Even if the law apparently stands otherwise.
In Barrio Bros., LLC v. Revolucion, LLC, No. 1:18-CV-02052, 2021 WL 2463844 (N.D. Ohio June 17, 2021), a District Judge in the Northern District of Ohio considered an appeal from a Magistrate Judge's Report and Recommendation. The Magistrate recommended that the plaintiffs' objections to production of certain Licensing Agreements be overruled.
In this case, both the Magistrate Judge and the District Judge appeared to enforce the parties' Stipulated Protective Order at the expense of the law including at the expense of Local Rules which one side of the litigation apparently followed.
The Magistrate Judge's recommendation and the District Judge's ruling came in a lawsuit involving the alleged theft of intellectual property rights. Barrio Brothers and the other plaintiffs sued various defendants, complaining that one of the defendants, Condado Tacos, misappropriated Barrio's intellectual property rights in the way it designed and built its restaurants.
The Magistrate Judge granted Condado Tacos' motion to compel production of Barrio Brothers' Licensing Agreements with its third-party partners in several cities in Michigan, Ohio, and New Hampshire. The third parties were not parties to the litigation, and apparently the theory behind the request for production was that the Licensing Agreements could show what Barrio Brothers franchised exactly, and what it did not. The plaintiffs appealed to the District Judge from this ruling. Barrio Brothers, 2021 WL 2463844, at *1.
Previously in this case, the plaintiffs and the defendants had agreed to a Stipulated Protective Order. The order they wrote covered the production of documents like the Licensing Agreements. Most important to the outcome of Barrio Brothers' production appeal, the parties' agreed order "provides Barrio a framework by which Barrio may seek out additional protection." Barrio Brothers, 2021 WL 2463844, at *2.
In the eyes of both the Magistrate and the District Judge, the parties' agreed order determined the outcome of Barrio Brothers' appeal of the Magistrate's ruling. "In other words," said the District Judge, " [i]f Barrio believes the Licensing Agreements merit additional protection, Barrio may seek such protection according to the terms of the Stipulated Protective Order." Barrio Brothers, 2021 WL 2463844, at *2.
The framework laid out in the agreed protective order by which Barrio Brothers and any of the other parties could seek out additional protection is not provided by the Rules of Civil Procedure. The Federal Rules leave much to the discretion of the District Courts in any case. See Fed. R. Civ. P. 26(c).
By their agreement in the Barrio Brothers case, the lawyers could mark their client's production as intended, for example, so as to prohibit disclosure of "highly sensitive competitive or confidential information to another party," or they could mark the production as restricted "only to specifically designated in-house counsel or party representatives." Barrio Brothers, 2021 WL 2463844, at *2.
After a dispute arose over disclosure, the attorneys further agreed:
[T]hen the parties may stipulate or move for the establishment of an additional category of protection that prohibits disclosure of such documents or information to category (2) ["Parties and employees of a party to this Order"] or that limits disclosure only to specifically designated in-house counsel or party representative(s) whose assistance is reasonably necessary to the conduct of the litigation and who agree to be bound by the terms of the order.
Barrio Bros., LLC v. Revolucion, LLC, Doc. No. 42, Stipulated Protective Order entered July 26, 2019, n.1 at p. 4 (N.D. Ohio Case No. 1:18-CV-02052) (emphasis supplied).
The Stipulated Protective Order further provided that any challenge to its terms had to be by motion in accordance with Northern District of Ohio Local Rule 7.1. The agreed order provided that nothing in it would limit "the Court's power" to enter any orders "with respect to the use and disclosure of any documents produced or [their] use in discovery," in part here pertinent. Barrio Bros., LLC v. Revolucion, LLC, Doc. No. 42, Stipulated Protective Order entered July 26, 2019, ¶ 8, at p. 7.
This is the framework provided almost word-for-word in Local Civil Rules Appendix L, a Form Stipulated Protective Order. This is also the framework that Barrio Brothers followed here.
The Barrio Brothers lawyers took the matter up with the presiding judge. They invoked the District Court's power to enter an order with respect to the use and disclosure of the Licensing Agreements in discovery. They appealed the Magistrate Judge's recommendation that Barrio Brothers disclose the Licensing Agreements in question to Condado Tacos. Barrio Brothers, 2021 WL 2463844, at *2.
It didn't work out well for nondisclosure of the Licensing Agreements in this case, however. In the end, the District Judge clearly announced her expectation that the parties would follow the procedures they agreed upon when they wrote their Stipulated Protective Order for the Magistrate to sign in the first place.
In many jurisdictions including the Sixth Circuit, "secrecy in the context of discovery," as in this case, is subject to a "good cause" showing and a Stipulated Protective Order does not by itself provide the required good cause showing for nondisclosure. In re: Nat'l Prescrip. Opiate Litig. (HD Media Co. v. U.S. Dep't of Justice), 927 F.3d 919, 929-30 (6th Cir. 2019) (appeal in Multi-District Litigation centered in the Northern District of Ohio). The Northern District's Form Stipulated Protective Order, Local Civil Rules Appendix L that was followed almost to the letter in this case, accordingly provides for a good cause showing for nondisclosure of discovery materials.
In the opinion in the Barrio Brothers case, however, there would be no discussion of good cause. In fact, a computer search shows that good cause was never mentioned in the opinion. Implicitly, perhaps, the good cause shown for secrecy had to be shown by a rather undeserved devotion to the terms of an agreement made by the parties themselves: "The Court expects the parties--and their attorneys--to abide by the Stipulated Protective Order to which they all agreed." Barrio Brothers, 2021 WL 2463844, at *2 (emphasis in original).
One other aspect of the parties' Stipulated Protective Order deserves attention, although it went unremarked in the District Judge's opinion. In her description of the agreed order, the District Judge recounted that the lawyers would decide in the first instance what is "confidential" and so deserving of protection from the federal court.
If one category of confidentiality was insufficient in the lawyers' eyes to protect against disclosure, then they agreed to two options. One was to prohibit disclosure to parties and employees of a party after filing a motion or a further stipulation. This option was mentioned by both the Magistrate Judge and the District Judge, but it does not appear to have been considered by either of them in this case.
The parties' other agreed option in the event that they disputed the future disclosure of documents they had marked "confidential," was to limit disclosure "only" to identified "in-house counsel or party representatives." In fact, the District Judge's opinion points out in passing that the Magistrate Judge "concluded that it was proper to 'leave it to the lawyers to decide whether the licensing agreements warrant this additional protection.'" Barrio Brothers, 2021 WL 2463844, at *1.
This is problematical. Courts including in the Sixth Circuit have rejected the idea that lawyers can confer discretion upon themselves to determine "confidentiality" in litigation. See, e.g., In re National Prescription Opiate Litigation, 927 F.3d at 929-30; Brown & Williamson Tobacco Corp. v. F.T.C., 710 F.2d 1165, 1180 (6th Cir. 1983) (holding that a “confidentiality agreement between the parties does not bind the court in any way”), cert. denied, 465 U.S. 1100, 104 S. Ct. 1585 (1984).
In the end, using a Form Appendix attached to the Local Rules may not achieve the result the lawyers intend in any given case. There was nothing wrong with the Local Civil Rules Appendix L, the form Stipulated Protective Order in this case, for example. It is worth noting that the District Judge in this case received a federal judicial commission in June 2019, so she is relatively new to the federal bench.
Whatever the reason for the rulings in this case, it is pretty clear that if the Form Stipulated Protective Order written in the Local Rules had been observed by the bench as closely as it was observed by the bar in this case, the result may have been no different but it is certain that "good cause" and not contract obedience would have been the focus of the judicial inquiry.
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