LABMD, INC. v. TIVERSA HOLDING CORP. et al

Filing 30

OPINION AND ORDER granting 23 Sealed Motion; denying 26 Motion for Disclosure of Plaintiff's Original RICO Case Statement and co-Defendant's Unredacted Motion to Modify; however, as more fully set forth in the Opinion and Order, IT I S FURTHER ORDERED that execution of this Order modifying the docket as set forth below shall be stayed until the expiration of the fourteen-day (14) period permitted under the Magistrate Judges Act, 28 U.S.C. § 636(b)(1), and Rule 72.C.2 of the Local Rules of Court, to file an appeal from this Order to the District Judge, and, in the event an appeal is filed from this Order, this Order shall be stayed until the resolution of such an appeal;IT IS FURTHER ORDERED that in the absence of an app eal filed on or before April 1, 2015, the Clerk shall unseal ECF No. 18 and all exhibits thereto, docket ECF No. 19 as Plaintiffs Amended RICO Case Statement, and unseal ECF Nos. 23 and 24, Defendants' Motion to Modify and Brief in Support. Signed by Magistrate Judge Maureen P. Kelly on 3/17/2015. (ndf )

2IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA

LABMD, INC.,
Plaintiff,
vs.

TIVERSA HOLDING CORP. formerly
known as TIVERSA, INC.; ROBERT J.
BOBACK; M. ERIC JOHNSON; DOES
1-10,
Defendants.

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Civil Action No. 15-92
Judge Mark R. Hornak/
Chief Magistrate Judge Maureen P. Kelly
Re: ECF Nos. 21, 23 and 26

OPINION AND ORDER
KELLY, Chief Magistrate Judge

I.

FACTUAL AND PROCEDURAL BACKGROUND
In a new chapter of the ongoing litigation between the parties, 1 Plaintiff LabMD, Inc., a

Georgia corporation (“LabMD”) has filed this civil action stating claims for conversion,
defamation, interference with business relations, fraud, negligent misrepresentation, conspiracy
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Litigation between the parties previously commenced in Georgia state court, was removed to
the United States District Court for the Northern District of Georgia, and was subsequently
dismissed for lack of personal jurisdiction. LabMd v. Tiversa, Inc., No. 11-4044 (N.D. Ga. Aug.
15, 2012), aff’d, 509 F. App’x 842 (11th Cir. Feb. 5, 2013). Thereafter, Tiversa filed an action in
this Court against LabMd pleading state law claims for defamation, slander per se, commercial
disparagement and trade libel. Tiversa Holding Corp. v. LabMD, Inc., No. 13-1296 (W.D. Pa.
Sept. 5, 2012). On November 4, 2014, Judge Nora Barry Fischer dismissed Tiversa’s action for
lack of diversity jurisdiction, upon the addition of Richard Edward Wallace, a Pennsylvania
resident, as a named defendant. (ECF No. 84). Tiversa is now pursuing its claims in a separate
consolidated action in the Pennsylvania Court of Common Pleas of Allegheny County, at GD14-16497, before Judge Christine Ward. Also pending and arising out of the subject matter of
this action is an administrative action commenced by the Federal Trade Commission, In the
Matter of LabMD, Inc., No. 9357 (F.T.C.).
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and a claim for the violation of the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. § 1962(c).
Plaintiff’s claims arise out of an alleged shakedown scheme, whereby Defendant Tiversa,
Inc., a Pennsylvania corporation, (“Tiversa”), Defendant Robert J. Boback, a Pennsylvania
resident (“Boback”), and Defendant M. Eric Johnson, a New Hampshire resident (“Johnson”)
conspired to infiltrate LabMD’s computer systems and, upon gaining access, created a data
security breach in LabMD’s confidential patient health-related computer files. Tiversa then
offered to sell LabMD services to remedy the security breach that Tiversa created. When
LabMD refused to purchase Defendant Tiversa’s services, Defendants turned to the Federal
Trade Commission and reported that due to LabMD’s failed data security protocols, confidential
patient health and personal information was disseminated on peer to peer networks, for unbridled
use by identity thieves. Tiversa informed the FTC that its analysis of LabMD’s data security led
it to conclude that LabMD was in violation of federal privacy rules and regulations.
LabMD alleges that as a result of Defendants’ conduct, the Federal Trade Commission
initiated a public and wide-ranging investigation, leaving LabMD “an insolvent shell of a
company.” LabMD further alleges that an ongoing investigation by the United States House of
Representatives Committee on Oversight and Governmental Reform revealed that Tiversa
inaccurately provided information to the Federal Trade Commission, and that Tiversa benefitted
commercially from federal investigations of several companies that were initiated upon Tiversa’s
reports of security data breaches. This revelation appears predicated upon statements allegedly
made a former Tiversa employee. (ECF No. 1, ¶ 31). It would further appear that at least one
former Tiversa employee has been provided a grant of immunity by the United States Attorney
General, and is expected to testify in the coming weeks before the Federal Trade Commission, in

