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In re Parmalat Securities Litigation

June 1, 2009

IN RE PARMALAT SECURITIES LITIGATION


The opinion of the court was delivered by: Pitman, United States Magistrate Judge

OPINION AND ORDER

I. Introduction

Lead Plaintiffs move to unseal certain discovery materials which certain defendants have designated as confidential pursuant to the protective order entered in this matter.*fn1

For the reasons discussed below, Lead Plaintiffs' motion is granted.

II. Facts

The factual and procedural history of this case is set forth in several decisions by Judge Kaplan, familiarity with which is assumed. See In re Parmalat Sec. Litig., 376 F. Supp.2d 472 (S.D.N.Y. 2005) (granting in part and denying in part motion to dismiss first amended consolidated complaint); In re Parmalat Sec. Litig., 570 F. Supp.2d 521 (S.D.N.Y. 2008) (granting Bank of America Corp., Bank of America, N.A., Banc of America Securities Ltd., Citigroup Inc., Citibank, N.A., Eureka Securitisation plc, and Pavia e Ansaldo's motion for summary judgment); In re Parmalat Sec. Litig., 04 MD 1653 (LAK), 2008 WL 3895539 (S.D.N.Y. Aug. 21, 2008) (certifying class of plaintiffs); In re Parmalat Sec. Litig., 594 F. Supp.2d 444 (S.D.N.Y. 2009) (denying Deloitte Touche Tohmatsu, Deloitte & Touche LLP and James Copeland's motion for summary judgment); In re Parmalat Sec. Litig., 598 F. Supp.2d 569 (S.D.N.Y. 2009) (denying Grant Thornton International and Grant Thornton LLP's motion for summary judgment). I recite the facts here only insofar as they are relevant to the instant motion.

All of the documents*fn2 produced by the parties during discovery are subject to a blanket protective order, which prohibits the parties from disclosing information designated confidential unless and until the Court rules that confidential treatment is inappropriate (Stipulated Protective Order, dated Aug. 3, 2005 ("Protective Order"), ¶ 9, annexed as Exhibit ("Ex.") 1 to Letter from James J. Sabella, Esq., Counsel for Lead Plaintiffs, to the Court, dated Oct. 10, 2008 ("Pls.' Oct. 2008 Letter")). Any party may challenge another party's designation of discovery material as confidential by giving the designating party written notice of the challenge (Protective Order ¶ 9, annexed as Ex. 1 to Pls.' Oct. 2008 Letter). If the challenging party and the designating party cannot resolve the issue through discussions, the designating party then has the burden of showing good cause for confidential treatment by a preponderance of the evidence (Protective Order ¶ 9, annexed as Ex. 1 to Pls.' Oct. 2008 Letter).

Here, Lead Plaintiffs have moved for an order striking the confidential designation of more than 200 documents submitted by the parties in connection with their motions for summary judgment. Lead Plaintiffs initially requested that defendants unseal approximately 1800 non-public documents which the parties cited in connection with their motions for summary judgment (Letter from James J. Sabella, Esq., Counsel for Lead Plaintiffs, to defendants' counsel, dated Sept. 19, 2008 ("Pls.' Sept. 2008 Letter"), annexed as Ex. 2 to Pls.' Oct. 2008 Letter). Defendants -- Grant Thornton International ("GTI"), Grant Thornton LLP ("GT-US") (collectively, the "GT defendants"), Bank of America Corp., Bank of America, N.A., Banc of America Securities Ltd. (collectively, "BoA"), Citigroup Inc., Citibank, N.A., Eureka Securitisation plc (collectively, the "Citi defendants") and Pavia e Ansaldo ("Pavia") -- refused to consent to removing their confidentiality designations, and Lead Plaintiffs submitted a letter memorandum to the Court requesting a pre-motion conference to resolve the matter (Pls.' Oct. 2008 Letter).

Defendants submitted letter memoranda opposing Lead Plaintiffs' request primarily on the grounds that Lead Plaintiffs' motive in making the request was improper and the documents were not entitled to any presumption of public access (Deloitte Oct. 2008 Letter; Letter from James L. Bernard, Esq., Counsel for the GT defendants, to the Court, dated Oct. 17, 2008 ("GT Oct. 2008 Letter"); Letter from Joseph B. Tompkins, Jr., Esq., Counsel for BoA, to the Court, dated Oct. 17, 2008 ("BoA Oct. 2008 Letter"); Letter from Jason A. D'Angelo, Esq., Counsel for the Citi defendants, to the Court, dated Oct. 17, 2008 ("Citi Oct. 2008 Letter"); Letter from Christopher M. Brubaker, Esq., Counsel for Pavia, to the Court, dated Oct. 17, 2008). Because defendants made no specific factual showing concerning the confidential nature of the documents in issue, I directed the defendants to offer whatever evidence they chose to offer in support of their designations by November 26, 2008 (Order, dated Nov. 12, 2008).

