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Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

UNITED NUCLEAR CORPORATION, 

Plaintiff, 

v. 

) 

) 

) 

) 

) 

) 

CRANFORD INSURANCE COMPANY, now known as) 

AMERICAN SPECIAL RISK INSURANCE COMPANY,) 

a Delaware Corporation; SPHERE INSURANCE) 

COMPANY, LTD., now known as SPHERE DRAKE) 

INSURANCE, PLC, a British Corporation; ) 

INTERNATIONAL INSURANCE COMPANY, an ) 

Illinois corporation, ) 

Defendants-Appellants, 

and 

NORTHBROOK EXCESS AND SURPLUS INSURANCE 

COMPANY, formerly known as NORTHBROOK 

INSURANCE COMPANY, an Illinois 

corporation, 

Defendant, 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) ____________________ ) 

) 

ROHM & HAAS COMPANY; SOUTH MACOMB ) 

DISPOSAL AUTHORITY; WASTE MANAGEMENT, ) 

INC.; CHEMICAL WASTE MANAGEMENT, INC.; ) 

GENERATORS OF WASTE AT THE ENVIRONMENTAL) 

CONSERVATION AND CHEMICAL CORPORATION ) 

SITE, in Zionsville, Indiana, ) 

Intervenors-Appellees. 

) 

) 

FILED 

United States Court of Appeals 

Tenth circuit 

JUN 151990 

ROBERT L. HOECKER 

Clerk 

No. 89-2205 

Appeal from the United States District Court 

for the District of New Mexico 

(D,C. No. CIV 85-880-M) 

Appellate Case: 89-2205 Document: 01019867835 Date Filed: 06/15/1990 Page: 1 
John A. Klecan of Butt, Thornton & Baehr, Albuquerque, New Mexico, 

for Defendants-Appellants. 

Bruce D. Drucker (Matthew W. Cockrell and Michelle J. Gilbert, 

also of Rivkin, Radler, Dunne & Bayh, Chicago, Illinois, for 

Intervenors-Appellees Waste Management, Inc., Chemical Waste 

Management, Inc. and SCA Services, Inc.; Donald w. Kiel of Pitney, 

Hardin, Kipp & Szuch, Morristown, New Jersey, for IntervenorAppellee Rohm & Haas Co.; and Philip B. Davis, Albuquerque, New 

Mexico, for Intervenors-Appellees, with him on the brief). 

Before LOGAN, SEYMOUR, and BRORBY, Circuit Judges. 

LOGAN, Circuit Judge. 

Defendants Cranford Insurance Company (Cranford), Sphere 

Insurance Company, and International Insurance Company 

(International) appeal from an order of the district court which 

allowed Rohm & Haas Company, South Macomb Disposal Authority, 

Waste Management, Inc., Chemical Waste Management, Inc., and 

numerous generators of waste at the Environmental Conservation and 

Chemical Corporation site in Zionsville, Indiana, (Intervenors) to 

intervene in this action, and which modified a protective order 

and an order sealing the record to permit Intervenors access to 

discovery for use in collateral federal and state litigation with 

defendants. 

Plaintiff United Nuclear Corporation (UNC) filed the instant 

action in 1985, seeking a declaration of liability under 

environmental impairment liability (EIL) insurance policies issued 

by defendants. To facilitate disc~very, the district court 

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Appellate Case: 89-2205 Document: 01019867835 Date Filed: 06/15/1990 Page: 2 
entered a stipulated protective order, pursuant to Fed. R. Civ. P. 

26(c), declaring all discovery materials to be confidential and 

prohibiting their use or disclosure other than for preparation for 

or use at trial. In 1986, the parties settled; the district court 

dismissed the suit with prejudice, sealed the record and file 

"until further order of the Court," IR. tab 136, and ordered that 

depositions not be disclosed except on order of a court of 

competent jurisdiction. 

documents produced by 

Pursuant to the settlement agreement, 

defendants were to be retained at UNC's 

expense for ten years. Defendants-Appellants Brief-in-Chief at 2. 

Intervenors are all litigants in suits in other state and 

federal courts seeking determinations that they have coverage 

under EIL insurance policies issued by defendants Cranford and 

International. In 1989, they sought to intervene in. the instant 

suit for the sole purpose of seeking modification of the 

protective order and the order sealing the record to permit them 

access to discovery produced in this lawsuit for use in their 

actions against defendants in other courts. The district court 

granted permissive intervention under Fed. R. Civ. P. 24(b) and 

modified its prior orders to allow Intervenors access to discovery 

for use in their collateral litigation. The court placed 

Intervenors under the same restrictions as the original parties: 

they could use and disclose the information solely for litigation 

purposes. Defendants have appealed, and we affirm. 

