by disclosing a transcript of Scott Pontone’s
deposition to Rostocki and Cordrey because the Pontone defendants failed to comply with the
protective order by designating the entire deposition as “Protected Material,” and not identifying
specific pages and lines of the transcript as “Protected Material.”
a. The consulting agreement
There is no dispute in this case that the consulting agreement is designated “Attorneys’
Eyes Only” meaning that document is considered “Protected Material” under the protective
order. (ECF No. 69 ¶ 2.) Pursuant to the protective order, Protected Material “shall be used
solely for the prosecution or defense of this litigation unless the information is available to the
general public without a breach of the terms of this Stipulated Protective Order[,]” and “shall not
be exhibited, disseminated, copied, or in any way communicated to anyone for any purpose
whatsoever, other than in conjunction with the above-captioned litigation.” (ECF No. 69 ¶¶
2, 9) (emphasis added.) Paragraphs two and nine of the protective order provide that permissible
disclosure is limited to disclosure related to the purposes of prosecuting or defending this case,
i.e., the above-captioned litigation. Based upon the submissions of the parties, Rostocki and
11
Cordrey are attorneys in Reed Smith’s Delaware office, and plaintiffs did not argue that Rostocki
or Cordrey provided assistance to them in this case or that their counsel in this case disclosed the
consulting agreement to Rostocki and Cordrey for any purpose related to this litigation. Counsel
for plaintiffs disclosing the consulting agreement to Rostocki and Cordrey, who are not counsel
of record in this case, led to the subsequent filing and use of that document in the Scott Pontone
Delaware case and violated the express terms of the protective order.
Plaintiffs argue that the disclosure of the consulting agreement was not a breach of the
protective order because (1) that document was filed under seal in Delaware, and (2) the
protective order permitted plaintiffs’ counsel to disclose documents designated “confidential” or
“attorneys’ eyes only” to counsel at Reed Smith “working on the closely related Delaware
actions.” (ECF No. 626-27.)7 With respect to plaintiffs’ first argument, the protective order
expressly provides that the use of Protected Material, which includes the consulting agreement,
shall be limited to use in this case. (ECF No. 69 ¶¶ 2, 9, 13.) Plaintiffs, therefore, violated the
protective order when their counsel in this case disclosed the consulting agreement to Rostocki
and Cordrey for purposes unrelated to this case. Whether the consulting agreement was filed
under seal in Delaware may be relevant to the extent of the harm suffered by the Pontone
defendants by the disclosure, but does not factor into an analysis about whether the protective
order was violated in the first instance by plaintiffs using the consulting agreement for a purpose
unrelated to this case.
With respect to plaintiffs’ second argument, i.e., the disclosure of the consulting
agreement to Reed Smith attorneys Rostocki and Cordrey was permissible under the protective
7
Plaintiffs also argue that to the extent they violated the protective order, the violation was
inadvertent. Plaintiffs’ argument, however, is not persuasive. As the court noted in Robin
Woods, “good faith is not a defense to civil contempt,” and a party is not required to prove the
opposing party willfully violated a court order in order to establish civil contempt. Robin Woods,
28 F.3d at 399-400.
12
order, the plain language of the protective order refutes this argument. Plaintiffs are correct that
the protective order contemplates disclosure of protected material to persons other than counsel
of record for the parties. (See ECF No. 69 ¶¶ 10(e)-(g), 12(c).) Paragraph ten of the protective
order provides that documents designated confidential may be disclosed to, among other persons:
(f) Plaintiffs' designated counsel of record in this action and employees of
Plaintiffs' counsel acting at the direction of counsel, and assigned to and necessary
to assist such counsel in the preparation or trial of this action;
[and]
(g) All attorneys for the parties in this action, including in-house attorneys, and
their assistants, associates, paralegals, clerks, stenographic personnel, and other
individuals specifically acting at the direction of counsel, and assigned to and
necessary to assist such counsel in the preparation or trial of this action[.]
(ECF No. 69 ¶ 10.) Paragraph twelve of the protective order provides that documents designated
Attorneys’ Eyes Only may be disclosed to, among other persons:
(c) Plaintiffs' designated counsel of record in this action and other attorneys at the
firm of such counsel[.]