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its pending action against LabMD. In the Matter of LabMD, Inc., No. 9357, 2014 WL 7495797
(F.T.C.) (Dec. 29, 2014).
Having recognized the history between LabMD and Tiversa, the Court now addresses
two pending motions. The first is a Motion to Modify Docketing of Errata at ECF 18 and 19
filed by Tiversa (ECF Nos. 21, 23), and the second is a Motion for Disclosure of Plaintiff’s
Original RICO statement and co-Defendant’s Unredacted Motion to Modify by M. Eric Johnson
(ECF No. 26).
On February 18, 2015, pursuant to Local Rule 7.1B, LabMD filed its “RICO Case
Statement,” setting forth with specificity the facts underlying its RICO related claims against
each of the Defendants. ECF No. 18. Plaintiff attached Exhibit P to the RICO Case Statement,
which is a publicly available Order of Chief Administrative Law Judge D. Michael Chappell.
Also attached to the RICO Case Statement, at Exhibit Q, is an executed fact-laden Affidavit,
dated April 17, 2014.
Several hours after LabMD filed the RICO Case Statement, an “Errata” containing an
amended version of the RICO Case Statement was filed on the docket at ECF No. 19. The
amendment removes any reference to the contents of Exhibits P and Q, and indicates that the
documents have been “Removed.” The docket entry further states: “Reason for Correction:
Inadvertent filing of privileged draft.” An entry by a Clerk’s Office staff member notes that ECF
No. 18 has been removed from public view. In pertinent part, the Errata is an amended version
of the RICO Case Statement and appears to revise LabMD’s allegations as to how and when it
learned of Defendants’ alleged fraudulent concealment.
Later that day, counsel for LabMD wrote a letter to counsel for Defendants, stating that in
accordance with the notification requirements of Rule 26(b)(5)(B) of the Federal Rules of Civil

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Procedure, counsel was reporting an inadvertent disclosure of privileged matter which was filed
on the docket at ECF No. 18, and that upon notification to the Court of the inadvertent filing, the
privileged draft was removed and “timely replaced with the final filed version.” (ECF No. 24-2).
Plaintiff’s counsel requested that any copies accessed by Defendants be destroyed.
Counsel for Tiversa responded, requesting the legal basis for LabMD’s assertion of
privilege, and noting that the cited Federal Rule of Civil Procedure pertains to discovery
materials, which on its face, would not apply to the retracted documents. (ECF No. 24-3).
Counsel for LabMD replied, expressing disappointment in the lack of “professional courtesy,”
and claiming that the draft RICO Case Statement is not a pleading, but is required by LR 7.1B as
“another mandatory Initial Disclosure under Fed. R. Civ. P. 26(a)(1).” Citing Fed. R. Evid.
502(b) and Rule 4.4(b) of the Model Rules of Professional Conduct as adopted in Pennsylvania,
counsel claimed the documents are attorney work-product, and also claiming that the documents
include “information that was provided in confidence by Plaintiff to its counsel for purposes of
this representation.” (ECF No. 24-4). The correspondence between counsel reveals the
anticipated necessity for resort to this Court to resolve the issue.
Subsequently, a telephone call was received at the Chambers of the undersigned from
counsel for Tiversa, requesting a conference addressing the removal of the original RICO Case
Statement as well as Exhibits P and Q. Counsel was instructed to file the pending Motion to
Modify the Docket, and was provided a briefing schedule, which was also communicated to
counsel for LabMD by telephone.
Given the absence of a Motion to Seal pursuant to Standing Order 2:05-mc-45 of the
United States District Court for the Western District of Pennsylvania and/or a related Order,
Chambers’ staff contacted the Clerk’s Office to determine how the documents at ECF No. 18

