Management Registry, Inc. v. A.W. Companies, Inc.

Background

The court considered Eric Berg’s Motion to Intervene and for Contempt. Berg had originally been a defendant, but Management Registry Incorporated dismissed its claims against him in August 2018. He later performed work in some capacity for Management Registry and filed a separate lawsuit in Minnesota state court against Wendy Brown, A.W. Companies, Inc., and another defendant.

In July 2019, the parties subpoenaed Berg for a deposition in the federal case. During and after the deposition, his attorney designated portions—and initially the entire transcript—as confidential or “Confidential—Attorney’s Eyes Only” under the federal case’s Protective Order. Defense counsel did not object to those designations at the time.

In September 2019, Wendy Brown testified in the state-court lawsuit that she learned information about Berg’s consulting income from his federal deposition transcript. The defendants then publicly filed the transcript as an exhibit to their state-court summary-judgment motion, despite receiving communications from Berg’s attorney about the confidentiality designations. After the federal hearing, Alex Loftus notified Berg’s attorney that the defendants would withdraw the state-court summary-judgment motion. Loftus also represented that Brown had deleted the electronic copy of the transcript that he had sent her.

Intervention

The court granted Berg permission to intervene under Federal Rule of Civil Procedure 24(b), which allows a person who is not already a party to join a case when the person’s interests share a legal or factual question with the case and intervention will not cause undue delay or prejudice.

The court held that a traditional showing of injury was not required for this limited type of intervention, involving enforcement of a confidentiality order. It also concluded that Berg had shown harm because the defendants’ use of his federal deposition may have required him to prepare a response to a state-court summary-judgment motion that otherwise would not have relied on that deposition.

Berg was not permitted to litigate the underlying claims on their merits. His intervention was limited to enforcing the Protective Order and protecting his confidential information. The court directed him to file his intervention pleading, added him as an intervenor, and added Scott Moriarty as his attorney of record.

Protective Order and Violations

The court found that the Protective Order clearly allowed a nonparty to designate deposition testimony as confidential or attorney’s-eyes-only material. It also found that the order defined “Document” broadly enough to include information disclosed during a deposition, prohibited disclosure of attorney’s-eyes-only material to a party, and limited the use of confidential material to the federal action.

The court identified three violations:

The court rejected the argument that the confidentiality designations were improper. The Protective Order provided a procedure for challenging or changing a designation, but the defendants and their attorneys did not use that procedure before using the transcript.

Sanctions and Other Relief

The court concluded that contempt proceedings were unnecessary because the state-court summary-judgment motion had been withdrawn and the electronic copy sent to Brown had been deleted. The court therefore did not certify facts to the District Court for a civil-contempt finding.

The court nevertheless concluded that sanctions were warranted under Federal Rule of Civil Procedure 37(b)(2), which permits sanctions for violating a discovery order. It held that Berg suffered harm and was entitled to expenses, including attorney’s fees, incurred because he had to bring the motion and have his attorney attend and argue at the hearing. The court declined to shift fees for any costs Berg may have incurred preparing a response to the withdrawn state-court summary-judgment motion.

The court considered revoking Loftus’s permission to practice in the District of Minnesota but declined to do so at that time. It warned that any further failure to comply with court orders would lead to revocation. The court also required Justin A. Bruntjen, the defendants’ local counsel, to become engaged in the litigation and to review and sign every pleading filed by the defendants.

Disposition

The court ordered that Berg’s Motion to Intervene and for Contempt was GRANTED IN PART. Berg was allowed to intervene for the limited purpose of enforcing the Protective Order, was entitled to seek expenses and attorney’s fees caused by the violations, and received the specified relief concerning defense local counsel.