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In re Dental Supplies Antitrust Litigation

United States District Court, E.D. New York

March 27, 2017



          GARY R. BROWN, United States Magistrate Judge

         Before the undersigned is a motion[1] by liaison counsel for the Class Action plaintiffs in this antitrust action, requesting amendment of the existing Confidentiality Order to include an “Outside Attorney's Eyes Only” designation. DE 157-1. Said motion was referred to the undersigned by the Honorable Brian M. Cogan. See Electronic Order dated March 15, 2017. The request emanates from a subpoena served upon non-party (“Amazon”) by plaintiffs' counsel, seeking, in relevant part, “documents regarding Amazon's contract negotiations with dental supplies manufacturers.” DE 157-1 at 2. The instant application follows concerns raised by Amazon's counsel that the subject documents, which would include highly confidential pricing information and business terms, could be viewed by defendants' in- house counsel under the existing confidentiality order. See DE 127. In the motion, plaintiffs cite compelling evidence which helps explain Amazon's concerns. See generally DE 157-1.

         Defendants oppose this application on several grounds. First, defendants claim that plaintiffs lack standing to file the motion. DE 158 at 1. Second, defendants argue that plaintiffs have failed to demonstrate good cause sufficient to justify modifying the confidentiality order. Id. at 2. Third, defendants suggest that granting the request would substantially burden and prejudice defendants. Id. at 3.

         For the following reasons and to extent described herein, the motion is granted.



         Defendants' standing argument is readily dispatched. The only citation offered in support of this position is a partial quotation of Rule 26(c)(1), by which defendants suggest that the Rule “entitles only ‘[a] party or any person from whom discovery is sought' to move for a protective order of the type that class plaintiffs seek.” Id. at 1 (quoting Fed.R.Civ.P. 26(c)(1)). Generally where “the burden of literal compliance with this subpoena falls to a third-party, [a party] lacks standing to oppose [a subpoena] on undue burden grounds.” Malibu Media, LLC v. Doe, No. 15-CV-3504 (JFB) (SIL), 2016 WL 4444799, at *6 (E.D.N.Y. Aug. 23, 2016); cf. In re Application of FB Foods, Inc., No. M8-85 (JFK), 2005 WL 2875366, at *1 (S.D.N.Y. Nov. 2, 2005) (“Absent a showing of privilege or privacy, a party ordinarily lacks standing to challenge a non-party subpoena with a motion for a protective order or to quash.”)

         This, however, is a distinctly different situation. Plaintiffs are not seeking to quash a subpoena -- indeed, plaintiffs served the subject demand. Rather, the instant application seeks to modify the existing confidentiality order in an effort to help facilitate compliance with a subpoena. Courts have distinguished between protective orders seeking to quash a third party subpoena and setting limitations on the use of information produced pursuant to a subpoena. For example, in Funai Elec. Co., Ltd. v. Orion Elec. Co., Ltd., Nos. 02-Civ. 2605 (AGS) (JCF); 01 Civ. 3501 (AGS) (JCF), 2002 WL 31413681, at *1 (S.D.N.Y. Oct. 25, 2002), which presented similar facts, Magistrate Judge Francis found that “failure of the third-parties to mount their own attack on the subpoenas indicates, however, that Orion's claims of burden and overbreadth are unsubstantiated.” Id. Notwithstanding this determination, the court held that “[n]evertheless . . . production shall be made in accordance with the protective order in this case.” Id. Insofar as the outcome of the instant motion affects their ability to prepare and present their case, plaintiffs have standing to seek modification of the protective order.

         Even assuming, arguendo, that plaintiffs lack standing to make the instant application, the Court retains the discretion to modify or amend a protective order sua sponte, a power it retains even after dismissal of the action. See Gambale v. Deutsche Bank AG, 377 F.3d 133, 142 (2d Cir. 2004) (“A district court . . . acts within its jurisdiction when it modifies or vacates a protective order . . . irrespective of whether it does so before or after a stipulation of dismissal has been filed”). Given the dictates of Rule 26, exercise of such discretion is highly appropriate under these circumstances. See Fed. R. Civ. P. 26(c)(1)(G) (empowering the court to “issue an order to protect a party or person [by] requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way”). In a competitive market environment, pricing data, such as the information at issue here, can be among the most sensitive commercial information. See PepsiCo, Inc. v. Redmond, 54 F.3d 1262, 1265 (7th Cir. 1995) (“pricing architecture is highly confidential and would be extremely valuable to a competitor”). In these circumstances, the protection of important business interests of a third party - here the confidential information of Amazon - demands that the Court take steps to prevent the unfair disclosure of such information, irrespective of how that concern was brought to the Court's attention.

         Good Cause

         “[I]nformation may be subject to protection from discovery because of its commercial value. The most common situation is that in which the producing party is able to demonstrate that the dissemination of confidential information will place it at a competitive disadvantage. In these circumstances, the commercial value of the information at issue can generally be protected by a protective order limiting the purposes for which the information can be used and the extent to which it can be disseminated.” Cohen v. City of New York, 255 F.R.D. 110, 118 (S.D.N.Y. 2008). In evaluating a proposed protective order designed to safeguard competitive information, one court held:

Where a party seeks a protective order restricting the scope of discovery of technical, proprietary information, the court should balance ... the interests in full disclosure of relevant information and reasonable protection from economic injury. Relevant considerations in striking this balance include: 1) whether the person receiving the confidential information is involved in competitive decision making or scientific research relating to the subject matter of the patent, 2) the risk of inadvertent disclosure of proprietary information, 3) the hardship imposed by the restriction, 4) the timing of the remedy and, 5) the scope of the remedy. The competing interests to be evaluated in determining the outcome of such a dispute are one party's right to broad discovery and the other party's ability to protect its confidential materials from misuse by competitors.

Infosint S.A. v. H. Lundbeck A.S., No. 06 Civ. 2869 (LAK) (RLE), 2007 WL 1467784, at *2 (S.D.N.Y. May 16, 2007) (denying application for “Outside Counsel Eyes Only” designation where in-house counsel not involved in competitive decision-making).

         Counsel for defendants assert that the “Attorney's Eyes Only” designation in the existing confidentiality order is sufficient to protect “certain (unspecified) Amazon documents that Amazon ‘does not want the Defendants' employees to view, '” because “the only employees at issue here are a limited number of in-house attorneys for each defendant.” DE 158 at 2 (emphasis original). Defendants' counsel correctly points out that, at least presumably, the in-house “attorneys are members of state and federal ...

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