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came to be removed from public view. It was reported that a secretary for LabMD’s local
counsel contacted the Clerk’s Office and stated that she had inadvertently filed a draft of the
RICO Case Statement. She requested that she be permitted to file the correct version, which
omitted Exhibits P and Q, and any references thereto. She also requested that the originally filed
version be removed from public view. The Clerk’s Office honored the request, and the
documents were sealed and removed from public view. The Court notes that LabMD is presumed
to have knowledge of the procedures for sealing documents filed of record as implemented
through the Local Rules for the United States District Court for the Western District of
Pennsylvania, given that LabMD has previously filed appropriate motions. See e.g. No. 13-1296,
ECF No. 54.
On February 26, 2015, Tiversa and Boback filed an “Unopposed Motion for Leave to File
Under Seal.” (ECF No. 20). The Motion explained the procedural irregularity at issue as well as
LabMD’s position that the originally filed RICO Case Statement and Exhibits P and Q were
privileged and/or subject to protection afforded by the attorney work-product doctrine. The
Motion explained that Tiversa intended to file a Motion to Modify Docketing of ECF No. 18 and
19 to strike the Errata or, in the alternative, to compel production of the redacted documents.
Upon the granting of Tiversa’s Motion for Leave to File Under Seal (Text Order dated
February 27, 2015), Tiversa and Boback filed the pending motion (ECF No. 23) and brief in
support (ECF No. 24). On March 5, 2015, counsel for M. Eric Johnson entered his appearance
and filed a “Motion for Disclosure of Plaintiff’s Original RICO Statement and co-Defendant’s
Unredacted Motion to Modify.” (ECF No. 26). LabMD has responded to both pending motions,
which are now ripe for review.

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II.

STANDARD OF REVIEW
The standard applicable to the inadvertent disclosure of privileged material is set forth at

Rule 502 of the Federal Rules of Evidence. Rule 502 provides, in relevant part, that, when an
inadvertent disclosure of privileged material is made in a federal proceeding, the disclosure does
not operate as a waiver if:
(1) the disclosure is inadvertent;
(2) the holder of the privilege or protection took reasonable steps to prevent
disclosure; and
(3) the holder promptly took reasonable steps to rectify the error, including (if
applicable), following Federal Rule of Civil Procedure 26(b)(5)(B).

Fed.R.Evid. 502(b). The analysis involves a two-step process: “‘[f]irst, it must be determined
whether the documents in question were privileged or otherwise protected and second, if
privileged documents are produced then a waiver occurs unless the three elements of FRE 502(b)
are met.’” Gilson v. Pennsylvania State Police, No. 12-CV-00002, 2015 WL 403181, at *1-2
(W.D. Pa. Jan. 30, 2015)(quoting Wise v. Washington Cty., Civ. No. 10–1677, 2013 WL
4829227, at *2 (W.D. Pa. Sept.10, 2013) and Rhoades v. Young Women's Christian Ass’n of
Greater Pittsburgh, Civ. No. 09–261, 2009 WL 3319820, at *2 (W.D. Pa. 2009) (alteration in the
original)). Further, “the disclosing party has the burden of proving that each of Rule 502(b)’s
elements has been satisfied.” Id. (citing Wise, 2013 WL 4829227, at *2 and Rhoades, 2009 WL
33319820, at *2).
Courts in this Circuit also consider the following factors in determining whether waiver
has occurred: (1) the reasonableness of the precautions taken to prevent inadvertent disclosure in
view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the
extent of the disclosure; (4) any delay and measures taken to rectify the disclosure; and (5)
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whether the overriding interests of justice would or would not be served by relieving the party of
its errors. See Gibson, 2015 WL 403181, at *2, (citing Wise, 2013 WL 4829227, at *2 (W.D. Pa.
Sept.10, 2013); Rhoades, 2009 WL 3319820, at *2; Smith v. Allstate Ins. Co., 912 F.Supp.2d
242, 247 (W.D. Pa. 2012)); Carlson v. Carmichael, Civ. No. 10–3579, 2013 WL 3778356, at *2
(E.D. Pa. July 19, 2013); Fed. R. Evid. 502 Advisory Committee’s Note; Rhoads Indus., Inc. v.
Bldg. Materials Corp. of Am., 254 F.R.D. 216, 219 (E.D. Pa. 2008)).
LabMD also relies upon Rule 26(b)(5)(B), which provides:
If information produced in discovery is subject to a claim of privilege or of
protection as trial-preparation material, the party making the claim may notify any
party that received the information of the claim and the basis for it. After being
notified, a party must promptly return, sequester, or destroy the specified
information and any copies it has; must not use or disclose the information until
the claim is resolved; must take reasonable steps to retrieve the information if the
party disclosed it before being notified; and may promptly present the information
to the court under seal for a determination of the claim. The producing party must
preserve the information until the claim is resolved.

