Opinion ID: 215414
Heading Depth: 1
Heading Rank: 2

Heading: Confidentiality Order Allegation

Text: We reject Peters's argument that she had inadequate notice of the Confidentiality Order allegation prior to Judge Baer's hearing. [8] See Peters's Br. at 55-57. First, Peters's argument that this allegation was not included in any way, shape or form in the Sanctions Motion, id. at 55, is incorrect. Although the defendants did not, in a separate count, charge Peters with violating the Confidentiality Order, that allegation was made in several sections of the motion: (1) as part of the charge that Peters had improperly refused to return discovery and had attempted to use discovery from the New York action in the Massachusetts action, see App. at A84 (The unmistakable inference from plaintiff's conduct is that it intends to use the discovery it tricked the [defendants] into providing in this matter in the Massachusetts Action or otherwise, for its own improper benefit.... Now that the New York action has concluded, the only reason for [plaintiff's counsel's request for leave to share transcripts with its client] is to misappropriate defendants' information, either in the Massachusetts Action or for plaintiff's anticompetitive business purposes. Meanwhile, the Complaint in the Massachusetts Action . . . clearly utilizes information gleaned from the depositions in this case, in further violation of the Confidentiality Order issued in this case. (emphasis in original)), A82-83 (stating that, after the plaintiff argued that plaintiff needed to retain a copy of the [discovery] documents for the Massachusetts Action, the district court indicated that the plaintiff would have to take discovery anew in any such action and ordered plaintiff to return all discovery to the Court.... This directive also was consistent with the Confidentiality Order issued in the case, which unambiguously prohibited the use of material marked CONFIDENTIAL or HIGHLY CONFIDENTIAL in connection with any other proceeding. (citations omitted)); (2) as part of the request that the district court bar the use in any other action of any materials covered by the Confidentiality Order, see id. at A95 (Plaintiff and its counsel breached the [Confidentiality] Order's express prohibition on using discovery information in other cases by utilizing information gleaned from Attorneys' Eyes Only depositions in the Massachusetts Complaint and necessarily sharing it with their Massachusetts counsel. The Court should thus enforce the [Confidentiality] Order and bar plaintiff, its affiliates, its employees, and its counsel, from using discovery from this case in the Massachusetts Action.); (3) as part of the request that plaintiff's counsel be disqualified from prosecuting the Massachusetts action, see id. at A96 (Pursuant to the [Confidentiality] Order. . ., the parties were required to treat confidential information or information exchanged on an `Attorneys Eyes Only' basis as `Protected Material,' as defined therein. As such, this material was ordered `not to be used ... in any other litigation proceeding.' [Confidentiality] Order ¶ 7(a) at 11. Despite this [Confidentiality] Order, plaintiff's counsel has already shown its willingness to use such information in the Massachusetts Action.); and (4) as part of their argument that the plaintiff should be held in civil contempt, see id. at A99 (stating that plaintiff's Massachusetts complaint utiliz[ed] information obtained in discovery in this action designated as `Attorneys' Eyes Only,' despite this Court's [Confidentiality] Order on April 12, 2007, which provides, inter alia, that material so designated `shall not be used ... in any other litigation proceeding.' Protective Order ¶ 7(a) at 11.). Through the above-noted portions of the defendants' sanction motion, a reasonable person would have been on notice that the Confidentiality Order allegation, if proved, could lead to sanctions. See Mullane, 339 U.S. at 314, 70 S.Ct. 652; In re Jacobs, 44 F.3d at 90. Peters herself appears to have reached that very conclusion as of May 24, 2007, when she signed an affidavit and a memorandum of law in support of her firm's opposition to the sanctions motion. See App. at A122-64 (Mem. of Law), A165-237 (Peters Aff.). In that affidavit and memorandum, Peters explicitly treated the Confidentiality Order allegation as an asserted ground for sanctions. Id. at A155-64, A232-37. The relevant portion of the memorandum begins as follows: Defendants contend that sanctions are warranted in this case due to Plaintiff's use of the deposition transcripts from the New York Action, which Defendants had designated as Attorneys' Eyes Only, in motion papers filed under seal in the Massachusetts Action. Defendants assert that this use of the