I 

Intervenors challenge our jurisdiction to hear this appeal. 

Although most orders granting intervention or modification of a 

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Appellate Case: 89-2205 Document: 01019867835 Date Filed: 06/15/1990 Page: 3 
protective order are interlocutory and not immediately appealable, 

intervention here was solely for the purpose of ,seeking 

modification of the protective order; the underlying controversy 

had already been concluded. Therefore, we believe the orders at 

issue are appealable, either as final orders, see Martindell v. 

International Tel. & Tel. Corp., 594 F.2d 291, 293-94 (2d Cir. 

1979), or collateral orders, see Wilk v. American Medical Ass'n, 

635 F.2d 1295, 1298 (7th Cir. 1980). Therefore, we proceed to the 

merits. 

II 

Defendants initially challenge the district court's grant of 

permissive intervention under Fed. R. Civ. P. 24(b). Of course, 

permissive intervention is a matter within the sound discretion of 

the district court, and we will not disturb its order except upon 

a ''showing of clear abuse." Shump v. Balka, 574 F.2d 1341, 1345 

(10th Cir. 1978). 

The courts have widely recognized that the correct procedure 

for a nonparty to challenge a protective order is through 

intervention for that purpose. Public Citizen v. Liggett Group, 

Inc., 858 F.2d 775, 783 (1st Cir. 1988), cert. denied, 109 S. Ct. 

838 (1989). When a collateral litigant seeks permissive 

intervention solely to gain access to discovery subject to a 

protective order, no particularly strong nexus of fact or law need 

exist between the two suits. Meyer Goldberg, Inc. v. Fisher 

Foods, Inc., 823 F.2d 159, 164 (6th Cir. 1987). Here, the 

district court allowed intervention on a finding that 

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Appellate Case: 89-2205 Document: 01019867835 Date Filed: 06/15/1990 Page: 4 
interpretation of the EIL policies was a common issue between the 

instant case and the other suits. This was a sufficient basis. 

Defendants argue that intervention three years after a case 

has settled is precisely the sort of undue delay and prejudice 

that Rule 24(b) prohibits. While it is true that an application 

for intervention must be timely, "[t]imeliness is to be determined 

from all the circumstances," and "the point to which the suit has 

progressed •.. is not solely dispositive." NAACP v. New York, 

413 U.S. 345, 365-66 (1973). The most important circumstance in 

this case is that intervention was not on the merits, but for the 

sole purpose of challenging a protective order. Rule 24(b) 's 

timeliness requirement is to prevent prejudice in the adjudication 

of the rights of the existing parties, a concern not present when 

the existing parties have settled their dispute and intervention 

is for a collateral purpose. See Public Citizen, 858 F.2d at 786-

87; Meyer Goldberg, 823 F.2d at 161-62. We find nothing improper 

in allowing intervention to challenge a protective order still in 

effect, regardless of the status of the underlying suit. 

III 

Defendants also object to the district court's modification 

of the protective order. As long as a protective order remains in 

effect, the court that entered the order retains the power to 

modify it, even if the underlying suit has been dismissed. See 

Public Citizen, 858 F.2d at 781-82; In re "Agent Orange" Prod. 

Liab. Litig., 821 F.2d 139, 145 (2d Cir.), cert. denied, 484 U.S. 

953 (1987). And modification of a protective order, like its 

original entry, is left 'to the discretion of the district court. 

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Appellate Case: 89-2205 Document: 01019867835 Date Filed: 06/15/1990 Page: 5 
See Wyeth Laboratories v. United States District Court, 851 F.2d 

321, 323 (10th Cir. 1988). 

The protective order in this case was entered by stipulation 

of the parties and designated all materials produced in discovery 

as confidential. The order restricted use and disclosure unless a 

party challenged the confidentiality of a particular item. These 

stipulated "blanket'' protective orders are becoming standard 

practice in complex cases. See Manual for Complex Litigation, 

Second, § 21.431 (1985). They allow the parties to make full 

disclosure in discovery without fear of public access to sensitive 

information and without the expense and delay of protracted 

disputes over every item of sensitive information, thereby 

promoting the overriding goal of the Federal Rules of Civil 

Procedure, "to secure the just, speedy, and inexpensive 

determination of every action." Fed. R. Civ. P. l; see generally 

In re Alexander Grant & Co. Litig., 820 F.2d 352, 356-57 (11th 

Cir. 1987); Marcus, Myth and Reality in Protective Order 

Litigation, 69 Cornell L. Rev. 1, 9-11 (1983). 