III.

DISCUSSION
A. Whether the documents are privileged?
Tiversa seeks to strike the Errata filing and reinstate the original RICO Case Statement,

contending that the Exhibit Q Affidavit “undermines Plaintiff’s allegations and exposes the
factual predicate of how Plaintiff learned of the purported fraud alleged in this case.” ECF No.
24, p. 1. LabMD, as the party with the burden of proof under F.R.E. 502(b), claims that the
original RICO Case Statement, including the exhibits thereto, constitute an inadvertently filed
“draft” and are privileged attorney work-product. LabMD further argues that the executed
Affidavit and publically available FTC hearing Order are also privileged, because the decision to
include these documents is an indication of counsel’s thought processes and litigation strategy.
(ECF No. 27, p. 4).
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The doctrine of work-product immunity “‘shelters the mental processes of the attorney,
providing a privileged area within which he can analyze and prepare his client’s case.’” In re
Grand Jury (Impounded), 138 F.3d 978, 981 (3d Cir. 1998) (quoting United States v. Nobles,
422 U.S. 225, 238 (1975)). The work-product doctrine “promotes the adversary system directly
by protecting the confidentiality of papers prepared by or on behalf of attorneys in anticipation of
litigation. Protecting attorneys’ work product promotes the adversary system by enabling
attorneys to prepare cases without fear that their work product will be used against their clients.”
In re Chevron Corp., 633 F.3d 153, 164 (3d Cir. 2011), Westinghouse Elec. Corp. v. Republic of
the Phil., 951 F.2d 1414, 1428 (3d Cir. 1991) (citations omitted).
Taking at face value LabMD’s claim that the originally filed RICO Case Statement is a
“draft” pleading, clearly prepared in the course of litigation, it would appear that the workproduct doctrine protects against disclosure. However, given the circumstances in which the
document was made public, the Court finds the protection afforded under the work-product
doctrine has been waived. 2
B. Whether privilege was waived?
1. Inadvertance
Applying the criteria set forth in Rule 502(b), as well as the related factors employed in
this Circuit, LabMD has not met its burden of proving that it is entitled to the protection afforded
by the attorney work-product doctrine. LabMD presents no evidence to support its claim that
filing the documents with the Court was inadvertent and not the result of a post-filing change in