transcripts constituted a violation of the Confidentiality Order warranting sanctions. Dorsey strenuously opposes this grounds [sic] for sanctions. Id. at A155. In her brief, Peters argues that the Sanctions Motion could not have included the Confidentiality Order Allegation, because the transcript excerpts were filed in Massachusetts after the Sanctions Motion was delivered to Dorsey's offices on April 24, 2007. Peters's Br. at 55 (emphasis in original). However, the allegations in the sanctions motion concerning violation of the Confidentiality Order were broad enough to encompass both violations that had already occurred and violations that were anticipated. See App. at A84 (The unmistakable inference from plaintiff's conduct is that it intends to use the discovery. . . in the Massachusetts Action or otherwise[.]). In any event, a reasonable person could not read the defendants' request for sanctions based on the prior filings in Massachusetts violating the Confidentiality Order without realizing that similar subsequent filings in Massachusetts would likely also be at issue. Additionally, a defense against sanctions for the post-April 24 filings in Massachusetts did not require different preparation than a defense against sanctions for the pre-April 24 filingsthe primary issue was not whether particular filings were improper, but whether the Massachusetts action was the same action as the New York action for purposes of the Confidentiality Order. Peters also received adequate advance notice of the charge through the district court's May 2007 order, in which the district court made clear that the Confidentiality Order allegation constituted a ground for sanctions that would be considered during the sanctions proceeding. See Wolters Kluwer Fin. Servs., Inc. v. Scivantage, 07-cv-2352, 2007 WL 1498114, at  (S.D.N.Y. May 23, 2007) (Plaintiff's counsel also suggested that following Plaintiff's voluntary dismissal, this Court's repeated orders to return discovery forthwith concomitantly modified the [Confidentiality] Order and granted her the ability to use transcripts of these `attorneys' eyes only' depositions in the Massachusetts action. Such a contention strains credulity. I will address Plaintiff's actions, however, in a future opinion regarding Defendants' motion for contempt and sanctions, once such motion is fully briefed.... I will decline, at this time, to direct Plaintiff to redact from its filings in the Massachusetts action the `attorneys' eyes only' transcripts of depositions taken in this action.... I will reserve decision on that sanction, as well as the more serious sanctions, including contempt, requested by Defendants.... These sanctions, as well as the branch of Defendant's motion that seeks disqualification of Plaintiff's counsel from the Massachusetts action, will abide the fully briefed motion and any hearings that are warranted. (internal citations and footnote omitted)). Thus, Peters had ample notice of this charge prior to the commencement of Judge Baer's sanctions proceeding.
Although we do not find the Confidentiality Order to be, in all relevant respects, crystal clear, In re Peters, 543 F.Supp.2d at 333, we conclude that it barred the use, in the Massachusetts action, of New York discovery materials covered by the order. The Confidentiality Order states, in various provisions, that it governs the handling of confidential documents in this action (used at least nineteen times), the action (used once), this lawsuit (used twice), the above-entitled litigation (used thrice), this litigation (used once), the litigation (used once), and this case (used once). [9] App. at A43-47 (Confidentiality Order). The order also references these actions and each action, id. at A53, A57, which appear to be errors and, in any event, are not relevant to the present issue. Although use of these different phrases introduced a degree of ambiguity, the context makes apparent that all of these phrases were meant to be synonymous and refer to the same legal proceeding. However, we agree with Peters that such phrases may, depending on the circumstances, refer to a group of separate, but related, legal proceedings before more than one court or judge, rather than a single action with a single docket number in a single court. Since these phrases are not defined in the order, and are susceptible to different definitions, most of them are of little use in interpreting the scope of the order. We focus on two portions of the order. First, paragraph 4 of the order contains the following language: (b) Access to Confidential Information. In the absence of written permission from the Producing Party or Designating Party, as applicable, or an order of the Court, any Protected Material consisting of or containing CONFIDENTIAL