# Federal Trade Commission v. Peabody Energy Corporation

> District Court, E.D. Missouri · April 1, 2020

URL: https://www.frixlaw.com/law-library/cases/10232785

## Case

- **Court:** District Court, E.D. Missouri
- **Decided:** April 1, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

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## How later opinions describe it (automated extraction)

- noting that in-house counsel are equally officers of the court and subject to the same codes of professional conduct as outside counsel

## Opinion text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10232785. Public record. Not legal advice.