Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-00019/USCOURTS-cand-3_18-cv-00019-5/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 18:1836(a) - Injunction against Misappropriation of Trade Secrets

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

COLLATERAL ANALYTICS, LLC,

Plaintiff,

v.

NATIONSTAR MORTGAGE, LLC, et al.,

Defendants.

Case No.18-cv-00019-RS (JSC)

ORDER RE: DEFENDANTS’ MOTION 

TO RETAIN CONFIDENTIALITY

DESIGNATION

Re: Dkt. No. 148

Plaintiff Collateral Analytics, LLC brings federal and state-law claims against Defendants 

Nationstar Mortgage, LLC (“Nationstar”), Xome Settlement Services, LLC (“Xome”), and 

Quantarium, LLC (“Quantarium”) (collectively, “Defendants”), including trade-secret 

misappropriation, breach of contract, computer fraud, intentional interference with contractual 

relations, and false advertising. (Dkt. No. 1.)1 This matter is before the Court on discovery 

referral from the district court. (Dkt. No. 68.) Defendants move to retain their designation of 70 

documents as “Highly Confidential-Attorneys’ Eyes Only,” pursuant to the parties’ stipulated 

Protective Order. (See Dkt. Nos. 62 & 148.) Plaintiff challenges Defendants’ designation and 

seeks to have the documents re-designated as “Confidential.” (Dkt. No. 152.) After careful 

consideration of the parties’ briefing, the Court DENIES Defendants’ motion because the material 

does not fall within the scope of the Protective Order. 

BACKGROUND

I. The Protective Order

The parties entered into the stipulated Protective Order on May 17, 2018. (Dkt. No. 62.) 

 

1 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the 

ECF-generated page numbers at the top of the documents. 

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The Protective Order provides for three confidentiality designations for materials a party 

“produces in disclosures or in responses to discovery”—“Confidential”; “Highly Confidential –

Attorneys’ Eyes Only” (“AEO”); or “Highly Confidential – Source Code.” (Id. at ¶ 2.4.) The 

AEO designation applies only to “extremely sensitive ‘Confidential Information or Items,’ 

disclosure of which to another Party or Non-Party would create a substantial risk of serious harm 

that could not be avoided by less restrictive means.” (Id. at ¶ 2.7.) 

The Protective Order covers “any Disclosure or Discovery Material” that carries one of the 

three confidentiality designations listed above, as well as: “(1) any information copied or extracted 

from Protected Material; (2) all copies, excerpts, summaries, or compilations of Protected 

Material; and (3) any testimony, conversations, or presentations by Parties or their Counsel that 

might reveal Protected material.” (Id. at ¶ 3.) However, the Protective Order does not cover “any 

information known to the Receiving Party prior to the disclosure or obtained by the Receiving 

Party after the disclosure from a source who obtained the information lawfully and under no 

obligation of confidentiality to the Designating Party.” (Id. (emphasis added).) 

Unlike AEO-designated material, documents designated as “Confidential” may be shared 

with “the officers, directors, and employees (including House Counsel) of the Receiving Party to 

whom disclosure is reasonably necessary for this litigation and who have signed the 

“Acknowledgment and Agreement to be Bound.” (Compare id. at ¶ 7.2(b) with ¶ 7.3.) Both 

categories of material may, however, be disclosed to “the author or recipient of a document 

containing the information or a custodian or other person who otherwise properly possessed or 

knew the information.” (Id. at ¶¶ 7.2(g), 7.3(f).) The Protective Order provides for judicial 

intervention in the event the parties cannot resolve their dispute over the designation of documents

and places the “burden of persuasion in any such challenge proceeding . . . on the Designating 

Party.” (Id. at ¶ 6.3.) 

II. The Documents at Issue

According to Defendants, the 70 documents at issue comprise two categories: (1) 

“documents concerning Defendants’ trade secrets and highly sensitive business information about 

the development of Defendants’ trades secrets”; and (2) “documents that are parent emails for 

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attachments, which discuss Defendants’ trade secrets or highly sensitive information about the 

development of Defendants’ trade secrets, and summarize the content of their attachments.” (Dkt. 

No. 148-1, Ex. A.) Defendants did not submit the actual documents for this Court’s review; 

however, Plaintiff does not dispute that the documents contain Defendants’ trade secret 

information. 

LEGAL STANDARD

The confidentiality of the documents at issue is governed by Federal Rule of Civil 

Procedure 26(c). (See Dkt. No. 62 at ¶ 2.2 (defining “confidential” information as “information 

(regardless of how it is generated, stored or maintained) or tangible things that qualify for 

protection under Federal Rule Civil Procedure 26(c).”).) Rule 26(c) provides, in part, that “[t]he 

court may, for good cause, issue an order . . . requiring that a trade secret or other confidential 

research, development, or commercial information not be revealed or be revealed only in a 

specified way.” Fed. R. Civ. P. 26(c)(1)(G). “For good cause to exist, the party seeking 

protection bears the burden of showing specific prejudice or harm will result if no protective order 

is granted.” Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210-11 (9th 

Cir. 2002). Where, as here, an existing “protective order was a stipulated order and no party ha[s] 

made a ‘good cause’ showing, then the burden of proof . . . remain[s] with the party seeking 

protection.” In re Roman Catholic Archbishop of Portland in Oregon, 661 F.3d 417, 424 (9th Cir. 

