In re: Receiver for Ronnie Gene Wilson and Atlantic Bullion & Coin Inc
ORDER and OPINION denying 223 Motion to Vacate 222 Order on Motion for Protective Order ; 223 Motion to Expedite. Signed by Honorable J Michelle Childs on 6/12/17.(alew, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
In re: Receiver for
Ronnie Gene Wilson and
Atlantic Bullion & Coin, Inc.
Civil Action No.: 8:12-cv-02078-JMC
ORDER AND OPINION
The court-appointed Receiver in this matter, Beattie B. Ashmore (the “Receiver”), has been
empowered by the court to institute legal proceedings against entities that the Receiver claims are
wrongfully in possession of assets as a result of the Ponzi scheme operated by Defendants Ronnie
Gene Wilson and Atlantic Bullion & Coin, Inc. (See ECF No. 43 ¶ 2.) In a separate action, the
Receiver, pursuant to the powers conferred on him, asserted claims for unjust enrichment and
fraudulent conveyance against Brigitte Owens, see Ashmore v. Owens, No. 8:15-cv-03633-JMC,
ECF No. 1 (D.S.C.), who has been named as an interested party in the instant matter. By a May 4,
2017 protective order, the court limited Owens’ use of two documents, which had been submitted
to the court by the Receiver and had been erroneously sealed and which she had obtained pursuant
to a previous court order. (See ECF No. 222.) Before the court is Owens’ motion to vacate the
protective order (ECF No. 223), which for the reasons below the court DENIES.
I. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
During the course of these proceedings, the Receiver submitted two documents to the court
that were reports “updat[ing] the court on [the Receiver’s] activities in accordance with the court’s
Order of Appointment.” (ECF No. 219 (citing ECF No. 1 ¶ 9, 26 (“The Receiver is ordered to
periodically file a Report on his activities with the Court.”)).) The documents were entered on the
docket in this matter (formerly at ECF Nos. 90 and 129) and were filed under seal by the Receiver.
On March 9, 2017, Owens filed a motion to unseal the two documents, arguing that they
had not been sealed in accordance with this court’s Local Rules (see ECF No. 211 at 1-2 (citing
Local Civ. R. 5.03 D.S.C.)) or with procedures required by controlling precedent (see id. at 2
(citing In re Wash. Post, 807 F.2d 383, 390 (4th Cir. 1986))) and that she was entitled to access
the documents pursuant to her First Amendment rights (see id. at 1). On May 1, 2017, the court
entered a text order granting in part and denying in part Owens’ motion to unseal (the “disclosure
order”). (ECF No. 219). The court “agree[d] with Owens that [the documents] were not sealed in
accordance with the requirements for sealing specified in the Local Rules or by [controlling
precedent].” (Id. (citing Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253-54 (4th Cir.
1988)).) Based on this conclusion, the court ordered the Clerk’s Office to provide copies of the
two documents to Owens. (Id.) Because the Receiver failed to follow the procedure in the Local
Rules for sealing documents filed with the court, the court also struck the two documents from the
On May 3, 2017, the Receiver filed a motion for a protective order. (ECF No. 221.) The
Receiver requested that the court direct Owens to not disseminate the information contained in the
two documents to any third party without first obtaining permission from the court upon a showing
of her need to use the information in her defense. (See id. at 1.) In support of the motion, the
Receiver asserted that the documents contained otherwise confidential information regarding the
investigation and recoupment of assets for the Ponzi scheme’s victims and financial and other
information regarding settlement agreements reached with other putative defendants to the
Receiver’s claw back suits, which contain confidentiality provisions. (See id. at 1-2.) He argued
that the protection he sought would permit Owens to have whatever information the documents
contained that would be useful in mounting her defense in Ashmore v. Owens, while also
preserving the Receiver’s ability to maintain the privacy of information that is otherwise
confidential. (See id. at 2.)
On May 4, 2017, the court entered an order granting the Receiver’s motion for a protective
order. (ECF No. 222.) The court “f[ound] that the Documents contain very sensitive and
confidential information related to the investigation and recoupment of assets for the victims of
the . . . Ponzi scheme” and “financial information about individuals related to this case and
settlement agreements, the majority of which contain confidentiality provisions.” (Id. at 2.) The
court explained that, in granting the motion, it “s[ought] to protect the information contained in
the Documents while preserving Owens’ ability to defend the claw back case brought against her
in Ashmore v. Owens.” (Id. (internal citation omitted).) Accordingly, the court ordered Owens to
not use the information contained in the documents or disseminate it to any third party unless she
first demonstrated a need to use the information for her defense and obtained the court’s
permission. (See id. at 1.)