The Deloitte defendants, the GT defendants, BoA and Pavia submitted letter memoranda arguing that their confidentiality designations were appropriate for approximately 1200 of the challenged documents because those documents contained various categories of confidential information (Letter from Michael J. Dell, Esq., Counsel for the Deloitte defendants, to the Court, dated Nov. 26, 2008; Letter from James L. Bernard, Esq., Counsel for the GT defendants, to the Court, dated Nov. 26, 2008 ("GT Nov. 2008 Letter"); Letter from Alan C. Geolot, Esq., Counsel for BoA, to the Court, dated Nov. 26, 2008 ("BoA Nov. 2008 Letter"); Letter from Christopher M. Brubaker, Esq., Counsel for Pavia, to the Court, dated Nov. 26, 2008). The Citi defendants chose not to make a specific factual showing in opposition to Lead Plaintiffs' request (Letter from Jason A. D'Angelo, Esq., Counsel for the Citi Defendants, to the Court, dated Nov. 26, 2008).

Lead Plaintiffs subsequently narrowed their challenge to only 55 of the GT defendants' documents and 172 of BoA's documents, but maintained that all of the documents designated confidential by the Citi defendants that were submitted by the parties in connection with the summary judgment motions should be unsealed (Letter from James J. Sabella, Esq., Counsel for Lead Plaintiffs, to the Court, dated Jan. 15, 2009 ("Pls.' Jan. 2009 Letter"), at 2). Lead Plaintiffs withdrew their request to strike the Deloitte defendants' and Pavia's confidentiality designations altogether (Pls.' Jan. 2009 Letter at 2; Letter from James J. Sabella, Esq., Counsel for Lead Plaintiffs, to the Court, dated May 27, 2009).*fn3 In addition, Lead Plaintiffs submitted copies of the documents in camera as well as a spreadsheet that challenged the continued protection of the remaining documents on a document-by-document basis (Spreadsheet annexed as Ex. A to Pls.' Jan. 2009 Letter; Electronic documents attached to Letter from James J. Sabella, Esq., Counsel for Lead Plaintiffs, to the Court, dated Jan. 21, 2009).

In response, both the GT defendants and BoA submitted letter memoranda as well as their own spreadsheets setting forth document-by-document replies to Lead Plaintiffs' challenges (Letter from James L. Bernard, Esq., Counsel for the GT defendants, to the Court, dated Feb. 13, 2009 ("GT Feb. 2009 Letter"); Spreadsheet annexed as Ex. A to GT Feb. 2009 Letter; Letter from Alan C. Geolot, Esq., Counsel for BoA, to the Court, dated Feb. 13, 2009 ("BoA Feb. 2009 Letter"); Spreadsheets annexed as Exs. A & B to BoA Feb. 2009 Letter). In addition, BoA renewed its argument that its documents were not entitled to any presumption of public access (BoA Feb. 2009 Letter at 2-3). However, the GT defendants failed to revisit that issue with respect to their documents (GT Feb. 2009 Letter at 2-3).

On March 16, 2009, I informed the parties that, in light of the extensive nature of their submissions regarding Lead Plaintiffs' request for a pre-motion conference, I intended to construe Lead Plaintiffs' submissions as a motion to remove the confidentiality designations from the narrowed set of documents identified in their January 15, 2009 letter and I would construe defendants' responses as oppositions to that motion (Order, dated Mar. 16, 2009). I also directed the parties to submit additional materials, if any, addressing the merits of the dispute no later than March 23, 2009 (Order, dated Mar. 16, 2009). The parties made no additional submissions.

III. Analysis

A. Legal Principles

1. Burden of Showing Good Cause under Rule 26(c)

"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." In re Zyprexa Injunction, 474 F. Supp.2d 385, 415 (E.D.N.Y. 2007), quoting Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). "The touchstone of the court's power under Rule 26(c) is the requirement of 'good cause.'" In re Zyprexa Injunction, supra, 474 F. Supp.2d at 415. A blanket protective order temporarily postpones the good cause showing until a party or intervenor challenges the continued confidential treatment of particular documents. The burden of establishing good cause then lies with the party seeking to prevent the disclosure of documents. Gambale v. Deutsche Bank AG, 377 F.3d 133, 139 (2d Cir. 2004); In re "Agent Orange" Prod. Liab. Litig., 821 F.2d 139, 145 (2d Cir. 1987); 8 Charles A. Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure ("Wright, Miller & Marcus") § 2035 (2d ed. 2008).

2. Presumption of Public Access

The "good cause" analysis is informed by the presumptions of public access under the common law and the First Amendment. Std. Inv. Chartered, Inc. v. Nat'l Ass'n of Sec. Dealers, Inc. ("Std. Inv. IV"), 07 Civ. 2014 (SWK), 2007 WL 2790387 at *2 (S.D.N.Y. Sept. 26, 2007), citing United States v. Amodeo, 71 F.3d 1044, 1048 (2d Cir. 1995) ("Amodeo").