INFORMATION shall be used solely for purposes of the prosecution and defense of the above-entitled litigation[.] Confidentiality Order ¶ 4(b). Paragraph 4(c)is identical to 4(b), except that the phrase, ATTORNEYS' EYES ONLY INFORMATION, is used in place of CONFIDENTIAL INFORMATION. Although one can argue over the precise meaning of above-entitled litigation, there is no plausible definition of that phrase that would encompass both the New York action and the Massachusetts action. Above-entitled refers to the title appearing on the first page of the Confidentiality Order itself; however, every conceivable part of that litigation title differs from the comparable portion of the Massachusetts action's title: (a) the names of the parties differ, in that the Massachusetts action involved one additional plaintiff and one additional defendant; (b) the name of the court differs; and (c) the docket number differs. Second, after defining Court as referring to the United States District Court for the Southern District of New York, see Confidentiality Order ¶ (2)( l ), the order states that: the Court may overrule a party's confidentiality designation, id. ¶ 4(a); the Court may permit the use of confidential material for purposes beyond the above-entitled litigation, id. ¶ 4(b)-(c); Court employees owe no duty to the parties to maintain the confidentiality of documents filed with the Court, id. ¶ 6(a); applications and motions to the Court appending confidential materials are to be filed under seal with the caption of this case appearing on the outside of the envelope, id. ¶ 6(b); the parties may move the Court to resolve disputes over the sealing of documents, id. ¶ 6(c); the party challenging a confidentiality designation may seek relief from the Court, id. ¶ 8; and [t]he Court shall retain jurisdiction, even after termination of this lawsuit, to enforce this Order and to make such amendments and modifications to this Order as may be appropriate, id. ¶ 13. These procedures and remedies, limited exclusively to the Southern District of New York, would make no sense if the order were read as (a) permitting any party, without leave, to file confidential documents in any other court, and/or (b) giving the Southern District authority over filings and other proceedings in other courts. The order clearly anticipates that the Southern District, and no other court, would control all matters of confidentiality covered by the order. An essential component of that control is the requirement that confidential documents be used only in that case in that court. [10] To the extent that Peters argues that the Confidentiality Order was orally modified by Judge Baer in some fashion relevant to the present issue, see Peters's Br. at 88-90, we reject the argument. Although Judge Baer addressed the treatment of discovery materials on several occasions, Peters has not cited any oral order, or comment, altering any provisions governing the filing of documents in any other litigation or court. We agree with the Grievance Committee that Judge Baer's instruction that Peters's firm could keep certain transcript excerpts did not alter the Confidentiality Order's bar on the use of those excerpts elsewhere, including in Massachusetts. See In re Peters, 543 F.Supp.2d at 334. Thus, Peters's submission of confidential materials to the Massachusetts court, without the prior leave of Judge Baer, violated the Confidentiality Order.
Although Peters violated the Confidentiality Order, an attorney's violation of a court order does not, by itself, necessarily constitute sanctionable misconduct. To be sanctionable, the attorney's violation must be accompanied by a culpable state of mind. See, e.g., ABA Standards for Imposing Lawyer Sanctions, R. 6.21-6.24 (1986, amended 1992)(outlining range of sanctions for violating a court order or rule, depending on the lawyer's mental state and other factors); In re Ryan, 189 A.D.2d 96, 104, 594 N.Y.S.2d 168 (1st Dep't 1993) (stating that venal intent is element of DR 1-102(A)(4)); In re Cohn, 194 A.D.2d 987, 990-91, 600 N.Y.S.2d 501 (3d Dep't 1993)(stating that venal intent is apparent element of DR 1-102(A)(4) and holding that, although venal intent was lacking, the same specifications ... supported charges of conduct prejudicial to the administration of justice involving misstatements in official documents misleading to judicial and other governmental agencies). For the following reasons, we find that, on the present record, there is insufficient evidence that Peters acted with a culpable state of mind when she violated the Confidentiality Order. First, the record created by Judge Baer does not make clear the degree of Peters's familiarity with the Confidentiality Order during the relevant time period. The record contains