(ECF No. 69 ¶ 12.) Paragraph thirteen of the protective order, however, limits permissible
disclosure of Protected Materials to situations in which disclosure is “necessary for this
litigation.” (Id. ¶ 13) (emphasis added.) Pursuant to the plain language of the protective order,
counsel for plaintiffs were permitted to disclose to Rostocki and Cordrey the consulting
agreement because Rostocki and Cordrey are “other attorneys at the firm of [plaintiffs’]
counsel.” (Id. ¶ 12.) Plaintiffs were not permitted, however, to disclose the consulting agreement
to Rostocki and Cordrey for any reason that was not “necessary for this litigation,” and Rostocki
and Cordrey were not permitted to use the consulting agreement for any purpose not “necessary
for this litigation.” (Id. ¶ 13 (emphasis added).) Based upon the submissions of the parties,
counsel for plaintiffs disclosed the consulting agreement to Rostocki and Cordrey, and the
consulting agreement was subsequently used to defend the Scott Pontone Delaware case, i.e., the
consulting agreement was attached to a motion to dismiss in that case. Plaintiffs do not argue that
13
they disclosed the consulting agreement to Rostocki and Cordrey for any reason related to this
litigation, and it is undisputed that Rostocki and Cordrey used the consulting agreement to
defend the Scott Pontone Delaware case. Accordingly, counsel for plaintiffs’ disclosure of the
consulting agreement to Rostocki and Cordrey and the subsequent use of the consulting
agreement in the Scott Pontone Delaware case constitute violations of the protective order. The
Pontone defendants established by clear and convincing evidence that plaintiffs violated the
protective order. Accordingly, plaintiffs are in contempt of an order of this court, i.e., the
protective order, and the court must determine what, if any, sanctions should be imposed upon
plaintiffs in this case.
b. The transcript of Scott Pontone’s deposition
Plaintiffs argue Scott Pontone’s deposition is not confidential because “the Pontone
Defendants have at no point ever provided specific paragraph and line designations from that
transcript,” which “is required under the Stipulated Protective Order in order to maintain that
confidentiality designation after 10 days.” (ECF No. 631 at 2-3.) Paragraph 6 of the protective
order provides:
6. A party or non-party shall designate all Protected Material disclosed during any
deposition in this matter as CONFIDENTIAL or ATTORNEY EYES ONLY by
notifying all parties during the deposition of the specific pages and lines of the
transcript which contain Protected Material. If a party or non-party asserts at the
deposition that it intends to designate portions of the testimony as
CONFIDENTIAL or ATTORNEYS EYES ONLY, but it is not practical to make
specific designations before the conclusion of the deposition, then the designating
party shall have ten (10) days from its receipt of the transcript to provide written
notice to the parties of the specific pages and lines of the transcript which contain
Protected Material. Each party shall attach a copy of such written notice to the
face of the transcript and each copy thereof in its possession, custody or control. If
the right to designate testimony following the deposition is invoked, all parties
shall treat the entire transcript as subject to the level of protection requested by the
designating party until the earlier of receipt of the notice of designations or
expiration of the ten (10) day period following receipt of the transcript.
14
(ECF No. 69 ¶ 6.) The Pontone defendants did not produce evidence to show that in accordance
with the protective order they provided plaintiffs “written notice…of the specific pages and lines
of the transcript which contain Protected Material.” (Id.) Under those circumstances, the court
cannot conclude that the transcript of Scott Pontone’s deposition was “confidential” material
subject to the protective order. The Pontone defendants, therefore, failed to satisfy their burden
to show by clear and convincing evidence that plaintiffs violated the protective order by
disclosing the transcript of Scott Pontone’s deposition to Rostocki and Cordrey. The Pontone
defendants’ motion for contempt will be denied with respect to counsel for plaintiffs disclosing
the transcript of Scott Pontone’s deposition to Rostocki and Cordrey, which led to Rostocki and
Cordrey using the transcript of Scott Pontone’s deposition to defend the Scott Pontone Delaware
case.
ii.
Plaintiffs filing in this court highly confidential information obtained
by plaintiffs under the protection of the protective order and
Delaware confidentiality provisions
The Pontone defendants joined by Batesville argue that plaintiffs violated the protective
order by filing on the docket in this case “highly confidential” information that constitutes
Protected Material in this case and from a sealed filing in the Scott Pontone Delaware case. (ECF
No. 619 at 6.) Related to this argument, the Pontone defendants filed two motions to seal with
respect to plaintiffs’ motion to amend the protective order (ECF No. 611) and response in
opposition to the motion for contempt (ECF No. 628). Based upon the Pontone defendants’
proposed redactions to plaintiffs’ motion to amend the protective order, it appears the “highly
confidential information” plaintiffs refer to in their filings in this case is that: (1) Batesville
pursuant to the consulting agreement has a mandatory obligation to pay Scott Pontone’s
attorneys’ fees in this litigation; (2) Batesville has paid Scott Pontone’s legal fees for years; (3)
the customer lists attached to the consulting agreement list all funeral homes in the New York
15
Metropolitan region; and (4) reference to a loan agreement between Scott Pontone and Batesville
dated April 7, 2013. Each of these alleged violations of a court order and whether the
information should be filed under seal will be addressed below.
a. Pursuant to the consulting agreement, Batesville has a mandatory obligation
to pay Scott Pontone’s attorneys’ fees in this litigation.
