Petition — American Telephone & Telegraph Co. v. MCI Communications Corp.

IN THE

Supreme Court of the nited States

OcTOBER TERM, 1978

No 8698-10638

AMERICAN TELEPHONE AND TELEGRAPH COMPANY;

ILLINOIS BELL TELEPHONE COMPANY; AND SOUTH-

WESTERN BELL TELEPHONE COMPANY, Petitioners,

Vv.

MCI ComMuNIcATIONS CoRPORATION; MCI-New York

West, Inc.; [NTERDATA COMMUNICATIONS, INC.; AND

Microwave Communications, Inc., Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Grorce L. SaunpErs, JR.

THEODORE N. MILLER

MicwHakE. S. Yaucu

Kennetu K. Howeu

GrraLp A. AMBROSE

One First National Plaza

Chicago, [linois 60603

Of Cownsel:

F. Marx GarLInGHOUSE

Donatp H. SHarp

Haro.p S. Levy

Doveuas B. McFapprn

LAwRENCE A. DimmitTT

Wayne E. Basier 195 Broadway

Srmwiey & AvsTIN New York, New York 10007

January 3, 1979 Attorneys for Petitioners

Press oF Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C.

aw

TABLE OF CONTENTS

Page

EE aL ar rere ne DOE mee 1

SS A I Se mE ME CERNE OO Gretel ge 2

IID 5nd ook en tanevsdenees ceswnseed 2

Statutory PROvISION INVOLVED ..........ccccccceces 3

Se ak os bane edbeeebwws 3

ReEasONS FOR GRANTING THE WRIT ............e-000- 5

I a ig Owl is oases ae be eran 18

TI one ack Cg es ie er eh aia bas ewe la

EE te ee ak oh cae aetine 9a

I a orien ae an baad deeun oa hbe mae ae 15a

INDEX OF AUTHORITIES

CasEs:

Alcoa v. United States Department of Justice, 1978-1

Trade Cas. { 61,824 (D.D.C. 1978) .............. 6

Cal well-Clements, Inc. v. McGraw-Hill Pub. Co., 11

Pe ee. CORSE Be RED dcvcccccncdvadcens ss 12

Cha nber of Commerce v. Legal Aid Society, 423 U.S.

1309 (1975) (Mir. Justice Douglas, in chambers) .. 11

Cchen v. Beneficial Industrial Loan Corp., 337 U.S.

ES igh sd cue us ode l eben Cen seeetene ses 2

Control Data Corp. v. International Business Machines

Corp., 306 F. Supp. 839 (D. Minn. 1969) ........ 13

Data Digests, Inc. v. Standard & Poor’s Corp., 57

fk Me go 8 ag. . Ep eer ee 5, 16

GAF Corp. v. Eastman Kodak Co., 415 F. Supp. 129

AM: WOE id ca Sos vn canenandcbesaces 5, 6, 15

ii Index of Authorities Continued

Page

In re Cement and Concrete Antitrust Litigation, MDL

Dkt. No. 296, Civ. 76-788A PHX CAM (D.Ariz.).. 6

In re Coordinated Pretrial Proceedings in Western

Liquid Asphalt Cases, 18 Fed. R. Serv. 2d 1251

SP ES TED, Wid ectreestet sescrcserjponcees 5, 10

Martindell v. International Tel. & Tel. Corp., 25 Fed.

R. Serv. 2d 1288 (S.D.N.Y. 1978) ........seecees 6, 16

Milsen v. Southland Corp., 1972 Trade Cas. {| 73,865

SUE ME PUNY ve bicedcas bs csv once Gaovenscee 11

Swift & Co. Packers v. Compania Colombiana Del Ca-

ribe, 389 U.S. 684 (1950) ..........ccvecvvccess

TV Signal Co. of Aberdeen v. American Tel. & Tel.

Co., Civil Action No. 70-6N (D.S.D.) .......++.-. 6

United States v. ARA Services, Inc., 1978-2 Trade Cas.

TORSO (ELD. Mo. 1OTE) 0. ccc cccccverscivess 6, 16

United States v. GAF Corp., 449 F. Supp. 351 (S.D.

Cab oiadsx caer vededay bes nen been cele’

William Inglis & Sons Baking Co. v. ITT Continental

Baking Co., No. C-71-1906-SW (N.D. Cal.) .......

Wyly Corp. v. American Tel. & Tel. Co., Civil Action

BG, THROES CIDTRG,). oc ccccccccccccegeevscvcess

Zenith Radio Corp. v. Matsushita Electric Industrial

Co., 1978-1 Trade Cas. {| 61,961 (E.D. Pa. 1976) .5, 6, 16

Zenith Radio Corp. v. Matsushita Electric Industrial

Co., 1978-2 Trade Cas. {| 62,019 (E.D. Pa, 1978) ...6, 16

MISCELLANEOUS MATERIALS:

Manual for Complex Litigation ...............000+: 12

Proposed Amendments to the Federal Rules of Civil

Procedure, 48 F.R.D. 487 (1970) .........e ee eee 12

IN THE

Supreme Court of the United States

OctToBEeR TERM, 1978

No.

AMERICAN TELEPHONE AND TELEGRAPH COMPANY;

ILLINoIs BeLL TELEPHONE COMPANY; AND SourH-

WESTERN BELL TELEPHONE Company, Petitioners,

v.

MCI Communications Corporation; MCI-New York

West, Inc.; InrerpaTA CoMMUNICATIONS, INC.; AND

Microwave Communications, Inc., Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Petitioners pray that a writ of certiorari be issued

under 28 U.S.C. § 1254(1) to review a judgment of

the United States Court of Appeals for the Seventh

Circuit entered in this cause on December 14, 1978.

OPINION BELOW

The memorandum opinion of the court of appeals

which accompanied its order is unpublished. That

opinion is annexed hereto as Appendix A. For the

2

convenience of the Court, the protective order of the

district court referred to by the court of appeals in

its memorandum opinion is annexed hereto as Ap-

pendix B.

JURISDICTION

This Court’s jurisdiction is invoked under 28 U.S.C.

§ 1254(1). The United States Court of Appeals for the

Seventh Circuit asserted appellate jurisdiction over

the decision of the district court under Cohen v. Bene-

ficial Industrial Loan Corp., 337 U.S. 541 (1949). The

jurisdiction of this Court to issue a writ of certiorari

under 28 U.S.C. § 1254(1) to review the order of the

court of appeals is established by the following deci-

sions of this Court:

Cohen v. Beneficial Industrial Loan Corp., 337

U.S. 541 (1949); and

Swift & Co. Packers v. Compania Colombiana Del

Caribe, 339 U.S. 684 (1950).

QUESTIONS PRESENTED

1. Whether the court of appeals erred in upholding

the modification of a protective order in order to af-

ford the Government access to materials and informa-

tion made available by petitioners under that protec-

tive order solely for the use of the plaintiffs and solely

for the purposes of this case, where the protective

order was entered by stipulation of the parties in this

‘ease, where Government counsel expressly represented

to petitioners that it had no intention of seeking access

to the discovery in this or any other private case

against them, and where petitioners relied upon both

the protective order and the Government’s representa-

tion and have been seriously prejudiced thereby?

3

2. Whether a private party can properly be permit-

ted to assist the Government in an antitrust case

against a common defendant by turning over to the

Government analyses of discovery materials obtained

under an agreed protective order in which that party

expressly undertook that it would not disclose such

analyses to anyone except for the purposes of the case

in which that party was involved?