2

Given this disposition, the Court will save for another day whether a publicly available Order
filed on the FTC docket is privileged, as well as whether any privilege attaches to a fact-laden
fully executed party Affidavit signed “under penalty of perjury.” See e.g. Bell v. Lackawanna
County, 892 F. Supp.2d 647, 661-62 (M.D. Pa. 2012), and cases cited therein.
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strategy. The documents do not bear a “DRAFT” stamp or notation, and the originally filed
RICO Case Statement is a fully executed complete document, accompanied by an appropriate
Certificate of Service, bearing an electronic signature. Thus, there is no basis for the Court to
weigh the blanket assertion that the originally filed RICO Case Statement is a draft document not
intended to be filed on the public docket.
2. Reasonableness of Precautions
With regard to precautions taken to prevent inadvertent disclosure, LabMD again
presents no evidence as to procedures typically employed by counsel to ensure that drafts are
segregated and protected, and that documents filed with the Court are reviewed by the
responsible attorney prior to submission. Faced with a similar paltry state of evidence as to
protective measures employed by counsel, privilege was deemed waived by Judge Fischer in
Wise, supra:
Defendants have presented little evidence about the precautions taken to prevent
the inadvertent disclosure. Mr. Joyal explains that it is the practice of his office to
scan all documents received in a case in order to easily attach them to e-mails and
court filings. (Docket No. 156, at ¶ 7). Because his usual secretary had been on
vacation at the time the inadvertent disclosure were made, he believes that all the
inadvertently disclosed documents were e-mailed to Plaintiff’s counsel by a
substitute secretary. (Docket No. 156, at ¶ 15). Nothing in his affidavit indicates
how he supervises his subordinates or whether he performs a final review prior to
transmission in order to guard against inadvertent disclosures. During oral
argument, Mr. Joyal was unable to speak to the general practice of other attorneys
in his law firm or at Travelers Insurance with respect to preventing inadvertent
disclosures. (Docket No. 162, at 16). While he represented that in the normal
course of events there would be an attorney who would review documents before
they were sent to opposing counsel, there was no attorney with knowledge of the
case who reviewed the documents in this instance because the disclosure took
place during the holidays, when a number of attorneys and staff were out of the
office. Id. at 16–17.
An attorney’s responsibilities, however, do not take a holiday. Nothing prevented
Mr. Joyal from asking another attorney in the office to review what the substitute
secretary planned to forward to Plaintiff's counsel and to call him (even on his
holiday vacation) in order to properly vet the disclosure before submission to his
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opponent. Alternatively, nothing prevented him from seeking an extension until
after his holiday vacation at which time he could have personally reviewed the
challenged documents.

Wise, 2013 WL 4829227, at *2-3. Here, LabMD presents no evidence to weigh precautionary
measures taken, or to determine whether the filing occurred due to an inappropriate delegation to
administrative staff or some mishap otherwise within the control of counsel. Therefore,
consideration of this factor weighs in favor of finding waiver.
Along with the reasonableness of precautions taken to prevent inadvertent disclosure, the
Court also considers the number of documents disclosed. In this case, LabMD filed one
document with two exhibits, a number readily within the ability of counsel to review prior to
filing. This is not a situation where a small number of documents are overlooked in the course of
a mass document production, entitling counsel to more deference. In Smith v. Allstate Ins. Co.,
912 F. Supp. 2d 242, 248 (W.D. Pa. 2012), the Court found an insurer “narrowly satisfied its
burden” under Rule 502(b) and did not waive privilege where seven documents containing
privileged information were served with more than 1,200 pages of documents in response to
Plaintiff's Request for Production of Documents. In such an instance, inadvertence may be
understandable given the number of documents to be examined before production. See, e.g.,
McGreevy v. CSS Industries, Inc., No. 95-CV-8063, 1996 WL 412813 at *2 (E.D. Pa. July 17,
1996)(small number of documents produced weighs in favor of a finding of waiver when
assessing care exercised to protect privilege); Advanced Med., Inc. v. Arden Med. Sys., Inc., No.
87-CV-3059, 1988 WL 76128, at *2 (E.D. Pa. July 18, 1988)(in extraordinary situations such as
expedited discovery or massive document exchanges, a limited inadvertent disclosure will not
necessarily result in a waiver). Accordingly, this factor too weighs in favor of finding waiver.

