United States Securities and Exchange Commission v. Aktiengesellschaft

Background

The court addressed a discovery dispute concerning a proposed protective order. A protective order sets rules for handling information that a party claims is confidential during litigation. The SEC and defendants submitted a joint letter brief about the proposed order. The court decided the dispute without oral argument.

SEC’s proposed Section 7.5

The SEC asked the court to allow it, after giving written notice to the party that designated information as confidential, to disclose protected material to federal, state, or foreign governments and regulatory authorities. The proposed provision would allow the designating party to challenge the disclosure under another section of the protective order.

The court declined to order inclusion of that provision. It reasoned that the proposal could allow confidential information to be disclosed to foreign governments or regulatory authorities without requiring them to protect its confidentiality. The court also stated that it lacked jurisdiction to enforce a confidentiality requirement against foreign governments or regulatory authorities.

The court rejected the SEC’s argument that defendants had designated too much material as confidential. It noted that the protective order already provided a process for challenging confidentiality designations and required those designations to be made in good faith. The court also found the proposed notice-and-objection process inadequate because the relevant section addressed subpoenas or court orders from another court, while the SEC had not shown that its disclosures to nonparties would be rare.

The court found that the cases cited by the SEC did not address sharing confidential information obtained through civil discovery. It also expressed concern that allowing such disclosures could make defendants less willing to cooperate in producing confidential discovery, complicating the civil case. The court therefore declined to adopt what it described as the SEC’s unprecedented provision.

Sharing information with foreign attorneys

The SEC sought permission to share confidential information with foreign lawyers retained to assist it in the case, so long as those lawyers first agreed to follow the protective order’s confidentiality requirements. Defendants instead proposed barring disclosure to foreign attorneys involved in pending or threatened litigation or regulatory, criminal, or administrative proceedings outside the United States relating to or arising from the diesel-emissions issue.

The court concluded that the SEC had not justified sharing defendants’ confidential information with foreign attorneys who were litigating against defendants. The SEC also had not claimed that it could not find non-conflicted counsel. The court therefore adopted defendants’ proposed language for now, while stating that the language could later be modified if it proved unworkable.

Disposition

The court declined to include the SEC’s proposed Section 7.5 and adopted defendants’ proposed language concerning disclosure to foreign attorneys. The order stated that it disposed of Docket No. 69.

Judge Charles Breyer issued the order according to the supplied case metadata.