Hearst Communications, Inc. v. Rugs America Corp.

Background

The parties, through counsel, jointly requested a protective order under Federal Rule of Civil Procedure 26(c). They represented that discovery would involve nonpublic and confidential documents or information whose disclosure could harm a producing person or a third party that owed a duty of confidentiality. The court found good cause for an appropriately limited order governing the pretrial phase of the case.

Confidentiality Designations

The order defines “Discovery Material” as information produced or disclosed during discovery. A producing person may designate only material whose disclosure is restricted by law or would harm business, commercial, financial, or personal interests, including previously undisclosed financial information; information about ownership or control of a nonpublic company; business, product-development, or marketing plans; and personal or intimate information. The order does not provide blanket protection for all discovery.

The order establishes procedures for marking confidential material and for designating deposition testimony. A deposition transcript is treated as confidential for 30 days after the deposition, unless specific pages, lines, or exhibits are designated earlier or the designation is made on the record. A producing person may also correct an earlier failure to designate material before trial by giving written notice to prior recipients.

Permitted Disclosures and Use

People subject to the order may disclose confidential material only to listed recipients, including the parties and their insurers; counsel and their staff; litigation-support vendors; mediators or arbitrators; certain people identified on a document; potential witnesses; experts and other specialized consultants; deposition stenographers; and the court and its personnel. Several categories of recipients must first receive the order and sign the attached nondisclosure agreement.

Recipients may use confidential material only to prosecute or defend this case and any appeals. They may not use it for business, commercial, competitive, or other litigation purposes. The order does not restrict a person’s use of that person’s own documents or information, or information obtained independently of discovery.

Challenges, Court Filings, and Personal Information

A party may object to a confidentiality designation before trial by giving written notice stating the specific grounds. If the parties cannot resolve the dispute, they must present it to the court under the judge’s individual rules. A party may likewise request additional restrictions, such as attorneys’-eyes-only treatment in extraordinary circumstances.

The order does not create an automatic right to file confidential material under seal. A party seeking to file material under seal must submit a letter-motion explaining the basis for sealing, and the parties must publicly file a redacted version while filing the unredacted version under seal as required by the order. The court retains discretion over whether to treat designated material as confidential when it is submitted in connection with a motion or proceeding and warns that trial evidence is unlikely to remain sealed.

Personally identifying information exchanged in discovery must be kept secure and confidential. A recipient experiencing a data breach must immediately notify the producing person and cooperate in addressing the breach.

Privilege and Inadvertent Disclosure

An inadvertent disclosure of material subject to attorney-client privilege or attorney work-product protection does not waive or forfeit the protection under the order. After a claim of inadvertent disclosure, the receiving party must return or destroy the material within five business days and certify that it has done so. The producing party must then provide a privilege log, and the receiving party may ask the court to compel production. The producing party retains the burden of establishing that the material is privileged or otherwise protected.

End of the Case and Enforcement

The order remains effective after the litigation ends. Within 30 days after final disposition, recipients must return or destroy confidential discovery material and certify that they have not kept copies or other reproductions, unless the producing person permits destruction instead. Counsel may keep archival copies of specified case and work-product materials, but those copies remain subject to the order.

Judge Jeannette A. Vargas ordered the protective order on July 15, 2025, after the parties stipulated and agreed to its terms. The order states that willful violations may result in contempt of court and that the court retains jurisdiction as needed to enforce the obligations or impose contempt sanctions.