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The Court also considers dispositive the extent of the disclosure, which in this case
involved the publication of the document on the docket of this action. In McGreevy, supra, the
Court found that the inclusion of a privileged document in a court filing “gives rise to a
presumptive right of public access. Thus, regardless of counsel’s intent, the filing of the
[document] as a judicial document places it in the public domain and is inconsistent with a claim
of privilege.” McGreevy, 1996 WL 412813, at *3; see also, J.N. v. S. W. Sch. Dist., 14-CV0974, 2014 WL 4792260, at *11 n.14 (M.D. Pa. Sept. 24, 2014)(filing a document with the court
“is inconsistent with a claim of privilege” and generally results in waiver).
The Court in J.N. v. S. W. Sch. Dist., cited with approval United States v. Gangi, 1 F.
Supp. 2d 256, (S.D.N.Y. 1998), where the Court found waiver of attorney work product privilege
with regard to the unintentional filing of an internal Prosecution Memorandum with the Court in
conjunction with an indictment. The Prosecution Memorandum set forth the Government’s legal
theories, anticipated witness list, alleged victims and cooperating witnesses, and summarized
anticipated testimony. Unfortunately, through a series of preventable errors, the Prosecution
Memorandum was attached to the Indictment and turned over to the Court for distribution, where
it was copied and provided to counsel for two defendants. The Court considered several factors
including the failure of counsel to act with due care by labeling the document “confidential,” the
failure to provide instructions to agents with regard to the sensitive nature of the document and,
most damning, the public filing of the document. The Court determined that there had been a
waiver of attorney work product protection. Id. at 267. In reaching its decision, the Court found
persuasive other instances where the public filing of attorney work product was deemed to waive
any protection afforded.
The case most analogous to this case is Carter v. Gibbs, 909 F.2d 1450 (Fed. Cir.
1990). There, the Government inadvertently appended an internal DOJ
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memorandum, containing attorney work product, to the copy of a Government
brief that was served on the opposing party in a civil case. The court held that the
Government had waived the work product privilege. Adopting a strict approach,
the court ruled that it was “irrelevant” that the disclosure was inadvertent,
observing that:
[The] purpose [of the work product privilege] is to prevent the
disclosure of an attorney’s mental impressions and thought
processes either to an opponent in the litigation for which the
attorney generated and recorded those impressions, or to a third
party with interests not ‘common’ to those of the party asserting
the privilege....

... Voluntary disclosure of attorney work product to an adversary in
the litigation for which the attorney produced that information
defeats the policy underlying the privilege.... Granting the motion
would do no more than seal the bag from which the cat has already
escaped.
Id. at 1451 (emphasis added) (citations omitted); accord In re Sealed Case, 877
F.2d 976, 980 (D.C. Cir. 1989) (“[I]f a client wishes to preserve the privilege, it
must treat the confidentiality of attorney-client communications like jewels—if
not crown jewels. Short of court-compelled disclosure, or other equally
extraordinary circumstances, we will not distinguish between various degrees of
‘voluntariness’ in waivers of ... privilege.”) (citation and footnote omitted); FDIC
v. Singh, 140 F.R.D. 252, 253 (D.Me.1992) (applying strict accountability rule
because “[o]ne cannot ‘unring’ a bell”).

U.S. v. Gangi, at 263-64. See also Vardon Golf Co. v. Karsten Mfg. Corp., 213 F.R.D. 528, 53334 (N.D. Ill. 2003)(finding waiver where otherwise protected material was disclosed to a party in
a public document). Here, the voluntary and complete disclosure of the original RICO statement
on the public docket and to at least two Defendants weighs most heavily in favor of finding
waiver.
3. Delay and measures taken to rectify disclosure
The sole Rule 502(b) factor weighing against a finding of waiver is the absence of
substantial delay in attempting to “claw back” the originally filed RICO Case Statement. The

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docket reflects that the revised version of the RICO Case Statement was filed on the same day as
the original. However, the manner chosen by counsel to rectify the situation cannot be
countenanced. It is apparent that an end-run around the Court and opposing counsel was
attempted through an ex parte call to the Clerk of Court’s docketing office by the secretary of
LabMD’s counsel. 3 The appropriate procedure to seal the originally filed RICO Case Statement
would have entailed the filing of a Motion to Withdraw and a Motion to Seal, pursuant to
Standing Order 2:05-mc-45 of the United States District Court for the Western District of
Pennsylvania, seeking expedited review, so that any claimed privilege could have been addressed
in due course with appropriate notice to the Court and to all parties. 4
3

The local rules require leave of court to seal a publicly filed document and thereby take into
consideration that there is a presumption of access to judicial records. See In re Cendant Corp.,
260 F.3d 183, 194 (3d Cir. 2001). A party seeking to seal a portion of the judicial record bears
the burden of demonstrating that “disclosure will work a clearly defined and serious injury to the
party seeking disclosure.” Hart v. Tannery, 461 F. App’x 79, 81 (3d Cir. 2012), quoting Miller v.
Ind. Hosp., 16 F.3d 549, 551 (3d Cir.1994).
4

