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Ringelberg v. Vanguard Integrity Professionals-Nevada, Inc.

United States District Court, D. Nevada

January 24, 2018

STEVEN RINGELBERG, Plaintiff,
v.
VANGUARD INTEGRITY PROFESSIONALS-NEVADA, INC., et al. Defendants.

         (Mot Prot Ord - ECF No. 57) (Counter Mot Prot Ord - ECF No. 63)

          ORDER

          PEGGY A. LEEN, UNITED STATES MAGISTRATE JUDGE

         Before the court are plaintiff's Motion for Protective Order (ECF No. 57), and defendants' Opposition and Countermotion for Entry of Protective Order (ECF No. 63). The court held a hearing on a series of motions in this case on November 7, 2017, and took the current motions under advisement indicating that the court would review the parties' competing proposed forms of protective order and enter a protective order. The parties requested, and received, a referral to the court's ENE program. An ENE was conducted before The Honorable George W. Foley on December 20, 2017, but the parties were unable to reach a settlement, and this case was returned to the normal litigation track. See Minutes of Proceedings (ECF No. 79). This order resolves the parties' disputes about disputed terms of a protective order governing confidentiality.

         The parties agree that a protective order governing confidentiality for documents disclosed in discovery should be entered. The parties met and conferred and exchanged draft proposed stipulated protective orders, and were able to agree on the majority of its terms. However, the parties reached an impasse with respect to the definition of “confidential information” for purposes of designating documents as confidential in discovery. The parties also disagree about whether intentional disclosure of attorney-client or qualified work-product documents in discovery operates as a waiver of privilege.

         With respect to the definition of “confidential information, ” plaintiff proposes a definition that purportedly sets forth an objective description which allows the parties and, if necessary, the court, to determine whether a particular document is entitled to designation as confidential in the event of a dispute. Defendants propose a broader and less restrictive definition of confidential information and also want the ability to designate some documents “highly confidential--attorney client privileged information.” Defendants' proposed definition contains a clause that documents may be designated as confidential by a producing party or non-party who reasonably and in good faith contends the information should be protected from disclosure pursuant to the protective order. Plaintiff opposes defendants' definition arguing the open ended “reasonably and in good faith” standard is subjective rather than objective. During oral argument, counsel for plaintiff argued that plaintiff's definition of confidential is consistent with defendants' internal policies concerning confidentiality, and would prevent the defendants from over-designating documents as confidential.

         The court will resolve the parties' dispute by defining “confidential information” as information, regardless of how generated, stored, or maintained, or tangible things that qualify for protection under Fed.R.Civ.P. 26(c).

         Plaintiff's version of the proposed protective order provides that “the intentional production of privileged materials should constitute a waiver of the privilege.” Defendants' version of this section of the draft proposed protective order provides that intentional production of privileged information will not constitute a waiver of the privilege. Plaintiff argues that defendants' proposal that production of privileged documents does not constitute a waiver is contrary to established law, the Federal Rules of Civil Procedure, and a term of the stipulated Discovery Plan and Scheduling Order (ECF No. 48) which the court entered. Additionally, plaintiff requests a 15-day claw back period after discovery of inadvertently produced documents.

         Defendants respond that plaintiff's proposed form of protective order fails to protect defendants against disclosure of privileged information that may be necessary for use at trial, and does not contain a sufficient “claw back” clause for inadvertent disclosure of attorney-client communications. Defendants object to a 15-day claw back period after discovery of an inadvertent production of privileged materials and propose alternative language requiring claw back “as soon as practicable” following discovery of the inadvertent production.

         Defendants maintain that there is good cause to enter a protective order permitting defendants “to assert documents necessary to pursue their available defenses and have the ability to claw back those that are inadvertently produced without losing their protected status.” Defendants also maintain that because plaintiff acted as in-house counsel for the defendants, and a substantial amount of relevant information involved in this case is privileged, and some of the privileged information supports defendants' defenses, “it is essential that Defendants be permitted to present its defenses without putting any privileges in jeopardy or forever being lost.” Defendants reason that they will be required to rely upon privileged documents in this case and “should not be compelled to waive any claims of privilege just because such privileged documents support Defendants' defenses in the litigation.” During oral argument counsel for plaintiff disputed that the parties would likely be required to rely on a number of privileged documents to assert their claims and defenses.