STATUTORY PROVISION INVOLVED

The pertinent provision of the Federal Rules of Civil

Procedure—Rule 26—is set forth in Appendix C to

this petition.

STATEMENT OF FACTS

The order to which this petition is directed arises

from the effort by the United States, a non-party to

this action, to obviate a protective order entered by

the United States District Court for the Northern

District of Illinois on August 6, 1974, in order to gain

access to documents, deposition transcripts and the

analyses of plaintiffs’ counsel made therefrom for use

in its own pending antitrust case against the Bell Sys-

tem—that is, United States v. American Tel. & Tel.

Co., Civil Action No. 74-1698 (D.D.C.). The back-

ground of this protective order and the Government’s

efforts to modify it are set out in the petition for

certiorari now pending before this Court in American

i & Tel. Co. v. United States, No. 78-761 (see pp.

The petition in American Tel. & Tel. Co. v. United

States involves a request for review of a judgment of

the United States Court of Appeals for the District

of Columbia Circuit denying a petition for a writ of

4

mandamus to set aside an order of the district court

in United States v. American Tel. & Tel, Co, com-

pelling the petitioners to produce to the Government

microfilm copies of all documents produced to and

selected by MCT in this case and by another plaintiff

in another private antitrust case pending against the

Bell System in the Southern District of New York

(Litton Systems, Inc. v. American Tel. & Tel. Co.,

No. 76 Civ. 2512).

Shortly after the issuance of the district court’s

order in United States v. American Tel. & Tel. Co., the

district court in this case issued an order modifying

its protective order so as to permit the Government

access, not only to the documents generated in the

distovery here, but also to deposition transcripts and

the analyses of such materials by MCI’s counsel. On

appeal, that order was affirmed by the Court of Ap-

peals for the Seventh Circuit in an unpublished order

under that Court’s Rule 35, which prohibits its cita-

tion or use ‘‘as precedent (a) in any federal court

within the cireuit in any written document or in oral

argument or (b) by any such court for any purpose.’’

The decision of the court of appeals was based

solely upon what it regarded as controlling exigencies

of this situation. The court rejected the contention

advanced by the Government that the order it sought

was consistent with the terms of the protective order

itself (App. A, pp. 2a-3a, 7a) ; it recognized that there

is a substantial line of decisions—including every de-

cision on the issue involving efforts by the Govern-

ment to obtain access to discovery in private antitrust

cases—declining to modify protective orders of the

kind involved here at the instance of strangers seek-

ing access to discovery made under such orders (td.

5

at 6a-7a); and it held that since the protective order

here was agreed to by the parties, ‘‘there is a higher

burden on the movant to justify the modification of

the order’’ (id. at 7a). It nonetheless permitted modi-

fication of the protective order because of the ‘‘waste-

fulness of requiring government counsel to duplicate

the analyses and discovery already made’”’ (id. at 8a).

REASONS FOR GRANTING THE WRIT

1. The writ should be granted in this case in order

that this Court can resolve an important question of

federal law which has not been, but should be, resolved

by this Court. The court of appeals itself referred to

the question involved in its order as one of “appel-

late first impression’? (App. A, p. 6a). Moreover, it

recognized that the weight of authority among the

district courts was contrary to its ruling (id. at 6a-Ta).

In fact, prior to the decision of the district court

in this case and that of the District Court for the Dis-

trict of Columbia in United States v. American Tel. &

Tel. Co., there was an unbroken line of twelve differ-

ent decisions rejecting efforts by governmental agencies

to gain access to discovery in private antitrust suits.

Data Digests, Inc. v. Standard & Poor’s Corp., 57

F.R.D. 42 (S.D.N.Y. 1972); In re Coordinated Pre-

trial Proceedings in Western Liquid Asphalt Cases, 18

Fed. R. Serv. 2d 1251 (N.D. Cal. 1974) ; William Inglis

& Sons Baking Co, v. ITT Continental Baking Co.,

No. C-71-1906-SW (N.D. Cal.) (Transcript, Septem-

ber 30, 1974) ; GAF Corp. v. Eastman Kodak Co., 415

F. Supp. 129 (S.D.N.Y. 1976) ; Zenith Radio Corp. v.

Matsushita Electric Industrial Co., 1978-1 Trade Cas.

161,961 (E.D. Pa. 1976) ; Wyly Corp. v. American Tel.

& Tel. Co., Civil Action No. 76-1544 (D.D.C.) (Order

6

of July 20, 1978) ; Alcoa v. United States Department

of Justice, 1978-1 Trade Cas. 161,824 (D.D.C. 1978) ;

Martindell v. International Tel. & Tel. Corp., 25 Fed.

R. Serv. 2d 1283 (S.D.N.Y. 1978); United States v.

GAF Corp., 449 F. Supp. 351 (S.D.N.Y. 1978) ; United

States v. ARA Services, Inc., 1978-2 Trade Cas, 1 62,250

(E.D. Mo. 1978) ; 7'V Signal Co, of Aberdeen v. Amert-

can Tel. & Tel. Co., Civil Action No. 70-6N (D.S.D.)

(Order of July 14, 1978) ; In re Cement and Concrete

Antitrust Litigation, MDL Dkt. No, 296, Civ. 76-788A

PHX CAM (D. Ariz.) (Order, June 1978).

The views of the courts with respect to the unlawful-

ness of this strategy were unequivocal. In one fre-

quently cited case, Zenith Radio Corp. v. Matsushita

Electric Industrial Co., 1978-1 Trade Cas, 161,961

(E.D. Pa, 1976), for example, Judge Higginbotham

branded the Government’s strategy as a distortion of

the compulsory processes of the courts (id. at 74,069) :

‘“‘Here, the USITC seeks wholesale access to the

fruits of plaintiffs’ discovery. Clearly, if the in-

stant actions had not been filed, plaintiffs Zenith

and NUE, against whom the USITC is now pro-

ceeding, would never have acquired the documents

the USITC is seeking. Just as clearly, the proper

discovery route for the USITC is to proceed dt-

rectly against defendants, as if the instant action

had never been filed. This Court will not be a party

to a distortion of the purposes of its compulsory

process.” (Emphasis supplied.)’

In yet another case, GAF' Corp. v. Eastman Kodak Co.,

415 F. Supp. 129 (S.D.N.Y. 1976); which is perhaps

‘Similarly, in a later phase of the same proceeding, Zenith

Radio Corp. v. Matsushita Electric Industrial Co., 1978-2 Trade

Cas. 62,109 (B.D. Pa. 1978), the court reached the same result

when a private party sought to obtain discovery under the same

circuiastances, emphasizing that to allow a wholesale appropriation

7

the leading case on the subject, Judge Frankel con-

demned the Government’s new strategy as fraught with

the ‘‘potential for oppression’”’ (id. at 132):

‘*Volunteered resources employed at large private

expense are added to the authorized Government

energies available against Kodak. That this par-

ticular defendant is a corporate giant (assailed by

a plaintiff who is no pigmy) cannot obviate the

unease engendered by the alliance. Congress, de-

ciding authoritatively for all of us, has allocated

resources to law enforcement, both civil and crimi-

nal, Sometimes it has given express encouragement

to informants and other adjuncts... . It is quite

another thing for a court to sanction, and thus to

encourage, the use of private litigants’ devices as

reinforcements for federal prosecutors, whether

civil or criminal. The potential for oppression

against enterprises large and small, or against

individuals, is not rendered imaginary by our in-

ability to forecast it with clarity.”’ (Emphasis

supplied. )

The court of appeals’ order does not remotely justi-

fy its refusal to adopt the principles announced and

applied in these decisions. The stated ground of that

order—that to compel the Government to conduct its

own discovery would be wasteful—would, if taken lit-

erally, justify the modification of any protective order,

since it is always theoretically wasteful to duplicate

discovery. Moreover, the circumstances in this case are

of the fruits of discovery from another proceeding would be noth-

ing less than ‘‘an abuse of the discovery process’’ (id. at 74,367-

68) :

‘It is an abuse of the discovery process to order a defendant

in the instant litigation to produce all documents which he

had submitted in another case under the judicial imprimatur

that those documents when submitted, were judicially pro-

tected as confidential.’’

