Protecting and enforcing protective orders: easier said than done: with challenges, even from third parties, increasing, counsel must carefully consider how these orders are drafted and entered.

Author:Hotchkiss, Anita

THE harsh truth is that the era of broad, agreed-upon protective orders covering virtually every document is gone. Even the entry of a narrowly drawn protective order to cover trade secrets and other confidential information does not guarantee that those documents will be protected from public dissemination for all time. Protective orders increasingly are being challenged and modified or vacated during the course of litigation--even years after the underlying action is resolved. Still worse: it is easier for a third party to attack and modify an existing protective order if the issuing court did not make the requisite findings of fact mandated in its jurisdiction. So what's a company to do?

What is the status of federal law on seeking and maintaining protective orders? What can counsel do in the preparation of a protective order to anticipate and avoid future challenges? There are no guarantees in this area, but there are ways to reduce the risk of attack and modification.


Under Rule 26(c) of the Federal Rules of Civil Procedure, "Protective Orders," federal courts have the authority to enter orders "to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense," including under 26(c)(7) "that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a designated way." The Comment b to Section 757 of the Restatement of Torts definition of trade secret, which has been adopted by some federal courts, includes any "formula, pattern, device, or compilation of information used in a business which gives the business an opportunity to obtain an advantage over competitors."

In seeking a protective order under Rule 26(c), a party must demonstrate that "good cause" to justify the order. Good cause may be shown by establishing "with specificity" that "disclosure will work a clearly defined and serious injury to the party seeking closure." In complex litigation involving large-scale discovery, however, the court may craft a broad "umbrella" protective order on a threshold showing of good cause, rather than requiring a showing of the specific harm threatened by disclosure. (1)

In deciding whether good cause exists for a protective order at any stage of litigation, including settlement, federal courts generally balance the requesting party's need for information against the possible injury accompanying public dissemination. Factors weighing in favor of the entry of an order include protecting privacy interests, encouraging settlement, avoiding production of information sought for improper purposes and preventing infliction of unnecessary or serious embarrassment, or, in the case of a corporation, monetary devastation. Circumstances weighing against protective orders exist where the information sought involves matters of public health and safety or other issues of significant and legitimate public concern. Similarly, where the party seeking the protective order is a public entity or official rather than a private individual, justification for a protective order is less compelling due to the public's countering interest. (2)

It is the "public interest" mantra that creates the greatest obstacle for those who fight to maintain the confidentiality of commercially sensitive corporate documents.


Public interest groups, the media, prospective litigants and even defeated and disgruntled plaintiffs from long-resolved litigation may seek to overturn protective orders many years after they were entered. This is true even if the order was entered by agreement and the plaintiff who agreed has no desire to vacate the order. At first glance, it would seem that these third-party efforts would be legally fruitless owing to issues of standing, timeliness and prejudice to the parties to the original litigation. Unfortunately, the federal requirements for permissible intervention and challenge are easily satisfied as long as the challenge does not affect the merits of the underlying case or upset its resolution. (3)

For example, in Pansy v. Borough of Stroudsburg, (4) a newspaper sought to intervene in a settled civil rights action that had been filed by a police officer against his employer. The newspaper wanted a copy of the settlement agreement, but its dissemination was prohibited by a confidentiality order. The paper filed a motion to intervene and to vacate or modify the confidentiality order.

The district court denied the motion and held that the newspaper could not intervene and gain access to confidential documents because it did not share an issue of law or fact in common with the action between the original parties, as required by Rule 24(b) of the Federal Rules of Civil Procedure. That rule, "Permissive Intervention," provides, "Upon timely application anyone may be permitted to intervene in an action: (1) when a statute of the United States confers a conditional right to intervene; or (2) when an applicant's claim or defense and the main action have a question of law or fact in common."

The Third Circuit held, however, that the requirements of Rule 24(b) may be relaxed for a party seeking to intervene for the purpose of modifying a protective order but not to affect the outcome of the main action. Indeed, it found that the newspaper's mere challenge to the confidentiality order established a common issue of law or fact with the original civil rights case sufficient to support intervention.

In addition, it held that a district court should not consider the timeliness of a motion to intervene unless the moving party seeks to litigate the merits of the underlying case and disrupt their resolution. The validity of a protective order is merely an ancillary issue that will not prejudice the original parties, the court stated, adding that third parties often are unaware that their potential interests may be affected by the settlement of an action until after the resolution of the matter. Surprisingly, the court concluded that depriving a third party of the opportunity to intervene and challenge the scope or need for a protective order post-settlement would effectively deprive third parties of, in the words of the court, "their day in court."


  1. Burden on Party Seeking Modification

    Once a third party successfully intervenes, the burden is on that party to articulate a reason for modifying the existing protective order. More often than not, interveners with their own agenda will assert that the protective order was improvidently granted, that it violates the public's right to access judicial records as guaranteed by common law and the First Amendment, or that the documents involve a matter of public health and safety and, unless they see the light of day, future harm will occur.

    For those seeking to maintain protective orders, the Second Circuit is the place to be. It announced in Securities and Exchange Commission v. (5) that it will not modify an existing protective order absent evidence that the order was improvidently granted or there exists some "extraordinary circumstance" or "compelling need." It stated, "If previously entered protective orders have no presumptive entitlement to remain in force, parties would resort less often to the judicial system for fear that such orders would be readily set aside in the future." Even so, it added, the district court may properly modify or lift a protective order where a litigant or deponent could not have reasonably relied on the continuation of the challenged order. (6)

    The Sixth Circuit follows the Second Circuit's stringent standard for modification. (7)

    So in the Second and Sixth Circuits, there is a general and strong presumption against modification unless the protective order is temporary on its face. While other federal jurisdictions refused to follow the Second Circuit's lead, none had articulated an alternative, more lenient standard until the Third Circuit did so in Pansy. (8) In Pansy, the court announced that in deciding motions to modify an existing protective order, the district court is required to balance the same factors used in determining whether to grant the order in the first instance. In addition, the district court must consider the extent to which the parties to the underlying litigation relied on the protective order in producing information or agreeing to a settlement. Ultimately, the court may modify or vacate the order if good cause did not exist for its initial entry, or if there is no longer good cause to justify its maintenance. (9)

  2. Was the Order Improvidently Granted?

    As most experienced trial lawyers know, it was for many years the practice of courts to enter "umbrella" protective orders to facilitate the production of documents without the need for document-by-document analysis and redaction. Because those orders were entered routinely by the agreement of the parties, there often was no record of factual findings to support them. Most issuing courts never engaged in the Pansy balancing test.

    Unfortunately, in the absence of evidence that a protective order was entered on a showing of "good cause," a reviewing court in a jurisdiction that follows Pansy may easily be persuaded to modify or vacate the order. The Pansy court stated, "It would be improper and unfair to afford an order presumptive correctness if it is apparent that the court did not engage in the proper...

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