Persian Gulf Inc. v. BP West Coast Products LLC

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 PERSIAN GULF INC., Case No.: 3:15-cv-01749-L-AGS

12 Plaintiff, CLASS ACTION 13 v. ORDER GRANTING PLAINTIFF'S 14 BP WEST COAST PRODUCTS LLC, et MOTION FOR al., 15 RECONSIDERATION OF Defendants. DISCOVERY RULING 16

18 19 Pending before the Court in this putative class action alleging violation of antitrust 20 laws is Plaintiff's motion to reconsider the Magistrate Judge's July 3, 2019 discovery 21 order. (Doc. no. 239 ("Motion").) Defendants filed a joint opposition and Plaintiff 22 replied. For the reasons which follow, Plaintiff's Motion is granted. 23 A district court’s review of a magistrate judge’s order on a non-dispositive motion 24 is limited. Rulings on discovery matters are non-dispositive. See 28 U.S.C. § 25 636(b)(1)(A); Civ. Loc. R. 72.1(b). A district judge may reconsider a magistrate judge's 26 ruling on a non-dispositive motion "where it has been shown that the magistrate's order is 27 clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. Proc. 72(a). 28 1 The parties entered into a stipulated protective order. (Doc. no. 184 ("Protective 2 Order").) As relevant to Plaintiff's Motion, the Protective Order allows a party to 3 designate discovery materials as "confidential – for counsel only" ("FCO"). (Protective 4 Order ¶ 4.) The Protective Order was signed prospectively and without prior review of 5 the discovery materials because "materials to be exchanged throughout the course of the 6 litigation between the Parties may contain "confidential . . . commercial information," 7 among other things. (Protective Order at 2,1 citing Fed. R. Civ. Proc. 26(c)(1)(G) 8 (emphasis added).) Accordingly, the initial FCO designations were left to the producing 9 party to determine "only if, in the good faith belief of such Producing Party and its 10 counsel, the information is among that considered to be most sensitive by the designating 11 party, including but not limited to . . . highly sensitive commercial information." 12 (Protective Order ¶4(b).) If materials were so designated, their sharing was limited to 13 certain categories of individuals who agreed to be bound by the Protective Order. 14 At issue in this dispute is disclosure of certain Defendants' FCO-designated 15 materials to Plaintiff's consultant Cody Rosenfield. The Protective Order allows for 16 disclosure of such materials to independent experts as follows: 17 (d) Independent Experts Any independent expert (testifying or otherwise) who is to receive or review confidential information must sign a 18 copy of the form attached hereto as Exhibit A in advance of seeing or 19 receiving such confidential information. The right of any independent expert, including support staff employed by such expert, to receive 20 confidential information designated “CONFIDENTIAL - FOR COUNSEL 21 ONLY” will be subject to the advance approval of such expert by the Producing Party or by permission of the Court. The Party seeking approval 22 of an independent expert to access such confidential information must 23 provide the Producing Party with the name and curriculum vitae of the independent expert. Any objection by the Producing Party to an 24 independent expert receiving confidential information designated 25 “CONFIDENTIAL – FOR COUNSEL ONLY” must be made in writing within fourteen (14) days following receipt of the identification of the expert 26 27 28 1 to whom access is proposed. “CONFIDENTIAL - FOR COUNSEL ONLY” information may be disclosed to an independent expert if the fourteen (14) 2 day period has passed and no objection has been made. The approval of 3 independent experts' access to “CONFIDENTIAL - FOR COUNSEL ONLY” information must not be unreasonably withheld[.] 4