8

so extreme that modification of the protective order

here would make virtually any other case an a fortiori

instance for the same result.’

The protective order in issue is the product of an

express agreement between the parties (App. A, p. Ta).

It was relied upon in the discovery process in the MCI

case itself (id. at 2a-3a) and, although the Court of

Appeals failed to acknowledge the fact, in the dis-

covery process in United States v. American Tel. &

Tel. Co. Moreover, in the latter discovery, defendants’

counsel also relied upon a representation made by

Government counsel that it had no intention of ever

seeking to modify the MCI protective order or any

other protective order entered in a private antitrust

suit against the Bell System (see Petition in No, 78-

761, pp. 4-5). In reliance upon the protective order

and the Government’s representation, defendants ac-

cepted stays of discovery entered sua sponte by the

district court, and the Court of Appeals in United

States v. American Tel. & Tel, Co., which prevented

them from engaging in discovery for nearly three

years while the discovery in this case and other pri-

vate cases was proceeding (id. at 6-7), In these cir-

*Indeed, the court of appeals apparently reflected its own

awareness of this fact, as well as the absence of any solid basis

for limiting its decision, when it ordered that its decision not be

published or relied upon within the Seventh Cireuit. This action

simply emphasizes the absence of any reasoned basis for the court ’s

order and lays bare the extreme character of the order here, One

can hardly escape the impression that the court concluded that be-

cause of the magnitude of United States v. American Tel. & Tel.

Co., established principles of law are apparently to be ignored in

favor of ad hoc expediencies which are so dangerous that their ap-

plication to that case is not to be regarded as precedent in any

other case.

9

cumstances, petitioners submit that the court of ap-

peals’ order stands unjustified for the simple reason

that it is unjustifiable.’

2. The writ should also be granted to prevent a

severe disruption in the administration of justice in

the federal courts. A threat of such disruption arises

first from the fact that the court of appeals’ decision

will inevitably undermine the confidence that litigants

place in protective orders, stipulations and representa-

tions of opposing counsel—confidence that is absolutely

necessary to the orderly conduct of discovery in com-

plex litigation of this kind. .

The protective order in this case was intended to

provide a fair and equitable mechanism to speed the

production of documents and the progress of deposi-

tions during pretrial discovery and was accepted and

relied upon by petitioners for that purpose.‘ As a

"This conclusion is reinforced by the opposition to certiorari

filed by the Government in No. 78-761. In that filing (p. 3), the

Government opposed certiorari on the theory that the protective

order in this case contemplated the order obtained by the Govern-

ment—a construction of the protective order directly repudiated

by the court of appeals (App. A, pp. 2a-3a, 7a)—and on the

theory that none of the district court decisions relied npon by

petitioners is applicable to the situation here (U.S, Opposition at

9-10)—a position that was also rejected. Indeed, the Court of Ap-

peals’ decision, as plainly wrong as it is, discredits the Govern-

ment’s entire opposition in No, 78-761, except to the extent that

the Government relies upon the notion that the district courts have

unbounded discretion in discovery matters. Although the Court of

Appeals appeared to accept that notion, it is not, and never has

been, the law.

* The protective order expressly stated that ‘‘the public in-

terest in the prompt and orderly administration of justice requires

that production of the voluminous documents and other discovery

materials involved in this case proceed as expeditiously as pos-

10

result, discovery in the MCI case proceeded expedi-

tiously, and very few disputes about discovery required

the attention of the district court.

If the court of appeals’ decision is allowed to stand,

protective orders and stipulations as tools to conserve

judicial resources and expedite pretrial proceedings

will be rendered ineffective. Regardless of the provi-

sions of a protective order issued over the signature of

a United States District Judge, and regardless of

representations and agreements made by opposing

counsel, a party facing massive discovery in an anti-

trust or other complex case will know that its docu-

ments and the transcripts of any depositions taken

of its officers or employees, as well as the work product

of opposing counsel, may find its way into the hands

of anyone who seeks to litigate any related issue

against it. Consequently, the pace of discovery in all

such eases will be drastically slowed, and the number

of disputes over the permissible scope of discovery to

sible’ and established ‘‘procedures . . . which will expedite the

discovery process’? (App. B, p. 10a). In this respect, the protec-

tive order is similar to other such orders which have been in-

creasingly employed in massive antitrust litigation to promote the

fundamental purpose of the Federal Rules of Civil Procedure—‘‘to

secure the just, speedy, and inexpensive determination of every

action’’ (Federal Rule of Civil Procedure 1), As expressed by one

district judge (In re Coordinated Pretrial Proceedings in Western

Liquid Asphalt Cases, 18 Fed. R. Serv. 2d 1251, 1252 (N.D. Cal.

1974) :

‘“‘The purpose of this litigation is to determine whether the

defendants are liable to the plaintiffs under the antitrust laws

and, if so, in what amounts. That in itself is difficult enough.

The protective order was issued so that I would be spared the

duty of deciding applications for protective orders during the

course of discovery. Massive quantities of documents have been

furnished by defendants under the umbrella of the protective

order and I have been spared such problems.’’

11

be resolved by the district courts will be significantly

increased.’

Beyond this inevitable slowing down of the diseov-

ery process, the court of appeals’ order invites abuse of

that process. The purpose of discovery under the Fed-

eral Rules is to permit the parties to a case to prepare

for trial in their case, not to obtain documents and

collect facts for some other purpose. See, e¢.g., Milsen

v. Southland Corp., 1972 Trade Cas, 173,865 (N.D. Tl.

1972). Yet there is no practical way to prevent just

such an abuse of the discovery process if protective

orders can be broken at will. Parties ean and will avail

themselves of the broad discovery rights available un-

der the Federal Rules of Civil Procedure to obtain

information of little or no value whatever in their own

litigation if they know that they can use the leverage

created by their possession of such information—and

their right to transfer it to others—to some advan-

tage."

° Cf. Chamber of Commerce v. Legal Aid Society, 423 U.S. 1309,

1312 (1975) (Opinion in chambers), in which Mr. Justice Douglas

relied on a protective order as a factor eliminating the possibility

of irreparable injury from compliance with a discovery order which

might otherwise violate an arguable congressional intention that

the materials to be discovered be treated as confidential. Had the

protective order not been available in that case, it would have been

necessary to resolve the issue of confidentiality prior to securing

compliance with the discovery request.

