In Dale v. T-Mobile US, Inc. – a putative antitrust class action litigation – Magistrate Judge Jeffrey Cole resolved whether and to what extent confidentiality agreements between parties apply to productions non-party recipients of subpoenas made.
Background
In this litigation, the parties entered a confidentiality order governing discovery in the case. After the parties issued subpoenas to numerous non-parties, a dispute with the non-parties arose regarding certain portions of the confidentiality order. Although the parties and the non-party subpoena recipients “nearly reached agreement [during meet and confers] for amending the Confidentiality Order,” they could not agree on certain topics, including whether defendant’s in-house counsel would be permitted to review highly confidential information from the non-parties. A motion to amend the confidentiality order was brought to the court.
Although Judge Cole ultimately denied the motion, he provided the parties and non-parties with guideposts and encouraged all to work cooperatively toward a mutually acceptable resolution. Magistrate Judge Cole initially noted that non-parties have “vastly different expectations regarding the confidentiality of their information” and explained that “parties to a lawsuit must accept the invasive nature of discovery, non-parties are just that, not parties …, and they generally do not have anywhere near the same skin in the game.” Therefore, “a non-party is entitled to greater protection in the discovery process than parties….”
Judge Cole then turned to the merits of the parties’ arguments. In rejecting defendant’s argument that the non-parties should be bound by the confidentiality order because the court was “well-aware of the nonparty discovery that Plaintiffs’ claims would entail,” the judge cited to the plain language of the confidentiality order, noting that by its terms the order applies only to “any named Party to this action … and to Non-Parties who agree to be bound by this Order.” Magistrate Judge Cole then analyzed the three factors a court must consider when the modification of a confidentiality agreement is sought (citing Heraeus Kulzer, GmbH v. Biomet, Inc.). He found the first factor, the nature of the order, favored modification “because the non-parties did not agree” to the confidentiality order. He concluded that the second factor, the foreseeability that modification would become necessary, also favored the non-parties because the parties’ agreement “left open the very real possibility that non-parties — competitors with one of the parties — would disagree with it.” Finally, he found the third factor, the parties’ reliance on the order, “is really neither here nor there” because they knew “non-parties they planned on subpoenaing would understandably balk.”
Regarding the substance of the non-parties’ objections to the confidentiality order, Magistrate Judge Cole noted that “[t]he non-parties have some very real concerns about in-house counsel for a competitor poring over their documents” and that “it is no small matter for in-house counsel to compartmentalize information learned in discovery.”
Magistrate Judge Cole urged the parties and non-parties to “take a critical look at their current positions and make another attempt to come up with something workable” and to “think creatively with an eye toward what is truly and not merely academically meaningful.” He also suggested that the parties and non-parties “put together some sort of mutually acceptable agreement rather than have something perhaps imposed on them down the road.” Ultimately, Magistrate Judge Cole denied the motion to amend the confidentiality order and ordered the parties to meet and confer “with the forgoing considerations and weaknesses in positions in mind.”
Conclusion
This decision provides a few useful reminders. First, disputes that can be resolved without imposing upon the court should seek to be resolved amicably. It also serves as a reminder that parties will be bound by the plain terms of an agreement – especially one the court orders. Finally, protections afforded to non-parties in a litigation may be greater given the different expectations of non-parties who have “no skin” in the litigation. Thought should be given to this when drafting agreements that might impact a non-party.