See, e.g., In re Sleepmaster Fin. Corp., 284 B.R. 411, 414 (Bankr. D. Del. 2002), where counsel
attempted to correct a filing belatedly discovered to contain incorrect information:
Counsel contacted the Clerk’s Office to try and remedy the Debtors’ error. This
was inappropriate. The Clerk's Office is not to take directions from counsel.
Further the directions given by counsel in this case were wrong. The Clerk’s
Office should not have marked the docket entry for that pleading as “Entered in
Error.” The pleading was not entered on the docket in error; it was properly
docketed in this case because it was a pleading filed in this case. A designation of
“Entered in Error” is proper only where the pleading was erroneously entered on
the docket in the wrong case (because, for example, the case number was
erroneous or it was docketed in the main case when it should have been docketed
in the adversary) or where the document actually filed is not what the docket
reflects, in which case a corrective entry should be noted on the docket.
In this case, however, once the Certificate of No Objection was filed of record by
counsel, it could not properly be removed from the file or the docket. The only
proper procedure to avoid the effect of that filing was for counsel for the Debtors
to file a Motion or Notice withdrawing that pleading.
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Under the circumstances presented, it is evident that LabMD has not met its burden under
Rule 502(b) to show reasonable precautions, if any, to prevent inadvertent disclosure, or to
establish that the filing in fact was inadvertent and not reflective of a late in the day change of
strategy. Based on the foregoing, the Court grants the Motion to Modify Docketing of Errata at
ECF No. 18 and 19 (ECF No. 23). However, the Court will require that the documents at issue
remain sealed from public view until the expiration of the appropriate time for an appeal from
this Order to a District Judge. If no appeal of this Order is filed by April 1, 2015, the Clerk will
be directed to unseal ECF No. 18 and all exhibits thereto, docket ECF No. 19 as Plaintiff’s
Amended RICO Case Statement, and unseal ECF Nos. 23 and 24, Defendants Motion and Brief
in Support. An appropriate Order follows.
ORDER
AND NOW, this 17th day of March 2015, upon consideration of the Motion to Modify
Docketing of Errata at ECF 18 and 19 (ECF No. 23), and the briefs filed in support and in
opposition thereto, and upon consideration of the Motion for Disclosure of Plaintiff’s Original
RICO Statement and co-Defendants’ Unredacted Motion to Modify” (ECF No. 26) and
Plaintiff’s response in opposition thereto, IT IS HEREBY ORDERED as follows:
1. Defendants’ Motion to Modify Docketing of Errata at ECF 18 and 19 (ECF No. 23) is
GRANTED;
2. IT IS FURTHER ORDERED that execution of this Order modifying the docket as set
forth below shall be stayed until the expiration of the fourteen-day (14) period permitted
under the Magistrate Judges Act, 28 U.S.C. § 636(b)(1), and Rule 72.C.2 of the Local
Rules of Court to file an appeal from this Order to the District Judge, and, in the event an

14

appeal is filed from this Order, this Order shall be stayed until the resolution of such an
appeal;
3. IT IS FURTHER ORDERED that in the absence of an appeal filed on or before April 1,
2015, the Clerk shall unseal ECF No. 18 and all exhibits thereto, docket ECF No. 19 as
Plaintiff’s Amended RICO Case Statement, and unseal ECF Nos. 23 and 24, Defendants
Motion and Brief in Support; and
4. IT IS FURTHER ORDERED that the Motion for Disclosure of Plaintiff’s Original RICO
Statement and co-Defendants’ Unredacted Motion to Modify” (ECF No. 26) filed on
behalf of Defendant M. Eric Johnson is denied without prejudice subject to the resolution
of an appeal of this Order, if any.

BY THE COURT:

/s/ Maureen P. Kelly
MAUREEN P. KELLY
CHIEF UNITED STATES MAGISTRATE JUDGE

cc:

All counsel of record by Notice of Electronic Filing

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