5 (Protective Order ¶8(d).) 6 Plaintiff informed Defendants it intended to disclose FCO-designated materials to 7 Mr. Rosenfield. Defendants objected on the grounds that they did not consider Mr. 8 Rosenfield to be an expert, that for the same reason Plaintiff would not be prejudiced by 9 inability to disclose FCO-designated documents to him, and that he poses an undue risk 10 of public disclosure of the FCO-designated documents notwithstanding his signing of 11 Exhibit A to the Protective Order. (Doc. no. 218-2 (May 3, 2019 letter from defense 12 counsel Dawn Sestito to Plaintiff's counsel.) Plaintiff filed a motion seeking an order 13 permitting disclosure. (Doc. no. 231.) On July 3, 2019, the Magistrate Judge held a 14 hearing and denied Plaintiff's motion. (Doc. no. 236.) The issues raised in Defendants' 15 May 3 letter were argued before the Magistrate Judge and are raised in opposition to 16 Plaintiff's Motion. (See doc. no. 239-3 (Transcript of Official Electronic Sound 17 Recording of Proceedings); doc. no. 255 ("Opp'n").) 18 The issue is governed by Brown Bag Software v. Symantec Corp., 960 F.2d 1465 19 (9th Cir. 1992) ("Brown Bag), a copyright infringement action relating to computer 20 software. 2 (See Opp'n at 11.) As here, the parties in Brown Bag entered into a stipulated 21 protective order designating certain discovery materials as "attorneys' eyes only." Id. at 22 23 24

25 2 The parties also cite a number of lower court opinions. “A decision of a federal 26 district court judge is not binding precedent in either a different judicial district, the same 27 judicial district, or even upon the same judge in a different case.” Camreta v. Green, 563 U.S. 692 n.7 (2011). 28 1 1469. Subsequently, Brown Bag's in-house counsel was substituted into the case in 2 place of its outside counsel. Id. Because the parties were competitors and the protective 3 order was intended to shield trade secret information, Symantec moved for a protective 4 order precluding disclosure of "attorneys' eyes only" materials to Brown Bag's in-house 5 counsel. Id. The motion was granted. Id. Disclosure to Brown Bag's in-house counsel 6 was prohibited, but Brown Bag could disclose the materials to "an independent 7 consultant, legal or otherwise." Id. 8 On appeal, the Court observed that the "issue entails conflicting interests." Brown 9 Bag, 960 F.2d at 1470. On one hand, the party seeking discovery is entitled to all 10 information within the broad scope of Federal Rule of Civil Procedure 26(b)(1). Id. On 11 the other hand, the producing party is protected from undue burden, including protection 12 of trade secrets from public disclosure, as provided by Rule 26(c). Id. Accordingly, the 13 Court considered the risk to Symantec "of inadvertent disclosure of trade secrets to 14 competitors against the risk to Brown Bag that protection of Symantec's trade secrets 15 impaired prosecution of Brown Bag's claims." Id. The Court elaborated: 16 proper review of protective orders in cases such as this requires the district court to examine factually all the risks and safeguards surrounding 17 inadvertent disclosure by any counsel, whether in-house or retained. 18 Further, the nature of the claims and of a party's opportunity to develop its case through alternative discovery procedures factors into decisions on the 19 propriety of such protective orders. 20 21 Id. 22 The evidence before the magistrate judge showed that Brown Bag's in-house 23 counsel had been recently hired, the company had a total of approximately fourteen 24 employees, and he was responsible for advising the company on a variety of legal issues, 25 including contracts, marketing and employment. Brown Bag, 690 F.2d at 1471. The 26