° The court of appeals simply brushed this whole problem aside

on the ground that ‘‘there is no showing that the government seeks

to exploit MCI v. ATT solely to obtain assistance in the litigation

of USA v, ATT’’ (App. A, p. 7a). Whatever that is supposed

to mean, it surely misses the point here. The point is that MCI

may well have engaged in discovery wholly unrelated to any claim

it may genuinely be asserting for the sole purpose of creating lev-

erage against petitioners through its efforts to turn over such dis-

12

Finally, the court of appeals’ decision reintro-

duces the inevitability of the same kind of unfairness

that plagued the discovery process prior to the 1970

amendments to the Federal Rules of Civil Procedure.

Prior to those amendments, discovery was frequently

permitted to proceed on a one-sided basis, with one

party being permitted to complete, or substantially to

complete, its discovery before discovery by the other

party was permitted to commence. The elimination of

tactical advantage by gaining priority in the conduct

and completion of discovery was an important result

of the 1970 amendments.’ Under the court of appeals’

covery to others. There is substantial basis in the record indicating

that this is precisely what happened, but of course, by its very

nature, the matter is not free from doubt. That, of course, is the

problem. Such matters are rarely free from doubt and therefore

cannot effectively be prevented under the court of appeals’ ap-

proach.

*In formulating the 1970 amendments, the Advisory Commit-

tee found the priority practice to be ‘‘unsatisfactory and unfair

in its operation’’ and stated that the better practice was the one

in effect in some jurisdictions where arrangements were typically

made for alternation in the taking of depositions. Proposed Amend-

ments to the Federal Rules of Civil Procedure, 48 F.R.D. 487, 507

(1970). As an example of the practice of which it approved, the

Committee cited Caldwell-Clements, Inc. v. McGraw-Hill Pub. Co.,

11 F.R.D. 156, 158 (S.D.N.Y. 1951), a case in which the court

rejected the priority rule:

‘This Court does not believe that any of the litigants should

be rendered sterile with the necessary preparation of its case

while the other party is conducting its examination, simply

because one got the jump on the other in serving notice,

especially so, where the other under the Rules was in no

position to make a similar move. The Court is of the opinion

that the interests of justice will be served in the present situa-

tion if the examinations proceed apace under the following

provision for alternate examination periods.’’ (Emphasis sup-

plied. )

Similarly, the Manual for Complex Litigation provides that all

parties should ‘‘proceed simultaneously with discovery’’ (§ 0.50)

13

decision, however, a litigant in one case may gain pre-

cisely the tactical advantage condemned by the 1970

amendments by availing itself of the fruits of diseov-

ery in some other case involving a common adversary.

Precisely such a tactical advantage has been gained

by the Government in United States v. American Tel.

¢& Tel. Co. as a result of the court of appeals’ decision.

The effect of the decision of the court of appeals

is to void solely for the Government the stays entered

in that case by the district court and the Court of

Appeals for the District of Columbia Circuit. Conse-

quently, in that case, the Government has obtained a

tactical advantage of four years of discovery not re-

ciprocally enjoyed by the Bell System.*

Indeed, the court of appeals’ decision creates a

situation which is the same as if the District Court for

the District of Columbia had entered an order staying

all discovery by petitioners for four years but permit-

ting the Government untrammelled discovery during

that time. Such retroactive interference with the pro-

cesses of another court is in no way justified by the

fact that the District of Columbia Court has endorsed

that procedure as to the documents discovered by MCI,

since ‘‘any other course ... may prejudice the party first to make

discovery or the party whose discovery is deferred’’ (id.). These

precepts have been widely followed by the courts in large antitrust

cases. See, ¢.g., Control Data Corp. v. International Business Ma-

chines Corp., 306 F.Supp. 839, 849 (D. Minn. 1969).

*The fact that petitioners have been able to conduct discovery

of MCI in this case in the four-year period does not obviate the

advantage gained by the Government. Discovery by petitioners in

MCI focused almost exclusively upon the business of MCI and

the cause of its alleged damages—matters which have little rele-

vance to the issues in the Government case.

14

for the basic conflict is not with the views of that court

but with the integrity of its past discovery stay orders

which cannot retroactively be made fair to petitioners

by either district court once the Government is per-

mitted to appropriate the discovery and analyses un-

dertaken by MCI.’

3. In addition, this Court should grant the writ to

consider the question raised by that aspect of the

court of appeals’ order that allows ‘‘MCI counsel to

make... their analyses of data [obtained from peti-

tioners] available to government counsel’? (App. A,

p. 8a). As noted by the court of appeals, petitioners

have already given the Government microfilm copies

of the documents it seeks in compliance with the order

of Judge Greene. Moreover, the Government’s request

for access to deposition transcripts from this case is

separable from its effort to gain access to the analyses

and work product of MCI’s counsel. Thus, the Gov-

ernment’s interest in avoiding duplicative discovery,

even if valid, can be accommodated without modify-

*The court of appeals’ decision also endorses a direct circum-

vention of the process of the United States v. American Tel. & Tel.

Co. court with respect to the production to the Government of the

transcripts of depositions taken in the MCJ case, Although the

modification of the MCI protective order approved by the Court

of Appeals permits MCI to deliver to the Government transcripts

of the depositions of petitioners’ officers and employees taken in

MCI, Judge Greene has to date specifically declined to rule that

the Government may secure those transcripts directly from the de-

fendants in that case pursuant to a Rule 34 request because ‘‘con-

siderations other than those which pertain to the documents may

well be present yet the government has made no effort to provide

the Court with either a legal or a factual basis on which to order

their production’’ (Opinion of September 11, 1978, in United States

v. American Tel. & Tel. Co.). Judge Greene has under considera-

tion the Government’s renewed motion for such access and has

scheduled a hearing on the matter for January 11, 1978.

15

ing the protective order to allow MCI to turn over its

analyses of confidential information to the Government.

In its decision, the court of appeals found that the

protective order involved here is an agreed order which

was entered by the district court ‘‘at the request and

signed consent of the parties’? (App. A, p. 2a). As

noted by the court of appeals, discovery in the case

has been conducted in reliance on the order and others

like it, which expressly restrict the use of discovered

material and information to the preparation or trial

of the case. In such circumstances, the courts have

consistently held that it is improper to allow a party

who has agreed to such an order or understanding and

induced such reliance to vitiate the terms thereof and

make discovered materials and information available

to strangers to the litigation. Thus, in GAF Corp. v.

Eastman Kodak Co., 415 F. Supp. 129 (S.D.N.Y. 1976),

Judge Frankel held (415 F. Supp. at 131-32) :

‘A considerable volume of papers has been given

on consent. Sometimes there has been resistance,

requiring recourse to the court. Some of the issues

raised in motion papers have been resolved by

compromise, with or without the court’s assist-

ance, All the positions taken over the years have

had presumably in view the understanding that

discovery was for the party receiving it, not for

strangers to the case, public or private. There is

no need to conjecture whether either side con-

strued or considered this understanding with par-

ticular reference to the Government as a prospec-

tive recipient of discovery papers .... It is also

unnecessary, and much too late, to wonder what

different views the parties might have taken of

discovery questions along the way had they con-

templated delivery of their papers to public offi-

cials ... The supervening idea of disclosure to

16

the Government must be judged (and burdened)

by the understanding that this was never a pro-

posed or expressly anticipated step when the pa-

pers were turned over to GAF in the first place.

(Emphasis added. )

Other courts have similarly rejected efforts to modify

protective orders retroactively to permit the use of

discovery materials for purposes other than the case

in which they were obtained. See, e.g., Data Digests,

Inc. v. Standard & Poor’s Corp., 57 F.R.D. 42 (8.D.

