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Henry v. Ocwen Loan Servicing, LLC

United States District Court, S.D. California

April 5, 2018

OCWEN LOAN SERVICING, LLC, et al., Defendants.



         Before the Court is the Defendants' motion for entry of a protective order. ECF No. 34. The parties jointly requested the motion be heard on shortened time to facilitate a scheduled deposition. ECF No. 36. The Court granted that request. ECF No. 42. Plaintiffs filed their opposition and Defendants filed their reply consistent with the agreement of the parties. ECF Nos. 40, 43.

         For the reasons discussed herein, the Court GRANTS Defendants' motion for entry of a protective order, and DENIES Plaintiffs' request for sanctions.


         This case arises from a home loan modification and alleges breach of contract and violations of the Fair Credit Reporting Act, Fair Debt Collection Act, and state equivalent statutes. ECF No. 1. In the course of discovery, Plaintiffs served Requests for Production of Documents (“RFP”) seeking, inter alia, servicing notes on the subject loan. ECF No. 34-1 at 1. Defendants' responses to the RFP included objections and stated that documents would be produced following agreement on a protective order. Id. at 2.

         The parties began the meet and confer process and Defendants provided a standard stipulated protective order for consideration. Id. Following meet and confer conferences, supplemental responses, and the initial production of documents, Defendants reiterated that servicing notes would be produced under a protective order. Id. at 2-3. Plaintiffs did not agree to stipulate to a protective order during this process. Id.

         Plaintiffs acknowledge that Defendants requested, on many occasions, that Plaintiffs stipulate to a protective order. ECF No. 40 at 2-4. Plaintiffs argue that each request was untimely and/or waived because it was not requested prior to the time that Defendants responded to discovery. Id. at 3 (lines 6-9). Plaintiffs responded to each of Defendants' requests that the Plaintiffs stipulate to a protective order by pointing out the untimely nature of the request. Id. at 3-4.

         Forced to move for entry of protective order, Defendants filed the instant motion and were provided the first available hearing date consistent with the Local Rules 28-day hearing calendar requirements, April 26, 2018. The parties jointly stipulated for this motion to be heard on shortened time in light of a deposition of Defendant Ocwen scheduled for April 12, 2018 and submitted briefing accordingly so that documents may be produced subject to the protective order in advance of and for use in the deposition.


         “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).

         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 (emphasis added) (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.


         A. Timeliness of the Motion for Protective Order

         Plaintiffs argue that Defendants' motion is untimely, and that Defendants have “waived” the ability to seek a protective order by not requesting one prior to the deadline to respond to the RFPs. ECF No. 40 at 3, 5-8.

         Rule 26(c), addressing protective orders, provides no time constraints for a request, and presumes that a request will not arise until discovery is pending. Fed.R.Civ.P. 26(c) (“A party or any person from whom discovery is sought may move for a protective order in the court where the action is pending.”).

         Plaintiff cites to an unpublished Ninth Circuit opinion, Seminara v. City of Long Beach, 68 F.3d 481 (9th Cir. 1995), for the proposition that a request for protective order is timely if made prior to date set for the discovery. Not only is this opinion clearly identified as unpublished, it does not meet any of the requirements that otherwise allow for citation of unpublished authority. See Fed. R. App. P. 32.1, [1] Ninth Circuit Rule, 36-3.[2] The subsequent cites are also dated prior to 2007 and inapplicable, or out of circuit authority that is not binding.

         Even so, Plaintiffs reliance on each case cited is misplaced: In Seminara, the Ninth Circuit concluded there was no abuse of discretion where the court sua sponte issued a protective order in circumstances where discovery responses had already been issued. Likewise, in Brittain v. Stroh Brewery Co., 136 F.R.D. 408, 414 (M.D. N.C. 1991), the court held that a protective order was appropriate and “seasonable” where, as here, “defendant (1) noted its objections in the response to the written discovery, (2) submitted a proposed protective order prior to plaintiffs' motion to compel discovery, and (3) moved for a protective order….” These are exactly the facts before this Court and, as in Brittain, a protective order is appropriate and “seasonable.” Finally, in Berry v. Baca, CV01-02069 DDP (SHX), 2002 WL 1777412, at *1 (C.D. Cal. July 29, 2002), the court addressed a protective order specific to a depositions and fee shifting request, not a protective order governing documents. This case is wholly inapplicable.

         While ideally, parties will promptly move for a protective order at the outset of a case, this Court is aware of no case law, and Plaintiffs cite to none, where failure to request a protective order prior to issuing responses constitutes a waiver of the ability to seek a protective order. And where, as here, the first set of responses to discovery included that production of documents would occur subject to a protective order, there is no basis to argue waiver. Likewise, in cases involving financial information, protective orders are routinely used and often stipulated to by counsel. In this case, Defendants had no reason to think that a protective order would be objectionable and began the negotiations for one concurrently with the responses regarding the documents that would subject to the protective order. The Court finds Defendants' request was made within a reasonable time and is timely. Fed.R.Civ.P. 26(c).

         B. Good Cause for Protective Order

         Defendants assert good cause exists for entry of a protective order because the “confidential servicing notes contain[] proprietary trade secrets.” ECF No. 34-1 at 4. In addition to being proprietary, Defendants argue the servicing notes are “not publically [sic] available, and deserve protection from unfettered dissemination by the parties to this litigation.” Id. at 5. Defendants articulate that the servicing notes are “integral to ensuring its financial security and preventing the occurrence of fraud on its business, employees and customers. Public dissemination of its servicing notes provides valuable information to competitors, potential fraudsters, identity thieves, and criminals by needlessly providing those individuals with information they may creatively use to scam, trick, and swindle Defendants and their customers.” Id. The Court finds this presents good cause and adequately “explain[s] what specific prejudice or harm will result without protection.” Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d at 1211.

         In opposition, Plaintiffs argue that “Defendants actions toward their own customers (Plaintiffs) deserves to be fully within the realm of public disclosure to warn customers … of extreme unfairness that Defendants have thrust upon Plaintiffs.” ECF No. 40 at 1. Plaintiffs rely on Performance Credit Corporation v. EMC Mortgage Corporation, SACV 07-383 DOC RNBX, 2009 WL 10673235, at *1 (C.D. Cal. June 23, 2009) for the proposition that servicing notes should be produced without a protective order. ECF No. 40 at 10.

         This Court reviewed the docket associated with Performance Credit via PACER and finds that a Stipulated Protective Order was entered in this case prior to the discovery dispute that is the subject of the cited order. Performance Credit Corporation v. EMC Mortgage Corporation, SACV 07-383 DOC RNBX, (Stipulated Protective Order, ECF No. 21, Dec. 21, 2007; Citation Order, ECF No. 84, June 23, 2009). Performance Credit does not support Plaintiff's position. There, the defendants requested a protective order in response to a motion to compel production. The Performance Credit court did not opine on the ability of the parties to make servicing notes available to the public at large, only that they were relevant to the litigation and must be produced to the plaintiff. 2009 WL 10673235, at *3. In this case, there is no dispute that the documents will be produced, rendering any reliance on Performance Credit inapposite.

         Balancing the interests of the parties, a protective order is appropriate. Defendants have demonstrated good cause, and Plaintiffs do not point to any prejudice that would result from the issuance of a protective order as this issue will be decided prior to the deposition scheduled for April 12, 2018 and the Servicing Notes at issue will be produced to Plaintiff for use and reference in this matter, under a protective order. A protective order permits discovery of the relevant documents to Plaintiffs while protecting financial and proprietary data that is not otherwise publicly available.

         C. Plaintiffs' ...

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