Federal Trade Commission v. Peabody Energy Corporation

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

FEDERAL TRADE COMMISSION, )

)

Plaintiff, )

)

v. ) Case No. 4:20-cv-00317-SEP

)

PEABODY ENERGY CORPORATION )

)

and )

)

ARCH COAL, INC., )

)

Defendants. )

MEMORANDUM AND ORDER

This matter is before the Court on Defendant Peabody Energy Corporation (“Peabody”)

and Arch Coal, Inc.’s (“Arch”) (collectively, “Defendants”) Unopposed Motion to Modify the

Protective Order (Doc. [52]) (“Defendants’ Motion”), the parties’ Joint Request for a

Teleconference, (Doc. [64]) (“Joint Request”), and multiple motions opposing Defendants’

proposed modifications to the protective order submitted by Navajo Transitional Energy

Company, LLC (“NTEC”); Ameren Corporation and Union Electric Company d/b/a Ameren

Missouri (“Ameren Entities”); and Peter Kiewit Sons’, Inc. (“Kiewet”) (collectively,

“Intervenors”). Docs. [62], [68], [73].1

1 ALLETE, Inc., Evergy, Inc., Indiana Michigan Power Company, Public Service Company of Oklahoma,

Southwestern Electric Power Company, and WEC Energy Group, Inc., also moved to intervene, see Doc.

[82], and they participated in the telephonic hearing and supplemental briefing in support of Intervenors’

motions opposing the modifications, see Docs. [88], [98].

I. Background

At the request of the parties, this Court entered a preliminary protective order in this case

on March 4, 2020, with the understanding that Defendants would be seeking modifications to

permit certain of their employees access to information designated as “confidential material”

under that order. Doc. [47]. Defendants’ Motion seeking a modification to that protective order

was filed on March 12, 2020. Doc. [52]. Five days later, the parties filed the Joint Request

indicating that Defendants would like further modifications to the protective order, but the FTC

was opposed. Doc. [64]. Between March 13th and the 23rd, Intervenors all sought intervention

for the purpose of opposing the proposed modifications to the protective order.2 Docs. [62],

[68], [73]. The Court held a telephonic hearing on March 24, 2020, on Defendants’ Motion, the

parties’ Joint Request, and the Intervenors’ objections thereto. In anticipation of that hearing, the

Court invited Defendants to submit limited supplemental briefing. Docs. [89], [90]. At the

hearing, the Court invited the FTC and Intervenors to respond to Defendants’ supplemental

briefing. Those responsive briefs were filed March 26, 2020. Docs. [97], [98]. This

Memorandum and Order considers all of the above-described briefing and argument.

Defendants’ Motion, which the FTC did not oppose at the time that it was filed,3 seeks a

modification of the protective order that would allow one member of each of Defendants’ in-

2 In addition to opposing Defendants’ proposed modifications to the protective order, Intervenors’

motions also seek additional relief, including their own proposed modifications of the protective order.

See, e.g., Doc. [62] ¶ 28; Doc. [68] ¶¶ 15-16; Doc. [73] at 1 (seeking “outside counsel only”

designations). NTEC’s also seeks apparent remedies for alleged non-compliance by the parties with

existing provisions. See, e.g., Doc. [62] ¶¶ 12-14, 26 (alleging that Defendants have not provided a copy

of the protective order to every entity that has received a subpoena and requesting the Court therefore add

a requirement to the protective order that NTEC itself be notified of all subpoenas). This Order addresses

only the parties and Intervenors’ proposed modifications to the protective order. Concerns about non-

compliance with existing provisions of the protective order should be raised separately as they arise—first

with the parties themselves, and then, if efforts to meet and confer fail, with the Court.