N.Y. 1972); United States vy. ARA Services, Inc.,

1978-2 Trade Cas. 162,250 (E.D. Mo. 1978); Zenith

Radio Corp. v. Matsushita Electric Industrial Co.,

1978-1 Trade Cas. 161,691 (E.D. Pa. 1976); 1978-2

Trade Cas. 162,019 (E.D. Pa. 1978); and Martindell

v. International Tel. & Tel. Corp., 25 Fed.R. Serv. 2d

1283 (S.D.N.Y. 1978).

The court of appeals recognized the validity of the

concern underlying these decisions and held that one

who seeks to modify’ an agreed protective order must

satisfy a ‘‘higher burden” of demonstrating ‘‘excep-

tional considerations” in order to justify such a modi-

fication (App. A, p. 7a). However, when it turned to

apply its own standard to this case, the standard simply

evaporated, for it found the requirement of ‘‘excep-

tional considerations’’ to be met on a record in which

there is not a scintilla of support for a finding of ‘‘ex-

ceptional considerations.”’

MCI has never even asserted that any ‘‘exceptional

considerations” exist which justify its attempt to repu-

diate its original agreement to the protective order and

the limitations therein on the use of information ob-

tained from petitioners. Quite the contrary, as the rec-

ord in the district court makes clear, the sole purpose

17

of MCI in proposing to furnish to the Government its

indices and analyses of the discovery obtained from

petitioners is to pressure petitioners to accede to some

unjustified settlement of its claim. Indeed, MCI can

have no other purpose for its willingness to make avail-

able to the Government the work product, expertise,

and strategy of its counsel—matters which the Govern-

ment could not possibly obtain from MCI by subpoena

or any other existing compulsory process.

Nor has the Government offered any ‘‘exceptional

considerations” to justify permitting MCI to pursue

such an improper strategy. Indeed, the Government’s

whole approach throughout this controversy has been

that it is entitled to anything MCI might be willing to

give it as a matter of course.

Whatever savings in time and expense may accrue to

the Government by allowing MCI to renege on its

agreement to treat information obtained from peti-

tioners as confidential cannot create ‘exceptional con-

siderations’’ sufficient to warrant the tactic of MCT.

Neither the Government nor this Court should condone

the repudiation of an order of a district court, entered

on the express agreement of a litigant to abide by its

terms, for the purpose of advancing the selfish inter-

ests of an antitrust plaintiff. Indeed, to do so is to in-

vite the transformation of litigation into a pressure

tactic rather than a means of resolving legitimate griev-

ances in accordance with the law. Clearly, the writ

sought by petitioners should issue to correct the sanc-

tion afforded such a tactic by the order of the court of

appeals.

18

CONCLUSION

The issue presented by the instant petition is an

important one, involving as it does both a dramatic

departure from accepted practice under the Federal

Rules of Civil Procedure and the potential for serious

disruption of the efficient and expeditious conduct of

discovery by the district courts. Such consequences

should not be allowed to occur without full consider-

ation by this Court, which bears the ultimate responsi-

bility for the administration of justice under the Fed-

eral Rules of Civil Procedure. Moreover, this petition

and the petition pending in No. 78-761 afford the

Court the opportunity to consider the ramifications of

the Government’s attempt to subvert the purpose and

structure of the Federal Rules of Civil Procedure on

the fullest possible record and at the most opportune

moment in the development of the Government’s

strategy. Accordingly, the petition for writ of certi-

orari should be granted.

Respectfully submitted,

Groroe L. Saunvers, Jr,

Tueropvore N, Mituer

Micuakg. 8, Yaucu

Kennetu K, Howeini

Geratp A, AMBROSE

One First National Plaza

Chicago, Illinois 60603

Of Counsel: Harovp 8. Levy

Dove.ias B, McF appen

Al eee Game Tronaves Lawrence A, DimmittT

195 Broadway

Wayne FE. Basier

Siotey & Austin New York, New York 10007

January 3, 1979 Attorneys for Petitioners

APPENDIX

la

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Chicago, [lniois 60604

Araurep: November 20, 1978

Decemper 14, 1978,

UNPUBLISHED ORDER NOT TO BE CITED

PER CIRCUIT RULE 35

Before

Hon. Tromas EB. Faincuiup, Chief Judge

Hon. Wittiam J. Bauer, Circuit Judge

Hon. Haruinaron Woon, Jr., Circuit Judge

ORIGINAL PETITION FOR

A WRIT OF MANDAMUS

American TeLernHone anp TreLearapH Company, ILLINors

Bett Tevernone Company, anp SoutHwestern Be.

TeLePpHonre Company, Petitioners

Vs.

Honoraste Joun F. Grapy, Judge for the United States

District Court for the Northern District of Illinois,

Respondent.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR

THE NORTHERN DISTRICT OF ILLINOIS, BASTERN DIVISION

No, 74-C-633, Judge Grady

2a

No. 78-2317

MCI Communications Corporation, et al.,

Plaintiff's-Appellees,

V8.

American TeterHone and TriearapH Company,

Inuinois Bert TeeepHonre CoMPANy, AND

Souruwestern Bett Tenepnons Company,

Defendants-A ppellants.

Order

In the instant appeal and conditional petition for writ of

mandamus appellant-petitioner challenges the propriety of

an order of the district court granting the motion of the

United States of America to modify the then-existing pro-

tective order which governed the use of discovered mate-

rials in MCI Communications Corp. v. ATT. We hereby

affirm the trial court’s order.

I. THE PROCEDURAL HISTORY

MCT Communications Corporation, a communications

common carrier engaged in providing private line com-

munications services, filed suit against the American Tele-

phone & Telegraph Company and its affiliates on March 6,

1974 in the United States District Court for the Northern

District of Tllinois alleging violations of Sections 1 and 2

of the Sherman Act. On August 6, 1974 the district court

entered a protective order to govern the subsequent use

of “all documents and other discovery materials produced in

response to any documents request made upon plaintiffs

or defendants in the... [ease]... and to any deposition

or portion of a deposition as to which confidential status is

requested by either party.” The protective order was en-

tered at the request and signed consent of the parties, From

1974 to the present, discovery on the parties has proceeded

pursuant to the terms of the protective order, Discovery

3a

from nonparties has proceeded pursuant to other protec-

tive orders entered by the district court which expressly

provided that the discovery materials obtained there under

may be used solely in the preparation of for trial in MCI

v. ATT.

On November 20, 1974 the United States filed its Section

2 Sherman Act suit against ATT in the District of Co-

lumbia, Three stays of this suit, one on motion of the

United States of America, one on motion of ATT, and one

on the Court's own motion interferred with the pace of

discovery until November 28, 1978,

On November 17, 1977 nonparty United States of Amer-

ica moved in the District Court for the Northern District

of Illinois for modification of the protective order entered

on August 6, 1974 in order to allow the government access

to all of the materials discovered in the MCT ease. The

government alleged that its action encompassed “virtually

all of the anticompetitive practices of which plaintiffs com-

plain here,” and that the government would be able to gain

access to those documents via discovery in the District of

Columbia case but that immediate access would save time

and money.

On September 11, 1978 Judge Greene granted the gov-

ernment’s motion to permit access to discovery in USA

v. ATT thus requiring MCT to provide to the government

all documents “produced by defendants and requested by

plaintiffs” in Litton Systems, Inc. v. ATT, No. 76 Civ.