On May 14, 2017, Owens filed the instant motion to vacate the court’s protective order.
(ECF No. 223.) She first notes that, normally, protective orders are entered under Fed. R. Civ. P.
26(c)(1). (See ECF No. 223 at 2.) She contends however that protective orders under Rule 26(c)(1)
apply only to information obtained during discovery; that the information contained in the two
documents at issue was not obtained during discovery; and that, therefore, there is no legal
authority authorizing the issuance of the court’s protective order. (See id.) Relatedly, Owens argues
that, because the information was not obtained during discovery, the court’s protective order
implicates her First Amendment rights. (See id. (citing Seattle Times Co. v. Rhinehart, 467 U.S.
20, 32 (1984)).) She contends that the protective order constitutes an overly-broad prior restraint
on her speech because it prevents her from disseminating information, some of which concededly
does not require protection, in an effort to protect the portion of the information for which
safeguards are thought necessary. (See id.)
In response, the Receiver argues that Owens obtained the documents through discovery.
(See ECF No. 224.) In the Receiver’s view, he created and filed the documents with the court only
pursuant to a court order to do so and only produced the documents to Owens pursuant to another
court order to do so. (See id. at 2.) Thus, the Receiver claims, he was compelled to produce the
documents to Owens through court order, and, therefore Owens’ receipt of the documents was
pursuant to a process amounting to discovery. (See id.) The Receiver emphasizes that the
protective order imposes reasonable restrictions on Owens’ use of the documents and allows her
to use them in her defense. (See id.)
II. LEGAL STANDARD
Neither party’s skeleton-style briefing even attempts to set out the legal standard governing
a motion to vacate. In the court’s view, Owens’ motion amounts to a request, pursuant to Fed. R.
Civ. P 54(b) for the court to reconsider an order entered prior to the entry of a judgment that
adjudicates all the claims in a case. See Carlson v. Bos. Sci. Corp., 856 F.3d 320, 325 (4th Cir.
“[U]nder Rule 54(b), the ‘district court retains the power to reconsider and modify its
interlocutory judgments at any time prior to final judgment when such is warranted.’” South
Carolina v. United States, ___ F. Supp. 3d ___, No. 1:16-cv-00391-JMC, 2017 WL 491694, at *4
(D.S.C. Feb. 7, 2017) (ellipsis omitted) (quoting Am. Canoe Ass’n v. Murphy Farms, Inc., 326
F.3d 505, 514-15 (4th Cir. 2003)). Although “Rule 54(b)’s approach involves broader flexibility
to revise interlocutory orders” than the approach taken under a Fed. R. Civ. P. 59(e) “motion to
reconsider final judgments,” Carlson, 856 F.3d at 325; accord South Carolina, 2017 WL 491694,
at *5, “district courts in the Fourth Circuit, in analyzing the merits of a Rule 54 motion, look to the
standards of motions under Rule 59 for guidance,” South Carolina, 2017 WL 491694, at *4 (citing
Ashmore v. Williams, No. 8:15-cv-03633-JMC, 2017 WL 24255, at *2 (D.S.C. Jan. 3, 2017)).
Additionally, “courts have cabined revision pursuant to Rule 54(b) by treating interlocutory rulings
as law of the case.” Carlson, 856 F.3d at 325 (citing Canoe Ass’n, 326 F.3d at 515); accord South
Carolina, 2017 WL 491694, at *4 n.5. “Thus, a court may revise an interlocutory order under the
same circumstances in which it may depart from the law of the case: (1) ‘a subsequent trial
producing substantially different evidence’; (2) a change in applicable law; or (3) clear error
causing ‘manifest injustice.’” Carlson, 856 F.3d at 325 (brackets omitted) (quoting Canoe Ass’n,
326 F.3d at 515); accord South Carolina, 2017 WL 491694, at *4 n.5. “This standard closely
resembles the standard applicable to motions to reconsider final orders pursuant to Rule 59(e).”
Carlson, 856 F.3d at 325; accord South Carolina, 2017 WL 491694, at *4 n.5.
