Opinion ID: 782262
Heading Depth: 4
Heading Rank: 1

Heading: Right of Access to Unfiled Discovery Materials

Text: 15 The district court refused to modify its protective order to allow the Private Intervenors access to unfiled discovery materials from the Foltz litigation for use in their collateral litigation. We review this decision for abuse of discretion. Beckman, 966 F.2d at 472. 16 a. General application of Rule 26. Federal Rule of Civil Procedure 26(c) states that when a party or other person from whom discovery is sought makes a motion asserting good cause for a protective order, the court in which the action is pending ... may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, based on any of several listed reasons. Those that appear pertinent to the present case include specifying terms and conditions of discovery, limiting the scope of the disclosure ... to certain matters, requiring that a deposition, after being sealed, be opened only by order of the court, and particularly that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a designated way.... FED. R. CIV. P. 26(c)(2), 26(c)(4), 26(c)(6), 26(c)(7). Any such order, however, requires that the court's determination identify and discuss the factors it considered in its `good cause' examination to allow appellate review of the exercise of its discretion. Phillips v. Gen. Motors, 307 F.3d 1206, 1212 (9th Cir.2002). 17 A party asserting good cause bears the burden, for each particular document it seeks to protect, of showing that specific prejudice or harm will result if no protective order is granted. Id. at 1210-11 (citing San Jose Mercury News, 187 F.3d at 1102); see also Beckman, 966 F.2d at 476 ([B]road allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.) (quoting Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir.1986) (internal quotation marks omitted)); Deford v. Schmid Prods. Co., 120 F.R.D. 648, 653 (D.Md.1987) (requiring party requesting a protective order to provide specific demonstrations of fact, supported where possible by affidavits and concrete examples, rather than broad, conclusory allegations of potential harm). 18 Two protective orders address unfiled discovery documents in the instant case. One regards a floppy disk produced by CMR. This disk does not appear in the court record, and State Farm fails to tie any documents in the court record to the disk. Unless the court articulates good cause for the disk to remain under seal, that seal must be removed. 19 Second, the district court issued a blanket protective order, forbidding both parties to disclose any information produced in discovery absent permission from the other party or from the district court. Some discovery documents sealed under this order contained confidential information that would satisfy the good cause standard of Rule 26(c). 4 Under the blanket protective order, however, the district court never required State Farm to show that specific discovery documents, whether eventually filed with the court or not, contained such information. While this course of action was understandable for the unfiled documents given the onerous burden document review entails, the blanket order makes appellate review difficult now that an intervenor is questioning the propriety of the original order. 20 Apart from generally noting the existence of confidential third party information, which may or may not have been filed, State Farm has not asserted, much less shown, specific harm or prejudice that it expects will arise from disclosure of any particular documents produced in discovery, as required by Beckman. With the exception of asserting the presence of information in medical records identifying third parties, the confidentiality of which can be protected using procedures described below, State Farm has failed to meet the burden imposed by Rule 26(c) of making a particular showing of good cause, nor has it alleged  specific prejudice or harm now. Beckman, 966 F.2d at 476 (emphasis added). State Farm has not identified any documents containing trade secrets and financial information. In light of Beckman, without more we cannot sustain the district court's ruling. 21 Now that the Private Intervenors have challenged the contention that the unfiled discovery documents belong under seal, the district court must require State Farm to make an actual showing of good cause for their continuing protection under Federal Rule of Civil Procedure 26(c). See Phillips, 307 F.3d at 1212 (remanding to district court with instructions to conduct a good cause analysis); Deford, 120 F.R.D. at 653 (The burden is on the party requesting a protective order to demonstrate that (1) the material in question is a trade secret or other confidential information within the scope of Rule 26(c), and (2) disclosure would cause an identifiable, significant harm.). 22 b. Discovery by Collateral Litigants. In addition to access to material that should not have been placed under seal in the first instance, collateral litigants may be entitled to modification of the original protective order permitting them access to the properly covered material, subject to the terms of that order. This court strongly favors access to discovery materials to meet the needs of parties engaged in collateral litigation. Beckman, 966 F.2d at 475. Allowing the fruits of one litigation to facilitate preparation in other cases advances the interests of judicial economy by avoiding the wasteful duplication of discovery. Id.; United Nuclear, 905 F.2d at 1428 (quoting and adopting the standard laid down by the Seventh Circuit in Wilk, 635 F.2d at 1299, that where 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.); 8 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 2044.1 (2d ed.1994). Where reasonable restrictions on collateral disclosure will continue to protect an affected party's legitimate interests in privacy, a collateral litigant's request to the issuing court to modify an otherwise proper protective order so that collateral litigants are not precluded from obtaining relevant material should generally be granted. Beckman, 966 F.2d at 475; Olympic Refining Co. v. Carter, 332 F.2d 260, 265-66 (9th Cir. 1964). 23 Nonetheless, a court should not grant a collateral litigant's request for such modification 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. See Wilk, 635 F.2d at 1300. Such relevance hinges on the degree of overlap in facts, parties, and issues between the suit covered by the protective order and the collateral proceedings. Laurie Kratky Dore, Secrecy by Consent: The Use and Limits of Confidentiality in the Pursuit of Settlement, 74 Notre Dame L.Rev. 283, 366-67 (1999). 