There is a strong presumption of public access to "'judicial documents,' that is, such 'items filed with the court that are relevant to the performance of the judicial function and useful in the judicial process.'" See In re Terrorist Attacks on September 11, 2001, 454 F. Supp.2d 220, 222 (S.D.N.Y. 2006) (quoting SEC v. TheStreet.com, 273 F.3d 222, 231 (2d Cir. 2001)). "Accordingly, a party seeking a protective order seal- ing trial, other court hearings, or motions and accompanying exhibits filed with the court must satisfy a more demanding standard of good cause." In re Terrorist Attacks, 454 F. Supp.2d at 222-23.

Nevertheless, the Second Circuit has also noted that "an abundance of statements and documents generated in federal litigation actually have little or no bearing on the exercise of Article III judicial power. . . . Unlimited access to every item turned up in the course of litigation would be unthinkable." [Amodeo], 71 F.3d at 1048. Courts deciding protective order motions must therefore locate documents on "a continuum from matters that directly affect an adjudication to matters that come within a court's purview solely to insure their irrelevance." Id. at 1049.

Std. Inv. IV, supra, 2007 WL 2790387 at *3.

In addition to the common law presumption of public access . . . , courts have identified a similar, though more demanding, presumption stemming from the First Amendment. See, e.g., Lugosch [v. Pyramid Co. of Onondaga, 435 F.3d 110, 124 (2d Cir. 2006)]; Gambale, 377 F.3d at 140 & n.4. The First Amendment's "qualified right of access to judicial documents" is "a necessary corollary of the capacity to attend the relevant proceedings." Hartford Courant Co. v. Pellegrino, 380 F.3d 83, 93 (2d Cir. 2004). Once a court has determined that "the more stringent First Amendment framework applies, continued sealing of the documents may be justified only with specific, on-the-record findings that sealing is necessary to preserve higher values and only if the sealing order is narrowly tailored to achieve that aim." Lugosch, 435 F.3d at 124.

Std. Inv. Chartered, Inc. v. Nat'l Ass'n of Sec. Dealers, Inc., 07 Civ. 2014 (SWK), 2008 WL 199537 at *4 (S.D.N.Y. Jan. 22, 2008).

As was recently re-articulated in Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110 (2d Cir. 2006), "documents submitted to a court for its consideration in a summary judgment motion are -- as a matter of law -- judicial documents to which a strong presumption of access attaches, under both the common law and the First Amendment." Id. at 121. Lugosch notes that "summary judgment is an adjudication, and '[a]n adjudication is a formal act of government, the basis of which should, absent exceptional circumstances, be subject to public scrutiny.'" Id. (quoting Joy v. North, 692 F.2d 880, 893 (2d Cir. 1982), cert. denied, 460 U.S. 1051, 103 S.Ct. 1498, 75 L.Ed.2d 930 (1983) (brackets in original)). Thus, summary judgment documents "should not remain under seal absent the most compelling reasons." Id.

Allen v. City of New York, 420 F. Supp.2d 295, 300-02 (S.D.N.Y. 2006). The "motive of the party seeking access to, or disclosure of, documents is irrelevant to the question of whether and how strong a public right of access exists with respect to those documents." Std. Inv. IV, 2007 WL 2790387 at *3; accord Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 123 (2d Cir. 2006).

3. Exception for Specific Showing of Competitive Harm

Notwithstanding the presumption of public access to judicial records, courts may deny access to records that are "sources of business information that might harm a litigant's competitive standing." Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 598 (1978). However, the fact that business documents are secret or that their disclosure might result in adverse publicity does not automatically warrant a protective order. Gelb v. Am. Tel. & Tel. Co., 813 F. Supp. 1022, 1035 (S.D.N.Y. 1993); see also Salomon Smith Barney, Inc. v. HBO & Co., 98 Civ. 8721 (LAK), 2001 WL 225040 at *3 (S.D.N.Y. Mar. 7, 2001) ("Implicit in the notion of 'confidential business information' is something beyond the mere fact that the particular datum has not previously been made available to the public.").

The party opposing disclosure must make a particular and specific demonstration of fact showing that disclosure would result in an injury sufficiently serious to warrant protection; broad allegations of harm unsubstantiated by specific examples or articulated reasoning fail to satisfy the test. See Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir. 1986); Schiller v. City of New York, 04 Civ. 7922 (KMK)(JCF), 04 Civ. 7921 (KMK)(JCF), 2007 WL 136149 at *5 (S.D.N.Y. Jan. 19, 2007), quoting In re Terrorist Attacks on Sept. 11, 2001, 454 F. Supp.2d 220, 222 (S.D.N.Y. 2006); Blum v. Schlegel, 150 F.R.D. 38, 41 (W.D.N.Y. 1993) ("The party seeking protection from disclosure has the burden of making a particular and specific demonstration of fact, as distinguished from general, conclusory statements revealing some injustice, prejudice, or consequential harm that will result if protection is denied."); see also Bridge C.A.T. Scan Assocs. v. Technicare Corp., 710 F.2d 940, 944-45 (2d Cir. 1983) (Rule 26(c) "is not a ...


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