No doubt such an order makes the discovery process in a 

particular case operate more efficiently; the assurance of 

confidentiality may encourage disclosures that otherwise would be 

resisted. Allowing modification of protective orders for the 

benefit of collateral litigants tends to undermine the order's 

potential for more efficient discovery. But when a collateral 

litigant seeks access to discovery produced under a protective 

order, there is a counterveiling efficiency consideration--saving 

time and effort in the collateral case by avoiding duplicative 

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discovery. In striking this balance, some.circuits have adopted a 

presumption in favor of the continued integrity of the protective 

order, see, ~' Agent Orange, 821 F.2d at 147-48 (protective 

orders modifiable only under extraordinary circumstances), 1 others 

have tipped the balance in favor of avoiding duplicative 

discovery, see,~' Wilk, 635 F.2d at 1299; Olympic Refining Co. 

v. Carter, 332 F.2d 260, 264-66 (9th Cir.), cert. denied, 379 U.S. 

900 (1964), and still others have simply left the balancing to the 

discretion of the trial court, see, e.g., Stavro v. Upjohn Co. (In 

re Upjohn Co. Antibiotic Cleocin Prods. Liab. Litig.), 664 F.2d 

114, 120 (6th Cir. 1981). We find ourselves in agreement with the 

standard laid down by the Seventh Circuit in Wilk: 

"[W]here an appropriate modification of a protective 

order can place private litigants in a position they 

would otherwise reach only after repetition of another's 

discovery, such modification can be denied only where it 

would tangibly prejudice substantial rights of the party 

opposing modification. Once such prejudice is demonstrated, however, the district court has broad discretion in judging whether that injury outweighs the 

benefits of any possible modification of the protective 

order." 

635 F.2d at 1299 (citations omitted). 

Defendants' desire to make it more burdensome for Intervenors 

to pursue their collateral litigation is not legitimate prejudice. 

1 Other courts have assumed that the Second Circuit's "extraordinary circumstances" test applies only when the government is 

the collateral litigant seeking to avoid duplicative discovery, 

because of the government's vast investigatorial resources and 

power for oppression. ~' Wilk, 635 F.2d at 1299-1300. Indeed, 

the Second Circuit acknowledged this as the basis for the test in 

Palmieri v. New York, 779 F.2d 861, 866 (2d Cir. 1985). Agent 

Orange, while purporting to apply an extraordinary circumstances 

standard, when confronted with a private collateral litigant, 

upheld modification based only upon the fact that the protective 

order was a "blanket" one. But, as discussed above, such orders 

are routine in complex cases. 

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Id. at 1300-01. As the district court recognized, any legitimate 

interest the defendants have in continued secrecy as against the 

public at large can be accommodated by placing Intervenors under 

the restrictions on use and disclosure contained in the original 

protective order. See id. at 1301; Olympic Refining, 332 F.2d at 

265-66. The district court, therefore, did not abuse its discretion in modifying the protective order. 

Having said that, we also should note the limits of the district court's continuing jurisdiction over this matter. The district court was within its power and discretion to modify the protective order, but because the underlying controversy was no 

longer alive, "the court simply lacked power to impose any new, 

affirmative requirements on the parties relating to discovery." 

Public Citizen, 858 F.2d at 781; cf .. Smith v. Phillips, 881 F.2d 

902, 905 (10th Cir. 1989) (district court had no power to order 

the parties to disclose the terms of settlement agreement resulting in stipulated dismissal, when the settlement was not of record 

or subject to any court order). 

In any event, the district court must refrain from issuing 

discovery orders applicable only to collateral litigation. "[F]ederal civil discovery may not be used merely to subvert limitations 

on discovery in another proceeding .... [and] a collateral litigant has no right to obtain discovery materials that are privileged or otherwise immune from eventual involuntary discovery in 

the collateral litigation." Wilk, 635 F.2d at 1300. While the 

district court here properly granted collateral litigants access 

to discovery under its protective order, "[q]uestions of the 

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discoverability in the [collateral] litigation of the materials 

discovered in [this] litigation are, of course, for the 

[collateral] courts." Superior Oil Co. v. American Petrofina Co., 

785 F.2d 130, 130 (5th Cir. 1986). Because defendants Cranford 

and International are parties to the collateral suits, they have 

both the interest and standing to raise in those courts any 

relevancy or privilege objections to the production of any 

materials. See Cipollone v. Liggett Group, Inc., 113 F.R.D. 86, 

91 (D.N.J. 1986), mandamus denied, 822 F.2d 335 (3d Cir.), cert. 

denied, 484 U.S. 976 (1987). 

AFFIRMED. 

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