United States v. Under Seal

646 F.3d 159, 2011 U.S. App. LEXIS 12043
Court of Appeals for the Fourth Circuit·Decided June 15, 2011·No. No. 10-4815·Published·Cited by 1 cases

Opinion

Affirmed by published opinion. Senior Judge GILMAN wrote the opinion, in which Judge NIEMEYER and Judge DAVIS joined.

OPINION

GILMAN, Senior Circuit Judge:

The under seal appellant (Company 1), a foreign company, is appealing the district court’s denial of its motion to quash the government’s grand-jury subpoenas served on the under seal intervenor (Company 2). The subpoenas seek documents that Company 1 delivered to Company 2 in response to discovery requests that arose during the course of civil litigation between the two companies in the United States District Court for the Eastern District of Virginia. Company 2 has entered this case as an intervenor in support of the government. For the reasons set forth below, we affirm the denial of Company l’s motion to quash the government’s subpoenas.

I. Background

A. Factual background

In 2007, the government commenced an investigation of a former Company 2 employee who began providing consulting services to Company 1 after his employment with Company 2 ended. The government was looking into the possible theft of Company 2’s trade secrets. This inquiry, in turn, led the government to investigate Company l’s use of the proprietary information. The employee ended up pleading guilty in December 2009 to theft of trade secrets, in violation of 18 U.S.C. § 1832, and to obstruction of justice, in violation of 18 U.S.C. § 1512(c).

Company 2 filed suit against Company 1 in early 2009, alleging a number of claims based on the same theft-of-trade-secrets allegations (the Civil Litigation). This separate lawsuit is currently pending before the district court.

The interests of Company 2 and the government are generally aligned in attempting to halt and to seek redress for Company l’s alleged misappropriation of Company 2’s trade secrets. Company 2 and the government have therefore cooperated with each other in a number of ways over the course of their respective proceedings. In a January 2009 email, an Assistant United States Attorney informed Company 2’s counsel that the government wanted to be as helpful as possible in providing Company 2 with information that the government had obtained in the course of its investigation, but that under the relevant rules and regulations, the government was not able to “carte blanche ... turn over everything in [its] possession.” In this same email, the government informed Company 2 that the government’s investigation was “dead.” The U.S. Attorney therefore did not see any problem with Company 2 filing its civil complaint.

Company 2 explains that it had delayed filing its civil complaint in compliance with the government’s request that Company 2 defer to the government’s criminal investigation. After receiving the government’s email, Company 2 forwarded a copy of its civil complaint to the government the day before the complaint was filed. The government also sought Company 2’s assistance and advice in the government’s investigation. In August 2009, [162]*162the two parties agreed to meet to discuss the ongoing proceedings. Company 1 claims that with Company 2’s assistance and with the information that Company 2 obtained in the Civil Litigation, the government was able to revive its investigation of Company 1 in 2010.

In the summer of 2009, Company 2 and Company 1 entered into a protective order (the Protective Order), pursuant to which materials that were designated as “Confidential” and/or “Confidential — Attorneys’ Eyes Only” “shall not be used or disclosed for any purposes other than the litigation of this action.” In addition, “Confidential — Attorneys’ Eyes Only” documents could be disclosed only to outside counsel and not to the parties themselves.

The Protective Order also provided for the eventuality that one of the parties and/or the protected material might be the subject of a subpoena or other legal process. In such a situation, the subpoenaed party would be required to give prompt written notice to the party that had produced the subpoenaed information within 10 business days of the receipt of the subpoena. The subpoenaed party would also be required to object, to the extent permitted by law, to the production of the protected material.

If the party attempting to obtain the protected material were to “take action” to enforce its subpoena, then the receiving party would “first respond by setting forth the existence of this Order and shall give prompt written notice to the producing party of such action ... within ten (10) business days of notice of any such action.” The party that originally produced the documents would then be afforded 10 business days following its receipt of notice to attempt to prevent compliance with the subpoena. But the Protective Order did not require any party “to challenge or appeal any order requiring production of confidential information covered by this Order, or to subject itself to any penalties for noncompliance with any legal process or order, or to seek any relief from the Court.”

Two subpoenas that the government served on Company 2 to obtain documents that Company 1 produced in the Civil Litigation are at issue. The first subpoena is dated August 14, 2009 and the second one is dated May 21, 2010.

With regard to the first subpoena, the government asked Company 2: “Who should I direct the subpoena to, what address/fax, and how would you like it to read?” Company 2 responded by providing the following wording that was used by the government in seeking Company l’s production of documents to Company 2: “documents produced to [Company 2’s] outside counsel ... on August 11, 2009 by [Company l’s] counsel.... Documents were produced pursuant to a discovery production between the parties.” Company 2 produced approximately 4,200 pages on August 26, 2009 in response to this subpoena.

In September 2009, the government complimented Company 2 on its quick pace of reviewing Company l’s documents and asked Company 2 the date of its civil-discovery cutoff. Then, in October 2009, Company 2 informed the government that Company 2 had received a specific Company 1 email that the government had asked about. But Company 2 revealed only that it had received this communication and did not disclose the message’s contents.

Company 1 produced more documents to Company 2 in early 2010, including documents that were designated as “Confidential” and/or “Confidential — Attorneys’ Eyes Only.” According to Company 1, Company 2 helped revive the government’s investigation by alerting the government [163]*163to Company 2’s early 2010 receipt of Company l’s confidential documents. The second subpoena, served in May 2010, specifically requested that Company 2 produce Company l’s documents that were marked “Confidential” and/or “Confidential — Attorneys’ Eyes Only.” Pursuant to the Protective Order, Company 2’s outside counsel notified Company 1 of the second subpoena. Company 1 responded by objecting to Company 2’s production to the government of the “Confidential” and “Confidential— Attorneys’ Eyes Only” documents, and further objected to the production of any and all documents that Company 1 had produced in the Civil Litigation.

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United States v. Under Seal, 646 F.3d 159, 2011 U.S. App. LEXIS 12043 (4th Cir. 2011).

646 F.3d 159 (United States v. Under Seal) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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