3 Later, the FTC asked the Court to impose greater limitations on Ms. Li and Ms. Klein’s access to

confidential material than the FTC had agreed to in consenting to Defendants’ Motion. Doc. [97] at 4-5.

house legal departments (specifically, Carol Li for Peabody and Rosemary Klein for Arch) to

view documents deemed “confidential material” under the protective order. Defendants’ Motion

would otherwise leave the protective order unchanged.4 Although the FTC did not oppose

granting access to Ms. Li and Ms. Klein, the parties agreed—and notified the Court in

Defendants’ Motion—that the FTC would notify “third parties that produced Confidential

Information” of the proposed modification and provide them six days to object thereto before

asking that the Court enter the modified protective order. Doc. [52] at 2 n.1.

During that six-day period, not only did several third parties file such objections, but the

parties themselves also submitted the Joint Request, outlining a disagreement between

Defendants and the FTC over proposed further modifications of the protective order.

Specifically, Defendants want to allow two additional employees from each Defendant (Scott

Jarboe and Alice Tharenos for Peabody; Robert Jones and Kenneth Cochran for Arch) to view

confidential material under the protective order, and the FTC objects to granting such access.

Intervenors, meanwhile—coal producers and purchasers and other energy providers, all

of whom have been subpoenaed by one or more parties to this litigation—object to allowing any

of the six employees of Defendants to view confidential material they have produced or will

produce in the context of this litigation. They argue that, as non-parties to this litigation, they

have legitimate privacy interests, and it is unfair for their competitors or suppliers to view their

most sensitive information, some of which they have developed over years and is central to their

competitive business strategies.

4 Counsel for the FTC originally advised this Court that they had to seek approval from the administrative

law judge who will preside over the anticipated Part 3 administrative hearing before it could consent to

any modification to the protective order. The Court understands the FTC’s lack of opposition to

Defendants’ Motion to signify that counsel obtained that approval for the modifications proposed therein.

After careful consideration of the parties’ written and oral arguments, the Court will grant

Defendants’ Motion with two modifications, outlined below. The Court will deny Intervenors’

motions insofar as they oppose any employee of Defendants having any kind of access to

confidential material under the protective order, but it will grant Intervenors’ motions as to the

further modifications proposed by Defendants in the context of the Joint Request. None of the

additional four employees proposed by Defendants in the Joint Request will have access to

confidential material under the protective order. As described below, the Court will also grant

NTEC’s request for one additional safeguard against disclosure of confidential material.

Legal Standard

Federal Rule of Civil Procedure 26(c) allows for the issuance of a protective order upon a

showing of good cause. See Monsanto Co. v. Pioneer Hi-Bred Int’l, Inc., No. 4:12-cv-1090-CEJ,

2014 WL 1211111, *1 (E.D. Mo. Mar. 24, 2014). “Rule 26(c) is highly flexible, having been

designed to accommodate all relevant interests as they arise. . . . [T]he ‘good cause’ standard in

the Rule is a flexible one that requires an individualized balancing of the many interests that may

be present in a particular case.” United States v. Microsoft Corp., 165 F.3d 952, 959–60 (D.C.

Cir. 1999).

Here, the Court must balance Defendants’ interest in “a fair opportunity to help prepare

their defense to the FTC’s challenge,” Doc. [64] at 1, and the risk of serious competitive harm to

third parties, including Intervenors, who have been compelled to produce sensitive information

for inspection by Defendants, who are their competitors or suppliers. See Doc. [98] at 4-5; see

also F.T.C. v. Advocate Health Care Network, 162 F.Supp.3d 666, 671-72 (N.D. Ill. 2016)

(“[W]e are not talking about an exchange of documents between two sides in a lawsuit. We are

talking about a number of third parties, not targets of any FTC action, who had to give up

exceedingly confidential information in response to a government subpoena.”).

In such situations, courts often try to balance the relevant interests by requiring third

parties to produce their sensitive information for use in the lawsuit but issuing a protective order

to prevent that information from falling into the hands of “competitive decision-makers” 5 at rival

corporations. Intervet, Inc. v. Merial Ltd., 241 F.R.D. 55, 57 (D.D.C. 2007). In a seminal case,

U.S. Steel Corp. v. United States, 730 F.2d 1465 (Fed. Cir. 1984), the United States Court of

Appeals for the Federal Circuit noted that involvement in competitive decisionmaking “may well

be” grounds for disqualifying certain in-house counsel from seeing confidential material

submitted by third parties, but the court stressed that these cases are highly fact-dependent and

not susceptible to brightline rules. 730 F.2d at 1468. Accordingly, the Federal Circuit rejected a

categorical distinction between “in-house” and “retained” counsel and encouraged courts to

focus instead on “[w]hether an unacceptable opportunity for inadvertent disclosure exists,” as

“determined . . . by the facts, on a counsel-by-counsel basis.” Id.