In support of her motion, Owens has pointed to no new evidence or intervening change in
the governing law. Rather, it appears that Owens requests that the court reconsider and vacate its
protective order on the ground that the order is based on a clear error or law or fact causing a
manifest injustice. Specifically, Owens appears to argue that, outside the discovery context, the
court lacks authority to enter a protective order restricting her dissemination of information
contained in the documents and that, therefore, any such order not only is based on legal error but
also violates her First Amendment rights to the extent it constitutes a prior restraint.
The court disagrees with Owens’ premise. For documents obtained outside the discovery
process, courts retain the inherent authority to enter protective orders in order to control and
preserve the integrity of their judicial proceedings. See United States ex rel. Rector v. Bon Secours
Richmond Health Corp., No. 3:11-cv-38, 2014 WL 66714, at *4 (E.D. Va. Jan. 6, 2014) (citing
Cabotage v. Ohio Hosp. for Psychiatry, LLC, No. 2:11-cv-50, 2012 WL 3064116, at *3 (S.D. Ohio
July 27, 2012); In re Shell Oil Refinery, 143 F.R.D. 105, 108-09 (E.D. La. 1992)); Pub. Citizen
Health Research Grp. v. Food & Drug Admin., 953 F. Supp. 400, 404 (D.D.C. 1996); see also
Pansy v. Borough of Stroudsburg, 23 F.3d 772, 786 (3d Cir. 1994) (recognizing courts’ authority
to enter “protective orders over discovery and confidentiality orders over matters concerning other
stages of litigation” including “over a settlement agreement”); accord Hunt v. Enzo Biochem, Inc.,
904 F. Supp. 2d 337, 343 (S.D.N.Y. 2012). “In exercising such power, the court is concerned only
with ‘balancing the scales’ and protecting its judicial proceedings,” Pub. Citizen Health, 953 F.
Supp. at 404 (quoting In re Shell, 143 F.R.D. at 108-09), and is not focused on the putative rights
of the party opposing protection, cf. Hunt, 904 F. Supp. 2d 343 (explaining that courts’ inherent
power to enforce protective orders stems not from rights of opposing party but from court’s interest
in managing litigation (citing Eli Lilly & Co. v. Gottstein, 617 F.3d 186, 195 (2d Cir. 2010))). The
exercise of this authority is more appropriate where the information at issue is sensitive, is
potentially subject to a privilege, or has limited relevance to the action at hand. See Cabotage,
2012 WL 3064116, at *4.
Here, the court concludes that its protective order was entered not over discoverable
material pursuant to Rule 26, but over material obtained outside the discovery process pursuant to
its inherent authority to control and preserve the judicial proceedings before it. First, the only
reason the Receiver created and submitted the documents was the court’s order directing him to
file regular reports as part of his obligation as the court-appointed receiver in this matter. The
documents were not created or submitted to the court for the purpose of disclosing discoverable
information to any party, and, as the court’s previous orders suggest, it is not clear what, if any,
relevance the documents have for Owens’ defense. Indeed, throughout the proceedings on this
issue, the Receiver has argued that the documents have no relevance to Owens’ defense or to the
Receiver’s claims against her (see ECF No. 212 at 2), and Owens has never challenged this
argument or otherwise asserted that the documents are relevant to the claims or defenses at issue
in Ashmore v. Owens.
Second, Owens received the documents pursuant to the court’s disclosure order and not
pursuant to any regular method of discovery. As for the disclosure order itself, it resulted from the
court’s exercising its inherent authority to fashion a remedy for the Receiver’s failure to properly
move to seal the documents and, therefore, in order to protect the integrity of the judicial
proceedings before the court. Rather than unsealing the documents, the court struck the filings
from the docket and ordered the Clerk’s Office to provide Owens a copy of the documents. The
court acted within its authority to strike the documents, and, once they were struck, there remained
no documents in the record for the court to unseal. Nevertheless, the court ordered the documents
to be disclosed to Owens, and the court emphasizes here that this disclosure was not ordered based
on any of Owens’ rights but, instead, based on the Receiver’s failure to abide by the rules for filing
sealed documents. 1
Third, neither the Receiver’s motion for a protective order nor the protective order itself
referenced Rule 26 or suggested that the documents had been disclosed to Owens pursuant to the
rules governing discovery or needed protection for the reasons outlined in Rule 26(c)(1).
Moreover, the order itself states that its chief purposes were to safeguard the sensitive information
of the Ponzi scheme’s victims and preserve Owens’ ability to defend against the Receiver’s claims;
it does not state that it was intended to ensure Owens’ access to discoverable materials.
In all of this, the court’s actions were not inconsistent with any law or rule. See Fed. R. Civ. P.