As discussed above, a party must prove three elements by clear and convincing evidence
to establish that an opposing party is liable for civil contempt: (1) a valid order of the court
existed; (2) the opposing party had knowledge of the order; and (3) the opposing party disobeyed
the order. John T., 318 F.3d at 552. Here, plaintiffs do not dispute that (1) a valid order of the
court existed, i.e., the protective order; and (2) they had knowledge of the protective order, and
the consulting agreement is designated Protected Material under the protective order. Plaintiffs
argue, however, that they did not violate the protective order by referencing the consulting
agreement, which “was not attached to Plaintiffs’ submission, was only referred to generally and
was neither quoted nor otherwise disclosed,” because “the Pontone Defendants themselves have
repeatedly referenced the Consulting Agreement in their filings.” (ECF No. 627 at 10 (emphasis
in original).) The basis for the Pontone defendants’ motion for contempt relating to the
consulting agreement does not appear to be plaintiffs’ mere reference to the consulting
agreement; rather, the Pontone defendants joined by Batesville seem to object to the disclosure
of the contents of the consulting agreement. Based upon plaintiffs’ reference to the contents of
the consulting agreement in their submissions filed publicly on this court’s docket, the court
agrees with the Pontone defendants that plaintiffs violated the protective order by failing to
“maintain the confidentiality” of the consulting agreement. (ECF No. 69 at 1.) Accordingly,
because plaintiffs disclosed the content of Protected Material in their motion to amend the
protective order (ECF No. 609) and response in opposition to the motion for contempt (ECF No.
16
627), the Pontone defendants’ motion to seal will be granted8 with respect to plaintiffs’
references to the contents of the consulting agreement in those documents. Appropriate sanctions
to be imposed upon plaintiffs based upon their violation of the protective order will be discussed
below.
b. Batesville has paid Scott Pontone’s legal fees for years.
Plaintiffs do not dispute that (1) a valid order of the court existed, i.e., the protective
order; and (2) they had knowledge of the protective order. Plaintiffs argue, however, that they
did not violate the protective order by including in their submissions that Batesville paid Scott
Pontone’s legal fees related to this case because counsel for the Pontone defendants in open court
during in a proceeding in the Scott Pontone Delaware case in the Court of Chancery of the State
of Delaware and Batesville in their reply to plaintiffs’ response to Batesville’s concise statement
of material facts with respect to the parties’ motions for summary judgment filed in this case
admitted that Batesville paid Scott Pontone’s defense costs. (ECF No. 627 at 10; ECF No. 563 ¶
8
The protective order in this case: (1) sets forth “a procedure for disclosing confidential
information to the parties in this litigation;” (2) aims to “protect [the confidential information]
from unauthorized use or disclosure;” and (3) “establishes a procedure for challenging
confidentiality designations.” (ECF No. 69 at 2.) This court, mindful of the parties’ agreement
set forth in the protective order, has been lenient about granting motions to seal with respect to
documents the parties designated as “confidential” or “attorneys’ eyes only.” Whether a
document should be filed under seal with this court, however, is not solely governed by the
protective order; rather, a document should—and from this point on will only—be permitted to
be filed under seal if upon consideration of the parties’ submissions the court determines that
under the applicable legal standards sealing is warranted. See Publicker Industries v. Cohen,
733F.2d 1059, 1071 (3d Cir. 1984); Pansy v. Borough of Stroudsburg, 23 F.3d 772, 787-91 (3d
Cir. 1994); Civ. Action No. 10-1609 ECF No. 239 adopted by the court at ECF No. 257.
There is a proliferation in the courts of litigants seeking to file documents under seal
despite the First Amendment to the United States Constitution embracing a right of public access
to civil trials. Publicker, 733 F.2d at 1070. The parties should not burden the court with motions
to seal based only upon reliance on the protective order and should file motions to seal only if
after consideration of the applicable legal standards, they determine in good faith sealing is
warranted. The court will not after the entry of this opinion and accompanying order routinely
grant motions to seal solely based upon the parties’ designation of information as “confidential”
or “attorneys’ eyes only.”
17
62.) Based upon the transcript of the proceeding in Delaware, plaintiffs are correct that counsel
for the Pontone defendants admitted in open court that Batesville paid Scott Pontone’s legal fees
related to this case. (ECF No. 612-1 at 3 (Counsel for the Pontone defendants stated in open
court: “I can represent to the Court, this is a matter of public record, without breaching the other
client’s confidentiality that Batesville Casket has provided defense costs to my client.”).)
Plaintiffs are also correct that Batesville in their reply to plaintiffs’ response to Batesville’s
concise statement of material facts with respect to the parties’ motions for summary judgment
filed in this case admitted that Batesville paid Scott Pontone’s defense costs. (ECF No. 563 ¶ 62
(Batesville admitted that it “has and continues to reimburse Scott Pontone and [Pontone Casket]
for at least part of the legal fees they incur in connection with this action.”).)
