Healthwerks Inc et al v. Stryker Spine

Filing 190

ORDER signed by Judge Pamela Pepper on 2/1/2016 re 157 MOTION to Seal Document, 166 MOTION to Restrict Document, 172 MOTION to Restrict Document, and 178 MOTION to Seal Document. The court ORDERS that on or before 2/15/16, any pa rty believing there is cause to seal or redact the items referenced in dockets 157, 166, 172 and 178 shall file a statement identifying those documents/that information for which such cause exists, and describing that cause. The court further ORDERS that failure to demonstrate the kind of cause referenced in the case law cited in this order will result in the court unsealing all of the documents referenced in those motions. (cc: all counsel)(pwm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSION
______________________________________________________________________________
HEALTHWERKS, INC.,
SPINE GROUP OF WISCONSIN, LLC,
GREAT LAKES SPINE GROUP, LLC,
PAUL R. BREITENBACH,

Case No. 14-cv-93-PP

Plaintiffs,
BIOMET SPINE, LLC,
Involuntary Plaintiff,
v.
HOWMEDICA OSTEONICS CORP.,
d/b/a Stryker Spine,
Defendant,
MIKE ROGERS,
SCOTT OLIN,
DAN GRAY,
JOHN MURRAY,
NICK NOVAK,
ANNIE BRAUER, and
TODD POTOKAR,
Third-Party Defendants.
______________________________________________________________________________
ORDER REQUIRING THAT ON OR BEFORE MONDAY, FEBRUARY 15,
2016, ANY PARTY BELIEVING THAT THERE IS CAUSE TO SEAL OR
REDACT THE ITEMS REFERENCED IN DKT. NOS. 157, 166, 172 AND 178
FILE A STATEMENT IDENTIFYING THOSE DOCUMENTS/THAT
INFORMATION FOR WHICH SUCH CAUSE EXISTS
______________________________________________________________________________
Defendant Howmedica removed this case from state court to the Eastern
District of Wisconsin on January 28, 2014. Dkt. No. 1. The parties have heavily
litigated most aspects of this case since it arrived in federal court. Judge J.P.
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Stadtmueller originally presided over the case, and he had scheduled the case
for trial on September 8, 2015. Dkt. No. 65. On December 29, 2014, however,
the case was reassigned to Judge Pepper as part of the case redistribution
process when she joined the court. Since that time, defendant Howmedica has
filed four different motions to seal; Biomet Spine has filed one; and the
plaintiffs/third-party defendants have filed three. On June 22, 2015, the court
held a hearing on Howmedica’s first motion to seal. Dkt. No. 89. At that
hearing, the court noted that the only ground the defendant had stated for
sealing the documents was that the documents were subject to the agreed
protective order. The court noted that Seventh Circuit case law made clear that
the simple fact that a document had been designated confidential pursuant to
a protective order was not sufficient ground to constitute cause for sealing. The
defendant argued that the documents contained proprietary customer lists and
financial information. Id. at 1. During the hearing, the court reviewed the
documents the parties had asked to seal, and had difficulty finding anything
that looked like proprietary information (other than the customer lists—the
court accepted, at that time, Howmedica’s argument that those were
proprietary). Counsel for the involuntary plaintiffs suggested that the court
adjourn the hearing and give the parties time to talk through which documents
truly needed redacting. The court reminded the parties that the fact that they
agreed something needed redacting or sealing did not establish that it did, in
fact, need to be sealed, and scheduled an adjourned hearing for July 1, 2015.
Id. at 2. At the July 1 hearing, the court agreed to the parties’ redactions.
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Over four months later, however, Biomet filed a motion to seal. Dkt. No.
