A joint motion for entry of a stipulated protective order is not enough for a federal court to enter the stipulated order. "Rule 26(c) allows the Court to enter a protective order for good cause shown." Gordon v. Menard, Inc., No. 1:23-cv-00317-HAB-SLC, 2023 WL 6619427, at *1 (N.D. Ind. Oct. 10, 2023) (Collins, USMJ). Good cause was not shown in Gordon, which is why the Magistrate Judge denied the joint motion without prejudice.
To begin with, the proposed stipulated protective order was overbroad on its face. In pertinent part, "it seeks to protect information regarding current and former employees and agents," but as the Court pointed out, there are many times when employee information is subject to disclosure such that an absolute ban on disclosure is contrary to the law. See Gordon, 2023 WL 6619427, at *1.
Next, all parties failed to show good cause to protect "Defendant Menard Inc.'s training videos and materials, policy and procedure, information of Menard Inc. and its shareholders and directors, store surveillance videos, and blueprints and schematics." Gordon, 2023 WL 6619427, at *2.
An insurance carrier's desire to protect its similar information from disclosure is obvious, particularly if the parties to an insurance case can get away with stipulating to protect something as ill-defined as otherwise unidentified "information of [the insurance company] and its shareholders and directors," similar to what the parties tried to do in proposing their stipulated order in Gordon. In Gordon, though, the parties' stipulation to protect did not fly in this regard. "The proposed order makes no effort to specify why the purported protected materials are confidential." Gordon, 2023 WL 6619427, at *2.
For a third drawback in the eyes of the Gordon Court, the proposed order would have allowed the parties to file documents marked "Confidential Material" under seal in their entirety, without redacting the supposedly confidential information. This, too, is contrary to law. See Gordon, 2023 WL 6619427, at *2.
For the benefit of the parties in the future, including if and when they redraft and resubmit their proposed stipulated protective order, the Court had two more things to say. First, this Court "is unwilling to enter a protective order that suggests it retain jurisdiction of any kind after resolution of the case[.]" Gordon, 2023 WL 6619427, at *2 (emphasis by the Court).
Second, the Court admonished the parties to modify their version of protected confidentiality of information once the case came to an end:
Similarly, the parties should expressly state that any provisions requiring the return or destruction of confidential or protected information at the end of this litigation—such as those in Paragraph 4 of the proposed order (ECF 16-1 ¶ 4)—do not apply to the Court or material filed with the Court.
Gordon, 2023 WL 6619427, at *2.
While entering all of these relatively clear and unambiguous rulings that leave no room for reasonable interpretation, the Court actually began its opinion in this case with a seeming ambiguity. As was pointed out above, the Court began its rulings in this case by referencing Federal Rule of Civil Procedure 26(c)'s requirement of "good cause" before any protective order can be entered by a federal court.
However, the Court pointed out in a footnote that the same level of scrutiny of what exactly constitutes "good cause" varies from case to case, and that it was applying "a higher level of scrutiny" for a good cause showing that the Court determined was required here, "[b]ecause the proposed order permits filing under seal without court permission[.]" Gordon, 2023 WL 6619427, at *1 n.1.
This is an important concept for practitioners and judges to keep in mind when evaluating whether good cause has been shown to shield discovery, evidence, information, or anything else during litigation in federal courts – including insurer bad faith litigation among the rest.
Stipulated Protective Orders in Federal and State litigation are addressed in § 3:107.50 concerning third-party bad faith claims, in Volume 1 of DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, 2024 Supplements in process), and in § 9:28.50 as they relate to first-party bad faith cases, in Volume 2 of DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, 2024 Supplements in process).
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