The protective order protects “confidential and proprietary business information of the
parties,” which includes “company information not known to the general public.” (ECF No. 69 ¶
3 (emphasis added).) Pursuant to the protective order, Protected Material “available to the
general public” may be used other than in connection with the above-captioned litigation. (ECF
No. 69 ¶ 2 (emphasis added).) Here, information that Batesville paid Scott Pontone’s legal fees
related to this case became “available to the general public” when counsel for the Pontone
defendants admitted that Batesville paid Scott Pontone’s legal fees related to this case on the
record in open court in the Scott Pontone Delaware case and Batesville in a submission in this
case admitted that “Batesville has and continues to reimburse Scott Pontone and PCC for at least
part of the legal fees they incur in connection with this action.” (ECF No. 563 ¶ 62.)
Accordingly, plaintiffs’ reference to Batesville paying Scott Pontone’s legal fees related to this
case in their submissions to this court does not constitute a violation of the protective order. The
Pontone defendants’ motion for contempt and motion to seal will, therefore, be denied in part
18
with respect to plaintiffs’ references to Batesville paying Scott Pontone’s legal fees related to this
case.
c. The customer lists attached to the consulting agreement list all funeral homes
in the New York Metropolitan region.
Plaintiffs do not dispute that (1) a valid order of the court existed, i.e., the protective
order; and (2) they had knowledge of the protective order. Plaintiffs argue, however, that they
did not violate the protective order because the content of the customer lists attached to the
consulting agreement “merely consist of all of the funeral homes in the New York Metropolitan
region.” (ECF No. 627 at 9.) The Pontone defendants’ motion for contempt with respect to
plaintiffs disclosing the consulting agreement, including the customer lists attached to the
consulting agreement, to Rostocki and Cordrey and the use of consulting agreement in the Scott
Pontone Delaware case is discussed above. With respect to plaintiffs detailing the contents of the
customer lists in their response in opposition to the motion for contempt filed with this court, the
Pontone defendants joined by Batesville showed by clear and convincing evidence that that
action constitutes a violation of the protective order.
Plaintiffs’ argument that the customer lists are not confidential because they “merely
consist of all of the funeral homes in the New York Metropolitan region” lacks merit. (ECF No.
627 at 9.) The consulting agreement and attached customer lists were designated Protected
Material in this case. Pursuant to the protective order, the parties agreed to protect the
confidentiality of those documents. First, to the extent plaintiffs argue the content of the
customer lists are not confidential, the protective order provides a procedure for the parties to
challenge designation of information as “Confidential” or “Attorneys’ Eyes Only.” (ECF No. 69
¶ 8.)9 Second, contrary to plaintiffs’ argument, the customer lists containing all funeral homes in
9
Paragraph eight of the protective order provides:
19
the New York Metropolitan region—as opposed to not containing all funeral homes in the
region—does not automatically render the list non-confidential; indeed, there is no evidence that
the general public knew which funeral homes were listed in the customer lists attached to the
consulting agreement until plaintiffs disclosed the information in its response in opposition to the
Pontone defendants’ motion to compel. Under those circumstances, plaintiffs violated the
protective order when they disclosed the content of the customer lists attached to the consulting
agreement in their response in opposition to the Pontone defendants’ motion to compel.
Accordingly, the Pontone defendants’ motion to seal the response in opposition will be granted
and any reference to the content of the customer lists in plaintiffs’ response in opposition to the
motion for contempt should be redacted. Appropriate sanctions to be imposed upon plaintiffs as
a result of their disclosure of the content of the customer lists will be discussed below.
d. Reference to a loan agreement between Scott Pontone and Batesville dated
April 7, 2013.
The Pontone defendants joined by Batesville allege plaintiffs violated confidentiality
provisions related to the Scott Pontone Delaware case by reference to the loan agreement entered
into between Scott Pontone and Batesville dated April 7, 2013. In light of the Pontone
defendants’ assertions of confidentiality with respect to the loan agreement, the court will grant
the Pontone defendants’ motion to seal with respect to the loan agreement. The Pontone
defendants’ motion for contempt will be denied with respect to the loan agreement, however,
A party challenging a confidentiality designation must request in writing that the
designation be changed. The writing shall set forth the receiving party's basis for
the challenge. The parties shall then meet and confer within 10 days of service of
the written challenge in a good faith effort to resolve the challenge. If the parties
are unable to resolve the challenge through the meet and confer, the challenging
party may, within 10 days of the meet and confer, proceed to move the Court to
resolve the dispute. Until the Court rules on the challenge, all parties shall
continue to afford the material in question the level of protection to which it
would be entitled under the challenged designation.
(ECF No. 69 ¶ 8.)
20
because the confidentiality provisions allegedly applicable to the loan agreement are part of the
Scott Pontone Delaware case and not before this court.