Following U.S. Steel, courts have focused on involvement in competitive decisionmaking

and, more fundamentally, on the risk of inadvertent disclosure: “The primary concern

underlying the ‘competitive decision-making’ test is not that lawyers involved in such activities

will intentionally misuse confidential information; rather, it is the risk that such information will

be used or disclosed inadvertently because of the lawyer’s role in the client’s business

decisions.” F.T.C. v. Sysco Corp., 83 F. Supp. 3d 1, 3-4 (D.D.C. 2015) (citing Brown Bag

5 The Federal Circuit has defined “competitive decisionmaking” as “shorthand for a counsel’s activities,

association, and relationship with a client that are such as to involve counsel’s advice and participation in

any or all of the client’s decisions (pricing, product design, etc.) made in light of similar or corresponding

information about a competitor.” U.S. Steel Corp. v. United States, 730 F.2d 1465, 1468 n.3 (Fed. Cir.

1984).

Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992), and Carpenter Tech. Corp. v.

Armco, Inc., 132 F.R.D. 24, 27 (E.D. Pa. 1990)). See also Matsushita Elec. Indus. Co. v. United

States, 929 F.2d 1577, 1580 (Fed. Cir. 1991); Advocate Health Care Network, 162 F.Supp.3d at

667-668; United States v. Aetna Inc., No. 1:16-CV-01494 (JDB), 2016 WL 8738420, at *5

(D.D.C. Sept. 5, 2016); Saint Alphonsus Med. Ctr. v. St. Luke’s Health Sys., No. 1:12-CV-00560-

BLW-RE, 2013 WL 139324, at *4 (D. Idaho Jan. 10, 2013) (“the very nature of competitive

information makes it difficult to compartmentalize.”)).

Accordingly, this Court understands its task to be to assess—“by the facts, on a counsel-

by-counsel basis” U.S. Steel, 730 F.2d at 1468—whether each of the individuals for whom

Defendants seek access to confidential material presents too great a risk of inadvertent

disclosure, keeping in mind that the risk of harm to third parties must be balanced against

Defendants’ very substantial interest in having access to discovery materials that may be used in

the case against them. See Brown Bag Software, 960 F.2d at 1470.

Analysis

Defendants’ six designees divide helpfully into three categories, which the Court will

address in turn.

1. Carol Li (Peabody) and Rosemary Klein (Arch)

The Court finds that Ms. Li and Ms. Klein present minimal risk of inadvertent disclosure

of confidential material, and that the risk is outweighed by the disadvantage to Defendants of

inhibiting their in-house litigation counsel’s involvement in their defense.

Defendants have persuaded the Court that Ms. Li and Ms. Klein are vital contributors to

Defendants’ litigation of this case. For Peabody, Ms. Li exercises operational oversight over this

litigation and outside counsel. Doc. [90-1] ¶ 12. She is the employee who will provide outside

counsel with the day-to-day detailed guidance they will need to litigate this case, and if she

cannot review draft and final briefs or expert reports containing confidential information, her

involvement in Peabody’s defense will be substantially impaired. Id. ¶ 13. For Arch, Ms. Klein

set up and ran the “clean team” during the FTC’s investigation of the joint venture. Doc. [89-1]

¶ 13. She coordinates directly with outside counsel on a day-to-day basis regarding legal

strategy and is one of only a few individuals at Arch with comprehensive knowledge of the

transaction. Id. ¶ 9. She intends to be an active member of the trial team, which will be

substantially more difficult if she is categorically excluded from reviewing any confidential

material. Id. ¶ 12.