2512 (S.D.N.Y.) and MCI Communications Corp. v. ATT,

74 C 683 (N.DAUL). ATT filed a writ of mandamus in the

Second Cireuit Court of Appeals naming Judge Greene as

respondent in an attempt to gain review of this order.

On October 31, 1978 the Second Circuit Court of Appeals

denied the writ of mandamus but granted a stay for 48

hours pending application for certiorari and for emergency

stay to the Supreme Court, ATT filed its emergency peti-

tion to the Supreme Court and a temporary stay was

da m

granted by Chief Justice Burger pending the filing of a

response by the government. The Supreme Court later de-

clined to continue the stay pending the disposition of the

filed writ of certiorari. 47 U.S.L.W. 3332 (Nov. 13, 1978).

ATT has complied with Judge Greene’s order and has

transferred the microfilm copies of the applicable docu-

ments to the government.

On October 9, 1978 Judge Grady granted the govern-

ment’s motion to modify the protective order in MCI v.

ATT but stayed its order until October 23, 1978 in order

to permit ATT to appeal the order. On October 16, 1978

ATT filed a motion for stay of Judge Grady’s order pend-

ing disposition of its appeal, a motion for expedited con-

sideration, its brief on appeal, and a conditional writ of

mandamus directed to the consideration of the Court in the

event that it would hold that Judge Grady’s order is not

properly appealable as a collateral order.

This Court continued the stay of the district court pend-

ing disposition of the case on appeal, and heard oral argu-

ment on November 20, 1978.

II. THRESHOLD INQUIRY: FINALITY OF THE

DISTRICT COURT ORDER

In Cohen v. Beneficial Industries Loan Corporation, 337

U.S. 541 (1949), the Supreme Court delineated one of the

several exceptions to the general rule that a final judg-

ment is a prerequisite to appeal. The Supreme Court held

the given order appealable

because it is a final disposition of a claimed right which

is not an ingredient of the cause of action and does not

require consideration with it.

337 U.S. at 546-47.

The Cohen rule was explicitly not made applicable to

orders respecting discovery in Alexander v. United States,

5a

201 U.S. 117, 121 (1906) on the ground that a witness must

first refuse to produce or to testify, and must be punished

for criminal contempt, before a right to review arises.

The discovery order presently under review modifies an

existing protective order in order to permit a nonparty

access to discovered materials. Because the discovery order

directs MCI to turn over the discovered materials to the

government, ATT does not have the option sanctioned in

Alexander in order to challenge and stop the transfer of

custody of the materials. For these reasons, this court finds

Alexander to be inapposite,’ applies the “collateral order”

doctrine of Cohen, and holds that the particular species of

discovery order under review is final and appealable. First

Wisconsin Mortgage Trust v. First Wisconsin Corp., 571

F.2d 390, 393 (7th Cir. 1978) (adopted en banc). For the

same reasons, the conditional petition for writ of man-

damus filed by ATT is denied.

Ill. THE MODIFICATION OF THE

PROTECTIVE ORDER

The order of October 9, 1978 modifying the protective

order on the motion of, and for the primary benefit for, a

nonparty is based on two determinations. First, the district

court concluded that allowing the government’s motion

would not interfere with the control that either it or the

District of Columbia court had over their respective cases.

Second, the district court expressly declined to rule that

ATT would be prejudiced unduly by the modification of

the protective order.

Appellant submits, inter alia, that the retroactive modi-

fication of a protective order in order to disclose discovered

1 See Covey Oil Co. v. Continental Oil Co., 340 F.2d 993 (10th

Cir.), cert. denied. 380 U.S. 964 (1965). Cf. Carter Products, Inc.

v. Eversharp, Inc., 360 F.2d 868, 871-72 (7th Cir. 1966).

6a

documents to a nonparty is a violation of the spirit and the

logic of the Federal Rules of Civil Procedure. Specifically,

appellant urges that modification of the protective order

after appellant relied on its authority and scope for more

than four years unduly prejudices appellant.

As a general proposition, pretrial discovery must take

place in the public unless compelling reasons exist for de-

nying the publie access to the proceedings. F.R.Civ.P. 26

(c). In the first instance, it is a matter for the district

court to issue protective orders permitting a party to keep

secret discovered material when “good cause” is shown. It

is also within the discretion of the district court to modify

existing protective orders to permit disclosure of discovered

materials.

The question of whether it is permissible to modify a

protective order on the motion of a nonparty in order to

permit that nonparty retroactive access to discovered docu-

ments is apparently a case of appellate first impression.

On the one hand, several district courts have refused to

enter protective orders which prevent disclosure to others

litigating similar issues on the grounds that the Federal

Rules of Civil Procedure do not foreclose collaboration in

discovery, and further, that there was no showing that the

moving party was exploiting one case solely to assist in the

litigation of another. Johnson Foils, Inc. v. Huyck Corp.,

61 F.R.D. 405 (N.D.N.Y. 1973); Williams v. Johnson &

Johnson, 50 F.R.D. 31 (S.D.N.Y. 1970).

On the other hand, several other courts have declined

to modify protective orders in order to permit a party

to turn over discovered documents to a nonparty. In GAF

Corporation v. Eastman Kodak Company, 415 F. Supp.

129 (S.D.N.Y. 1976), the court denied plaintiff’s motion

for an order allowing it to give to the government 52

documents selected from the hundreds of thousands re-

quested and received in discovery. Plaintiff had concluded

7a

that the documents evidenced an antitrust violation. The

court reasoned that there had been an explicit understand-

ing between the parties that discovery was being demanded

solely for the preparation of the case * and in the face of

that understanding and the potential augmentation of the

government’s awesome powers as investigator,*® an attempt

to persuade the government to initiate a suit in this man-

ner would not be countenanced.

After a thorough review of the applicable case law, this

Court notes that where a protective order is agreed to by

the parties before its presentation to the court, there is a

higher burden on the movant to justify the modification of

the order. While it is not the case that the ‘‘sophisticated

litigant’’ cannot take the scope delineated by a protective

order ‘‘literally’’ even when ‘‘it is in terms subjected to

change by further order of the court,’’ nonetheless this

Court cannot conclude that the district court erred in per-

mitting modification of the protective order. The excep-

tional considerations warranting the alteration of an agreed

protective order exist in the present case. The government

filed its antitrust complaint eight months after the MCI

complaint. Since the government filed its complaint against

ATT nearly four years ago, theve is no showing that the

government seeks to exploit MCI] v. ATT solely to obtain

assistance in the litigation of USA v. ATT. In addition,

there is no showing that any claim of privilege was waived

or that anything discovered by MCI would be protected

from a long and costly process in the District of Columbia

case. ATT has already transferred the microfilms of docu-

* See also United States v. ARA Services, Inc., 1978-2 Trade

Cases {| 62,250 (E.D.Mo. 1978).

"Jd. at 132. See also Zenith Radio Corp. v. Matsushita Electric

Indus. Co., 1978-1 Trade Cases {] 61,961 (E.D.Pa. 1976).

8a

ments to the government, pursuant to Judge Greene’s

order, and thus, the relaxation of the protective order in

this case has only the effect of permitting MCI counsel to

make the depositions and their analyses of data available

to government counsel. We are impressed with the waste-

fulness of requiring government counsel to duplicate the

analyses and discovery already made.

For these reasons, the district court order is ArriRMED.

However, the stay ordered by this Court pending the dis-

position of the appeal shall remain in effect until the man-

date issues.