2. Sanctions
The court must “fashion a sanction that will achieve full remedial relief.” John T., 318
F.3d at 554. “Sanctions for civil contempt serve two purposes: ‘to coerce the defendant into
compliance with the court's order and to compensate for losses sustained by the disobedience.’”
Robin Woods, 28 F.3d at 400 (quoting McDonald’s Corp. v. Victory Inv., 727 F.2d 82, 87 (3d
Cir. 1984)). “Compensatory sanctions…must not exceed the actual loss suffered by the party that
was wronged.” Elkin v. Fauver, 969 F.2d 48, 52 (3d Cir. 1992). Here, the Pontone defendants in
their motion for contempt, which was joined by Batesville, argue: “Deterrence is required in this
case as Plaintiffs show no signs of curing their violations of the Protective Order.” (ECF No. 619
at 10.) The Pontone defendants joined by Batesville request, among other things, an order
“directing Plaintiffs to take all steps necessary to cure their violations…and for such other relief
as the Court may deem to be just and proper after the full scope of Plaintiffs’ and Reed Smith’s
violations are ascertained.” (Id.)
As discussed above, attorneys’ fees may be awarded against a party that is held in
contempt; indeed, “‘the cost of bringing the violation to the attention of the court is part of the
damages suffered by the prevailing party and those costs would reduce any benefits gained by
the prevailing party from the court's violated order.’” Robin Woods, 28 F.3d 396 at 400 (quoting
Cook, 559 F.2d at 272). Plaintiffs are, therefore, ordered to pay the Pontone defendants’
attorneys’ fees incurred in bringing to the attention of the court plaintiffs’ violations of the
protective order. Plaintiffs’ obligation to pay is limited to the Pontone defendants’ reasonable
attorneys’ fees incurred preparing the motion for contempt (ECF No. 619), amended motion to
expedite discovery (ECF No. 614), first motion to seal (ECF No. 611), second motion to seal
21
(ECF No. 628), reply brief with respect to the motion for contempt (ECF No. 626), reply brief
with respect to the amended motion to expedite discovery (ECF No. 638), and reply brief with
respect to the first motion to seal (ECF No. 618.) Because Batesville joined in the Pontone
defendants’ motions for contempt and seal, plaintiffs must pay Batesville’s reasonable attorneys’
fees incurred in preparing the motions for joinder. (ECF Nos. 621, 623.) These sanctions, i.e.,
requiring plaintiffs to pay the Pontone defendants’ and Batesville’s reasonable attorneys’ fees,
are compensatory and do not exceed the actual loss suffered by the Pontone defendants or
Batesville.
The Pontone defendants requested expedited discovery relating to the extent of plaintiffs’
violation of the protective order. (ECF Nos. 614, 619.) As an additional sanction, within fourteen
days of the entry of this opinion and accompanying order, each counsel of record for plaintiffs in
this case currently associated with Reed Smith must submit an affidavit addressing: (1) which
documents designated as Protective Material were disclosed for purposes unrelated to this case;
(2) to whom the documents designated as Protective Material were disclosed for purposes
unrelated to this case; (3) when the documents designated as Protective Material were disclosed
for purposes unrelated to this case; and (4) if they know of any other attorney at Reed Smith who
disclosed documents designated as Protective Material for purposes unrelated to this case—the
name of that attorney and to whom and when that attorney disclosed the documents designated
as Protective Material for purposes unrelated to this case.
The issues addressed in the affidavits should be limited to disclosures unrelated to the
above-captioned case. In other words, the affidavits should only address disclosures made for
purposes unrelated to this case, i.e., disclosures in violation of the protective order. Based upon
the imposition of this sanction, the Pontone defendants’ amended motion to expedite discovery
will be denied without prejudice. The Pontone defendants in good faith may renew their request
22
for discovery related to plaintiffs’ violation of the protective order to the extent the affidavits
submitted by counsel of record for plaintiffs implicate a need for additional discovery. 10 The
foregoing sanction, i.e., the payment of attorneys’ fees, properly compensates the Pontone
defendants and Batesville for losses caused by the disobedience of plaintiffs, and requiring
counsel of record for plaintiffs to submit affidavits addressing the extent of plaintiffs’ violation
of the protective order responds to the Pontone defendants’ request for discovery.
With respect to the Pontone defendants’ request that the court order plaintiffs to “cure
their violation,” in light of the court granting plaintiffs’ motion to amend the protective order
infra, the court will not order plaintiffs to withdraw the consulting agreement as an attachment to
their motion to dismiss in the Scott Pontone Delaware case. Based upon the amendments to the
protective order provided for in this opinion and accompanying order, requiring plaintiffs to
withdraw the consulting agreement in the Scott Pontone Delaware case would make needless
work and cause unnecessary expense for the parties and the Delaware court; indeed, pursuant to
the amendments to the protective order provided for in this opinion, plaintiffs may prospectively
use the consulting agreement in the Scott Pontone Delaware case without violating the protective
order.
