United States District Court, D. New Jersey
MEMORANDUM OPINION AND ORDER
DOUGLAS E. ARPERT UNITED STATES MAGISTRATE JUDGE.
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
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.
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.
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.
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
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
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.
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).
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
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.”
say 77% of the 3, 092 pages of discovery materials produced
by the Nonparties have been designated as
“Attorneys' Eyes Only.” 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