9a

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

No. 74 C 633

MCI Communications CorPORATION, ET AL.,

Plaintiffs,

Vv.

American TELEPHONE & TELEGRAPH COMPANY, ET AL.,

Defendants

and

AMERICAN TELEPHONE & TELEGRAPH COMPANY, ET AL.,

Counterclaimants

Vv.

MCI Communications CorPoRATION, ET AL.,

Counterdefendants

Protective Order

Whereas, this case involves numerous and complex is-

sues as to which parties have served broad and compre-

hensive requests for the production of documents pursuant

to Rule 34 of the Federal Rules of Civil Procedure;

Wuereas, each of the parties maintains voluminous rec-

ords, including millions of printed or typewritten docu-

ments as well as computerized information subject to pro-

duction pursuant to the document requests served by the

parties ;

Wuereas, many of the documents and other discovery

materials of each of the parties are likely to be confidential

in nature within the meaning of Rule 26 of the Federal

Rules of Civil Procedure, many documenis and other dis-

covery materials of each of the parties are likely to be

privileged under Rule 26 of the Federal Rules of Civil

10a

Procedure, and many documents and other discovery mate-

rials are likely to be protected from production as work

product within the meaning of Rule 26 of the Federal Rules

of Civil Procedure;

Wuenreas, the public interest in the prompt and orderly

administration of justice requires that production of the

voluminous documents and other discovery materials in-

volved in the discovery requested in this case proceed as

expeditiously as possible;

Wuergas, none of the parties is willing to waive any of

its rights with respect to any of its documents which are

confidential or privileged or which reflect work product

under Rule 26 of the Federal Rules of Civil Procedure;

Wuereas, the need for prompt and orderly discovery is

not inconsistent with the ability of the parties to make some

examination to determine whether documents and other dis-

covery materials are confidential or privileged or reflect

work product but may make it impossible for them to con-

duct such examination on a sufficiently thorough basis to

insure that their rights under Rule 26 of the Federal Rules

of Civil Procedure are fully protected with respect to such

documents and other discovery materials and;

Wuereas, the Court wishes to establish procedures which

are fair to all the parties, which will expedite the discovery

process, and which will facilitate the handling by this Court

of any problems that may arise in connection with dis-

covery;

Ir Is THererore Orveren that:

1, This order shall govern all documents and other dis-

covery materials produced in response to any document

request made upon plaintiffs or defendants in the above-

captioned matter and to any deposition or portion of a

deposition as to which confidential status is requested by

either party.

lla

2. All documents and other discovery materials as to

which a claim of privilege or work product is asserted by

any party shall be segregated by that party and shall be

retained until further order of Court.

3. The production of any document or other discovery

material by plaintiffs or defendants under this Order shall

be without prejudice to any claim that such material is

privileged under Rule 26 of the Federal Rules of Civil

Procedure or protected from discovery as work product

within the meaning of Rule 26 of the Federal Rules of

Civil Procedure, and no party shall be held to have waived

any rights under Rule 26 by such production, Any docu-

ment or other discovery material turned over to an oppos-

ing party with respect to which a claim of privilege or

work product is subsequently made shall be returned to the

party producing the same, provided that the party dis-

puting the claim of privilege may point the issue to the

Court for determination. That determination will be made

without regard to the fact that such document has been

turned over to the other party pursuant to this Order. If

the Court upholds the claim of privilege or work product,

all copies of the document or other discovery material will

be returned to the party producing it, or expunged, and, in

either event, such document or other discovery material

cannot be introduced into evidence in this or any other

proceeding by any person without the consent of the party

producing it; nor will such document be subject to produc-

tion in any proceeding by virtue of the fact that it had been

inadvertently disclosed in this proceeding.

4. All documents and other discovery material produced

by plaintiffs and defendants shall initially be treated as

confidential material, and if such status is requested by

either party, all depositions or portions of depositions shall

initially be treated as confidential.

5. With respect to any documents or other discovery

material or any deposition which has been designated as

12a

confidential, any other party may file a motion with the

Court that such material should not be deemed confidential.

Unless and until otherwise ordered by this Court, however,

all documents and other discovery material and any depo-

sition designated as confidential hereunder may be in-

spected only by the persons herein described.

6. Confidential material and any copies thereof, and

notes made therefrom shall be disclosed only to attorneys

in the offices of Jenner & Block and Sidley & Austin or to

persons regularly employed in such attorneys’ offices or to

persons provided for in paragraph 7 hereof for use solely

in the preparation or trial of this action. No copies shall be

made except by or on behalf of attorneys from said offices.

Any such attorneys making or causing to be made copies of

confidential material shall maintain those copies within the

possession of themselves or those entitled to access to such

documents under paragraph 7 of this order.

7. Confidential material may be disclosed to other per-

sons (other than attorneys in the offices of Jenner & Block

and Sidley & Austin and persons regularly employed in

their offices) whose assistance is required by said attorneys

in the preparation or trial of this action, upon compliance

with the following requirements of this paragraph. Hach

party will provide the other with a list of the persons who

are to be regularly employed in this capacity before any

documents are produced. Subject to this provision, this list

may be supplemented from time to time as necessary so

long as the names of such persons are submitted to the

other party in sufficient time prior to their gaining access

to confidential documents to permit objection to any person

whose name is submitted. Each party reserves the right to

object to any person being included on the list of those

entitled to regular access to confidential documents. As to

persons designated as entitled to regular access to confi.

dential documents, as well as any other person to whora

confidential material may be disclosed from time to time,

l3e

each such person shall first be advised by the attorney

making the disclosure that pursuant to this protective order

such person may not divulge such confidential material to

any other persons except in the preparation or trial of this

action and that disclosure in the preparation of the case is

limited to persons entitled to knowledge of such documents

under this Order. The attorney shall secure from each such

person an affidavit describing tho affiant and stating that

he has read this protective order and understands that,

pursuant to this protective order, he may not, and that he

undertakes not to, divulge any confidential material except

in accordance with this Order. Where such affidavit is exe-

cuted by a person not regularly employed by a named party

to this action, that affidavit, together with a list of the

confidential material disclosed to such person, and the date

of disclosure, shall be retained by the attorney making the

disclosure. Where such affidavit is executed by a person

regularly employed by a named party, but not designated

in the list of the persons regularly employed in assisting

in the litigation, that affidavit shall be served on counsel

for the party producing the confidential document within

5 days after its execution, and the attorney making the

disclosure shall retain a list of the confidential material

disclosed, and the date of disclosure.

8. Confidential material may be disclosed to deponents

during the course of their depositions if the attorney mak-

ing such disclosure first advises the deponent that pursuant

to this protective order such person may not divulge such

confidential material to any other person.

%., In the event that any confidential material is included

with, or the contents thereof are in any way disclosed in any

pleading, motion, deposition transcript or other paper filed

with the Clerk of this Court, such confidential material shall

be kept under seal by the Clerk until further order of this

Court; provided, however, that such paper shall be furn-

ished to the Court and attorneys for the named parties,

l4a

and a duplicate copy thereof, with the confidential material

deleted therefrom, may be placed in the public record,

10. Nothing in the foregoing provisions of this protective

order shall be deemed to preclude any party from seeking

and obtaining, on an appropriate showing, additional pro-

tection with respect to the confidentiality of documents or

other discovery material.

Ir Is So Onperep:

/s/ Wiuu1am J, Lynonw

Judge, United States District Court

August 6th, 1974

Agreed to as to form and substance:

/s/ Guorae L. Saunpers, Jr.

