Opinion
No. 03-2024-JWL
May 2, 2003.
MEMORANDUM AND ORDER
Pending before the Court is Plaintiff's Motion for Protective Order (doc. 14). Defendants oppose Plaintiff's Motion. For the reasons stated below, Plaintiff's Motion will be granted.
Relevant Background
This is a derivative shareholder suit alleging misconduct of officers, directors and other shareholders of Midland Fumigant, Inc. ("Midland") and Kaw Valley, Inc. ("Kaw Valley"). Relevant to the pending motion, Plaintiff asserts it is a competitor of defendant Midland in the sale of a pesticide which contains the active ingredient aluminum phosphide. Plaintiff further asserts that, although it owns 25% of defendant Midland, Defendants have refused — apparently outside the discovery process in this lawsuit — to provide Plaintiff with information concerning the business affairs of that company. In support of its Motion for Protective Order, Plaintiff argues that information concerning business affairs of companies operating in competition with each other normally is entitled to some degree of confidentiality. Plaintiff further argues that entry of an order limiting dissemination of such information at the onset of discovery serves the interests of a just, speedy, and less expensive determination of discovery disputes.
Defendants oppose the entry of a protective order at this stage of the litigation, arguing Plaintiff has not asserted any facts, but instead only conclusory opinions, about the potential for a discovery dispute and the need for protection. Defendants maintain that "[p]erhaps the time will arrive when good cause for a protective order will exist. However, with no outstanding discovery, and no outstanding objections, Plaintiff's anticipatory motion for a protective order simply is not ripe for judicial determination."
Defendants' Response at p. 2 (doc. 16).
Discussion
Fed.R.Civ.P. 26(b)(1) allows broad discovery, not only of "any matter, not privileged, that is relevant to the claim or defense of any party," but also of matters that appear "reasonably calculated to lead to the discovery of admissible evidence." In the face of the broad scope of permissible discovery, Fed.R.Civ.P. 26(c) provides a mechanism, available in appropriate cases, to limit the discovery or dissemination of certain information. Upon a showing of good cause and as justice may require "to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense," a court may, among other things, enter a protective order providing that discovery "not be had" or "be had only on specified terms and conditions."There are at least three kinds of protective orders that courts utilize to limit the discovery or dissemination of confidential or private information: (1) particular protective orders; (2) blanket protective orders; and (3) umbrella protective orders.
Particular Protective Orders: The narrowest kind of protective order is one that covers specific, identified information. A particular protective order is usually sought by a party prior to disclosing the information for which protection is sought. It requires that a court review specific, identified information to determine whether good cause exists to enter an order providing protection for that specific information. In cases with more than a few sensitive documents, the use of particular protective orders can prove inefficient and burdensome because it requires a court to review and make a determination about each piece of information for which protection is sought before that information is disclosed to the other side.
Umbrella Protective Orders: At the other end of the spectrum, a court may issue an umbrella protective order which designates all discovery as protected without any prior review whatsoever, by either a court or the parties. Umbrella protective orders are disfavored.
Blanket Protective Orders: Between the extremes are blanket protective orders. Blanket protective orders place upon the parties themselves, or others from whom discovery is sought, the initial burden of determining what information is entitled to protection. Normally, a blanket protective order requires that counsel for a producing party review the information to be disclosed and designate the information it believes, in good faith, is confidential or otherwise entitled to protection. The designated information is thereafter entitled to the protections afforded by the blanket protective order unless the designation is objected to by an opposing party. Judicial review of a party's designation as confidential occurs only when there is such an objection which the parties cannot resolve by agreement.
Gillard v. Boulder Valley Sch. Dist. Re-2, 196 F.R.D. 382, 385 (D.Colo. 2000) (citation omitted).
Id. at 385-86 (citation omitted).
"Blanket protective orders routinely are approved by courts in civil cases, frequently on the stipulated request of the parties." The agreement of all parties is not required to enter a blanket protective order as long as the following conditions are met:
Id. at 386.
First, a party must make some threshold showing of good cause to believe that discovery will involve confidential or protected information. This may be done on a generalized as opposed to a document-by-document basis. Moreover, even though a blanket protective order permits all documents to be designated as confidential, a party must agree to only invoke the designation in good faith. After receiving documents, the opposing party has the right to contest those documents which it believes not to be confidential. At this stage, the party seeking the protection shoulders the burden of proof in justifying retaining the confidentiality designation. Thus, the burden of proving confidentiality never shifts from the party asserting that claim — only the burden of raising that issue.
Id. (citation omitted).
"Blanket protective orders serve the interests of a just, speedy, and less expensive determination of complex disputes by alleviating the need for and delay occasioned by extensive and repeated judicial intervention." In this case, Plaintiff has made a threshold showing of good cause to believe that discovery will involve the disclosure of confidential information, including business records of a competitive company. Defendants do not dispute that certain information subject to discovery in this case should be maintained as confidential, but only that entry of a protective order with regard to this information is premature at this time. Accordingly, the Court finds Plaintiff's generalized showing of good cause for the entry of a blanket protective order is sufficient, and that a document-by-document showing is not required.
Id.
Based on this discussion, Plaintiff's Motion for Protective Order is hereby granted. To that end, the Court orders the parties to confer and then submit a jointly proposed blanket protective order by May 9, 2003 that limits the dissemination of confidential or private information to be produced in this litigation. It is further ordered that such blanket protective order shall
Although Plaintiff states in its Motion that a proposed Protective Order is attached, there was no proposed protective order submitted to the Court.
(1) include, in the first paragraph, a concise but sufficiently specific recitation of the particular facts in this case that provided the Court with an adequate basis upon which to make the required finding, see, supra, of good cause pursuant to Fed.R.Civ.P. 26(c);
(2) require that a lawyer designate information as confidential only after a review of the information and based on a good faith belief that it is confidential or otherwise entitled to protection; and
(3) provide a procedure by which the confidential designation may be challenged, and upon such a challenge place the burden on the party seeking protection to establish good cause.
If the parties disagree concerning the scope or form of such protective order, the party or parties seeking such an order shall file an appropriate motion and supporting memorandum by May 9, 2003.
IT IS SO ORDERED.