Horne v. International Business Machines Corp.

Background

The parties, through counsel, requested a protective order under Federal Rule of Civil Procedure 26(c). They sought protection for nonpublic and competitively sensitive information that might be disclosed during discovery. The court found good cause for an appropriately tailored confidentiality order governing the pretrial phase of the action.

Confidentiality designations

The order permits a producing party to designate only material that it reasonably and in good faith believes includes:

- Previously undisclosed financial information, including profitability reports or estimates, percentage fees, design fees, royalty rates, minimum guarantee payments, sales reports, and sales margins; - Previously undisclosed information about ownership or control of a nonpublic company; - Previously undisclosed business plans, product-development information, or marketing plans; - Information of a personal or intimate nature about an individual; or - Another category that the court later gives confidential status.

The producing party or its counsel must clearly mark confidential portions and, for most discovery material, provide a copy with the confidential information redacted for future public use. The order contains separate procedures for designating deposition testimony and exhibits. During the 30 days after a deposition, the entire transcript must be treated as confidential. A producing party may also make a later confidentiality designation for material previously produced without limitation by notifying prior recipients in writing.

Permitted disclosures and use

Confidential discovery material may be disclosed only to persons listed in the order, including the parties and their insurers, counsel and litigation-support personnel, outside vendors, mediators or arbitrators, certain people identified on a document, potential witnesses, experts and specialized advisers, deposition transcriptionists, and the court. Certain witnesses, experts, mediators, and arbitrators must first receive the order and sign a nondisclosure agreement. Counsel must retain those agreements and produce them to opposing counsel before the person testifies or when the case concludes, whichever comes first.

Recipients may use confidential discovery material only to prosecute or defend this action and related appeals. They may not use it for business, commercial, competitive, or other litigation purposes. The order does not restrict a party's rights regarding its own documents or information.

Court filings and challenges

A party filing confidential material under seal must also publicly file a redacted version and submit an unredacted version under seal, along with required courtesy copies. A party seeking to file under seal must provide a particularized justification. The order states that the court may unseal documents if it cannot make specific findings that sealing is essential to preserve higher values and narrowly tailored to that interest. The court retains discretion over whether to give confidential treatment to material submitted in connection with a motion or other proceeding and warns that material introduced at trial is unlikely to remain sealed.

A party may object to a confidentiality designation before trial by giving written notice stating the specific grounds. A party seeking additional disclosure limits, such as an attorneys'-eyes-only restriction in extraordinary circumstances, must use a similar procedure. Unresolved disputes are to be presented to the court under its individual practices.

Privilege and final handling of materials

If privileged or attorney-work-product material is inadvertently disclosed, the disclosure does not waive or forfeit the protection. After notification, the receiving party generally 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 within five business days. The receiving party may ask the court to compel production, while the producing party retains the burden of establishing privilege or protection.

Within 60 days after final disposition of the action, including appeals, recipients must return confidential discovery material or destroy it if the producing party permits, and certify that they retained no copies or other reproductions. Counsel specifically retained for the action may keep an archival copy of specified litigation materials, but those copies remain subject to the order. The order survives termination of the litigation, and the court retains jurisdiction to enforce it or impose contempt sanctions. Judge Philip M. Halpern entered the stipulated order on May 20, 2020.