Securities and Exchange Commission v. Klein

Nature of the Order

The Court entered a stipulated protective order under Federal Rule of Civil Procedure 26(c) and 5 U.S.C. § 552a(b)(11). The order governs the production, discovery, and dissemination of nonpublic confidential information and sensitive data or records, including information potentially covered by the Privacy Act of 1974. The parties stipulated to the order on October 5, 2022, and Judge Lorna G. Schofield entered it on October 6, 2022.

Covered Materials and Confidentiality Designations

The order applies to documents, materials, and information produced during discovery by the parties or third parties. It covers electronic discovery, interrogatory answers, responses to requests for admission or production, documents produced in response to subpoenas, informal discovery, deposition testimony, and deposition exhibits.

A party or third party may designate material “CONFIDENTIAL” if counsel or the producing person determines in good faith, after reasonable inquiry, that the material contains information that may be protected by statute, regulation, or other authority. Examples include bank or brokerage account information, trade secrets, confidential government information, nonpublic research and development records, customer or business information, commercial or financial information, and personally identifying information protected by the Privacy Act. The order prohibits routine or unsupported confidentiality designations.

Deposition testimony may be designated confidential when the deposition is taken or within 30 days after the transcript is received. Testimony describing a document already designated confidential is also treated as confidential.

Use and Disclosure Restrictions

Unless the Court orders otherwise or the order provides otherwise, confidential information may be used only in connection with this action. The order does not prevent the Securities and Exchange Commission from complying with legal disclosure obligations, including obligations under the Freedom of Information Act, or from using information for law-enforcement activities and for regulating, administering, and enforcing federal securities laws.

Subject to those provisions, confidential information may be disclosed to specified categories of people, including the parties and counsel of record; counsel’s necessary employees; outside vendors and service providers; mock jurors; a document’s author, addressee, or identified recipient; deposition stenographers and videographers; consultants and experts; certain potential witnesses and their counsel; the Court or jury; and other people approved in writing by the parties or authorized by Court order.

Before disclosure, counsel must inform the recipient that the information is confidential and that the Court has prohibited use or disclosure outside the limits of the order. Potential witnesses and mock jurors may receive confidential information only after being asked to agree to be bound by the order. If such a person refuses, the party seeking disclosure may request relief from the Court.

Challenges, Sealing, and Privilege

A party or third party challenging a confidentiality designation must first make a good-faith effort to resolve the dispute. If that effort fails, the challenging party may seek Court resolution under the Court’s procedures and Local Rule 37.2. The order states that a confidentiality designation does not waive any claim or defense and does not constitute an admission that the information is confidential, privileged, discoverable, relevant, or admissible.

The order does not automatically seal documents filed with the Court. Documents may be filed under seal only through the procedures in Judge Schofield’s rules and applicable Court rules. A filing containing disputed confidential information must be accompanied by a motion or letter motion requesting sealing when the producing party does not consent to public filing. The order also states that the filing party may submit supporting materials addressing the standards for sealing.

If privileged or otherwise protected discovery material is inadvertently produced despite reasonable prescreening efforts, the production does not waive the applicable protection when the producing party promptly requests its return. Upon request, recipients must immediately return or destroy the material and all copies. A receiving party may retain a record identifying the material and describing its nature for use in a motion to compel.

A party or third party that inadvertently produced confidential information without designating it may retroactively designate it within a reasonable time after discovering the mistake by giving written notice to recipients.

End of the Case and Continuing Effect

Within 60 days after final disposition of the action, including appeals, recipients other than the Court must return or destroy confidential information and provide written certification that they have not retained copies or other reproductions. Attorneys specifically retained for the action may keep archival copies of specified case materials, but those copies remain subject to the order.

The order survives termination of the litigation and remains binding on people who received confidential information. The Court retains jurisdiction as necessary to enforce the order or impose sanctions for contempt. Judge Schofield’s order is a discovery-management order; it does not resolve the underlying claims or defenses.