Additionally, the protective order was intended to protect the confidential settlement agreements
into which the Receiver has entered with third parties so as to preserve the third parties’ faith in
the integrity of their agreements (not to mention the administration of justice under which the court
assumes they fashioned their agreements) and to thereby facilitate similar settlements in the future.
In sum, the documents at issue were never subjected to the discovery process; they were
never intended to be so subjected; and, ultimately, they were not disclosed to Owens pursuant to
the discovery process. Instead, the court ordered their disclosure as a remedial measure, and the
court’s protective order was clearly intended to preserve the integrity of judicial proceedings
before the court. Because the court entered the protective order pursuant to its inherent authority
rather than pursuant to the authority conferred by Rule 26, Owens’ arguments that the court
committed clear error by entering a protective order outside the bounds of Rule 26 is meritless.
The court notes that Owens’ argument is limited to her incorrect contention that the court
lacked authority to enter a protective order outside the discovery context and further notes that,
with one possible exception, she does not argue that, assuming the court had authority, it erred in
deciding to exercise that authority. The possible exception is Owens’ argument regarding her First
Amendment rights. Although much of her First Amendment argument fails as a logical result of
the court’s discussion in the paragraphs above, 2 Owens appears to argue that the protective order
amounts to a prior restraint on speech in violation of the First Amendment regardless whether the
For instance, Owens’ argument that the rule exempting from First Amendment protection
information made available to a party through discovery does not apply here because the
documents were not obtained during discovery (see ECF No. 223 at 2 (citing Seattle Times, 467
U.S. at 32)) is largely beside the point because the argument fails to consider whether information
disclosed and protected pursuant to a court’s inherent power is afforded First Amendment
protection. Similarly, Owens’ argument that she obtained access to the documents pursuant to her
First Amendment rights (see id.) mischaracterizes the record: she obtained access through the
court’s inherent authority to remedy the Receiver’s violation of the Local Rules and not as a matter
of right or entitlement.
order was entered outside the context of the discovery process.
The court concludes that Owens has failed to show that the court has committed clear error
in this regard because it is not clear that the First Amendment would apply to information disclosed
to a party by a court order that exercises the court’s inherent authority. Owens acknowledges the
rule that the First Amendment does not protect a litigant’s right to access information available
only through discovery and that a Rule 26 protective order limiting the use of information obtained
in discovery does not implicate First Amendment rights. (ECF No. 223 at 2 (citing Seattle Times,
467 U.S. at 32).) But she cites no authority (and the court has located no authority) standing for
the proposition that this same rule would not apply to information, such as the information
contained in the documents at issue in this case, obtained only through a court’s remedial order.
Thus, at most, the law remains unsettled on whether Owens has a First Amendment right to access
information contained in the two documents and on whether the court’s control over such
information by way of a protective order implicates her First Amendment rights. In fact, the very
principle of law on which Seattle Times relied—that “[t]he right to speak and publish does not
carry with it the unrestrained right to gather information,” Zemel v. Rusk, 381 U.S. 1, 16-17
(1965)—strongly suggests that, when, as here, a party lacks any independent right to access the
information beyond the access afforded her for the purposes of adjudicating a dispute, no First
Amendment rights inhere. See In re Policy Mgmt. Sys. Corp., 67 F.3d 296, at *4 (4th Cir. 1995)
(per curiam) (unpublished table disposition) (concluding that First Amendment protections do not
apply to documents in a court record when the “documents are not considered by the court, . . . do
not serve as a substitute for a trial[,] and are more akin to discovery materials”); In re Search
Warrant for [redacted].com, ___ F. Supp. 3d ___, No. 16-2316M (FFM), 2017 WL 1450314, at
*7 (C.D. Cal. March 31, 2017) (explaining Seattle Times rule applies when the party “gather[s]
the information in question . . . with the aim of advancing [the party]’s interests in a lawsuit”
(internal quotation marks omitted)). Because Owens has failed to demonstrate that the First
Amendment clearly applies here, she has failed to demonstrate the court’s protective order
amounted to clear error in that it violated her First Amendment rights.
Because Owens has not demonstrated that the court committed clear error causing manifest
injustice, she has failed to meet the Rule 54(b) standard required for the court to grant her request
for reconsideration of the court’s protective order. Accordingly, Owens’ motion to vacate (ECF
No. 223) is hereby DENIED.
IT IS SO ORDERED.
United States District Court Judge
June 12, 2017
Columbia, South Carolina
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