Based upon the foregoing analysis, the Pontone defendants’ motion for contempt will be
granted in part with respect to the consulting agreement and denied in all other respects.
Plaintiffs will be found in contempt of the protective order, and appropriate sanctions will be
ordered.
V. Motion to Amend the Protective Order
Plaintiffs request paragraph nine of the protective order be amended as follows:
10
The court will not, however, permit a fishing expedition with respect to these or any other
issues. The parties are reminded that discovery in this aged case has ended, and this matter is
scheduled for trial. Unreasonable delay of this case by any party will not be tolerated.
23
9. Protected Material shall not be exhibited, disseminated, copied, or in any way
communicated to anyone for any purpose whatsoever, other than in conjunction
with the above-captioned litigation and the actions entitled Harry Pontone v.
Milso Industries Corp. and The York Group, Inc., Civil Action No. 7615-VCP
and Scott Pontone v. Milso Industries Corp. and The York Group, Inc., Civil
Action No. 8842-VCP, both presently pending in the Court of Chancery of the
State of Delaware. Except as provided for in this Stipulated Protective Order, the
parties shall keep all Protected Material from all persons except as provided for
by the terms of [the] Stipulated Protective Order.
(ECF No. 609 at 7.) The Pontone defendants do not object to an amendment of the protective
order, but they do not agree with the limited nature of amendment proposed by plaintiffs; rather,
the Pontone defendants argue that paragraphs two and nine of the protective order should be
amended to read as follows:
2. This Stipulated Protective Order shall govern the disclosure and use of
“Confidential” information and documents and “Attorneys Eyes Only”
information and documents, as defined in paragraph 5, produced in connection
with this litigation (collectively, “Protected Material”). All information which is –
or has been – produced or discovered in this litigation, regardless of whether
designated “Confidential” or “Attorneys’ Eyes Only,” can be used for the
prosecution or defense of any matter so long as the party involved in that
matter deems the Protected Material relevant to the matter unless the
information is available to the general public without breach of the terms of this
Stipulated Protective Order.
…
9. Protected Material shall not be exhibited, disseminated, copied, or in any way
communicated to anyone for any purpose whatsoever, other than in conjunction
with a matter in which anyone of the parties to this action deems the
Protected Material relevant. Each party who uses the Protected Material for
any matter shall be limited to the filing on the record of only such portions of
the Protected Material that have been cited and which are relied upon by
that party in his or its filings.
(ECF No. 615 at 4.)
Batesville objects to plaintiffs’ proposed amendment to the extent it permits plaintiffs to
use “unspecified confidential Batesville documents produced by Batesville…in Delaware
litigation to which Batesville is not a party.” (ECF No. 620 at 1.)
A. Applicable Law
24
The court has the power to enter protective orders “under the inherent ‘equitable powers
of courts of law over their own process, to prevent abuses, oppression, and injustices.’” Pansy v.
Borough of Stroudsburg, 23 F.3d 772, 785 (3d Cir. 1994) (quoting Seattle Times Co. v.
Rhinehart, 467 U.S. 20, 35 (1984)). “It is well-established that a district court retains the power
to modify or lift confidentiality orders that it has entered.” Pansy, 23 F.3d at 784. “Nevertheless,
simply because courts have the power to grant orders of confidentiality does not mean that such
orders may be granted arbitrarily.” Id. at 785. “The parties may later seek to modify the order as
appropriate at a later stage.” Pearson v. Miller, 211 F.3d 57, 73 (3d Cir. 2000).
B. Discussion
Plaintiffs and the Pontone defendants agree that the protective order entered by the court
in this case should be modified to permit the use of Protected Material in cases other than the
instant case. Plaintiffs argue the protective order should be amended to allow for the use of
Protected Material in this matter and two cases filed in the Delaware Chancery Court, i.e., Harry
Pontone v. Milso Industries Corp. and The York Group, Inc., Civil Action No. 7615-VCP and
Scott Pontone v. Milso Industries Corp. and The York Group, Inc., Civil Action No. 8842-VCP.
(ECF No. 609 at 7.) The Pontone defendants argue for a much broader amendment, i.e., the
protective order should be amended to allow for the use of Protected Material in this matter and
“any matter so long as the party involved in that matter deems the Protected Material relevant to
the matter.” (ECF No. 615 at 4.) Batesville opposes any amendment permitting parties to this
action to use its documents in connection with any litigation to which it is not a party. (ECF No.
620 at 1.)