On the other side of the balance, no one has contested Defendants’ claims that neither

Ms. Li nor Ms. Klein plays any role in competitive decisionmaking nor poses any appreciable

risk of inadvertent disclosure. Doc. [90-1] ¶ 7; Doc. [89-1] ¶ 6. In fact, the FTC originally did

not object to modifying the protective order to allow these two attorneys access to confidential

material. See Doc. [52] at 2.

Intervenors’ primary counterargument to Ms. Li and Ms. Klein is that their roles in the

future may change such that the risk of inadvertent disclosure would be greater than it is now.

Doc. [98] at 5. Of course, that is possible; the future is uncertain. But on the evidence before the

Court, Ms. Li and Ms. Klein both appear to have exclusively legal experience and current

portfolios. See Doc. [90-1] ¶ 4; Doc. [89-1] ¶ 5. There is no evidence that they have any

qualifications that would suit them for competitive decisionmaking roles. Unlike the other

attorneys Defendants seek access for, there is no suggestion that either Ms. Li or Ms. Klein

regularly participates in strategy meetings outside her respective company’s legal department.6

6 Ms. Klein reports that she has “approximately five times” attended an Executive Leadership Team

meeting to deliver a 10-15-minute presentation. Doc. [90-1] ¶¶ 8, 9. The Court does not regard that as

The Court cannot find that the entirely speculative possibility that Ms. Li or Ms. Klein might

someday be in a position to disclose confidential material to competitive decisionmakers

outweighs the cost to Defendants of denying their most integrally involved in-house litigators

full access to the evidence adduced against them.

Li and Klein are the employees of Defendants who have the greatest operational, day-to-

day involvement with this litigation. They are lawyers, not businesspeople, and neither is

currently, or ever has been, involved in any competitive decisionmaking on behalf of their

companies; nor have Intervenors or the FTC raised any grounds for realistic concern that they

will be in the future. To deny Ms. Li and Ms. Klein access to confidential material while

permitting it to outside counsel would be to apply the overly formalistic distinction between in-

house and external counsel that the Federal Circuit forbade in U.S. Steel. 730 F.2d at 1468

(noting that in-house counsel are equally officers of the court and subject to the same codes of

professional conduct as outside counsel).

Because the Court finds that permitting Ms. Li and Ms. Klein to view confidential material

would not pose an undue risk of inadvertent disclosure, it will grant the proposed modification of

the protective order to allow them access to confidential material.

2. Alice Tharenos (Peabody) and Kenneth Cochran (Arch)

By contrast, the Court finds that providing Ms. Tharenos and Mr. Cochran access to

confidential material would present a substantial risk of inadvertent disclosure, outweighing any

disadvantage to Defendants of denying them access to confidential materials.

comparable to, for example, Mr. Jarboe’s attendance of “weekly Executive Leadership Team meetings,

the periodic Board of Directors meetings, the monthly Business Performance Reviews, the monthly

Marketing Matters meetings, and the weekly Global Development Steering Committee meetings.” Doc.

[90-2] ¶ 6.

The second pair of prospective designees are at the opposite end of the spectrum from the

first. Unlike Ms. Li and Ms. Klein, Ms. Tharenos and Mr. Cochran are businesspeople and are

not lawyers. Doc. [90-3] ¶¶ 4, 13; Doc. [89-3] ¶¶ 3, 4, 9. Asked directly by the Court,

Defendants were unable to cite a single instance in which a court has granted non-lawyers the

kind of access to competitor and customer data that they are asking this Court to grant to Ms.

Tharenos and Mr. Cochran. Transcript of Tel. Conf. at 21:14-20 (Mar. 24, 2020) (Doc. [96]).

The nearest example Defendants could provide was F.T.C. v. Sysco, in which, counsel

claimed, the court required that the FTC provide redacted affidavits for review by

businesspeople. Id. at 21:21-22:10 (referring to F.T.C. v. Sysco Corp., 83 F. Supp. 3d 1 (D.D.C.

