BARBARA MOSES, United States Magistrate Judge.
Plaintiff Royal Park Investments SA/NA (Royal Park) is a Belgian limited liability company formed as a special purpose vehicle during the 2008 financial crisis to take over certain distressed assets held by Fortis Bank SA/NV and its affiliates. Beginning in 2012, Royal Park sued a number of United States-based financial institutions in an effort to recover losses sustained in its residential mortgage-backed securities (RMBS) portfolio. There are now at least five such suits pending in this District, in which Royal Park, represented by the firm of Robbins Geller Rudman & Dowd LLP (Robbins Geller) seeks damages from those financial institutions in their capacities as trustees of various RMBS trusts. This is one of those cases. Another is Royal Park Investments SV/NA v. U.S. Bank National Association, No. 14-CV-02590 (VM) (JCF) (U.S. Bank).
The allegations against defendant U.S. Bank in No. 14-CV-02590 are very similar to the allegations against defendant Deutsche Bank National Trust Company (Deutsche Bank) in this action. The two complaints assert the same claims, on the same legal theories, and contain many of the same factual allegations. In addition — and key to the dispute now before the Court — both defendants are represented by the firm of Morgan, Lewis & Bockius, LLP (Morgan Lewis) and each of them, through Morgan Lewis, executed a Stipulation and Agreed Protective Order (Protective Order) which provides, among other things, that all discovery materials "produced or disclosed in connection with this Action shall be used solely for the prosecution or the defense of this Action (including any appeal therefrom)." See Prot. Order (Dkt. No. 77), ¶ 2; U.S. Bank Prot. Order (Dkt. No. 70 in No. 14-CV-02590), ¶ 4. Although the stated purpose of each Protective Order is to facilitate the discovery and handling of materials that "merit confidential or highly confidential treatment," see Prot. Order ¶ 1; U.S. Bank Prot. Order ¶ 1, the provision requiring that discovery materials be "used solely for the prosecution or defense of this Action" applies to "all" discovery materials, whether "confidential," "highly confidential," or entirely pedestrian.
Royal Park now complains that Deutsche Bank violated the Protective Order by "utilizing Discovery Materials produced by [Royal Park] in this action to defend a separate client, U.S. Bank ... in separate litigation as to which [Royal Park] is also a party." Pl. Ltr. dated May 27, 2016 (Dkt. No. 170), at 1. Plaintiff does
Pl. Ltr. dated May 27, 2016, at 1-2. Royal Park argues, based on these incidents, that there has been a "clear violation of the Protective Order." Id. at 2. Plaintiff asks that Morgan Lewis be ordered to "disclose" any and all similar violations of the Protective Order and "utilize separate lawyers and personnel on the Deutsche Bank and U.S. Bank actions to prevent future violations." Id. at 4.
Royal Park does not identify any concrete prejudice flowing from the claimed violations.
Deutsche Bank denies that any of the conduct at issue violates the Protective Order. There is a difference, it argues, between "the use of knowledge of the existence of certain documents and the use of their contents," Def. Ltr. dated June 2, 2016, at 3; in defendant's view, the Protective Order prohibits only the latter. Thus, in the first and third incidents described by Royal Park, Deutsche Bank contends that it was permissible for its attorneys to use their "knowledge of the existence of" documents previously produced in this action to advocate for their production in U.S. Bank as well. Id. As for the second incident, defendant asserts that the "hit rate" information discussed during the March 30, 2016 conference did not even qualify as Discovery Material, as that term is used in the Protective Order. Id. at 1-2.
The question underlying Royal Park's application is whether a stipulated
Jazz was a patent dispute in which the parties' Discovery Confidentiality Order (DCO) stated that confidential documents and information produced in discovery could be used "solely for the purposes of this litigation and not for any business or competitive purposes." Id. at *3. The same parties were also engaged in inter partes review (IPR) proceedings before the U.S. Patent and Trademark Office (USPTO). Id. Defendants Amneal and Par wrote to Jazz to demand that it produce certain documents in the IPR proceedings that it had previously produced under the DCO in the district court case. Id. at *4-5. Defendants identified the documents by bates number and asserted that they were inconsistent with one of the positions Jazz was taking in the IPR proceedings. Id. Jazz sought sanctions, arguing that defendants' conduct violated the DCO. Id. Magistrate Judge Joseph A. Dickson agreed:
Id. at *5-6.
Judge Dickson went on, however, to express concern that the DCO (as he read it) would prohibit not only prejudicial misuse of confidential discovery information but also the "legitimate use" of such information "to establish that a party has wrongfully failed to produce relevant documents" in other proceedings. Id. at *13-14. The court therefore deferred the question of monetary sanctions and ordered the parties to meet and confer concerning revisions to the DCO that would allow "legitimate use" of discovery materials and thereby "reduce the potential for unfair gamesmanship." Id. at *14. If the parties failed to solve this problem, Judge Dickson added, he might "reconsider" his prior decisions. Id.