evidence, presented by Peters, that: other attorneys in Peters's firm had taken the lead in negotiating that order; the order had been issued by the district court on April 12, 2007; Peters had left the country the following day and did not have a copy of the order during her time abroad; she had not reviewed the order prior to her departure (although she had discussed it briefly with others); and she had relied on the advice of other attorneys in her firm as to the order's requirements. See App. at A792, A907, A923-24; see also A840 (Brackett research email dated Apr. 19, 2007) (I think that we can construe the Massachusetts Action as a continuation of the previous matter.). Zachary Carter and Jonathan Herman, two of the attorneys upon whom Peters claims to have relied, see id. at A769, A811, testified that they had not read the Confidentiality Order during the relevant time period, see id. at A727, A731, A733, A811. However, Herman, who had been assigned by the firm to supervise Peters's conduct of the litigation, see id. at 731, 804, had asked Carter on April 24, apparently on Peters's behalf, whether use of transcript pages from the New York action in an exhibit to an anticipated Massachusetts filing would violate any existing court order of [Judge] Baer, id. at A846. In response, Carter advised that, although there was an outstanding motion requesting the return of transcript pages, republishing them in the exhibit would be fair game. Id. According to Carter's testimony, however, he was not familiar with the Confidentiality Order at the time he gave that advice, as the only orders that [he] had been ... exposed to[] were those that had been issued from April 16 through the time he gave that advice. Id. at A731. The record does not indicate whether Peters knew, or should have known, the limited nature of Carter's advice. As for Marc Reiner, Deidre Sheridan, and Brackett, the Dorsey attorneys who Peters alleged were the most familiar with the Confidentiality Order, see id. at A792, A907, A923-24; cf. id. at A697 (Reiner testifying that he had read the order carefully), their testimony and declarations do not cover the issue of Peters's familiarity with the Confidentiality Order, see id. at A239-43, A244-50, A680-706, A708-16, A819-24, although they were presumably the most knowledgeable about that point, aside from Peters herself. In fact, Sheridan never testified at all. Although Reiner's testimony, and an email, indicate that he had informed Peters of Judge Baer's April 16 instruction that her firm should seek new discovery in the Massachusetts action, see id. at A686, A835, he did not mention the Confidentiality Order in relation to that instruction. Judge Baer and the Grievance Committee rejected Peters's assertion that she had acted in good faith as demonstrated by her reliance on Brackett's research on whether the Massachusetts and New York cases were the same litigation within the meaning of the Confidentiality Order. See In re Peters, 543 F.Supp.2d at 334; App. at A839-41. However, a rejection of that evidence requires a finding as to her familiarity with the Confidentiality Order, i.e., whether she knew, or should have known, that the Confidentiality Order barred the filing in Massachusetts of material covered by that order. Furthermore, if the Grievance Committee concludes, on remand, that Peters did not know that the Massachusetts filing was barred by the Confidentiality Order, but should have known, a finding as to the degree of her culpability is necessary since mere negligence might not warrant severe, or any, disciplinary measures. See ABA Standards for Imposing Lawyer Sanctions, R. 6.23-6.24 (stating that reprimand or admonition is generally appropriate for negligent failure to comply with court order or rule). On the other hand, it is possible that Peters would warrant discipline for violating the Confidentiality Order even if she was not familiar with its termsif, for example, her failure to familiarize herself with the order was in bad faith. However, such a conclusion would require detailed factual findings. Second, we disagree with the Grievance Committee's conclusion that Peters's good faith defense is undermined by provisions of the Confidentiality Order that provide[] a mechanism for seeking guidance from the Court on its scope, In re Peters, 543 F.Supp.2d at 334 (citing Confidentiality Order ¶¶ 9, 10, 13), and by the asserted fact that her own client did not agree with her use of the transcripts in the Massachusetts action, id. (citing Wolters Kluwer, 525 F.Supp.2d at 514 n. 254). Paragraph 9 of the Confidentiality Order permits any person to seek judicial modification or amendment of [the] [o]rder; paragraph 10 requires that notice be given to a party if disclosure is sought of that