104. The court again scheduled a hearing to find out the cause for Biomet’s
request. Before the hearing date even arrived, the defendant filed another
motion to seal, Dkt. No. 111, and the plaintiffs and third-party defendants filed
their own motion to seal, Dkt. No. 117. At the November 23, 2015 hearing on
Biomet’s motion, the court observed that it had tried to go through, line by line,
the items Biomet had asked the court to seal, but that it appeared that Biomet
sought new and additional sealing beyond what the court already had allowed,
and that the court couldn’t figure out why. Id. at 1. Counsel for Biomet
responded that he didn’t necessarily think many of the items needed sealing,
but that he was concerned about violating the protective order. After
discussion, counsel for Biomet suggested (as counsel for the plaintiffs had done
at the prior hearing) that the court adjourn the hearing to allow the parties to
again determine which documents actually presented concern that would give
rise to cause. Id. The court set a deadline of December 11, 2015 by which the
parties should submit to the court a list of the items they believed should be
sealed, along with proof of cause, and adjourned the hearing to December 18,
2015. Id. at 2.
At the December 18, 2015 hearing, the court expressed concern about
the continued requests to seal so many documents, reminding the parties that
they’d sought to bring this case in court—a public forum—and wondered why
the parties would seek to seal so many documents being filed in a public
dispute. Dkt. No. 169. Counsel for defendant Howmedica told the court that
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the spinal product industry was such that competitors could gain unfair
advantage over a manufacturer if they learned the percentage it paid its
distributors, or the discounts it granted certain customers. He argued that the
spinal product industry was not a free, open market, where everyone knew
everyone else’s prices, inventory or customers. The court responded by
wondering whether that was a good thing. The court also noted some of the
documents Howmedica wished to keep confidential dated back to 2009 or
2011, and wondered how that information could be confidential now; counsel
for Howmedica responded that many documents involved multi-year
agreements. Id. at 1-2. Counsel for the plaintiffs, third-party defendants and
involuntary plaintiff indicated that they had tried to narrow the redactions as
much as possible. Id. at 2. Again, the court spent time, on the record, going
through each requested redaction, and approving, disapproving or modifying
the redactions. Id. at 2-6. The December 18 hearing (which admittedly also
involved some motions to compel) lasted just shy of two hours.
Despite the amount of time the parties and the court have spent on the
sealing of information at Howmedica’s request, the parties now have filed
additional motions to seal. On December 21, 2015—three days after the
December 18 hearing—Howmedica filed a motion to seal its response to the
plaintiffs’/third-party defendants’ proposed material facts. Dkt. No. 157. This
motion stated that the parties, “consistent with the procedure set forth in the
Court’s Minute Order dated June 22, 2015,” were going to meet and confer to
discuss what redactions they’d propose to the court, and that the redactions
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would “take into account the Court’s guidance from the December 18, 2015
hearing.” Id. at 2.
On that same date—December 21, 2015—the plaintiffs/third-party
defendants filed a motion to seal exhibits to their oppositions to defendant
Howmedica’s motion for summary judgment. Dkt. No. 166. This motion
appears to be another attempt by the plaintiffs/third-party defendants to avoid
having defendant Howmedica accuse them of violating the protective order.
A month later, on January 19, 2016, Howmedica filed a motion asking
the court to seal its response to Biomet’s Rule 56 statement of additional facts
and supporting exhibits. Dkt. No. 172. Howmedica again indicates that the
parties will meet and confer to decide what really needs sealing. The
plaintiffs/third-party defendants filed such a motion. Finally, on January 19,
2016, the plaintiffs/third-party defendants filed a motion asking to seal their
reply to Howmedica’s statement of additional facts. Dkt. No. 178.
So—since the two-hour hearing on sealing that took place on December
18, 2015, the parties have filed four additional motions to seal. At the
December 18, 2015 hearing, counsel for the plaintiffs/third-party defendants
argued that enough was enough. The court was inclined at that time (and
times prior) to agree, but despite that inclination, agreed to seal various
documents. The filing of these additional motions to seal has caused the court
to go back to the Seventh Circuit’s guidance, as well as to look at recent
decisions from some of its colleagues on the district court. That review has

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convinced the court that it is time to bring the sealing marathon in this case to
an end.
As long ago as 1999, the Seventh Circuit expressed its concern about the
kinds of arguments Howmedica has made in this case. In Citizens First Nat’l
Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943, 944 (7th Cir. 1999), the
district court had signed a protective order that “[kept] out of the public record
of the litigation, any document ‘believed to contain trade secrets or other
confidential or governmental information, including information held in a
fiduciary capacity.’” (Citation omitted) One of the parties then asked to submit
an appendix to the Seventh Circuit, under seal, and cited to the protective
order as grounds. Id.
