This post come from the non-Reed Smith side of this blog.

Courthouses are public buildings filled with publically-paid employees and courtrooms run by public officials who are often publically elected. Litigating in a court of law is a public event.  As the 7th Circuit put it:

People who want secrecy should opt for arbitration.  When they call on the courts, they must accept the openness that goes with subsidized dispute resolution by public (and publicly accountable) officials.  Judicial proceedings are public rather than private property.

Union Oil Co. v. Leavell, 220 F.3d 562 (7th Cir. 2000). And so our clients often find themselves engaged in difficult court battles to protect confidential, business-sensitive information from public disclosure.  The difficulty increases in mass torts, which involve multiple courthouses and jurisdictions.

We recently saw a decision in a mass tort that addressed one such battle.  In Beavers v. Medtronic, Inc., 2014 WL 7882099 (D. Hi. June 20, 2014), an Infuse Bone Graft plaintiff refused to agree to a confidentiality order that would restrict her use of Medtronic confidential material to only that litigation.  She wanted to “share” the material with other plaintiffs in collateral litigation in other courts.  Id. at *2.

Medtronic moved for a protective order.  Id.  Plaintiff opposed, citing Foltz v. State Farm Mut. Auto Ins., 331 F.3d 1122 (9th Cir.), a Ninth Circuit decision that allowed litigants in a collateral litigation to come to another court and ask to modify that court’s confidentiality order so that they could “share” confidential discovery material and use it in their own litigation.  Id. at 1131-34.  The Beavers plaintiff argued that the Foltz holding meant that she was entitled to a confidentiality order that prospectively authorized her to share confidential material with plaintiffs in collateral litigation. 2014 WL 7882099 at * 2.

Wrong.  The court granted Medtronic’s request for a protective order.  The Foltz holding did not authorize what the Beavers plaintiff claimed it did.  Rather, it laid out a procedure that collateral litigants, not the plaintiff who had already received the confidential material, must follow. First, the collateral litigant must come to the court that issued the confidentiality order and ask that court to modify its confidentiality order to grant the collateral litigant access to the material.  But the collateral litigant must first make a showing to the court that the confidential material is relevant to the collateral litigation.  Moreover, the defendant, Medtronic, has the opportunity to oppose the request. Second, even if the collateral litigant succeeds in showing that the material is relevant to the collateral litigation and the court modifies its confidentiality order, that modification will likely place confidentiality obligations on the collateral litigant.  Third, the collateral plaintiff may then also have to overcome a challenge by the parties in the collateral litigation to the relevance of the confidential material, as those parties and that court are likely to best understand the issues in that litigation.  This procedure is laid out in some detail in the Foltz decision.  331 F.3d 1131-34.

This makes a lot of sense.  The authority and discretion to distribute confidential material beyond the litigation in which it was produced should not be handed over to the plaintiff that receives that material.  The resulting distribution of the confidential material to multiple other parties and courts would undermine the ability to protect the confidentiality of the material.  Instead, the distribution process should be actively monitored by the courts involved.  Protection of business-sensitive material is much better accomplished by the process laid out in Foltz.  It would be even better accomplished through well-considered, coordinated proceedings across the various jurisdictions involved.  That would allow all parties the opportunity to negotiate the scope of the production of confidential material, and its use and protection, with the various courts involved thereafter issuing coordinated orders. Authorizing a plaintiff to willy nilly distribute the material to other litigants, on the other hand, would only serve to give plaintiffs little reason to participate in a coordinated process.