         Defendants acknowledge that this case is in federal court on federal question jurisdiction, and therefore federal law of privilege applies. However, they argue applicable law permits the court to look to state privilege law. In this case, defendants contend the court should primarily look to federal common law, but may also rely on state law, particularly in Nevada and California. Nevada Revised Statute (“NRS”) § 49.095 is Nevada's attorney-client privilege statute. There are exceptions to the privilege codified at NRS 49.115, but defendants concede no statutory exception applies to the facts in this case. Defendants reason that intentional disclosure of privileged materials should not constitute a waiver because an attorney is not permitted to waive the attorney-client privilege on behalf of the client. Rather, the privilege belongs to the corporation because the corporation is the client. In this case, the defendants are the holders of the attorney-client privilege and may need to rely upon privileged materials in their defense of plaintiff's claims. Defendants maintain that they should not be placed in the position of having to choose between presentation of their best defense and preserving a privilege. They should be able to do both, to set forth their best case while preserving their privilege.

         Having reviewed and considered the moving and responsive papers and the arguments of counsel, the court will enter a protective order in the form below resolving the parties' disputes. This protective order is entered to facilitate the parties' discovery exchanges. In entering this protective order, the parties have not shown, and this court has not found, that any specific documents are entitled to confidential treatment in this case. The parties have not provided specific facts supported by affidavits or concrete examples to establish that a protective order is required to protect any specific trade secret or other confidential information under Rule 26(c) of the Federal Rules of Civil Procedure or that disclosure would cause an identifiable and significant harm. Additionally, entry of this protective order does not constitute a finding of good cause, in and of itself, for filing documents produced in discovery under seal in motions or applications filed with the court.

         The Ninth Circuit has held that parties seeking to maintain the confidentiality of documents attached to most non-dispositive motions must show good cause exists to overcome the presumption of public access. Kamakana v. City and County of Honolulu, 447 F.3d 1172 (9th Cir. 2006); but see Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092 (9th Cir. 2016) (standards courts apply to sealing requests turn on the relevance of the documents to the substantive merits of a case-not the relief sought). Parties seeking to maintain the secrecy of documents attached to dispositive motions must show compelling reasons sufficient to overcome the presumption of public access. Id. If a sealing order is permitted, it must be narrowly tailored. Press-Enterprise Co. v. Superior Ct. of California, 464 U.S. 501, 512 (1984). Sealing entire documents is improper when any confidential information can be redacted while leaving meaningful information available to the public. In re Roman Catholic Archbishop of Portland, 661 F.3d 417, 425 (9th Cir. 2011).

         To comply with Kamakana, the party who designates documents as confidential must submit a memorandum of points and authorities to the court presenting articulable facts that identify the interests in favor of the documents' continued secrecy and showing that these specific interests outweigh the public's strong interest in transparency. If an opposing party files a motion to seal certain documents based on the parties' protective order, the designating party is required to file within 14 days an appropriate memorandum of points and authorities making a particularized showing why the documents should remain under seal or why the designating party should be allowed to file a redacted version. If the designating party fails to timely comply with this order, the motion to seal will be denied and the Clerk of the Court will be directed to unseal the documents to make them available on the public docket.

         In addition to Kamakana, the parties are required to follow the proper CM/ECF procedures for any requests to seal judicial records. The Local Rules of Practice provide that the electronic record is the court's official record and require the Clerk of the Court to maintain the official files in all cases in electronic form. See LR IC 1-1. Pursuant to LR IA 10-5, attorneys must file documents under seal using the court's electronic filing procedures:

Unless otherwise permitted by statute, rule, or prior court order, papers filed with the court under seal must be accompanied by a motion for leave to file those documents under seal. If papers are filed under seal under prior court order, the papers must state on the first page, directly under the case number: “FILED UNDER SEAL UNDER COURT ORDER (ECF No.). All papers filed under seal will remain sealed until the court either denies the motion to seal or enters an order unsealing them.

