The opinion of the court was delivered by: ELIZABETH LAPORTE, Magistrate Judge
ORDER GRANTING DEFENDANTS' MOTION TO COMPEL
PLAINTIFF'S ANSWER TO INTERROGATORY 5
To satisfy the heightened pleading requirements for securities fraud
litigation contained in the Private Securities Litigation Reform Act of
1995, Plaintiffs relied heavily in their complaint on twenty-two
Confidential Witnesses (CWs) to plead their fraud claims with
particularity. These CWs allegedly have information supporting
Plaintiffs' claims that Defendants' system architecture did not have the
capabilities described in Defendants' SEC filings. Plaintfifs did not
identify the CWs by name.
At issue in this motion to compel is Defendants' Interrogatory 5, which
states: "Identify all Confidential Witnesses described in or referenced
in the Complaint." In response, Plaintiffs stated: "Plaintiff hereby
incorporates the General Objections above. Plaintiff has identified the
confidential witnesses in their initial disclosures. Plaintiff otherwise
objects to this Request on the basis of attorney-work product."
Plaintiffs' initial disclosures list more than 200 individuals who are
believed to have discoverable information. Defendants state that while
some of those individuals can be ruled out as not matching the
complaint's general descriptions of the CWs, there are at least 165 persons who appear to fit the
various CW descriptions. Defendants also dispute the work product claim.
The Court held a hearing on April 20, 2004 at which all parties were
represented by counsel. Based on the parties' papers and their oral
argument, the Court enters the following Order.
There is no binding authority on the question of whether the identities
of the CWs in a securities class action are discoverable. District courts
have split on the issue, albeit based in part on factual differences.
Compare Inre Aetna Inc. Securities Litigation 1999 WL 354527
(E.D. Pa.) (granting the defendants' motion to compel response to
interrogatories seeking the identity of persons described only generally
in the complaint where the plaintiffs objected based on the work product
doctrine and referred the defendants to the plaintiffs' list of 750
individuals with discoverable information; holding that the
interrogatories sought relevant factual information and that the need for
the information outweighed the minimal work product protection, if any,
the information may have); In re Theragenics Corp. Securities
Litigation 205 F.R.D. 631 (N.D. Ga. 2002) (following Aetna
and granting the defendants' motion to compel answers to interrogatories
seeking identities of individuals upon whom the plaintiffs relied in
making the allegations in the complaint; holding that the information is
not entitled to work product protection and disclosure of the names is
consistent with the policies of the Private Securities Litigation Reform
Act); In re Northpoint Communications Group. Inc., C-01-1473
WHA (Judge Alsup stated in a telephone conference that when a plaintiff
showcases information obtained from confidential witnesses in an effort
to meet the requirements of the Private Securities Litigation Reform Act,
the plaintiff must disclose the identities of those witnesses upon proper
interrogatory); with In re MTI Technology Corp. Securities
Litigation II, 2002 U.S. Dist. LEXIS 13015 (C.D. Cal.) (holding that
the identity of the witnesses interviewed by the attorneys and linked to
specific allegations in the complaint was protected by the work product
doctrine, focusing on the facts that the 71 potential witnesses were
either currently or previously employed by Defendant, that 71 potential
witnesses was not an unmanageable number for which to conduct discovery,
that disclosure would not further the policies of the Private Securities
Litigation Reform Act and that the witnesses could experience
retaliation); In re Ashworth. Inc. Securities Litigation
213 F.R.D. 385 (S.D. Cal. 2002) (finding the MTI reasoning
persuasive to deny a motion to compel identification of witnesses who
provided information that formed the basis for any allegations in the
complaint based on work product doctrine, where the plaintiff had refused
to substantively respond to interrogatories and referred to a list of
over 100 persons with discoverable information, and there was no substantial
need and undue hardship to overcome the work product protection).
Under the circumstances of this case, the Court is persuaded by the
reasoning in Aetna and Theragenics. The Court holds
that a list containing the names of the twenty-two CWs does not
constitute work product and that even if it were work product, the need
for the information and the hardship otherwise entailed outweighs any
minimal work product protection. Because Plaintiffs chose to build their
complaint on a foundation of statements from the twenty-two CWs, the
identities of those individuals are highly relevant and reasonably
calculated to lead to discoverable evidence. Moreover, the issue of
disclosure is really a matter of when, not whether. The fact discovery
cutoff of September 2, 2004 is rapidly approaching, all motions must be
heard by November 9, 2004 and trial begins on January 19, 2005.
Accordingly, the identities of most if not all of these CWs will be
revealed in the next few months, either in a class certification motion,
in any number of pretrial motions or at trial. It would be unfair to
permit Plaintiffs to rely so heavily on the CWs in the complaint, yet to
keep those identities from Defendants, especially given the schedule in
this case. Defendants are not seeking any documents prepared by counsel,
but are instead seeking a list of the subset of highly relevant
potential witnesses. This list would not reveal counsel's mental
impressions or processes and therefore is not protected by the work
product doctrine.
Even if the list were protected by the work product doctrine, the need
for the information under the procedural posture of this case outweighs
the minimal work product protection, due to the timing of this case and
to the relatively large list of potential witnesses. Plaintiffs made no
showing that disclosure now rather than in the coming months would cause
undue prejudice. Plaintiffs' counsel's statement at the hearing that
disclosure should be denied because some of the descriptions in the
complaint are sufficiently detailed to enable Defendants to identify the
individuals from the list of potential witnesses is unavailing; to the
extent that the complaint enables identification, there is no
confidentiality to preserve. Finally, while the Court recognizes that the
number of potential witnesses in this case is not as large as in
Aetna, it is substantially more than in MTI and
Ashworth. Given the compressed discovery schedule, it is simply
not practical for Defendants to interview or depose all 165 individuals
who could possibly be the CWs.
Accordingly, it is hereby ordered that Defendants' motion to compel
further response to interrogatory 5 is granted. Plaintiffs need not
disclose that counsel spoke to certain witnesses, or the substance of any
interviews, but shall disclose a list of the identities of the twenty-two
CWs to Defendants. Plaintiffs need not link up any particular C W with a paragraph in the complaint, and
may identify the witnesses in any order. No later than April 26, 2004,
Plaintiffs shall either disclose the list or file objections to this
Order with Judge Armstrong.
The Court declines to enter a protective order limiting the disclosure
of these witnesses' identities because there has been no showing on this
record of good cause. Although the Court agrees that, in general,
whistle-blowers may often need protection from retaliation, here
Plaintiffs conceded at the hearing that there was no evidence of any
likelihood of retaliation in this case. None of the twenty-two CWs are
current employees of Defendants, and Defendants' company no longer exists
in the form that it previously did. The Court appreciates Plaintiffs'
zealous attempts to protect the identities of these individuals, but
without any showing of specific need, a protective order is not
warranted. Of course, Plaintiffs may inform the witnesses of this Court's
Order and their right to talk or not talk to the Defendants informally as
they see fit. And, if any retaliation or abuse occurs, the Court will
take prompt action, as Defendants recognized at the hearing.
© 1992-2004 VersusLaw ...