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Miller v. Rodriguez

United States District Court, D. New Jersey

December 6, 2018

RICHARD MILLER and POWER EQUIPMENT AND DESIGN, LLC Plaintiffs,
v.
DAVID RODRIGUEZ, JOELLEN RODRIGUEZ AND CONTACT POWER, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          DOUGLAS E. ARPERT UNITED STATES MAGISTRATE JUDGE.

         This matter comes before the Court on a Motion by Defendants to Enforce Compliance With a Confidentiality Order. ECF No. 70. The Nonparty objects of the discovery requests and Confidentiality Order oppose the Motion. ECF No. 73, 74. Plaintiffs have taken no position. The Court has fully reviewed the submissions of the Defendants and Nonparties and considers same without oral argument pursuant to Fed.R.Civ.P. 78. For the reasons set forth below, Defendants' Motion is GRANTED.

         I. BACKGROUND[1]

         The facts of this case are well known to the Parties and were set down at length in the Opinion of this Court denying Defendants' Motion for Leave to File an Amended Counterclaim and Third-Party Complaint. ECF No. 65. Briefly, the facts pertinent and necessary to disposition of the Motion are as follows:

Plaintiff Richard Miller (“Miller”) and his company, Power Equipment and Design, LLC (“PED”), brought this action against Defendant Contact Power, Inc. (“Contact Power”) alleging Contact Power breached an oral agreement to pay Miller certain commissions. ECF No. 65 at 1. Contact Power was the sales-and-marketing arm of HiReli, LLC (“HiReli”) and its managing member, William Krause (“Krause”) (together with Ellen Barag, the “Nonparties”). Id. In turn, HiReli was the sales representative in the New Jersey/New York metropolitan area for G&W Electric, a global supplier of electric power gear. Defs.' Br. in Support of Mot. to Enforce Compliance With Confidentiality Order at p.4. n2. Contact Power's services to HiReli included identifying potential customers and sales opportunities for G&W products. ECF No. 65 at 2.

         Miller filed suit in Superior Court of New Jersey alleging Contact Power breached an employment agreement pursuant to which he was to receive commission payments for his sales and management efforts. Id. Miller seeks, among other things, compensation related to the sale of G&W products to the utility PSEG Long Island that Contact Power failed to pay to him. Id. After removing this action from Superior Court of New Jersey in May 2016, Contact Power filed an Answer that included six counterclaims. Id. Specifically, Contact Power alleges Miller, via his access to such confidential Contact Power information as “customer lists, methods of operation, vendor lists, vendor relationships, and pricing information, ” become aware of the PSEG Long Island project in July 2014. ECF No. 67 at ¶ 9. At some point after July 2014, Miller “terminated his arrangement with Contact Power” in order to transfer this business opportunity to himself and PED. ECF No. 67 at ¶ 9. In this regard, Contact Power asserts that Miller negotiated a direct agreement with HiReli, wherein Miller would receive a lower commission rate than that due to Contact Power for the sale of G&W products. Id. at ¶ 10-13. Contact Power alleges HiReli then terminated its agreement with Contact Power, preventing Contact Power from receiving any revenue from the PSEG sales. Id. at ¶ 13.

         In November 2017, Contact Power sought to join HiReli and Krause as third-party defendants pursuant to Fed.R.Civ.P. 14(a)(1). ECF No. 43. This Court denied that motion, though it allowed Contact Power to file an Amended Counterclaim. ECF No. 65. During discovery, Contact Power served HiReli with a subpoena. Defs.' Br. at p.5. In October 2017, the Parties and Nonparties entered a Stipulated Discovery Confidentiality Agreement and Protective Order. ECF No. 36. The language of that Order largely duplicates the form order contained in Appendix S to the Local Civil Rules. Id. The Order creates three tiers of information: that identified as “Confidential” and that designated as “Highly Confidential-Attorneys' Eyes Only, ” with the remainder being undesignated discovery. “Confidential” means discoverable material that “(a) that contains trade secrets, competitively sensitive technical, marketing, financial, sales or other confidential business information, or (b) that contains private or confidential personal information, or (c) that contains information received in confidence from third parties, of (d) which the Non-Parties otherwise believe in good faith to be entitled to protection under” Fed.R.Civ.P. 26(c)(1)(G) or L.Civ.R. 5.3. Id. “Attorneys' Eyes Only” is defined as any information “that contains highly sensitive business or personal information, the disclosure of which is highly likely to cause significant harm to an individual or to the business or competitive position of the Non-Parties.” Id. “Confidential” information may be disclosed only to retained or in-house counsel for the parties and outside experts or consultants retained for the purposes of this action, as well as executives of the parties who are required to participate in decisions with reference to this lawsuit. Id. Material designated “Attorneys' Eyes Only” may be viewed only by retained counsel for the receiving party. Id.