The court explained that the law required that a district court must
make a determination “of good cause to seal any part of the record of a case.”
Id. (citing Fed. R. Civ. P. 26(c); Seattle Times Co. v. Rhinehard, 467 U.S. 20, 37
(1984); Jepson, Inc. v. Makita Elec. Works, Ltd., 30 F.3d 854, 858 (7th Cir.
1994); Pansy v. Borough of Stroudsburg, 23 F.3d 772, 785-87 (3d Cir. 1994)).
Noting that “parties to a lawsuit are not the only people who have a legitimate
interest in the record compiled in a legal proceeding,” the court observed that
“the public at large pays for the courts and therefore has an interest in what
goes on at all stages of a judicial proceeding.” Id. at 944-45 (internal citations
omitted). While the court allowed that the public interest “does not always
trump the property and privacy interests of the litigants,” it stated that the
public interest could be overridden “only if the latter interests predominate in a
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particular case, that is, only if there is good cause for sealing a part or the
whole of the record in that case.” Id. at 945 (citations omitted). The court
specifically stated,
The determination of good cause cannot be elided by allowing the
parties to seal whatever they want, for then the interest in publicity
will go unprotected . . . . The judge is the primary representative of
the public interest in the judicial process and is duty-bound
therefore to review any request to seal the record (or part of it).
Id. (citing Arthur R. Miller, Confidentiality, Protective Orders, and Public Access
to the Courts, 105 HARV. L. REV. 427, 492 (1991)). Finding that the district
court’s order had been too broad—sealing not just trade secrets, but things
that were not trade secrets; sealing “other confidential . . . information” and all
“governmental information”—the Seventh Circuit remanded to the district court
for a determination of which portions of the appendix, if any, ought to be kept
out of the public record. Id. at 945-46.
A year later, in Union Oil Co. of California v. Leavell, 220 F.3d 562, 567
(7th Cir. 2000), the court confronted a situation where “[a]lmost every
document filed in this case, even the district court’s opinions, orders, and
judgment, bears the legend ‘FILED UNDER SEAL.’” The plaintiff argued that
the parties agreed to keep the settlement confidential, and it appears expressed
concerns about trade secrets. Id. The Seventh Circuit responded, “Litigation
about trade secrets regularly is conducted in public; the district court seals
only the secrets (and writes an opinion omitting secret details); no one would
dream of saying that every dispute about trade secrets must be litigated in
private.” Id. Indeed, the court pointed out, disputes about national security
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issues such as the Pentagon papers or the hydrogen bomb were litigated in
open court, with the exception of some sealed items. Id. (citations omitted). The
court noted,
Many a litigant would prefer that the subject of the case—how
much it agreed to pay for the construction of a pipeline, how many
tons of coal its plant uses per day, and so on—be kept from the
curious (including its business rivals and customers), but the
tradition that litigation is open to the public is of very long
standing.
Id. (citations omitted). The court suggested that “[p]eople who want secrecy
should opt for arbitration. When they call on the courts, they must accept the
openness that goes with subsidized dispute resolution by public (and publicly
accountable) officials.” Id. at 568. Noting that it had “uniformly rejected”
requests to seal proceedings “in order to implement the parties’ preference for
seclusion,” the court ordered the clerk to place all documents on the public
record, and directed the district court to do the same. Id.
Perhaps most on point with what Howmedica has argued in this
litigation is the Seventh Circuit’s 2010 decision in In re Specht, 622 F.3d 697
(7th Cir. 2010). Two of the corporate parties asked the Seventh Circuit to keep
the language of their indemnity agreements and some other documents
confidential, arguing that “[o]ther participants in the wireless communication
business might be able to obtain some negotiating advantage by knowing the
agreement’s terms.” Id. at 701. The parties seeking confidentiality, however, did
not argue that the documents contained trade secrets. Id. The Seventh Circuit
denied the request to keep the documents confidential, stating, “[d]ocuments
that affect the disposition of federal litigation are presumptively open to public
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view, even if the litigants strongly prefer secrecy, unless a statute, rule, or
privilege justifies confidentiality.” Id. (citing Baxter Int’l, Inc. v. Abbott Labs.,
