Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_04-cv-00807/USCOURTS-casd-3_04-cv-00807-4/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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04cv0807

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

RICHARD HOWARD KELLY, an

individual,

Plaintiff,

v.

PROVIDENT LIFE AND ACCIDENT

INSURANCE COMPANY, etc., et

al.,

Defendants. 

 

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Case No. 04-CV-0807-WQH (JMA)

ORDER REGARDING JOINT MOTION

RE DISCOVERY DISPUTE OVER

PROTECTIVE ORDER 

[Doc. 75] 

The parties have filed a Joint Motion Re Discovery Dispute

Over Protective Order [Doc. 75]. Plaintiff Richard Howard Kelly

(“Plaintiff”) and Defendant Provident Life and Accident Insurance

Company (“Defendant”) have been unable to stipulate to a

protective order to be entered in this case, and have each

submitted a proposed protective order to the Court (see Joint

Mot., Ex. A [Defendant’s] & Ex. B [Plaintiff’s]). 

For the reasons set forth below, the Court finds that

Defendant’s proposed protective order should be entered.

//

Case 3:04-cv-00807-CAB-BGS Document 80 Filed 12/05/08 Page 1 of 7
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I. Background

Both parties wish to enter into a stipulated protective

order in this matter. Joint Mot. at 2. Prior to the filing of

the instant motion, Plaintiff forwarded a proposed protective

order to Defendant. Id. Defendant agreed to substantial

portions of Plaintiff’s proposal, and adopted many of its

provisions in its own proposed protective order. Id. The

primary issue on which the parties disagree, and the issue to be

decided upon by the Court, is whether a “sharing” or “nonsharing” protective order should be entered. Plaintiff desires

the former; Defendant seeks the latter.

Plaintiff’s proposed protective order contains, in relevant

part, the following provisions to which Defendant objects:

The material may be used by counsel for the requesting

party to use in any other similar litigation, which

would include cases where a claim of breach of

contract, insurance bad faith, and/or rescission of a

settlement agreement is made against Defendant

PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY.

Access to any CONFIDENTIAL documents, or any part

thereof, as well as to the matters contained therein,

shall be limited to: . . . (vii) attorneys

representing any other party alleged to have been

injured as a result of a claimed breach of contract,

insurance bad faith, and/or rescission of a settlement

agreement as against Defendant PROVIDENT LIFE AND

ACCIDENT INSURANCE COMPANY. 

Pl.’s Proposed Protective Order, Joint Mot., Ex. B at ¶¶ 1.B. &

1.C. 

Defendant proposes the following provision, to which

Plaintiff objects:

All CONFIDENTIAL documents produced in this suit,

whether by a party or nonparty, subpoena, agreement or

otherwise, and all information contained in them or

derived from them, shall be used solely for the

preparation and trial of this suit (including any

appeals and retrials), and shall not be used for any

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3 04cv0807

other purpose, including business, governmental or

commercial, or in any other administrative, arbitration

or judicial proceedings or actions.

Def.’s Proposed Protective Order, Joint Mot., Ex. A at ¶ E.

II. Discussion 

The matter before the Court is governed by Foltz v. State

Farm Mut. Auto. Ins. Co., 331 F.3d 1122 (9th Cir. 2003). In

Foltz, the Ninth Circuit observed that, “This court strongly

favors access to discovery materials to meet the needs of parties

engaged in collateral litigation.” Id. at 1131. In doing so,

however, the court stated:

Nonetheless, a court should not grant a collateral

litigant’s request [to modify a protective order]

automatically. As an initial matter, the collateral

litigant must demonstrate the relevance of the

protected discovery to the collateral proceedings and

its general discoverability therein. Requiring a

showing of relevance prevents collateral litigants from

gaining access to discovery materials merely to subvert

limitations on discovery in another proceeding. 

Id. at 1132. Importantly, “[s]uch relevance hinges on the degree

of overlap in facts, parties, and issues between the suit covered

by the protective order and the collateral proceedings.” Id.

(quotations omitted). 

The Foltz court then went on to address the mechanics of the

relevancy inquiry. It stated that the court that entered the

protective order must “satisfy itself that the protected

discovery is sufficiently relevant to the collateral litigation

that a substantial amount of duplicative discovery will be

avoided by modifying the protective order.” Id. In other words,

the essential issue that the issuing court must decide is whether

the protective order should be modified. Before deciding to

modify the protective order, the issuing court must consider the

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relevance of the protected discovery to the collateral

litigation, and must “weigh the countervailing reliance interest

of the party opposing modification against the policy of avoiding

duplicative discovery.” Id. at 1133. Even if the issuing court

decides to modify the protective order, however, it does not

determine whether the collateral litigant will ultimately obtain

the discovery materials. Rather, any “disputes over the ultimate

discoverability of specific materials covered by the protective

order must be resolved by the collateral courts.” Id.

