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Satmodo, LLC v. Whenever Communications, LLC

United States District Court, S.D. California

February 27, 2018

SATMODO, LLC, Plaintiff,
v.
WHENEVER COMMUNICATIONS, LLC, et al., Defendants.

          ORDER ON MOTION FOR ENTRY OF PROTECTIVE ORDER AND PROTECTIVE ORDER, AS MODIFIED BY THE COURT (ECF NO. 38)

          HON. NITA L. STORMES, UNITED STATES MAGISTRATE JUDGE

         Before the Court is the Plaintiff's Motion for Entry of a Protective Order. ECF No. 38. In response, the Court set out a briefing schedule and hearing date. ECF No. 39. Defendants filed an opposition on February 14, 2018 and Plaintiff filed a reply on February 21, 2018. ECF Nos. 42, 43. The Court deems this motion suitable for determination on the papers submitted and without oral argument. CivLR 7.1 (d)(1).

         I. LEGAL STANDARD

         “Rule 26(c), setting forth grounds for protective orders, was enacted as a safeguard for the protection of parties and witnesses in view of the broad discovery rights authorized in Rule 26(b).” United States v. Columbia Broad. Sys., Inc., 666 F.2d 364, 368-69 (9th Cir. 1982). “Generally, the public can gain access to litigation documents and information produced during discovery unless the party opposing disclosure shows ‘good cause' why a protective order is necessary.” Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210 (9th Cir. 2002). In order to satisfy the good cause standard, the party seeking the protective order must explain what specific prejudice or harm will result without protection. Id. at 1211. “Rule 26(c) confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required . . . [because the] trial court is in the best position to weigh fairly the competing needs and interests of parties affected by discovery.” Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984).

         II. DISCUSSION

         This case alleges that Defendants participated in a click-fraud scheme to force Plaintiff's daily advertising budget, calculated on a per click basis, to be reached prematurely and clear advertising availability for its competitors, including defendant Whenever Communications. See ECF No. 16. Plaintiff argues that a protective order is necessary to protect privileged and proprietary information. ECF No. 38 at 1. Included within the Plaintiff's proposed protective order is further explanation:

Disclosure and discovery in this action are likely to involve production of confidential proprietary, or private information and, for competitive reasons, are normally kept confidential. The materials to be exchanged throughout the course of the litigation between the parties may contain trade secret or other confidential research, technical, cost, price, marketing or other commercial information, as is contemplated by Federal Rules of Civil Procedure 26(c)(7). Special protection from public disclosure and use for any purpose other than prosecuting this litigation may be warranted. … The nature of the claims involved in this action may require discovery into competitive sensitive information, including potentially from third parties. A private agreement between the Parties would be insufficient to alleviate the Parties' concerns that such information remain confidential. The entry of a protective order is designed to prevent the unauthorized disclosure and use of such information of Parties and Non-Parties during the litigation and after it has been concluded. A protective order will also facilitate timely production of material from both Parties and Non-Parties. …

ECF No. 38-1, Ex. C.

         Plaintiff submits that it will not produce confidential and proprietary documents recently requested by the Defendants-such as “full and complete reports and logs identifying clicks on Plaintiff's paid ads, efforts Plaintiff has employed to try and block and/or monitor and track future attempts at unauthorized access, documents evidencing Plaintiff's ‘historical and recent sales, costs, expenses, and conversion rates…”-to the Defendants, a direct competitor, absent a protective order or another order of the court compelling production. ECF No. 43 at 2.

         In opposition to the motion for entry of a protective order, Defendant first argues that Plaintiff fails to demonstrate good cause for a protective order “at this juncture of the case.” ECF No. 42 at 1-2. Defendant concedes “there may be need for a protective order on very limited categories of discovery later in the case, ” but disputes that it is necessary now or for documents requested because “a material portion” of the ClickCease reports Plaintiff relies on to demonstrate fraudulent clicks have been included in filings before the Court. ECF No. 42 at 4. Defendants do not offer any proposed alternate categories, language, or its own proposed protective order. Defendant's only specific challenge to any term of Plaintiff's proposed protective order is to the definition of “‘CONFIDENTIAL' Information or Items” on the grounds that it uses subjective terms, failing to identify a “properly demarcated category of legitimately confidential information.” Id. at 2 (emphasis in original).

         While Plaintiff makes minimal effort to identify “what specific prejudice or harm will result without protection, ” the Court is also unaware of any cases involving direct competitors where there was any disagreement that a protective order was warranted, as Defendants appear to argue.[1] The potential for prejudice and/or harm are high when producing marketing, financial, or other confidential and proprietary information to a direct competitor. Thus, the Court will exercise its discretion to enter a blanket protective order. Seattle Times Co. v. Rhinehart, 467 U.S. at 36 (“Rule 26(c) confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required.”)

         Blanket protective orders are routinely approved for use in civil cases and consistent with the mandate that courts provide “just, speedy, and inexpensive” resolution in every action and proceeding. Van v. Wal-Mart Stores, Inc., C 08-5296 PSG, 2011 WL 62499, at *2 (N.D. Cal. Jan. 7, 2011) (“Blanket protective orders serve the interests of a ‘just, speedy, and inexpensive' determination of cases by avoiding the undue cost and delay that would ensue if courts had to make a good cause determination on a document-by-document basis for all documents exchanged in discovery that a party wished to protect.”). The Ninth Circuit implicitly acknowledged that the use of blanket protective orders conserves judicial resources-and taxpayer money-by eliminating the requirement that a party move for a protective order every time that party produces documents they contend are confidential. See Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1131 (9th Cir.2003) (noting that use of a blanket protective order was “understandable for the unfiled documents given the onerous burden document review entails.”).