297 F.3d 544 (7th Cir. 2002); Union Oil Co., 220 F.3d 562).
In the past year, Chief Judge Griesbach confronted motions to seal in
Formax, Inc. v. Alkar-Rapidpak-MP Equip., Inc., No. 11-C-298, 2014 WL
792086 (E.D. Wis. Feb. 25, 2014). At the outset, he noted that
[m]otions to seal are becoming increasingly common and occupy
an increasing portion of the court’s time. In litigation involving
businesses especially, it is common for one or both parties to
request entry of a protective order to govern the handling [of]
information they may be obligated to disclose in discovery that the
disclosing party believes could damage its business if the
information is disclosed to the wider general public, including their
competitors. The typical protective order requested by the parties
allows the disclosing party to designate such information
“confidential” and thereby create a duty on the part of the receiving
party to avoid any further disclosure of the information than is
necessary to conduct the litigation. The benefit of such an order is
that it increases a party’s willingness to respond to discovery
requests without involving the court on closer questions because of
fear that providing information that is not directly relevant may
cause injury to their businesses. The difficulty arises when one of
the parties decides to include information from a document
designated “confidential” as part of a court filing. The standard
protective order states that if information from a document
designated “confidential” by another party is filed with the court, it
must be sealed. Filing documents under seal, however, conflicts
with the general rule that litigation in the courts of the United
States is open to the public. Union Oil Co. of California v. Leavell,
220 F.3d 562, 567 (7th Cir. 2000).
Id. at *1.
He went on to discuss the fact that
the determination whether to grant a motion to seal is not always a
simple matter. The parties submit briefs addressing each
document they wish the court to maintain under seal, and the
court must read their briefs and issue a decision applying the law
to the facts before it. This diverts time and attention from the
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merits of the case and forces parties and court to devote time and
resources to tangential issues that do not contribute to the
resolution of the case. These diversions can be minimized if the
parties exercise greater restraint in designating material
confidential and, perhaps, more importantly, give careful
consideration before filing confidential material with the court.
Id. at *2.
In Formax, the information designated confidential was financial
information. Judge Griesbach noted that “[d]ocuments containing highly
sensitive pricing information, sales figures, sales dollar amounts, profit and
loss data, and other financial records not normally made known to the public
may be properly filed under seal.” Id. at *3 (citing, e.g., E.E.O.C. v. Abbott
Labs., 10-C-833, 2012 WL 3842460, at *2 (E.D. Wis. Sept. 5, 2012)). On the
other hand, he stated that
not all pricing information or customer lists are entitled to
protection. Who a business’ customers are and what it charges for
its goods and services usually are not trade secrets. In Wisconsin,
customer lists are not generally afforded protection as trade
secrets. See Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis.2d
202, 209, 267 N.W.2d 242 (1978). And, of course, the customer
who pays the price for the goods or services necessarily knows
what he paid and, absent a confidentiality agreement, is free to
disclose the amount to others. Most customers typically shop
around to see who has the best price. A company’s gross revenue
and market share are also not the kind of information that selfevidently poses a risk of unfair competition from one’s competitors.
Absent further explanation, the fact that documents contain such
information does not constitute good cause for sealing them.
Id.
Howmedica’s motion to seal its response to the plaintiffs’/third-party
defendants’ proposed material facts states that the document “reveals actual
revenue figures, customer names, surgical tray inventory figures and details on
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customer needs in the Territory.” Dkt. No. 157 at 2. It states that exhibits 106107 and 113 contain items marked confidential by the counterclaim
defendants and third-party defendants. Id. It states that Exhibits 108, 111-112
and 114-116 “reveal Stryker Spine customer names, revenue totals and other
Stryker Spine confidential business information.” Id.
As Judge Griesbach indicated in Formax—and contrary to what the court
previously allowed—customer lists or names do not constitute trade secrets.
The fact that others sought confidentiality of some of the exhibits does not
suffice to state cause, as this court has said several times. “Other Stryker
Spine confidential business information” does not state cause. It is not clear
that “revenue figures” states cause, or “surgical tray inventory figures and
details on customer needs in the Territory.”