With regard to the above procedure, the Ninth Circuit

explained:

Allowing the parties to the collateral litigation to

raise specific relevance and privilege objections to

the production of any otherwise properly protected

materials in the collateral courts further serves to

prevent the subversion of limitations on discovery in

the collateral proceedings. These procedures also

preserve the proper role for each of the courts

involved: the court responsible for the original

protective order decides whether modifying the order

will eliminate the potential for duplicative discovery. 

If the protective order is modified, the collateral

courts may freely control the discovery processes in

the controversies before them without running up

against the protective order of another court.

Id. 

Here, Plaintiff seeks to circumvent all of the above

principles and procedures by including, in the first instance, a

“sharing” provision in the protective order to be entered in this

case. In other words, Plaintiff seeks the ability to share

confidential documents he obtains in this case with collateral

litigants without needing to seek to modify the protective order

and obtain a relevancy determination from the Court, and without

requiring the collateral courts to resolve any disputes which may

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arise with respect to discoverability of the materials in the

collateral cases. 

Plaintiff’s proposed protective order contemplates that

Plaintiff would determine to whom any confidential documents

would be provided. Pl.’s Proposed Protective Order, Joint Mot.,

Ex. B at ¶¶ 1.B. & 1.C. Such a procedure, obviously, would

interfere with this Court’s duty to undertake the relevancy

inquiry dictated by Foltz. Moreover, not only have the

collateral litigants not even been specifically identified, but

such litigants would, under Plaintiff’s proposal, not be required

to make any showing of relevance. This interferes with the

requirement in Foltz that the collateral litigant demonstrate to

the Court the relevance of the protected discovery to the

collateral proceedings. See Foltz, 331 F.3d at 1132. 

The Court is not at all persuaded by Plaintiff’s arguments

in favor of a sharing order and against a non-sharing order. 

Plaintiff, for example, argues that ample authority supports the

proposition that “the purposes of discovery are best realized

when litigants have an opportunity to share discovery.” Joint

Mot. at 7. The sharing of discovery, however, will not be

prevented by the entry of a non-sharing protective order. 

Rather, collateral litigants desiring any discovery produced

pursuant to the protective order will simply have to go through

appropriate steps to obtain that discovery, as set forth in

Foltz. 

Additionally, Plaintiff’s attempts to distinguish Foltz are

neither persuasive nor well-taken. For example, Plaintiff

contends that a substantial difference between this case and

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Foltz is that the protective order in Foltz was entered after a

settlement had been reached, and thus the non-sharing component

of the protective order was a “bargained for exchange.” Joint

Mot. at 9. This is erroneous. The three protective orders at

issue in Foltz, including the “blanket” protective order, were

entered during the discovery process. Foltz, 331 F.3d at 1128. 

Thus, Plaintiff’s entire analysis of this supposed “substantial

difference” between this case and Foltz rests upon an erroneous

reading of the facts in that case. Furthermore, Plaintiff’s

characterization of Foltz as a case which simply stands for the

proposition that parties can agree to a non-sharing protective

order (see Joint Mot. at 10) is wholly unreasonable. As set

forth above, Foltz goes into great detail about the precise

procedures, considerations and mechanics involved in the sharing

of protected discovery with collateral litigants. Finally,

Plaintiff’s attempt to distinguish Foltz on the basis that there

was an already existing non-sharing protective order in that

case, versus no protective order as of yet in this one,

completely overlooks the principle that a collateral litigant

should not be granted automatic access to a defendant’s

confidential documents.

Plaintiff represents that there are potentially “hundreds of

thousands of collateral litigants across the country.” Joint

Mot. at 11. The Court will simply not permit these litigants to

gain automatic access to Defendant’s confidential materials

without providing some procedural safeguards regarding the

dissemination of those materials, and without following the

procedures set forth in Foltz. Thus, the Court finds that

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Defendant’s proposed protective order should be entered. The

entry of Defendant’s protective order will not prejudice any

potential collateral litigants to move for modification of the

protective order in the future. 

III. Conclusion

For the reasons set forth above, the Court finds that

Defendant’s proposed protective order should be entered. 

Defendant shall submit its version of the protective order to the

undersigned’s chambers via e-mail at

efile_adler@casd.uscourts.gov, in either WordPerfect or Word

format, forthwith. The Court will enter said protective order

promptly thereafter.

IT IS SO ORDERED.

DATED: December 5, 2008

Jan M. Adler

U.S. Magistrate Judge

Case 3:04-cv-00807-CAB-BGS Document 80 Filed 12/05/08 Page 7 of 7