Federal Trade Commission v. Advocate Health Care Network

162 F. Supp. 3d 666, 2016 U.S. Dist. LEXIS 24788, 2016 WL 770099
CourtDistrict Court, N.D. Illinois
DecidedFebruary 29, 2016
DocketNo. 15 C 11473
StatusPublished
Cited by17 cases

This text of 162 F. Supp. 3d 666 (Federal Trade Commission v. Advocate Health Care Network) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Federal Trade Commission v. Advocate Health Care Network, 162 F. Supp. 3d 666, 2016 U.S. Dist. LEXIS 24788, 2016 WL 770099 (N.D. Ill. 2016).

Opinion

MEMORANDUM OPINION AND ORDER

Jeffrey Cole, UNITED. STATES MAGISTRATE JUDGE

On January 8, 2016, with direction from Judge Alonso, the FTC and the two defendants, Advocate and Northshore, entered into an agreed confidentiality order covering discovery in this litigation. [Dkt. # 36]. With the confidentiality order in place, about a week later, the defendants sought production of data and information the FTC relied upon to form the basis of the allegations of its Complaint. [Dkt. # 48]. As the FTC concedes, in the run-up to filing suit, it accumulated highly confidential information from a number of third parties, which happen to be the defendants’ competitors — information those third parties produced to the FTC in confidence in response to subpoena. [Dkt. # 2]. That information included strategic business plans; market and competitive assessments, analyses, studies, profiles, and forecasts; peer analyses; responses to requests for proposals; and pricing lists and reports. Not surprisingly, in the wake of the defendants’ motion to compel, those third parties have lined up to intervene in this matter and protect their confidential information from defendants’ perusal. The Intervenors weren’t a part of the confidentiality order negotiations, of course, and now, with their highly sensitive confidential information at stake, they understandably want input. Counsel for In-tervenors have attempted to negotiate an amendment of the confidentiality order with counsel for defendants that would limit defendants’ access to the Intervenors’ Highly Confidential information to the defendants’ outside counsel. Defendants’ counsel declined, but were apparently willing to consider whether specific documents within the broader category of Highly Confidential Information could instead be designated as subject to review by “Outside Counsel Only.” hat effort has come to naught.

The Intervenors have filed motions to amend the confidentiality order. The defendants oppose any changes to the confidentiality order and charge the third parties with trying to complicate matters and do nothing more than delay or prevent the merger that is the target of the FTC’s Complaint in this case. [Dkt. # 76, at 1-2].

I.

The party requesting a protective order has the burden of demonstrating to the court that “good cause” exists for its issuance. Jepson v. Makita Elec. Works, Ltd., 30 F.3d 854, 858 (7th Cir.1994). In this instance, good cause has to be assessed while bearing in mind that the In-tervenors — the parties whose confidential information is at risk — had no role in the fashioning of the protective order, which was crafted without anyone representing their interests. Still, given the protection that the FTC and the defendants did put into place, the question is whether allowing in-house counsel access to the Interve-nors’ — defendants’ competitors — highly [668]*668confidential information creates an unacceptable risk of, or opportunity for, “inadvertent disclosure” of that information. Matsushita Elec. Indus. Co., Ltd. v. United States, 929 F.2d 1577, 1579 (Fed.Cir. 1991); Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir.1992).

In-house counsel stand on different ground than outside counsel, of course. They have “a unique relationship to the corporation by which they are employed. Although in-house counsel serve as legal advocates and advisors for their client, their continuing employment often intimately involves them in the management and operation of the corporation of which they are a part.” FTC v. Exxon Corp., 636 F.2d 1336, 1350 (D.C.Cir.1980). It is not as though in-house counsel might intentionally disclose confidential information for the benefit of their employers. “Like retained counsel ..., 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.” United States Steel Corp. v. United States, 730 F.2d 1465, 1468 (Fed.Cir.1984). See also Autotech Technologies Ltd. Partnership v. Automationdirect.com, Inc., 237 F.R.D. 405, 406-07 (N.D.Ill.2006).

Inadvertent disclosure, however, is another matter, and it presents different challenges. In United States Steel Corp., the Federal Circuit explained it this way:

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 FTC v. Exxon Corp., 636 F.2d 1336, 1350 (D.C.Cir.1980).1

[669]*669The confidentiality order in this case precludes in-house counsel “involved” in “competitive decision-making” from accessing Highly Confidential information. [Dkt. # 36, ¶ 5(c)(3) ].2 United States Steel employed the phrase, “competitive decision-making,” not as a self-defining test, but “as a serviceable 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.” 730 F.2d at 1468 n. 3. (Parenthesis in original)(Emphasis supplied). See also Exxon Corp., 636 F.2d at 1350. United States Steel made it clear that analysis of the risk of inadvertent disclosure involves a careful and sensitive assessment of the entire setting in which in-house counsel functions, and that involvement in competitive decision-making, while an important consideration, was not necessarily the exclusive one. Indeed, the parties in that case called it one basis for limiting access, and the court said it was an example of an instance where a party ought to be.forced to rely on outside counsel. 730 F.2d at 1468 and n. 3.

As it is simply a convenient shorthand for an inevitably complex inquiry, merely insisting that one is not “involved in competitive decision-making” cannot pretermit inquiry into the underling facts or serve as a shibboleth the mere invocation of which permits access to Highly Confidential information. The compendious phrase used in United States Steel is not an exception: Thus, the factual circumstances surrounding each individual counsel’s activities, association, and relationship with a party, whether counsel be in-house or retained, must govern any concern for inadvertent or accidental disclosure. U.S. Steel Corp., 730 F.2d at 1468.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
162 F. Supp. 3d 666, 2016 U.S. Dist. LEXIS 24788, 2016 WL 770099, Counsel Stack Legal Research, https://law.counselstack.com/opinion/federal-trade-commission-v-advocate-health-care-network-ilnd-2016.