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Kevin Barry Fine Art Associates v. Ken Gangbar Studio, Inc.

United States District Court, N.D. California

January 9, 2020


          DISCOVERY ORDER RE: DKT. NO. 100

          THOMAS S. HIXSON United States Magistrate Judge.

         Defendant and counterclaimant Ken Gangbar Studio, Inc., has challenged the confidentiality designations of 974 documents produced in this action - 972 by third-party Defendant John Johnson and two by non-party Monarch Art & Frame, Inc. The parties were unable to resolve the challenge without court intervention, so Plaintiff and counter-defendant Kevin Barry Fine Art Associates (“KBFAA”) and Johnson moved under paragraph 6.3 of the stipulated protective order to retain the confidentiality designations of all 974 documents. The moving parties argued that the documents fell into two broad categories: first, documents that show commercial information concerning their sales, costs, revenues and business methods, which they say contain the moving parties' confidential information; and second, documents related to their projects for designers and end users who conduct business with them with an expectation of confidentiality, which they say contain their clients' confidential information. Rather than putting all 974 documents before the Court, which the Court agrees is infeasible, the moving parties proceeded by way of examples. They initially filed 10 examples of each of the two categories of documents as exhibits I and J to the Bolling Declaration, ECF No. 100-3, but since the filing was in the public record, it waived whatever confidential status the documents previously may have had. The Court explained in its December 13, 2019 Order that it was unwilling to make confidentiality determinations using as examples documents for which the moving parties had voluntarily waived confidentiality. ECF No. 105.

         The Court is here now on the moving parties' second attempt. With the 20 documents whose confidentiality has been waived out of the way, there are now 954 documents at issue, 953 produced by Johnson and one by Monarch Art & Frame. The moving parties have submitted 16 documents for in camera review, 10 of which are in the second category and 6 of which are in the first.

         Let's start with the second category. The moving parties say these documents should be treated as confidential because they contain client information, which KBFAA tells clients it will keep confidential and which some of its written contracts require to be kept confidential. KBFAA says that Johnson and Monarch are independent contractors that KBFAA hires for client projects, so KBFAA's confidentiality obligations toward its clients also apply to Johnson and Monarch. As an initial matter, Ken Gangbar asserts that it is inconsistent with paragraph 9 of the protective order for parties to the litigation to designate documents as confidential on the ground that they contain a non-party's confidential information. The Court disagrees.

         Paragraph 9 of the protective order says:

(a) The terms of this Order are applicable to information produced by a Non-Party in this action and designated as “CONFIDENTIAL.” Such information produced by Non-Parties in connection with this litigation is protected by the remedies and relief provided by this Order. Nothing in these provisions should be construed as prohibiting a Non-Party from seeking additional protections.
(b) In the event that a Party (the “Responding Party”) is required, by a valid discovery request, to produce a Non-Party's confidential information in its possession, and the Responding Party is subject to an agreement with the Non-Party not to produce the Non-Party's confidential information, then the Responding Party shall:
(1) promptly notify in writing the Requesting Party and the Non-Party that some or all of the information requested is subject to a confidentiality agreement with a Non-Party;
(2) promptly provide the Non-Party with a copy of the Stipulated Protective Order in this litigation, the relevant discovery request(s) (with any materials designated as Confidential by a separate Designating Party redacted), and a reasonably specific description of the information requested; and
(3) make the information requested available for inspection by the Non-Party, making any necessary arrangements for the redaction of materials designated Confidential by a party other than the Non-Party.
(c) If the Non-Party fails to object or seek a protective order from this court within 14 days of receiving the notice and accompanying information, the Responding Party may produce the Non-Party's confidential information responsive to the discovery request. If the Non-Party timely seeks a protective order, the Responding Party shall not produce any information in its possession or control that is subject to the confidentiality agreement with the Non-Party before a determination by the court. Absent a court order to the contrary, the Non-Party shall bear the burden and expense of seeking protection in this court of its Protected Material.

         Subsection (a) states that the protections of the protective order are applicable to documents produced and designated as “confidential” by a non-party. However, virtually all of the documents at issue here were produced by Johnson, a party. It is common for a litigant to possess documents that have somebody else's confidential information in them - that happens a lot when a litigant has customers. Paragraph 9(a) does not bar a litigant from designating its own produced documents as confidential on the ground that they contain third-party confidential information.

         A literalist might have a problem with KBFAA designating as confidential a document produced by Monarch. It seems like the proper procedure under paragraph 9(a) is for the non-party to designate its documents as confidential if it believes they are, so you could draw a negative inference that if the non-party fails to do so, nobody else can. This negative inference is bolstered by paragraph 5.2 of the protective order, which suggests that confidentiality designations are made by the producing party. However, in this case we are dealing with the situation where the producing party (Monarch) has a document that supposedly contains somebody else's confidential information (the client's), and Monarch's obligation to keep it confidential is derivative of KBFAA's commitment to do so. On these facts, there is nothing procedurally improper about KBFAA's designating a document produced by Monarch as confidential. Stated another way, Monarch's failure to comply with the confidentiality obligations it assumed by working for KBFAA (if it had any) should not bar KBFAA from enforcing those obligations.

         Subsections (b) and (c) of paragraph 9 address a different situation. This is the situation where the producing party has promised not to produce a non-party's confidential information. These subsections create a mechanism by which the non-party receives notice of the discovery request and then can move for a protective order to try to stop the document production. Here, Johnson and ...

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