27 3 Unless otherwise noted, internal quotation marks and citations are omitted 28 1 magistrate judge concluded that the in-house "counsel's employment would necessarily 2 entail advising his employer in areas relating to Symantec's trade secrets" and would put 3 him in an "untenable position of having to refuse" legal advice on certain issues "lest he 4 improperly or indirectly reveal Symantec's trade secrets." Id. 5 On the other hand, the magistrate judge found no undue prejudice to Brown Bag if 6 disclosure was limited to an independent consultant in lieu of the in-house counsel. 7 Brown Bag, 690 F.3d at 1471. Brown Bag's prior outside counsel had already reviewed 8 the "attorneys' eyes only" materials to develop the evidence relative to the pending 9 summary judgment motions, trade secrets were not relevant to the issues raised in those 10 motions, the discovery cut off had passed, and Brown Bag could use an independent 11 consultant to review the materials in preparation for trial. Id. The magistrate judge's 12 order was affirmed on appeal. 13 The issue raised by Plaintiff's Motion is disclosure to its consultant, who, unlike 14 the in-house counsel in Brown Bag, is not affiliated with Defendants' competitors. 15 Defendants are concerned that Mr. Rosenfield will disclose their sensitive business 16 information because he had previously worked for and continues to have ties with 17 consumer groups seeking greater transparency and more government oversight of 18 Defendants' operations. Unlike in Brown Bag, Mr. Rosenfield is not an attorney. 19 Signing Exhibit A to the Protective Order does not place him in an "untenable position" 20 as was the case in Brown Bag, where failure to disclose confidential information to the 21 client could constitute a breach of professional ethical obligations. It is not uncommon 22 for experts and consultants to be retained over the course of their careers by parties 23 holding opposing points of view and to receive sensitive confidential information in the 24 process. Defendants' opposition is largely based on Mr. Rosenfield's refusal to withdraw 25 his public statements about Defendants when Defendants believed they had contrary 26 evidence, and the unspoken and unsupported assumption that Mr. Rosenfield's agreement 27 to comply with the Protective Order lacks good faith. Defendants have not shown that 28 / / / / / 1 Mr. Rosenfield is more likely than other independent experts to violate the Protective 2 Order, whether intentionally or inadvertently. 3 Defendants further contend that Mr. Rosenfield does not qualify as an expert on 4 the issues of gasoline pricing because he lacks a graduate degree or any degree in finance 5 or economics.4 Plaintiff has not designated him as an expert but is using him as a 6 consultant to work in conjunction with its designated expert witness. Detailed provisions 7 of Paragraph 8(d) of the Protective Order do not include a requirement that independent 8 experts pass the standard established by Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 9 579, 592-593 (1993). As there has been no indication that Mr. Rosenfield will be 10 offering his opinions in court, an analysis of his qualifications under Rule 702 of the 11 Federal Rules of Evidence is not required. 12 As is apparent from Plaintiff's complaint, Mr. Rosenfield has conducted extensive 13 research into California gasoline market. (See doc. no. 76 passim.) His research and 14 knowledge in this area were deemed sufficient for the Petroleum Market Advisory 15 Committee of the California Energy Commission to include his presentation at its 16 February 8, 2016 meeting, which is relevant time for this action. (See 17 www.energy.ca.gov/data-reports/planning-and-forecasting/petroleum-market-advisory- 18 committee (Feb. 8, 2016 meeting); doc. no. 76 (2015 price spikes).) 19 Finally, it is apparent from the record that Plaintiff has relied on Mr. Rosenfield's 20 research of the California gasoline market since the inception of this case. (See Doc. no. 21 1-3 at 12, 18.) Although it may well be true that Plaintiff could locate another consultant 22 regarding the gasoline market in general, finding one with detailed knowledge of the 23 California market, the focus of Plaintiff's claims, would be a much harder task. (See doc. 24 no. 86 at 2, 5-6.) At this stage of litigation, forcing Plaintiff to search for a comparable 25 replacement would unduly impair the prosecution of its case. 26 27 28 1 For the foregoing reasons, Plaintiff's motion is granted. Upon proof that Mr. 2 Rosenfield signed Exhibit A to the Protective Order and on the terms provided in 3 || Paragraph 8(d) of the Protective Order, Defendants shall permit disclosure to Mr. 4 ||Rosenfield of discovery materials designated as "confidential — for counsel only." 5 IT IS SO ORDERED. 6 7 ||Dated: September 27, 2019 1 fee fp 9 H . James Lorenz, 10 United States District Judge

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