         The Nonparties say they produced documents pursuant to the Confidentiality Order in September 2017. Nonparties' Br. in Opp. to Mot. at p.1. Defendants say HiReli produced roughly 700 documents in October 2017. Defs.' Br. at p.5. In any event, by letter dated February 14, 2018, Defendants objected to the Nonparties' designations for much of that discovery. ECF No. 70-2 at p.36. By Defendants' count, 91% of those documents were designated as either “Confidential” or “Attorneys' Eyes Only, ” while 77% of the 3, 092 pages of that discovery was labeled “Attorneys' Eyes Only.” Defs.' Br. at p.5. In that letter, Defendants said they believed documents identified on an attached spreadsheet did not meet the Confidentiality Order's standards for those designations, especially those labeled as “Attorneys' Eyes Only.” Id. Defendants based their objections in part on the fact that Contact Power was a sales representative of HiReli, not a competitor, and so many of the documents could not fit the criteria for designation as “confidential, ” let alone “Attorneys' Eyes Only.” ECF No. 70-2. In the spreadsheet, Defendants identified document pages by Bates number and stated reason(s) for contesting the “Attorneys' Eyes Only” designation. Id. Many of the objections are pro forma descriptions, reading: “Documents do not meet definition of ‘attorneys' eyes only' as they do not contain ‘highly sensitive business or personal information' the disclosure of which is ‘highly likely to cause significant harm.' All parties are adequately protected by a confidentiality designation.” ECF No. 70-2 at p.38-49. Others include more specific objections, such as the objection for documents identified as having a subject matter “PED commission statements, ” which states: “PED's commission statements have been produced by plaintiffs with no confidentiality designation.” Id. at p.38. Similarly, the objection for documents labeled as subject matter “Terms and conditions, ” is: “G&W's standard terms and commissions are provided to all customers and, certainly would have been provided to CPI as its sales agent.” Id. Defendants state that they raised this issue “because of the inability of counsel and expert to discuss relevant damage documents with Contact Power in connection with Contact Power's damage evaluation and liability report” for this litigation. Defs.' Br. at pp.5-6. Defendants say HiReli “responded that the time to challenge the designations under the Confidentiality Order had expired” and so the Nonparties “would not discuss reclassifying the documents.” Defs.' Br. at p.6 (citing Certification of Christine F. Marks at ECF No. 70-2, Exhibit D).

         The Nonparties contend Defendants' motivation for filing the instant motion to reclassify the documents is to give David Rodriguez, Contact Power's principal and HiReli's direct competitor, “access to these highly proprietary and sensitive business documents to allegedly assist CPI's export to prepare” a report that actually was produced to Plaintiffs in July 2018. Nonparties' Br. at p.1.

         In June 2018, Defendants filed the instant motion seeking to “modify the designation of these documents from ‘Attorneys' Eyes Only' to ‘Confidential.'” Defs.' Br. at p.3. Defendants and the Nonparties tangentially each also argue that they should receive an award of attorneys' fees incurred in connection with the motion. Defs.' Br. at p.3, Nonparties' Br. at p.1, n3.

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 26(c)(1) permits “[a] party or any person from whom discovery is sought...[to] move for a protective order” and authorizes the Court to enter such an order “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed.R.Civ.P. 26(c)(1). The Local Civil Rules allow parties to “enter into written agreements to keep materials produced in discovery confidential.” L.Civ.R. 5.3(b). Rule 5.3 also provides that “[a]ny dispute regarding the entry of an order or the confidentiality of discovery materials under any order, under this section shall be brought before a magistrate judge pursuant to L.Civ.R. 37.1(a)(1).” Id. The Court notes also that “District Courts retain the power to modify or vacate confidentiality orders that [they have] entered” and “when a party seeks to modify an order of confidentiality, the party must come forward with a reason to modify the order.” Charlie H. v. Whitman, 213 F.R.D. 240, 245 (D.N.J.2003); see also Pansy v. Borough of Stroudsburg, 23 F.3d 772, 784-85, 790 (3d Cir.1994).

         “[W]here there is an umbrella protective order[, ] the burden of justifying the confidentiality of each and every document sought to be covered by a protective order remains on the party seeking the protective order.” United States v. Wecht, 484 F.3d 194, 211 (3d Cir.2007); see also Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1122 (3d Cir.1986). However, this “does not mean...that the party seeking the protective order must necessarily demonstrate to the court in the first instance on a document-by-document basis that each item should be protected.” Cipollone, 785 F.2d at 1122. “After the documents delivered under this umbrella order, the [receiving] party could indicate precisely which documents it believed not to be confidential, and the [producing party] would have the burden of proof in justifying the protective order with respect to those documents.” Id.

         III. DISCUSSION

         The instant motion primarily is concerned with documents designated as “Attorneys' Eyes Only, ” which may be disclosed only to counsel for Contact Power, but also with documents designated as “Confidential, ” which may be disclosed to, among others, any executive of Contact Power “who is required to participate in decisions with reference to this lawsuit.”

         Defendants say 77% of the 3, 092 pages of discovery materials produced by the Nonparties have been designated as “Attorneys' Eyes Only.”[2] Defs.' Br. at pp.1-2. Defendants contend this represents an “absurdly high” percentage of documents designated with what is supposed to be the highest tier of confidentiality and essentially accuse the Nonparties of discovery abuse. Defs.' Br. at p.8 (citing Team Play, Inc. v. Boyer, 2005 WL256476 (N.D.Ill. Jan. 31, 2005) (where the producing party marked 4173 document pages out of roughly 6, 000 pages produced, or roughly 70%, as “Attorneys' Eyes Only.”)). Rather, Defendants say, this tier is ...


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