2015)). This Court has been unable to find any order requiring the provision of affidavits

stripped of confidential information to businesspeople in Sysco, but it did find an order requiring

the FTC to provide the names of declarants to Sysco employees. Order, FTC v. Sysco, No. 1:15-

cv-00256 (APM) (D.D.C. Mar. 18, 2015). Unfortunately, whether to provide Defendants’

corporate employees with the names of declarants (or redacted affidavits, for that matter) is not

the question before this Court. Instead, Defendants have asked this Court to grant Ms. Tharenos

and Mr. Cochran access to all information designated as “confidential material” under the

protective order. Doc. [64] at 1-2. Sysco provides no support for granting Mr. Cochran and Ms.

Tharenos that level of access. In fact, the district court in Sysco denied such access to an

attorney whose activities brought him merely “within the orbit” of competitive decisionmaking

activities. Sysco, 83 F.Supp.3d at 4. Sysco certainly does not support granting full access to

employees who actually are businesspeople.

The Court also does not find in the record any reason to conclude that the need for Ms.

Tharenos and Mr. Cochran to view confidential material outweighs the risk of harm to third

parties of their competitively sensitive information being reviewed by businesspeople who work

for Defendants. Both individuals claim that they will be better able to help with the litigation

with such access. Doc. [90-3] ¶¶ 11-12; Doc. [89-3] ¶¶ 7-8. But like the attorney excluded in

Sysco, Ms. Tharenos and Mr. Cochran are

not in any way prevented from imparting [their] personal knowledge of the [coal]

industry, [their employers’] business operations or the proposed merger to assist outside

counsel. Though this restriction may somewhat diminish [their] ability to advise [their

employers,] the court must strike a balance between [Defendants’] ability to prepare and

present [their] defense and the interest of third parties in avoiding the inadvertent use or

disclosure of their confidential information.

Sysco, 83 F.Supp.3d at 4. In this case, that balance weighs against granting access to

businesspeople.

This is not to discount Ms. Tharenos and Mr. Cochran’s promises not to disclose any

confidential material, of course. See Doc. [89-3] ¶ 11; Doc. [90-3] ¶ 15. The probability of

willful disclosure is not what this Court is bound to assess; rather, it’s the risk of inadvertent

disclosure. See U.S. Steel, 730 F.2d at 1468. That risk is plainly substantially higher for an

employee whose experience and expertise are in “directing and overseeing [a coal] company’s

mining operations, procurement, safety initiatives, and development projects,” Doc. [89-3] ¶ 3,

even if his contact with competitive decision-makers is “on a social basis” id. ¶ 5, than it is for

an in-house litigation attorney who has no business expertise or operational experience in the

coal industry. And the risk of inadvertent disclosure is even higher for an employee whose

current responsibilities include “integrational planning and transition services relating to

acquisitions and joint ventures,” Doc. [90-3] ¶ 3, and who attends “Business Performance

Reviews,” “Marketing Matters meetings,” and “Global Development Steering Committee

meetings,” id. ¶ 6.

Peabody’s counsel frankly acknowledged that it could not predict what role Ms. Tharenos

would play at Peabody in the future. Doc. [96] at 45:14-15. Arch stressed that Mr. Cochran is

“semi-retired,” as if to suggest that he is unlikely to exercise any responsibility for competitive

decisionmaking in the future, Doc. [96] at 21:6, but no one asserted definitively that he certainly

would not, nor could they have. There is nothing about being “semi-retired” that would prevent

Mr. Cochran from being involved in competitive decisionmaking in the future, any more than it

has prevented him from “being a member of the ‘clean team’ that was responsible for evaluating

the expected synergies from the proposed joint venture.” Doc. [89-3] ¶ 4; see Steuben Foods,

Inc. v. GEA Process Eng’g, Inc., No. 12-CV-0904S(SR), 2013 WL 12238482, at *3 (W.D.N.Y.

July 2, 2013) (finding good cause to preclude access to retired executive working as a consultant

where he was involved in the activity underlying the dispute). As observed with respect to Ms.