25
Based upon the proposed amendments submitted by plaintiffs and the Pontone defendants
and the objection raised by Batesville, the court will granted plaintiffs’ motion to amend the
protective order. Paragraph nine of the amended protective order shall read as follows:
9. Protected Material shall not be exhibited, disseminated, copied, or in any way
communicated to anyone for any purpose whatsoever. Documents produced by
plaintiffs and the Pontone defendants in this case, however, may be used in
connection with the actions entitled Harry Pontone v. Milso Industries Corp. and
The York Group, Inc., Civil Action No. 7615-VCP and Scott Pontone v. Milso
Industries Corp. and The York Group, Inc., Civil Action No. 8842-VCP,
(together, the “Delaware cases”), both presently pending in the Court of Chancery
of the State of Delaware, so long as the party using the Protected Material deems
the Protected Material relevant to the matter. Plaintiffs and the Pontone
defendants may not, however, use documents in the Delaware cases that were
produced in this case solely by Batesville without first complying with the
provisions of this Stipulated Protective Order. Except as provided for in this
Stipulated Protective Order, the parties shall keep all Protected Material from all
persons except as provided for by the terms of the Stipulated Protective Order.
This amendment reflects, at least in part, the amendments proposed by plaintiffs and the Pontone
defendants and the objection raised by Batesville. The amendment to the protective order is
prospective and has no bearing on the resolution of the Pontone defendants’ motion for
contempt. In other words, amendment will not retroactively cure any breach of the protective
order. The court notes, however, that it would be wasteful of judicial resources for plaintiffs to
withdraw and then refile a motion or submission in the Delaware case that refers to or attaches a
document which may be disclosed under this amendment.
VI. Motion to Compel and For Costs
Plaintiffs in the response in opposition to the motion for contempt assert a cross-motion
to compel and for costs.11 (ECF No. 627 at 12.) Plaintiffs argue that in the Scott Pontone
11
In plaintiffs’ response in opposition to the motion for contempt, plaintiffs request their costs
for responding to the Pontone defendants’ motion for contempt because it is a “baseless motion.”
(ECF No. 627 at 12.) Because the motion for contempt is meritorious, plaintiffs’ request for costs
will be denied.
26
Delaware case, Scott Pontone attached as an exhibit to his complaint a loan agreement he entered
into with Batesville on April 7, 2013 (the “loan agreement”). (Id.) Plaintiffs argue the loan
agreement should have been produced by Scott Pontone and Batesville because it is responsive
to a number of plaintiffs’ discovery requests. (Id. at 13.)
Batesville argues in response to plaintiffs’ motion to compel that: (1) “a contract that was
executed more than two years after [plaintiffs] served their discovery requests” cannot be
responsive to the discovery requests; (2) plaintiffs have not demonstrated why the loan
agreement is relevant to the claims and defenses in this case; (3) plaintiffs did not attach a
certification to their motion to compel indicating they conferred with the Pontone defendants and
Batesville prior to filing the motion to compel; and (4) Batesville and the Pontone defendants do
not have an obligation to supplement their discovery responses with a document that did not
exist at the time the discovery responses were sent and received. (ECF No. 637 at 2-4.)
The Pontone defendants in their response in opposition to the motion to compel argue: (1)
this court previously denied plaintiffs’ attempt to obtain discovery with respect to the amount of
Scott Pontone’s attorneys’ fees that are being paid by Batesville; (2) the loan agreement is not
relevant to the claims or defenses raised in this case; and (3) plaintiffs did not include with their
cross-motion to compel a certification that they in good faith conferred with the Pontone
defendants to obtain the loan agreement without court intervention as required by Federal Rule
of Civil Procedure 37(a)(1). (ECF No. 688 at 4.)
The parties’ arguments will be addressed below.
A. Applicable Law
The court also notes that it was procedurally improper for plaintiffs to raise a motion in a
responsive briefing. The parties shall not include requests to the court in responsive briefing; all
requests to the court should be made in a proper motion filed on the court’s docket.
27
“Unless otherwise limited by court order,” the scope of discovery extends to all
nonprivileged matter that is relevant to a claim or defense. FED. R. CIV. P. 26(b)(1). For “good
cause,” the court may extend discovery beyond matter which is relevant merely to claims and
defenses—to “any matter relevant to the subject matter involved in the action.” Id. “Relevant
information need not be admissible at the trial if the discovery appears reasonably calculated to
lead to the discovery of admissible evidence.” Id.
Notwithstanding the broad scope of discovery established by Rule 26(b)(1), the trial court
is “vest[ed] . . . with broad discretion to tailor discovery narrowly.” Crawford-El v. Britton, 523
U.S. 574, 598-99 (1998); see FED. R. CIV. P. 26(b). The court is required to limit the frequency
or extent of discovery upon determining that: (1) “the discovery sought is unreasonably
cumulative or duplicative, or can be obtained from some other source that is more convenient,
less burdensome, or less expensive;” (2) “the party seeking discovery has had ample opportunity
to obtain the information by discovery in the action; or;” (3) “the burden or expense of the
proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in
controversy, the parties' resources, the importance of the issues at stake in the action, and the
importance of the discovery in resolving the issues.” FED. R. CIV. P. 26(b)(2)(C). Additionally,
upon motion the court may limit the time, place, and manner of discovery, or even bar discovery
altogether on certain subjects, as required “to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense.” FED. R. CIV. P. 26(c).
