Parallax Health Sciences, Inc. v. EMA Financial, LLC

Background

Parallax Health Sciences, Inc. is the plaintiff and counterclaim defendant, and EMA Financial, LLC is the defendant and counterclaim plaintiff. The parties agreed to confidentiality terms for the pretrial phase of the action. The court found good cause for entering an appropriately tailored protective order.

Protective-order requirements

The order covers documents, electronically stored information, tangible things, testimony, discovery responses, and copies, excerpts, summaries, and compilations of those materials. It creates two designations:

- “CONFIDENTIAL,” for information such as sensitive personal, technical, business, financial, proprietary, or commercial information, trade secrets, and information ordinarily kept confidential. - “HIGHLY CONFIDENTIAL—OUTSIDE ATTORNEYS’ EYES ONLY,” for especially sensitive information whose disclosure could benefit a competitor or cause economic harm, including certain technical, financial, marketing, customer, pricing, cost, and patent-application information.

The order limits the use of designated information to preparing for and conducting this litigation, including any appeal. It permits disclosure of “CONFIDENTIAL” material to specified categories of people, including counsel, certain party personnel who need the information for the litigation, experts, consultants, translators, vendors, court reporters, and others allowed by consent or court order. People receiving the information may have to sign an acknowledgment agreeing to follow the order.

“Highly confidential” material generally may be disclosed only to outside counsel and specified support personnel, experts, translators, vendors, court reporters, document sources, or others allowed by consent or court order. The order also permits counsel to use such material in preparing clients and witnesses, subject to limits on dissemination.

Challenges, privilege, filing, and later treatment

A party may challenge a confidentiality designation. The party asserting protection generally has the burden of showing that the designation is necessary, while a party claiming that information is publicly known has the burden of proving that claim. Previously designated material remains protected while a challenge is pending.

The order provides that producing privileged or work-product-protected material does not waive the protection. It establishes procedures for notifying other parties, returning or destroying inadvertently produced material, and challenging a privilege claim. It also states that protected material may be filed with the court under seal only with prior court permission, a motion, and good cause under the court’s electronic-filing procedures.

Within 30 days after the litigation ends, including any appeal, receiving parties generally must return or destroy protected materials at their election and cost, subject to stated exceptions for counsel’s files and inaccessible backup systems. The confidentiality restrictions continue after the litigation ends. The order also addresses subpoenas and other third-party requests, modification of the order, and contempt consequences for violations.

Ruling

Judge Robert W. Lehrburger entered the stipulated protective order. The order expressly states that it is based on the parties’ representations and agreement and that it is not a judicial determination that any specific document or information is protected under the federal discovery rules. The opinion does not decide the merits of the underlying claims or counterclaims.