See LR IA 10-5(a).

         Turning to the parties' dispute concerning privilege waiver for intentionally produced documents, the court notes the parties' stipulated Discovery Plan and Scheduling Order (ECF No. 48) stipulated to provisions governing claims of privilege and attorney work product. In it, the parties stipulated that a party unintentionally producing a document protected from disclosure by the attorney-client privilege, attorney work-product doctrine, or other recognized privilege would amend its discovery response and notify the other party that a document was inadvertently produced and should have been withheld within 15 days of discovering its inadvertent disclosure. The parties also stipulated that within 72 hours of receiving notice of an inadvertent production, the requesting party must promptly return the documents and any copies, preserving its right to challenge the assertion of privilege with the court. Defendants' proposed form of protective order would alter the terms of the prior stipulation. Having previously stipulated to these provisions, the court will enforce the parties' stipulation and order regarding inadvertently produced documents and the timeframe for notifying opposing counsel that a privileged document was inadvertently produced as well as the timeframe for returning inadvertently produced documents.

         With respect to defendants' request that the court enter an order providing that the intentional production of privileged documents shall not constitute a waiver, the court categorically rejects defendants' non-waiver arguments. As the Advisory Committee Notes to Rule 502(a) make clear, “[t]his subdivision does not alter the substantive law regarding when a party's strategic use in litigation of otherwise privileged information obliges that party to waive privilege regarding other information on the same subject matter, so that the information being used can be fairly considered in context.” See, Addendum to Advisory Committee Notes, Statement of Congressional Intent Regarding Rule 502 of the Federal Rules of Evidence.

         A party may not intentionally put privilege or protected information into litigation in a selective, misleading, or unfair manner. Advisory Committee Notes to Rule 502(a) revised, 11/28/07. Fed.R.Evid. 502(b) was enacted to overcome the holdings of some courts that inadvertent disclosure of protected information results in subject matter waiver of all documents on the same subject matter. Id. Rule 502(b) became effective in 2007 and took the middle ground among conflicting approaches taken by the courts regarding the legal effect of inadvertent disclosure of protected communications or information in federal proceedings. Id. Rule 502(b) now provides that inadvertent production of privileged or protected materials does not constitute a waiver if the holder of the privilege or qualified protection took reasonable steps to prevent disclosure and also took reasonable steps to rectify the error. Id.

         Rule 502(d) was enacted to address the rising costs of pre-production privilege review, especially in complex cases involving large amounts of electronically stored information. Id. 502(d) was designed to enable a court to enter an order “that will allow the parties to conduct and respond to discovery expeditiously, without the need for exhaustive pre-production privilege reviews, while still preserving each party's right to assert the privilege to preclude use in litigation of information disclosed in such discovery.” See Addendum to Advisory Committee Notes, Statement of Congressional Intent Regarding Rule 502 of the Federal Rules of Evidence. The Rule “does not alter the law regarding waiver of privilege resulting from having acquiesced in the use of otherwise privileged information. ... and “does not provide a basis for the court to enable the parties to agree to a selective waiver of the privilege…” Id.

         Rule 502(e) enables the parties to agree among themselves concerning the effect of disclosures between each other in a federal proceeding. However, the parties' agreement regarding their own disclosures is not binding on non-parties unless it is incorporated in a court order. (“This subdivision does not confer any authority on a court to enter any order regarding the effect of disclosures. That authority must be found in subdivision (d), or elsewhere.”) Id.

         In short, Fed.R.Evid. 502 does not authorize the relief defendants request in its proposed form of protective order.

         Controlling Ninth Circuit case law also does not support the relief defendants request. The attorney-client privilege is one of the oldest of the common law privileges. Upjohn v. United States, 449 U.S. 383 (1981). Its purpose is “to encourage full and frank communication between attorneys and their clients and thereby promote broader public interest in the observance of law and administration of justice.” Id. The Ninth Circuit has adopted Dean Whitmore's articulation of the essential elements of the attorney-client privilege:

(1) Where legal advice of any kind is sought,
(2) from a professional legal advisor in his capacity as such,
(3) the communications relating to that purpose,
(4) made in ...

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