Autotech Technologies Ltd. Partnership v. Automationdirect.Com, Inc.

237 F.R.D. 405, 2006 U.S. Dist. LEXIS 59580, 2006 WL 2411279
District Court, N.D. Illinois·Decided August 21, 2006·No. No. 05 C 5488·Published·Cited by 10 cases

Opinion

MEMORANDUM OPINION AND ORDER

JEFFREY COLE, United States Magistrate Judge.

BACKGROUND

On January 18, 2006, Automationdirect.com (“ADC”) moved for a protective order pursuant to Rule 26(c) regarding discovery of the names of customers and contacted prospective customers (and related information) who have been sold or solicited to purchase products ADC has received from Auto-tech Technologies L.P. (“Autotech”).1 The parties briefed the matter, taking diametrically opposed positions: ADC insisted that its customer names and related information were not discoverable under any circumstances, and that no safeguards could ensure the confidentiality of the information. Auto-tech insisted that it should have unrestricted access to the customer information. As in most cases where there is a clash of absolutes, the answer was to be found in a compromise. I urged the parties to negotiate a mutually acceptable “attorneys-eyes-only” type of arrangement — a mechanism that in cases such as this has received repeated judicial approval. See Autotech Technologies Ltd. Partnership v. Automationdirect.com, Inc., 235 F.R.D. 435 (N.D.Ill.2006).

Unable to agree on who should have access to the information covered by the order, they each submitted a version that reflected their respective positions along with supporting briefs. Following the completion of the briefing, the parties came to a partial agreement at the oral argument on June 29, 2006. First, it was agreed that the customer information that would be covered by any protective order would include not just names, addresses, and phone numbers, but customer communications with ADC as well. Second, the parties agreed that Mr. Fleischer, Auto-tech’s outside counsel, and members of his firm, Chuhak & Tecson, could have access to the customers’ names, addresses, and phone numbers and related information in an unredacted form. However, ADC balked at allowing such access to Mr. Kumar — Auto-tech’s CEO and a defendant in this case. Finally it was agreed that Mr. Kumar would have access only to customer communications, with names and identifying information redacted.

The parties could not, however, agree on whether Messrs. Corn and Susler — Auto-tech’s two in-house attorneys — would have access to both customer information and communications without redaction or whether their access should be restricted along with Mr. Kumar’s. Autotech continues to insist upon unfettered access for Messrs. Corn and Sussler, while ADC maintains that, as with Mr. Kumar, only access to redacted customer information is appropriate.

ANALYSIS

A.

In the instant case, ADC’s legitimate interest in ensuring that certain confidential information be protected must be weighed in the [407] balance with Autotech’s competing interest in its counsel having access to that information so that it may prosecute its claims. Those competing interests are accommodated by an “attorneys’-eyes-only” protective order. Such orders have become de rigeur, at least where outside counsel are to have access to the information. Autotech Technologies Ltd. Partnership v. Automationdirect.com, Inc., 235 F.R.D. 435 (N.D.Ill.2006). The problem becomes more complicated when a party insists that its in-house counsel have the same access under the protective order. After all, the argument goes, in-house counsel are members of the bar, are bound by the same canons of ethics as other lawyers, and are subject to the same sanctions as outside counsel for violations of the order. Consequently, to introduce some asymmetry into the right of access at once unfairly stigmatizes in-house counsel and impermissibly prejudices the party that employs them.

But to concede that the rectitude of in-house counsel is equal to that of outside counsel and that the same deterrent sanctions apply equally to both groups does not require a finding of perfect equivalence between in-house and outside counsel. “Regardless of an occasional statement of some courts to the contrary, house counsel are subject to pressures different from those which outside counsel face, if only that their own economic well-being is inextricably bound up with their employer’s.” In re PPG Industries, Inc., 944 F.2d 912, 1991 WL 191142, at *1 (Fed.Cir.1991)(unpublished opinion).2 Nonetheless, preferring a rule of fairness to one of administrative convenience and simplicity, the federal courts have refused to allow controlling weight to be given to the classification of counsel as in-house rather than retained. They have required a case-by-ease analysis where it is claimed that in-house counsel ought not be allowed to have access to information that is otherwise available to outside counsel. See Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir.), cert. denied, BB Asset Management, Inc. v. Symantec Corp., 506 U.S. 869, 113 S.Ct. 198, 121 L.Ed.2d 141 (1992).

The sole question is whether there is an unacceptable risk of or opportunity for “inadvertent disclosure” of confidential information. Matsushita Elec. Indus. Co., Ltd. v. United States, 929 F.2d 1577, 1579 (Fed.Cir.1991). In United States Steel Corp. v. United States, 730 F.2d 1465 (Fed.Cir.1984), the Federal Circuit explained it this way:

Like retained counsel, however, in-house counsel are officers of the court, are bound by the same Code of Professional Responsibility, and are subject to the same sanctions. In-house counsel provide the same services and are subject to the same types of pressures as retained counsel. The problem and importance of avoiding inadvertent disclosure is the same for both. Inadvertence, like the thief-in-the-night, is no respecter of its victims. Inadvertent or accidental disclosure may or may not be predictable. To the extent that it may be predicted, and cannot be adequately forestalled in the design of a protective order, it may be a factor in the access decision. Whether an unacceptable opportunity for inadvertent disclosure exists, however, must be determined, as above indicated, by the facts on a counsel-by-counsel basis, and cannot be determined solely by giving controlling weight to the classification of counsel as in-house rather than retained.

Id. at 1468. See also Brown Bag Software, 960 F.2d at 1470; FTC v. Exxon Corp., 636 F.2d 1336, 1350 (D.C.Cir.1980).

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Autotech Technologies Ltd. Partnership v. Automationdirect.Com, Inc., 237 F.R.D. 405, 2006 U.S. Dist. LEXIS 59580, 2006 WL 2411279 (N.D. Ill. 2006).

237 F.R.D. 405 (Autotech Technologies Ltd. Partnership v. Automationdirect.Com, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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