2011) (internal quotation marks and citation omitted) (alterations in original). District courts have 

“broad discretion” under Rule 26(c) to determine “what degree of protection is required.” Seattle 

Times v. Rhinehart, 467 U.S. 20, 36 (1984).

DISCUSSION

Plaintiff challenges the AEO designation of the 70 documents at issue because they were 

allegedly “sent to or received from” Plaintiff prior to this litigation and are thus not covered under 

the Protective Order. (See Dkt. No. 152 at 2 (“The parties exchanged [the documents] at issue in 

2015 through 2017—before Collateral Analytics sued in 2018.”).) Plaintiff seeks to re-designate 

the materials as “Confidential.” (Id.) Defendants move to retain the documents’ AEO designation 

because they are “Highly Confidential under the terms of the Protective Order and permitting their 

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de-designation and disclosure would harm Defendants in violation of the Protective Order’s letter 

and purpose.” (Dkt. No. 148 at 8.) Defendants do not dispute that the documents at issue were 

sent to or from Plaintiff prior to the litigation, nor do Defendants directly address the Protective 

Order’s inapplicability to “any information known to the Receiving Party prior to the disclosure,” 

(see Dkt. No. 62 at ¶ 3), or the Protective Order’s provision allowing for disclosure of AEOdesignated material to “the author or recipient of a document containing the information or a 

custodian or other person who otherwise properly possessed or knew the information,” (id. at ¶

7.3(f)). Defendants instead broadly assert that “[f]or the [AEO] designation in the Protective 

Order to have meaning in this case, the parties must be able to use it to stop the further spread of 

secret information, even when a party has previously seen that information in some limited 

capacity.” (See Dkt. No. 148 at 7.) Defendants’ arguments fail to carry their burden of 

demonstrating that the AEO-designation is proper because the Protective Order—by its plain 

terms—does not even cover the documents at issue. 

Defendants do not dispute that Plaintiff “has sent or received these exact documents” prior 

to the litigation. (See Dkt. No. 152 at 4.) In other words, it is undisputed that Plaintiff had these 

documents and thus knew the information contained in them prior to Defendants’ disclosure in 

this case. Thus, the material is not covered under the Protective Order because it constitutes 

“information known to the Receiving Party prior to the disclosure.” (See Dkt. No. 62 at ¶ 3

(emphasis added).) Defendants’ assertion that ‘the Protective Order’s plain language does not 

permit any de-designation” on the grounds that the material was “sent to or from” Plaintiff is 

unavailing because it fails to acknowledge that Plaintiff possessed the exact AEO-designated 

information at issue before the disclosure, rendering the Protective Order inapplicable. 

Plaintiff does not argue that the AEO-designated material must be made public and instead 

seeks only to re-designate the material as “Confidential.” The Court declines to re-designate the 

documents, however, because the documents do not even qualify as “Confidential” material under 

the Protective Order. (See id.) The Court assumes that the parties exchanged the documents at 

issue prior to Defendants’ litigation disclosure with some sort of restrictions in place, but the 

parties do not provide the Court with any information on that score. Instead, the parties base their 

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respective arguments solely on the terms of the Protective Order. In other words, they offer no 

arguments for designating the material as “Confidential” or “AEO” separate and apart from the 

Protective Order. Those arguments must fail because the material does not even fall within the 

Protective Order’s scope. 

Defendants’ additional argument set forth in their Reply—that Plaintiff recognizes the 

harm in allowing further disclosure of trade secret information because Plaintiff itself has refused 

to allow Defendants’ in-house attorneys “to view Collateral Analytics’ Highly Confidential 

documents[ ] containing its trade secrets”—is also unavailing. (Dkt. No. 156 at 5.) There is no 

indication that Plaintiff’s AEO-designated materials were, like the documents at issue here, sent to 

or received from Defendants prior to the litigation, and Defendants make no argument to the 

contrary. (See Dkt. No. 156 at 5-6; see also id., Exs. A-C.) 

CONCLUSION

For the reasons set forth above, the Court DENIES Defendants’ motion to retain the AEO 

designation as to the 70 documents at issue because the material does not fall within the scope of 

the Protective Order. Under the plain terms of the Protective Order, Defendants cannot 

retroactively declare information AEO that was shared with Plaintiff pre-litigation without such

restrictions. The parties, of course, are nonetheless free to stipulate that the documents shall be 

treated with a particular confidentiality designation under the Protective Order. 

This Order disposes of Docket No. 148. 

IT IS SO ORDERED.

Dated: May 29, 2019

JACQUELINE SCOTT CORLEY

United States Magistrate Judge

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