         “While blanket protective orders are usually based on a joint request of the parties-and courts generally expect such cooperation among litigants-the agreement of all parties is not required so long as certain conditions are met.” Van v. Wal-Mart, 2011 WL 62499, at *2 (citing Parkway Gallery Furniture, Inc. v. Kittinger/Pennsylvania House Group, Inc., 121 F.R.D. 264, 268 (M.D. N.C. 1988)). Specifically, the party requesting the protective order must “make some threshold showing of good cause to believe that discovery will involve confidential or protected information, ” which “may be done on a generalized as opposed to document-by-document basis.” Id. Additionally, the parties “must agree to only invoke the designation in good faith.” Id. Finally, the party receiving documents must have the right to challenge the confidentiality designations assigned to documents. Id.

         The Court finds that Plaintiff has satisfied the threshold showing of good cause to believe that discovery will involve confidential information. Plaintiff points to presently pending discovery requests from Defendant seeking financial and historical sales information. See ECF No. 43-1 at ¶ 4, Exs 1-2. Additionally, this lawsuit is between direct market competitors and discovery is likely to include further financial and trade secret information, such as the marketing budgets or strategies that are the subject of litigation.

         Upon review of the proposed protective order submitted by Plaintiff, the Court finds that it contains all the other necessary conditions, including that confidentiality designations may only be invoked in good faith (see ¶¶ 2.1, 2.5, 5.1) and may be challenged by the receiving party (see ¶ 6).

         Defendants raise a single objection to Plaintiff's proposed protective order. See ECF No. 42 at 2 (objecting to proposed protective order section 2.1 “CONFIDENTIAL” Information or Items). Defendants' specific objection is to the subjective nature of what constitutes confidential information, which is defined as:

CONFIDENTIAL” Information or Items: Information (regardless of how generate [sic] stored, or maintained) or tangible things that a Party or Non-Party reasonably and in good faith believes to contain confidential or proprietary information that is not publicly available (such as commercial financial, trade secret, or other sensitive information) and that are treated confidentially by a Party [sic] Non-Party.

ECF No. 38-1, Ex. C at 10. Defendants offer no alternative proposed definition or categories for what can be properly considered or designated as “CONFIDENTIAL.” In considering Defendant's objection, the Court reviewed the Southern District's model protective order (available on the Court's website), and finds an equally subjective standard is used:

Designation as “CONFIDENTIAL”: Any party may designate information as “CONFIDENTIAL” only if, in the good faith belief of such party and its counsel, the unrestricted disclosure of such information could be potentially prejudicial to the business or operations of such party.

         Model Protective Order, ¶ 4(a).

         The Court finds a subjective standard appropriate for two reasons: First, because the parties are in the best position to determine what documents are best designated “CONFIDENTIAL.” Second, because the protective order contains appropriate safeguards, such as requiring the parties not over-designate and providing a mechanism for the parties to challenge designations. While the Court finds these safeguards strike the proper balance, it will add language from the model protective order to further address Defendants' concern.

         In light of the foregoing, the Court hereby enters the following protective order, as modified by the Court from the proposed protective order submitted by Plaintiff:[2]

         III. PROTECTIVE ORDER

         1. PURPOSES AND LIMITATIONS

         Disclosure and discovery in this action are likely to involve production of confidential proprietary, or private information and, for competitive reasons, are normally kept confidential. The materials to be exchanged throughout the course of the litigation between the parties may contain trade secret or other confidential research, technical, cost, price, marketing or other commercial information, as is contemplated by Federal Rules of Civil Procedure 26(c)(7). Special protection from public disclosure and use for any purpose other than prosecuting this litigation may be warranted.

         This Order does not confer blanket protections on all disclosures or responses to discovery and that the protection it affords from public disclosure and use extends only to the limited information or is entitled to confidential treatment under this Order or applicable legal principles.

         The nature of the claims involved in this action may require discovery into competitive sensitive information, including potentially from third parties. A private agreement between the Parties would be insufficient to alleviate the Parties' concerns that such information remain confidential. The entry of a protective order is designed to prevent the unauthorized disclosure and use of such information of Parties and Non-Parties during the litigation and after it has been concluded. A protective order will also facilitate timely production of material from both Parties and Non-Parties.

         2. DEFINITIONS

         2.1. “CONFIDENTIAL” Information or Items: Information (regardless of how generated, stored, or maintained) or tangible things that a Party or Non-Party reasonably and in good faith believes to contain confidential or proprietary information that is not publicly available (such as commercial financial, trade secret, or other sensitive information), and that are treated confidentially by a Party or Non-Party, the unrestricted disclosure of which could be potentially prejudicial to the business or operations of such party.

         2.2. Designating Party: A Party or Non-Party that designates information or items produced in disclosures or in responses to discovery as “CONFIDENTIAL” or “HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY” 2.3. Disclosure or Discovery Material: All items or information, regardless of the medium or manner generated, stored, or maintained (including, among other things, testimony, ...


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