Charlotte B Milliner v. Mutual Securities, Inc.

Background

Charlotte B. Milliner and Joann Brem filed a putative class action against Mutual Securities, Inc. concerning claims arising from their brokerage agreement. The parties later settled the plaintiffs' individual claims, and the case was dismissed on September 11, 2018.

Mutual Securities then moved to enforce the settlement agreement and a stipulated protective order. The motion concerned materials that plaintiffs' counsel, David Sturgeon-Garcia, attached to a Financial Industry Regulatory Authority claim filed for Vincent F. Gilotti against Mutual Securities and five individuals. In its July 8, 2019 order, the court found that Sturgeon-Garcia had violated this case's protective order by submitting five pages marked confidential and directed their withdrawal. The court also held in abeyance the issue of whether Sturgeon-Garcia was bound by the settlement agreement's confidentiality provision, pending the California Supreme Court's decision in Monster Energy Co. v. Schechter.

After the July 8 order, the plaintiffs appealed. They also sought reconsideration of the protective-order ruling, moved to vacate the 2018 dismissal, and opposed the pending settlement-enforcement issues. Gilotti moved to intervene to seek unsealing of the settlement agreement.

Jurisdiction over the pending motions

The court held that the appeal deprived it of jurisdiction over matters directly involved in the appeal. It therefore denied without prejudice Gilotti's motion to intervene because the motion concerned unsealing the settlement agreement, which was directly related to a matter before the Court of Appeals for the Ninth Circuit.

The court also held that it lacked jurisdiction to decide the effect of Monster Energy on whether Sturgeon-Garcia was bound by the settlement agreement's confidentiality provision. The court denied without prejudice the plaintiffs' motion to vacate the dismissal because it was unclear whether that motion was collateral to the appealed matters, and the parties had not addressed the jurisdictional issue.

The court concluded that it could decide the plaintiffs' reconsideration motion under Federal Rule of Civil Procedure 60 because it was filed within 28 days of the July 8 order. The Ninth Circuit had stayed the appeal while the district court determined whether the reconsideration motion affected the appeal.

Reconsideration of the protective-order ruling

The plaintiffs argued that Exhibit 2 had been produced in response to a subpoena in a different related case, not in this case, and was governed by that other case's protective order. Mutual Securities conceded that this was correct and stated that its counsel had mistakenly treated the document as having been produced in this case. Counsel denied intending to mislead the court.

The court rejected reconsideration under Rule 60(b)(3), which permits relief for fraud, misrepresentation, or misconduct, because the plaintiffs had not shown that Mutual Securities unfairly obtained the earlier order or that they could not have discovered the mistake during the earlier motion proceedings.

The court nevertheless granted relief under Rule 60(b)(6), which allows relief for another reason justifying it in extraordinary circumstances. Because Exhibit 2 was produced in the other lawsuit and was not subject to this case's protective order, the court vacated the portion of the July 8 order finding a violation concerning Exhibit 2 and directing the plaintiffs to withdraw it from Gilotti's claim.

The plaintiffs also appeared to ask the court to decide that Sturgeon-Garcia's use of Exhibit 2 did not violate the other case's protective order. The court denied that request. It also denied Mutual Securities' request that the court refer the issue to Judge Donato, stating that Mutual Securities should file a motion before Judge Donato if it wished to pursue the issue.

Disposition

The plaintiffs' motion for reconsideration was granted in part. The portion of the July 8, 2019 order concerning the alleged violation of this case's protective order involving Exhibit 2, including the direction to withdraw Exhibit 2 from Gilotti's claim, was vacated. Gilotti's motion to intervene, the portion of Mutual Securities' motion to enforce the settlement agreement concerning the Monster Energy confidentiality issue, and the plaintiffs' motion to vacate the September 11, 2018 dismissal order were all denied without prejudice pending resolution of the appeal.