George L, Saunders, Jr.

Attorney for all defendants

/s/ Rosert L. Bompavan

Robert L. Bombaugh

Attorney for all plaintiffs

1da

APPENDIX C

Federal Rules of Civil Procedure

Rue 26

GeNERAL Provisions Governtne Discovery

(a) Discovery Methods, Parties may obtain discovery by

one or more of the following methods: depositions upon

oral examination or written questions; written interroga-

tories; production of documents or things or permission to

enter upon land or other property, for inspection and other

purposes; physical and mental examinations; and requests

for admission, Unless the court orders otherwise under

subdivision (¢) of this rule, the frequency of use of these

methods is not limited,

(b) Scope of Discovery. Unless otherwise limited by order

of the court in accordance with these rules, the scope of

discovery is as follows:

(1) Jn General, Parties may obtain discovery regarding

any matter, not privileged, which is relevant to the subject

matter involved in the pending action, whether it relates to

the claim or defense of the party seeking discovery or to

the claim or defense of any other party, including the exist-

ence, description, nature, custody, condition and location of

any books, documents, or other tangible things and the

identity and location of persons having knowledge of any

discoverable matter, It is not ground for objection that the

information sought will be inadmissible at the trial if the

information sought appears reasonably caleulated to lead

to the discovery of admissible evidence,

(2) Znsurance Agreements, A party may obtain discovery

of the existence and contents of any insurance agreement

under which any person carrying on an insurance business

may be liable to satisfy part or all of a judgment which may

be entered in the action or to indemnify or reimburse for

16a

payments made to satisfy the judgment. Information con-

cerning the insurance agreement is not by reason of dis-

closure admissible in evidence at trial. For purposes of this

paragraph, an application for insurance shall not be treated

as part of an insurance agreement.

(3) Trial Preparation: Materials. Subject to the provi-

sions of subdivision (b) (4) of this rule, a party may obtain

discovery of documents and tangible things otherwise dis-

coverable under subdivision (b)(1) of this rule and pre-

pared in anticipation of litigation or for trial by or for

another party or by or for that other party’s representa-

tive (including his attorney, consultant, surety, indemnitor,

insurer, or agent) only upon a showing that the party seek-

ing discovery has substantial need of the materials in the

preparation of his case and that he is unable without undue

hardship to obtain the substantial equivalent of the mate-

rials by other means. In ordering discovery of such mate-

rials when the required showing has been made, the court

shall protect against disclosure of the mental impressions,

conclusions, opinions, or legal theories of an attorney or

other representative of a party concerning the litigation.

A party may obtain without the required showing a state-

ment concerning the action or its subject matter previously

made by that party, Upon request, a person not a party

may obtain without the required showing a statement con-

cerning the action or its subject matter previously made

by that person. If the request is refused, the person may

move for a court order. The provisions of Rule 37(a) (4)

apply to the award of expenses incurred in relation to the

motion, For purposes of this paragraph, a statement made

is (A) a written statement signed or otherwise adopted or

approved by the person making it, or (B) a stenographic,

mechanical, electrical, or other recording, or a transcription

thereof, which is a substantially verbatim recital of an oral

statement by the person making it and contemporaneously

recorded,

\7a

(4) Trial Preparation: Experts. Discovery of facts

known and opinions held by experts, otherwise discover-

able under the provisions of subdivision (b)(1) of this rule

and acquired or developed in anticipation of litigation or

for trial, may be obtained only as follows:

(A)(i) A party may through interrogatories require any

other party to identify each person whom the other party

expects to call as an expert witness at trial, to state the

subject matter on which the expert is expected to testify,

and to state the substance of the facts and opinions to

which the expert is expected to testify and a summary of

the grounds for each opinion. (ii) Upon motion, the court

may order further discovery by other means, subject to

such restrictions as to scope and such provisions, pursuant

to subdivision (b)(4)(C) of this rule, concerning fees and

expenses as the court may deem appropriate.

(B) A party may discover facts known or opinions held

by an expert who has been retained or specially employed

by another party in anticipation of litigation or prepara-

tion for trial and who is not expected to be called as a wit-

ness at trial, only as provided in Rule 35(b) or upon a

showing of exceptional circumstances under which it is im-

practicable for the party seeking discovery to obtain facts

or opinions on the same subject by other means.

(C) Unless manifest injustice would result, (i) the court

shall require that the party seeking discovery pay the ex-

pert a reasonable fee for time spent in responding to dis-

covery under subdivisions (b)(4)(A) (ii) and (b)(4)(B) of

this rule; and (ji) with respect to discovery obtained under

subdivision (b)(4)(A)(ii) of this rule the court may re-

quire, and with respect to discovery obtained under gsub-

division (b)(4)(B) of this rule the court shall require, the

party seeking discovery to pay the other party a fair por-

tion of the fees and expenses reasonably incurred by the

latter party in obtaining facts and opinions from the ex-

pert.

18a .

(c) Protective Orders. Upon motion by a party or by the

person from whom discovery is sought, and for good cause

shown, the court in which the action is pending or alterna-

tively, on matters relating to a deposition, the court in the

district where the deposition is to be taken may make any

order which justice requires to protect a party or person

from annoyance, embarrassment, oppression, or undue bur-

den or expense, including one or more of the following: (1)

that the discovery not be had; (2) that the discovery may

be had only on specified terms and conditions, including a

designation of the time or place; (8) that the discovery

may be had only by a method of discovery other than that

selected by the party seeking discovery; (4) that certain

matters not be inquired into, or that the scope of the dis-

covery be limited to certain matters; (5) that discovery be

conducted with no one present except persons designated

by the court; (6) that a deposition after being sealed be

opened only by order of the court; (7) that a trade secret

or other confidential research, development, or commercial

information not be disclosed or be disclosed only in a des-

ignated way; (8) that the parties simultaneously file speci-

fied documents or information enclosed in sealed envelopes

to be opened as directed by the court.

If the motion for a protective order is denied in whole or

in part, the court may, on such terms and conditions as are

just, order that any party or person provide or permit dis-

covery. The provisions of Rule 37(a)(4) apply to the award

of expenses incurred in relation to the motion.

(d) Sequence and Timing of Discovery. Unless the court

upon motion, for the convenience of parties and witnesses

and in the interests of justice, orders otherwise, methods of

discovery may be used in any sequence and the fact that a

party is conducting discovery, whether by deposition or

otherwise, shall not operate to delay any other pari, ’s dis-

covery.

(ec) Supplom niuiwn of mesponses, A party who has re-

sponded to a request for discovery with a response that was

19a

complete when made is under no duty to supplement his

response to include information thereafter acquired, except

as follows:

(1) A party is under a duty seasonably to supplement

his response with respect to any question directly ad-

dressed to (A) the identity and location of persons having

knowledge of discoverable matters, and (B) the identity of

each person expected to be called as an expert witness at

trial, the subject matter on which he is expected to testify,

and the substance of his testimony.

(2) A party is under a duty seasonably to amend a prior

response if he obtains information upon the basis of which

(A) he knows that the response was incorrect when made,

or (B) he knows that the response though correct when

made is no longer true and the circumstances are such that

a failure to amend the response is in substance a knowing

concealment,

(3) A duty to supplement responses may be imposed by

order of the court, agreement of the parties, or at any time

prior to trial through new requests for supplementation of

prior responses,