Endico v. Endico

Background

The parties jointly requested a confidentiality and 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 opinion states that Felix W. Endico and William A. Endico are each 50% shareholders of nominal defendant UFS Industries, Inc., which has ongoing business operations.

What the Order Protects

The order defines “Discovery Material” as information of any kind produced or disclosed during discovery. A producing party, or Felix Endico or William Endico for material produced by or from UFS, may designate material as “Confidential” only when the designating person reasonably and in good faith believes it includes previously undisclosed:

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

Felix Endico, William Endico, or their counsel may designate portions of discovery material produced by or from UFS, or containing UFS information, as confidential. The order also describes procedures for marking documents, preparing redacted copies, and designating deposition testimony and exhibits. During the 30 days after a deposition, the entire transcript must be treated as confidential.

Limits on Disclosure and Use

People subject to the order may disclose confidential discovery material only to specified recipients, including the parties, insurers and their counsel, litigation counsel and assigned staff, litigation vendors, mediators or arbitrators, certain people identified on documents, potential witnesses, experts and specialized advisers, deposition stenographers, and the court and its personnel.

Before receiving confidential material, certain witnesses, experts, advisers, mediators, and arbitrators must receive the order and sign the attached nondisclosure agreement. Confidential material may be used only to prosecute or defend this action and related appeals. It may not be used for a business, commercial, competitive, or unrelated litigation purpose. The order states that it does not restrict a party's rights regarding its own documents or information. It also expressly permits UFS, its shareholders Felix Endico and William Endico, and their agents to use or disclose UFS documents and information subject to their existing legal or other duties.

Sealing, Challenges, and Privilege

A party filing documents under seal must publicly file a redacted version and submit an unredacted version under seal, along with the materials required by the court's individual practices. The order states that the court retains discretion over whether to keep designated material confidential when it is submitted in connection with a motion or other proceeding, and that the court is unlikely to seal material introduced as trial evidence.

A party may object to a confidentiality designation before trial by giving written notice stating specific grounds. If the parties cannot promptly resolve the dispute, counsel must bring it to the court under the court's individual practices. A party may similarly request additional restrictions, such as an “attorneys' eyes only” designation, in extraordinary circumstances.

If privileged or attorney-work-product material is inadvertently disclosed, the disclosure does not itself waive the protection. The receiving party must return or destroy the material within five business days after receiving a claim of inadvertent disclosure and provide a certification. The disclosing party must then provide a privilege log, and the receiving party may ask the court to order production. The disclosing party retains the burden of proving that the material is privileged or protected.

Retention and Enforcement

Within 60 days after final disposition of the action, including appeals, recipients generally must return or, with the producing party's permission, destroy confidential discovery material and certify that they kept no copies or other reproductions. Litigation counsel may retain archival copies of specified case materials, which remain subject to the order. Felix Endico, William Endico, and their agents may retain UFS documents and information in their capacity as UFS shareholders.

The order survives termination of the litigation. The court retains jurisdiction over people subject to the order as needed to enforce its obligations or impose contempt sanctions.

Ruling

Judge Philip M. Halpern found good cause for an appropriately tailored confidentiality order and ordered the parties and all other persons covered by the order to comply with its terms. The document is a stipulated protective and nondisclosure order; it does not decide the underlying claims or the admissibility of evidence at trial.