24 We take this opportunity to clarify the mechanics of this relevance inquiry. The case law suggests that the court that entered the protective order should 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. See Wilk, 635 F.2d at 1300 (comparing complaints to conclude that much, if not most, of the protected discovery would be eventually discoverable in the collateral suit); United Nuclear, 905 F.2d at 1428 (upholding the modification of a protective order but admonishing the district court to leave the specific [q]uestions of the discoverability in the [collateral] litigation of the materials discovered in [this] litigation to the collateral courts (quoting Superior Oil Co. v. Am. Petrofina Co., 785 F.2d 130, 130 (5th Cir.1986) (internal quotation marks omitted))). No circuits require the collateral litigant to obtain a relevance determination from the court overseeing the collateral litigation prior to requesting the modification of a protective order from the court that issued the order. 5 The court that issued the order is in the best position to make the relevance assessment for it presumably is the only court familiar with the contents of the protected discovery. 25 Because the district court that issued the order makes only a rough estimate of relevance, however, the only issue it determines is whether the protective order will bar the collateral litigants from gaining access to the discovery already conducted. Even if the issuing court modifies the protective order, it does not decide whether the collateral litigants will ultimately obtain the discovery materials. As the Fifth and Tenth Circuits have noted, once the district court has modified its protective order, it must refrain from embroiling itself in the specific discovery disputes applicable only to the collateral suits. Superior Oil, 785 F.2d at 130; United Nuclear, 905 F.2d at 1428 ([B]ecause the underlying controversy [is] no longer alive, `the court simply lack[s] power to impose any new, affirmative requirements on the parties relating to discovery.') (quoting Pub. Citizen v. Liggett Group, Inc., 858 F.2d 775, 781 (1st Cir.1988)). 26 The disputes over the ultimate discoverability of specific materials covered by the protective order must be resolved by the collateral courts. Id. 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 of 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. 27 Of course, before deciding to modify the protective order, the court that issued it must consider other factors in addition to the relevance of the protected discovery to the collateral litigation. In particular, it must weigh the countervailing reliance interest of the party opposing modification against the policy of avoiding duplicative discovery. See Beckman, 966 F.2d at 475. However, we have observed that [r]eliance will be less with a blanket [protective] order, because it is by nature overinclusive. Id. at 476. As noted above, a party seeking the protection of the court via a blanket protective order typically does not make the good cause showing required by Rule 26(c) with respect to any particular document. Thus, reliance on a blanket protective order in granting discovery and settling a case, without more, will not justify a refusal to modify. [A]ny legitimate interest ... in continued secrecy as against the public at large can be accommodated by placing [the collateral litigants] under the same restrictions on use and disclosure contained in the original protective order. United Nuclear, 905 F.2d at 1428; see also Beckman, 966 F.2d at 476. 28 c. The Protective Order in This Case. We now turn to the district court's refusal to modify its protective order as to discovery documents in this case, examining it in light of the procedures and considerations we have delineated above. Here, the Private Intervenors purport to be engaged in litigation against State Farm with allegations substantially similar to those involved in the Foltz litigation. The Private Intervenors accuse State Farm of conspiring with CMR to fraudulently deny personal injury claims under its automobile policies during a period of time overlapping that involved in Foltz 's conspiracy claim. They moved to modify the protective order to permit access to the Foltz discovery materials for use in their collateral litigation. 29 The district court denied the motion to modify with little explanation. The entire disposition with respect to this motion consisted of the following: 30 [T]he proposed intervenors' motion to modify the protective orders in this case is denied. A collateral litigant will not be permitted to exploit another's discovery in the sense of instituting the collateral litigation simply as a device to obtain access to sealed information. See Wilk v. Am. Medical Assoc., 635 F.2d 1295, 1300 (7th Cir.1980). Federal Discovery may not be used to merely subvert limitations on discovery in other proceedings. Id. Thus, a collateral litigant has no right to obtain discovery materials that are privileged or otherwise immune from eventual discovery in the collateral litigation. 31 Dec. 14, 1999 Dist. Ct. Order at 6. While these are correct statements of legal principles, the district court utterly fails to apply them to the facts of this case. It articulates no basis for concluding that the information contained in the Foltz discovery would not be discoverable in the collateral litigation or that the Private Intervenors are not bona fide litigants. 32 Because the district court failed to undertake the relevance determination, we find that it abused its discretion in denying the Private Intervenors' motion to modify. If any properly protected Foltz discovery is relevant to the collateral suits, the district court should have modified the protective order in the interest of avoiding duplicative discovery; the courts overseeing the collateral litigation can settle any disputes as to whether particular documents are discoverable in the collateral litigation. Consistent with the law as outlined above, State Farm's reliance on the overinclusive blanket protective order is an insufficient reason to refuse to modify the protective order. See Olympic Refining, 332 F.2d at 265 (All that may be done is to afford such protection from disclosure as is practicable, consistent with the right of access thereto for purposes of litigation.). Any trade secrets, financial information, and third-party medical or personnel information can be protected by placing the Private Intervenors under the same use and disclosure restrictions contained in the original protective order. 33 We therefore remand to the district court with instructions to make a relevance determination based upon a comparison of the complaints in the Foltz litigation and the collateral suits, the contents of the protected discovery, the general rules on the scope of discovery in the collateral jurisdictions, and any other relevant factors that are in conformity with this opinion.