Li and Ms. Klein above, uncertainty about future career paths can be a reason to exclude even

members of companies’ legal teams from viewing confidential documents. See, e.g., Order at 2,

United States v. Deere, No. 16 C 08515 (N.D. Ill. Apr. 26, 2017). Although the Court did not

find that a persuasive argument against Ms. Li and Ms. Klein on the facts presented, the Court

does find it a compelling concern about Ms. Tharenos and Mr. Cochran.

For all of these reasons, the Court finds that the risk of inadvertent disclosure of third

parties’ sensitive information is too great to grant Defendants’ request to include Ms. Tharenos

and Mr. Cochran among those who may access confidential material under the proposed order.

3. Scott Jarboe (Peabody) and Robert Jones (Arch)

Although the third category of designees is a closer call, the Court finds that the risk of

inadvertent disclosure by Mr. Jarboe and Mr. Jones is too great to allow them access to

confidential materials under the protective order.

Mr. Jarboe is the Chief Legal Officer of Peabody and Mr. Jones, the General Counsel of

Arch. Both provide comprehensive legal counsel to their respective employers and Boards of

Directors and have ultimate supervisory authority over all litigation. Doc. [90-2] ¶¶ 3, 13; Doc.

[89-2] ¶ 3. Crucially, though, they also both claim significant industry expertise and non-legal

responsibility within their companies, and both acknowledge that they regularly participate in

meetings of corporate leadership at which competitive decisions are at least discussed, if not

“made.” Mr. Jones, for example, has been with Arch for nearly 30 years, claims to be

“knowledgeable about Arch’s operations and the energy industry overall,” and admits to

“see[ing] various reports and attend[ing] Executive Meetings, including Board Meetings where

the status of our sales commitments and production forecasts are discussed . . . .” Doc. [89-2]

¶¶ 4, 6. Similarly, Mr. Jarboe, who has been with Arch for more than 10 years, “stay[s]

informed regarding the current status of generation sources, plant closures, and announcements

from utilities about power plant closures, as well as supply and demand forecasts,” and he

attends “weekly Executive Leadership Team meetings, the periodic Board of Directors meetings,

the monthly Business Performance Reviews, the monthly Marketing Matters meetings, and the

weekly Global Development Steering Committee meetings.” Doc. [90-2] ¶¶ 4, 6.

Notwithstanding the above, both Mr. Jarboe and Mr. Jones deny involvement in

competitive decisionmaking on behalf of their employers. Doc. [90-2] ¶¶ 5, 7; Doc. [89-2] ¶ 5.

The Court has no reason to doubt either their truthfulness or their commitment to using

confidential material only in the defense of this litigation. Doc. [89-2] ¶ 15; Doc. [90-2] ¶ 20.

Nevertheless, given their substantial roles in the strategic leadership of their respective

companies, the Court concludes that granting them access to the competitively sensitive data of

competitors and customers would create an unacceptably high risk of inadvertent disclosure. See

Sysco, 83 F.Supp.3d at 4 (“Mr. Libby’s membership on the Executive Team brings him well

within the orbit of Sysco’s competitive decision-making activities.”) (internal citation omitted);

see also PhishMe, Inc. v. Wombat Sec. Techs., Inc., No. CV 16-403-LPS-CJB, 2017 WL

4138961, at *9 (D. Del. Sept. 18, 2017) (denying access to General Counsel after weighing risk

of inadvertent disclosure against harm to movant from restriction); Cytosport, Inc. v. Vital

Pharm., Inc., No. CIV S-08-2632 FCDGGH, 2010 WL 728454, at *3 (E.D. Cal. Mar. 2, 2010)

(“If the CEO is not a lawyer, query who will advise him on such issues. Questions such as the

extent that in-house counsel will be advising the employer on such legal issues as input on

contract formation, marketing, and employment are important [in this inquiry].”).

Undoubtedly, Mr. Jones and Mr. Jarboe will be considerable assets to Defendants’

litigation teams, even without access to confidential materials. Like Ms. Tharenos and Mr.

