Sidhi Vinayak Petroleum, Inc. v. Hess Corporation

          RULING ON PLAINTIFF'S MOTION FOR PROTECTIVE ORDER (DOC. NO. 102) AND DEFENDANTS' CROSS MOTION FOR PROTECTIVE ORDER (DOC. NO. 103)

          ROBERT M. SPECTOR, UNITED STATES MAGISTRATE JUDGE

         I. RELEVANT FACTUAL BACKGROUND

         The plaintiff Sidhi Vinayak Petroleum, Inc., a franchisee of defendant Hess Corporation [“Hess”], commenced this litigation on October 31, 2016 (Doc. No. 1), arising out of two transactions: (1) the transfer of the franchise agreements with Hess to defendant Marathon Petroleum Company, LP [“Marathon”]^[1] when defendant Hess sold its refinery assets in October 2014; and, (2) the plaintiff's right of first refusal as it applied to defendant Petroleum Marketing Group, Inc.'s [“PMG”] offer to purchase defendant Marathon, made on May 22, 2017.^[2]

         On May 16, 2019, the plaintiff filed a Motion for Protective Order (Doc. No. 102), and the next day, the defendants Hess, Marathon, and PMG, filed their Cross-Motion for Protective Order, and opposition to the plaintiff's Motion. (Doc. No. 103). On June 11, 2019, the Court (Eginton, J.) issued an Order finding the Motion for Protective Order moot and granting the Cross Motion for Protective Order. (Doc. No. 106). Following a Motion for Reconsideration filed by the plaintiff (Doc. No. 107), the Court reopened the plaintiff's Motion and the defendants' Cross Motion and referred both to this Magistrate Judge. (Doc. No. 108). On June 18, 2019, the plaintiff filed a brief in opposition to the plaintiff's Cross Motion (Doc. No. 111), and on July 2, 2019, the defendants filed their reply brief. (Doc. No. 114).

         For the reasons set forth below, the plaintiff's Motion for Protective Order (Doc. No. 102) is denied, and the defendants' Cross Motion for Protective Order (Doc. No. 103) is granted.

         II. DISCUSSION

         Both parties have submitted proposed Protective Orders governing the information, documents, and other materials produced during discovery in this action. Protecting the privacy of proprietary information is the legitimate purpose of a protective order, and it is undisputed in this case that a protective order is appropriate and necessary to govern the exchange of confidential and proprietary business information to be disclosed in discovery. See Burgess v. Town of Wallingford, No. 3:11 CV 1129(CSH), 2012 WL 4344194, at *9 n.17 (D. Conn. Sept. 21, 2012) (“Absent a protective order, ‘the discovery rules place no [specific] limitations on what a party may do with materials obtained during discovery.'”) (quoting 23 Am. Jur. 2d Depositions and Discovery § 167 (Westlaw update Aug. 2012)). As the United States Supreme Court has explained, “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[, ]” Seattle Times Co v. Rhinehart, 467 U.S. 20, 36, 104 S.Ct. 2199, 81 L.Ed.2d 17 (1984), and it is this “degree of protection” that is at issue in the underlying motions.

         The proposed orders differ in their restriction on the use of the designated materials, the procedure for challenging designations, and the process for sealing designated material filed with the Court. In addition, the plaintiff's Proposed Protective Order does not include language that the filing of pleadings or other papers disclosing or containing designated material does not waive the designated status of the material, or language that the Court will determine how that material will be treated during trial and other proceedings. (Compare Doc. No. 102, at 3 ¶¶ 5, 12, 14 with Doc. 103, Ex. A ¶¶ 5, 12, 14, 15).

         A. USE RESTRICTION

         The defendants argue that the plaintiff's proposed order is “fundamentally improper and deficient” in that there is no prohibition on the use of confidential information. (Doc. No. 103 at 2). The defendants' Proposed Protective Order, identical to the Standing Protective Order used by many of the district judges in this district, ^[3] states that material designated as confidential under the protective order “shall not be used or disclosed for any purpose other than the litigation of this action and may be disclosed only” in a stated manner, whereas, the plaintiff's Proposed Protective Order states that designated material “shall not be disclosed for any purpose other than the litigation and may be disclosed only” in the stated manner. (Compare Doc. No. 102, at 2 ¶ 5 with Doc. No. 103, Ex. A ¶ 5). Counsel for the plaintiff argues that counsel, or their respective firms, “have had the same dispute over the word ‘use' for perhaps twenty years[]”^[4] and that counsel's “future compliance with the order could constitute a blatant violation of [Rule 5.6 of the] Rules of Professional Conduct[]” which prohibits restrictions on a lawyer's right to practice. (Doc. No. 111 at 2).

         In response, the defendants argue that the plaintiff's position is “wrong on all fronts[]” as the “[m]ere access to information via the discovery process does not give one the right to appropriate that information for its own use[, ]” and that, if the plaintiff and its counsel were allowed “to assume dominion over the defendants' confidential and proprietary information simply because the plaintiff has served discovery in this lawsuit, ” Rule 26(c) would be “defeated, ” and the defendants “would be forced to scrutinize all of their discovery compliance with the goal of maximizing the protection of their confidential and proprietary information.” (Doc. No. 114, at 4-5) (citation omitted). The Court agrees with the defendants.

         First, as the defendants note appropriately, the plaintiff mis-cites Rule 5.6 of the Connecticut Rules of Professional Conduct. Rule 5.6(2) reads, “A lawyer shall not participate in offering or making . . . [a]n agreement in which a restriction on the lawyer's right to practice is part of the settlement of a client controversy.” Conn. Rules of Prof'l Conduct r. 5.6(2) (emphasis added). Similarly, Model Rule of Professional Conduct 5.6(b) provides: “A lawyer shall not participate in offering or making an agreement in which a restriction on the lawyer's right to practice is part of the settlement of a client controversy.” Model Rules of Prof'l Conduct r. 5.6(b) (9th Ed. 2019). Moreover, ABA Formal Opinion 00-417 explains that:

Rule 5.6(b) applies only to restrictions imposed as part of a settlement of a controversy. Thus, the rule and this opinion have no application to agreements restricting the use of information where the agreement is entered into as a condition of receiving the information. Nor does the rule apply to protective orders imposed during litigation.

(Doc. No. 114, Ex. A n.4) (emphasis added). This case does not involve a settlement of a client controversy. Thus, this Rule of Professional Conduct is ...