party's Protected Material; and paragraph 13 provides that the obligations created by the order would survive the termination of the lawsuit unless ... modified by the respective Court in each action and that the district court would retain jurisdiction to enforce, amend, or modify the order. None of those provisions contain an explicit mechanism for seeking guidance on the scope of the Confidentiality Order. While such guidance could be sought, with or without reference to any provision of the Confidentiality Order, no provision mandates that a party seek guidance as to the meaning of a term or provision of the order or suggests that failure to seek guidance is necessarily unreasonable or in bad faith. The record also does not contain clear evidence that Peters's client disagreed with her use of the New York transcripts in Massachusetts. At one point, the relevant witness, in-house counsel for the client, testified that he had instructed Peters to make an argument to the district court about the use of New York depositions in the Massachusetts action. See App. at A460-61. However, in response to a question about whether he understood that the district court had made a further ruling on these issues, he testified that there had been additional communications on that, without describing that ruling or those communications. See id. at A461. That witness also testified that he had authorized Peters to request the Massachusetts court to order the defendants to again produce the documents that Judge Baer had ordered be returned to him, see id. at A464, and that he had been consulted prior to the filing of New York transcripts in the Massachusetts action, had been advised that the Confidentiality Order did not cover the anticipated filing, and, apparently, had not objected, see A518-19. [11] Third, in finding that Peters had violated the Confidentiality Order in bad faith, the Grievance Committee adopted Judge Baer's conclusion that Peters used the transcripts [in the Massachusetts action] in a bad-faith effort for the improper purpose of gaining advantage (and expedient relief) in a new court after she had `judge-shopped,' and after she had gained extensive discovery without providing any discovery of her own, and in an effort to have [the Massachusetts] Court eviscerate the Confidentiality Order that this Court had entered to govern discovery produced in this litigation. In re Peters, 543 F.Supp.2d at 334 (first alteration in original) (citing Wolters Kluwer, 525 F.Supp.2d at 548). This conclusion, however, links the Confidentiality Order allegation to several other allegations made in the defendants' sanction motion, without separate analysis of those other allegations. Additionally, part of Judge Baer's conclusion was rendered questionable by this Court's opinion in the appeal from Judge Baer's reprimand order. In that appeal, this Court reversed the district court's reprimand against Peters's law firm for voluntarily dismissing the Wolters Kluwer litigation, stating that the firm was entitled to file a valid Rule 41 notice of voluntary dismissal for any reason, and rejecting Judge Baer's conclusion that the dismissal was an improper attempt to judge-shop, or that the filing of the Rule 41 notice itself was sanctionable. Wolters Kluwer, 564 F.3d at 114-15; see also id. at 115 (It follows that Dorsey was entitled to file a valid Rule 41 notice of voluntary dismissal for any reason, and the fact that it did so to flee the jurisdiction or the judge does not make the filing sanctionable.). Furthermore, the record shows that there were legitimate reasons supporting dismissal, as both the client's in-house counsel and certain Dorsey attorneys, Peters included, had become aware of a possible lack of personal jurisdiction in New York; indeed, the defendants had filed a motion to dismiss on that basis. See App. at A648, A832 (email exchange between Peters and opposing counsel discussing the issue). Additionally, there does not appear to be a dispute that Peters initially had opposed dismissal under Rule 41 and had instead attempted, unsuccessfully, to have the district court rule on her motion to have the case transferred to Massachusetts. [12] See, e.g., id. at A202 (Peters Decl. ¶ 132), A239-41 (Reiner Decl. ¶¶ 2-6), A680-81 (Reiner testimony), A833-34 (emails, between Peters and other attorneys, discussing issue). For the forgoing reasons, we also vacate the portion of the Grievance Committee's order sanctioning Peters based on the Confidentiality Order allegation. On remand, however, the Grievance Committee is free to make a new determination, based on detailed factual findings, of whether Peters acted with a culpable state of mind when she violated the Confidentiality Order and, if so, to discipline her accordingly.