Protective Orders-Not Everything Can Be Swept Under the Rug!
April, 2005
by Michael S. Errera and Dean S. Rauchwerger
Litigants frequently seek protective orders to prevent dissemination of documents and other information. There are, however, significant limits to the amount and type of documents and information that can legitimately be kept secret from the public.
General Principles
To secure a protective order, a party must show “good cause.” This means a showing of specific facts, rather than conclusions or conjecture, to justify concealing information from the public's right to know. A party seeking a protective order to merely avoid annoyance or embarrassment will likely have its request denied.
There Are Boundaries For Prohibiting Public Disclosure Of Case Evidence
Parties who feel threatened by potential “copy-cat” lawsuits or similar claims, such as product manufacturers, many times pursue protective orders to prohibit dissemination of documents, depositions, and materials garnered in litigation. Courts disapprove of cloaking evidence in secrecy as the judicial process condones the public's right to know and the sharing of evidence and pleadings. In Garcia v. Peeples, 734 S.W.2d 343 (Tex. 1987), the court rejected a protective order requested by an automobile manufacturer on the development and design of its fuel systems. The court recognized that public policy favored the ability of a party to share the information gathered in discovery with non-litigants, on the notion that shared discovery keeps parties honest and makes litigation more cost effective and less time consuming. Id. Similarly, in Earl v. Gulf & Western Manufacturing Co., 366 N.W.2d 160 (Wis. Ct. App. 1985), the court refused to grant a protective order prohibiting plaintiff from sharing discovery that it obtained in a punch press product liability claim with other similarly situated plaintiffs since defendant did not meet the threshold requirement of “good cause.”
Lack Of Secrecy During Appeal
An order limiting disclosure of documents, appropriate at the trial court, must be re-sought on appeal.
The extreme measures litigants take in protecting information can be seen in Union Oil Co. of California v. Leavell, 220 F.3d 562 (7th Cir. 2000). The court found that the parties' decision at the trial court to mark virtually every document and court order as “Filed Under Seal” was improper and held that all documents had to be made public and available for inspection. The Seventh Circuit observed, “people who want secrecy should opt for arbitration. When they call on the courts, they must accept the openness that goes with subsidized dispute resolution by public (and publicly accountable) officials.” Id. at 568. The rationale is based on the legitimacy of the judicial process: “What happens in the halls of government is presumptively public business. Judges deliberate in private but issue public decisions after public arguments based on public records . . . Any step that withdraws an element of the judicial process from public view makes the ensuing decision look more like fiat, which requires compelling justification.” Id.
Alternative Means To Ensure Secrecy
If you are confronted with confidential or trade secret information that does not satisfy the test for keeping material confidential under seal by the trial court, consider alternative dispute resolution (“ADR”) where secrecy can be ensured. Through ADR, the entire process, from exchange of documents, meetings with an arbitrator, settlement negotiations, and settlement terms and conditions, can be kept confidential and out of the public record. However, if a dispute arises from an arbitration agreement, documents that were protected from public viewing under the arbitration agreement may lose that protection. In Baxter Int'l, Inc. v. Abbott Laboratories, 297 F.3d 544 (7th Cir. 2002), prior to taking a dispute to federal court, two litigants agreed upon a confidentiality agreement during arbitration, a second agreement was reached after the claim was filed in federal court for resolution, and a third agreement, without appellate court approval, was made following one of the party's appeal. The appellate court refused to honor the previously agreed upon confidentiality agreements, noting that the appealing party did “not have any right to keep third parties from learning what this litigation is about. And [the party], whose refusal to accept the result of the arbitration is the cause of the current problem, has no claim to keep a lid on its own documents . . . It had, and spurned, a sure path to dispute resolution with complete confidentiality: accept the result of the closed arbitration.” Id. at 548.
Practice Pointers:
Shrouding documents, depositions, and pleadings under a veil of secrecy is challenging to achieve as protective orders require a “good cause” showing. When involved in litigation, be mindful that the documents tendered in discovery and deposition testimony will usually neither be hidden from public viewing nor prevented from being shared with other interested litigants. If you genuinely have confidential or proprietary information, provide your counsel with the requisite “good cause” reasons to obtain a protective order. Be in a position to persuade the court that confidentiality is essential to the vitality of your business and its proprietary needs. Even if a protective order is entered by the trial court, it may not be enforced at the appellate level. If the pain of public disclosure is too great, consider ADR where disclosure of documents, information, and testimony can more easily be shielded.•
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