I share Judge Dickson's concern about the potential for unfair gamesmanship that would flow from interpreting the Protective Order in the manner now advocated by Royal Park. Such an interpretation would allow it to withhold relevant and discoverable documents in one action with impunity, even after producing them in a similar case (and even if there was nothing confidential about the documents themselves), safe in the knowledge that its adversary could not mention their existence without risking sanctions. Royal Park's inability to identify any concrete harm suffered as a result of Deutsche Bank's conduct underscores my concern and suggests that plaintiffs primary objective is not to prevent discovery abuse by the defendants it has sued but to hamper their ability to obtain discovery to which they are entitled.
Similarly, in Streck, Inc. v. Research & Diagnostic Sys., Inc., 250 F.R.D. 426 (D.Neb.2008), Magistrate Judge Thomas D. Thalken rejected defendants' claim that plaintiff improperly "used" documents produced in the district court by seeking their disclosure in a related interference proceeding before the USPTO for the purpose of impeaching a witness there. Id. at 433-35. In Streck, plaintiffs counsel did not merely allude to the existence of the documents at issue; he told the USPTO that he "has reason to believe that, based on documents produced by [the defendants] in the Nebraska limitation [sic], Mr. Veronneau is mistaken." Id. at 434 n. 4 (first alteration in the original). Counsel thus revealed, at least in broad strokes, the contents of the documents that he was not permitted to "use" except in the Nebraska litigation itself. Nonetheless, Judge Thalken denied defendants' motion for sanctions, ruling that they were "straining the term `use,'" and noting that "[t]he plaintiff was not relying on the materials themselves, but attempting to secure their disclosure in the interference proceeding." Id. at 435.
In re Dual-Deck is also instructive. The stipulated protective order in Dual-Deck stated that discovery materials, whether or not confidential, "shall not be used at any time for any ... purpose whatsoever" other than preparing or trying the case in which they were produced. 10 F.3d at 694. In discovery, plaintiff Go-Video obtained information suggesting that defendants committed antitrust violations beyond those already alleged. Id. After Go-Video was denied leave to amend, it relied on the same discovery (a) to file a second lawsuit;
I recognize that Dual-Deck was a contempt case — such that "substantial compliance" was sufficient to avoid liability even if Go-Video committed "technical violations" of the protective order, id. at 695 — and in any event is not binding in this District. I need not decide, however, whether the Protective Order before me prohibits Deutsche Bank from filing a new lawsuit based on information learned through discovery in this one. I need only decide whether it prohibits Deutsche Bank's lawyers from using their knowledge of what has been produced here to advocate for the production of the same documents, if otherwise discoverable, in a parallel case against a different defendant. I conclude that it does not. I further conclude that Royal Park, like defendants in Streck, is "straining the term `use,'" 250 F.R.D. at 435, when it insists that those lawyers committed a "clear violation of the Protective Order" merely by asking Royal Park to promptly turn over documents which (as Judge Francis apparently found) were within the scope of discovery in U.S. Bank but for unknown reasons had not yet been produced. Acknowledging the existence of such documents, in that setting and for that purpose, cannot be considered a prohibited "use" of discovery materials without rendering the Protective Order absurd.
I now turn to the second incident cited by Royal Park to illustrate Morgan Lewis's "cross-use of Discovery Material," namely, counsel's acknowledgment, during a discovery conference in this action, that he "knew about the hit rates for search terms provided to defendants in other trustee actions." Pl. Ltr. dated May 27, 2016, at 2.
Although it is not necessary to modify the Protective Order to resolve the current dispute, Royal Park's motion is a useful lesson concerning the dangers it presents if left in its current form. The purpose of the Protective Order is to "facilitate the production, exchange, and discovery of Discovery Materials that merit confidential or highly confidential treatment." Prot. Order ¶ 1. The clause on which Royal Park relies, however, limits the use of "[a]ll" Discovery Materials, whether or not confidential, to "the prosecution or the defense of this Action." Id. ¶ 2. This makes little sense except as a potential tool to prevent opposing counsel from cooperating with one another to advocate effectively for their clients. See Milwaukee, 2016 WL 1719657, at *5 ("The purpose of the protective order ... was to protect from the disclosure of confidential information — not to prevent the discovery of relevant documents.").
The prohibition on "using" Discovery Materials in other cases is also problematic, as illustrated above. Particularly where, as here, two lawsuits have been filed by the same plaintiff, in the same court, on the same legal theories, against two defendants who already share the same counsel, it is difficult to imagine what non-tactical objection Royal Park could have to the prospect of those defendants sharing discovery as well. See Charter Oak Fire Ins. Co. v. Electrolux Home Prods., Inc., 287 F.R.D. 130, 134 (E.D.N.Y.2012) (granting plaintiffs motion, in products liability case against dryer manufacturer, to modify protective order so that plaintiffs lawyers
Royal Park's application for sanctions (Dkt. No. 170) is DENIED.
The parties are directed to meet and confer promptly for the purpose of preparing modifications to the Protective Order: (a) to permit the use of non-confidential discovery materials for purposes other than "the prosecution or the defense of this Action," and (b) to permit discovery materials, including confidential and highly confidential discovery materials, to be shared among the parties and counsel in this action and U.S. Bank. The parties' proposed modifications should be submitted on or before June 28, 2016, in the form of a stipulation and order (if the parties are agreed), or simultaneously-filed letter-applications attaching each party's proposal (if they are not agreed).