Cochran, Mr. Jones and Mr. Jarboe will not be sidelined by this decision. They will still be “able

to assist outside counsel and advise [Defendants] on litigation strategy. [They] will have access

to redacted final and draft pleadings, expert reports, affidavits, and deposition transcripts, and to

discovery not designated as Confidential Material.” Sysco Corp., 83 F. Supp. 3d at 4. And like

Tharenos and Cochran, they will still be free to impart their expertise—in their cases, both

industry-related and legal—to outside counsel. See id. Also like their business-side colleagues,

they may be marginally less effective in providing that advice due to their lack of access to

confidential material. Still, the Court does not believe that the marginal advantage to Defendants

of granting a second member of each in-house legal staff access to confidential material

outweighs the very real risk to Intervenors from their competitively sensitive data being provided

to members of Defendants’ executive leadership. Id. (denying access to a second member of in-

house counsel with close connections to executive board where court had granted access to one

in-house counsel already).

4. Additional safeguards for confidential information

The Court expects all parties to comply strictly with every term of the protective order

and believes that they will. Still, in deference to Intervenors’ legitimate concerns for the security

of their confidential materials, the Court will make the following two modifications to the

proposed modified protective order already submitted by the parties (Doc. [52-1]):

(1) As requested by NTEC in its motion to intervene (Doc. [62] ¶ 27), Ms. Li and Ms. Klein

will be required to attest in writing that they will fully comply with the protective order.

The requirement should be added to the protective order itself, and attestations completed

by Ms. Li and Ms. Klein should be appended to the final protective order submitted by

the parties pursuant to this Order.

(2) The final protective order will contain the following penalty provision, as an added

incentive against misuse of confidential material:

Any violation of this Order will be deemed a contempt and punished by a fine of

$250,000. This fine will be paid individually by the person who violates this Order.

Any violator may not seek to be reimbursed or indemnified for the payment the

violator has made. If the violator is an attorney, the Court will deem the violation

of this Order to warrant the violator being sanctioned by the appropriate

professional disciplinary authority, and the Court will urge that authority to suspend

or disbar the violator.

5. No “Outside Counsel Only” designation

Intervenors and, in its supplemental briefing, the FTC have requested that, if this Court

grants any of Defendants’ employees access to confidential material under the protective order, it

further modify the protective order to permit third parties to designate especially sensitive

materials as viewable by “Outside Counsel Only.” Doc. [62] ¶ 28; Doc. [68] ¶¶ 15-16; Doc. [73]

at 1; Doc. [97] at 4-5. Defendants object that creating such a classification would essentially

effect no change to the current, unmodified protective order, because third parties will simply

shift to classifying all of their information as “Outside Counsel Only,” leaving Defendants in

precisely the same predicament they are in now. Doc. [96] at 30:7-15.

The Court cannot tell at this point if Defendants’ prediction is cynical or sound, but it

harbors its own significant concerns about the administrability of a two-tiered protective order,

especially given the expedited timeline on which this case is proceeding. Those concerns,

together with the Court’s confidence in the ability of Ms. Li and Ms. Klein to avoid inadvertent

disclosure of confidential material, persuade the Court to deny the requests for an “Outside

Counsel Only” designation. See generally United States v. Aetna Inc., No. 1:16-CV-01494

(JDB), 2016 WL 8738420, at *10 (D.D.C. Sept. 5, 2016) (rejecting two-tier protective order

where it would have required re-designation of large swathes of confidential materials in a case

litigated on a highly expedited schedule).

Conclusion

For the reasons outlined above, Defendants’ Motion (Doc. [52]) is GRANTED, and their

proposed modified protective order (Doc. [52-1]) will be entered, subject to the modifications

described above. Intervenors’ motions (Docs. [62], [68], [73]) are GRANTED in part and

DENIED in part as outlined above.

IT IS HEREBY ORDERED THAT, no later than 5 PM CT on the date following the

entry of this Order, the parties should submit a final protective order incorporating the above

modifications for immediate entry by this Court.

Dated this 1st day of April, 2020.

SARAH E. PITLYK

UNITED STATES DISTRICT JUDGE

16