The plaintiffs’/third-party defendants’ motion to seal exhibits to their
opposition to Stryker’s motion for summary judgment states that “[c]ertain
exhibits to the Harvey Declaration . . . have been filed under seal because they
were designated as ‘CONFIDENTIAL’ or ‘ATTORNEYS’ EYES ONLY’ by one of
the parties in the lawsuit and because one of the parties requests that the
exhibit remain sealed or that certain information be redacted before the exhibit
is filed in the public record.” Dkt. No. 166 at 2. It states that the movants will
ask all the other parties if they still want these documents sealed; if anyone
does, the movants state, the parties will file requests for redaction or sealing.
Id.

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Howmedica’s motion to seal its response to Biomet’s statement of
additional facts and exhibits is similar to its motion to seal its response to the
plaintiffs’/third-party defendants’ proposed facts. Dkt. No. 172. Again, the
motion states that the parties will be conferring about what needs to be
redacted, but says that the information of concern is “a detailed breakdown of
Stryker’s historical sales figures,” “sales data . . . totaled by customer and the
customer names.” Id. at 3. As intimated above, and as Judge Griesbach
discussed, the court does not agree that this information is a trade secret (and
Howmedica has not argued as much).
Finally, the plaintiffs’/third-party defendants’ motion to seal their reply
to Howmedica’s statements of additional fact seeks to protect “actual revenue
figures, customer names, surgical tray inventory figures and details on
customer needs in the Territory.” Dkt. No. 178 at 2. The court no longer agrees
that this information should be kept from the public record, after reviewing the
Seventh Circuit’s decisions and Judge Griesbach’s ruling in Formax.
The case before the court is scheduled to go to trial on May 23, 2016—
less than four months from today. See Dkt. No. 83. Dispositive motions were
due November 16, 2015. Dkt. No. 82 at 1. Biomet filed a motion for summary
judgment on October 13, 2015, Dkt. No. 100. Defendant Howmedica filed a
motion for summary judgment on November 16, 2015. Dkt. No. 112. The
plaintiffs/third party defendants also filed a summary judgment motion on that
date. Dkt. No. 120. All three of these motions are fully briefed. The motions the

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parties have filed since the December 18, 2015 hearing are requests to seal
some of these pleadings, or attachments to the pleadings.
The court is aware that the parties have other cases than this one, and
other clients. But in the time since filing these motions to seal, the parties have
not filed detailed redaction/sealing requests. The court gleans from the filings
that Howmedica is the party requesting the confidentiality for many of these
documents; the other parties appear to be requesting sealing/redaction in a
good-faith attempt to avoid violating the protective order. As indicated above,
the court’s review of the case law has brought it to the conclusion that the
arguments Howmedica has made for sealing many prior documents—and for
sealing the information referenced in these most recent four motions—do not
constitute cause for keeping this information from the public record.
Accordingly, as Judge Adelman did in Kohler Co. v. Kopietzki, No. 13-cv1170, 2014 WL 7240138 (E.D. Wis. Dec. 19, 2014), I will give those parties who
believe that there is cause for the documents in these four post-December 18,
2015 motions to seal fourteen (14) days to file a pleading showing good cause
why the documents should be redacted or should remain under seal. If the
requesting party does not show good cause, consistent with the case law the
court has cited above, the court will order that the documents be unsealed.
Before any party files a request to keep a document sealed, or to redact a
document, the court encourages that party to review the cases above, and to
keep in mind the Seventh Circuit’s statement that “only trade secrets,
information covered by a recognized privilege . . ., and information required by
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statute to be maintained in confidence . . . is entitled to be kept secret.” Kohler,
2014 WL 7240138 at *2 (quoting Baxter Int’l, Inc. v. Abbott Labs., 297 F.3d
544, 546 (7th Cir. 2002)).
Accordingly, the court ORDERS that on or before MONDAY, FEBRUARY
15, 2016, any party believing that there is cause to seal or redact the items
referenced in Dkt. Nos. 157, 166, 172 and 178 shall file a statement identifying
those documents/that information for which such cause exists, and describing
that cause. The court further ORDERS that failure to demonstrate the kind of
cause referenced in the case law cited in this order will result in the court
unsealing all of the documents referenced in those motions.
Dated in Milwaukee, Wisconsin this 1st day of February, 2016.

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