“The conduct of discovery is a matter for the discretion of the district court and its
decisions will be disturbed only upon a showing of an abuse of this discretion.” Wisniewski v.
Johns-Manville Corp., 812 F.2d 81, 90 (3d Cir. 1987) (citing Marroquin-Manriquez v. I.N.S.,
699 F.2d 129, 134 (3d Cir. 1983)). The district court abuses its discretion with regard to
managing discovery, when its ruling “deprive[s] [a party] of crucial evidence, or otherwise
28
constitute[s] a ‘gross abuse of discretion resulting in fundamental unfairness.’” Wisniewski, 812
F.2d at 90 (quoting Marroquin-Manriquez, 699 F.2d at 134).
“In order to succeed a motion to compel discovery, a party must first prove that it sought
discovery from its opponent.” Petrucelli v. Bohringer & Ratzinger, 46 F.3d 1298, 1310 (3d Cir.
1995). Under Federal Rule of Civil Procedure 37(a)(1), this requires certification that the movant
conferred or attempted to confer with the entity objecting to discovery in good faith prior to
resorting to court action.12
B. Discussion
On June 18, 2014, the Pontone defendants provided the court a copy of the loan
agreement for the court’s in camera review. (ECF No. 695.) The subject matter of the loan
agreement is the payment of Scott Pontone’s legal fees related to the above-captioned case and
the Scott Pontone Delaware case. (Id.)
On December 13, 2012, the court ordered plaintiffs to disclose to the Pontone defendants
the amount of attorneys’ fees and expenses they incurred in this case as of that date. (ECF No.
444.) On December 18, 2012, plaintiffs filed a motion for reconsideration asking the court to
reconsider its decision ordering plaintiffs to disclose their attorneys’ fees to the Pontone
defendants or in the alternative, “require Defendants to disclose their attorneys’ fees and
expenses to date, including the amount of the Pontone Defendants’ fees being paid by Batesville,
so that the amount of Plaintiffs’ attorneys’ fees may be viewed in context.” (ECF No. 426 at 12.) At a hearing on December 19, 2012, the court denied plaintiffs’ motion for reconsideration
12
Federal Rule of Civil Procedure 37 provides:
(1) In General. On notice to other parties and all affected persons, a party may
move for an order compelling disclosure or discovery. The motion must include a
certification that the movant has in good faith conferred or attempted to confer
with the person or party failing to make disclosure or discovery in an effort to
obtain it without court action.
FED. R. CIV. P. 37(a)(1).
29
and their request for the Pontone defendants’ attorneys’ fees. (ECF No. 445 at 45.) With respect
to the request for the Pontone defendants’ attorneys’ fees, counsel for plaintiffs argued, among
other things:
Now, the amount of fees and the allocation is very relevant to a number of items,
if you're going to find anything is relevant, but, for example, the fact that
Batesville may be paying for fees pursuant to an indemnification agreement
would be relevant and probative of whether or not they have aided and abetted the
Pontones' conduct and what the level of their knowledge was relative to what the
Pontones might be doing.
(ECF No. 445 at 42.) The court denied plaintiffs’ request because plaintiffs did not request the
information they sought from the Pontone defendants. (Id. at 45) (“You never asked for it. You
never moved to compel if you did ask for it.”)
The loan agreement sought by plaintiffs in the motion to compel addresses the exact
subject matter plaintiffs raised with the court during the December 19, 2012, hearing, i.e.,
Batesville’s payment of Scott Pontone’s attorneys’ fees related to this case. As the court noted at
the hearing on December 19, 2012, plaintiffs never requested that information from the Pontone
defendants during the lengthy period of fact discovery in this case. For the same reasons set forth
on the record during the December 19, 2012 hearing, plaintiffs’ motion to compel will be denied.
VII.
Conclusion
For the reasons set forth in this opinion:
Plaintiffs’ Motion to Amend the Protective Order (ECF No. 609) will be
GRANTED;
Pontone defendants’ First Motion to Seal (ECF No. 611) will be
GRANTED in part;
Pontone defendants’ Motion for Contempt (ECF No. 619) will be
GRANTED in part;
Pontone defendants’ Amended Motion to Expedite Discovery (ECF No.
614) will be DENIED without prejudice;
30
Plaintiffs’ Motion to Compel and for Costs (ECF No. 627) will be
DENIED; and
Pontone defendants’ Second Motion to Seal (ECF No. 628) will be
GRANTED in part.
An appropriate order will be entered.
BY THE COURT,
Dated: August 1, 2014
/s/ JOY FLOWERS CONTI
Joy Flowers Conti
Chief United States District Judge
31
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