Joe Comes, Riley Paint, Inc., An Iowa Corporation, Skeffington's Formal Wear Of Iowa, Inc., An Iowa Corporation, And Patricia Anne Larsen Vs. Microsoft Corporation, A Washington Corporation ( 2009 )

IN THE SUPREME COURT OF IOWA
No. 07–2063
Filed November 20, 2009
JOE COMES, RILEY PAINT, INC., an Iowa
Corporation, SKEFFINGTON’S FORMAL
WEAR OF IOWA, INC., an Iowa Corporation, and
PATRICIA ANNE LARSEN,
Appellees,
vs.
MICROSOFT CORPORATION,
a Washington Corporation,
Appellant,
and
PRO-SYS CONSULTANTS, LTD., NEIL GODFREY,
K.L. & K. (London) LTD., MARIAN STARESINIC,
and MARC LEFRANCOIS,
Intervenors-Appellees.
Appeal from the Iowa District Court for Polk County, Scott D.
Rosenberg, Judge.
Defendant appeals from the district court’s order modifying a
protective order to allow Canadian intervenors access to discovery.
AFFIRMED.
Brent B. Green and Kirk W. Bainbridge of Duncan, Green, Brown
& Langeness P.C., Des Moines, David B. Tulchin, Joseph E. Neuhaus,
and Sharon L. Nelles, of Sullivan & Cromwell LLP, New York, New York,
and Richard J. Wallis and Steven J. Aeschbacher, Redmond,
Washington, for appellant.
2
Mark L. Tripp of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des
Moines, for intervenors-appellees.
Richard M. Hagstrom of Zelle, Hofmann, Voelbel, Mason & Gette
LLP, Minneapolis, Minnesota, for appellees.
3
HECHT, Justice.
Parties to litigation pending against Microsoft in Canadian courts
sought to intervene in this case for the purpose of obtaining access to
documents and data produced pursuant to a protective order. The
district court granted the Canadian plaintiffs’ motion to intervene and
modified the protective order to allow the Canadians the access they
requested subject to the order’s terms of confidentiality. Upon our review
of the district court’s ruling, we affirm.
I. Background Facts and Proceedings.
Plaintiffs in Iowa (Iowa plaintiffs) filed a class-action, antitrust
lawsuit against Microsoft Corporation (Microsoft) in February 2000. At
the time, several other similar lawsuits were pending against Microsoft in
various federal and state courts. The discovery in the other pending
cases was coordinated and protected by a protective order. At the outset
of this case, the Iowa plaintiffs and Microsoft agreed to continue to
coordinate discovery with the plaintiffs in the other jurisdictions. The
protective order entered in the federal multidistrict litigation (MDL)
provided confidential information obtained through discovery could be
disclosed to “counsel in any action arising out of the same facts and
circumstances alleged in [the multidistrict litigation] provided he or she
agrees” to be bound by the terms of the protective order. The Iowa Pre-
Trial Procedures Order No. 1 provided for discovery in the Iowa case to be
coordinated with the discovery in the federal MDL and in other state
courts “so as to prevent duplication of effort and waste of private and
judicial resources.” 1
1As a demonstration not only of the sheer breadth of discovery in this case, but
of the extent and value of the benefit of the coordination of discovery, the parties
estimate that about twenty-three million of the twenty-four million pages of discovery
4
A stipulated protective order was entered in the Iowa case on
January 23, 2003, providing that “certain documents and information
produced or to be produced during discovery in this litigation should be
kept confidential in order to protect the legitimate business interests of
the parties.” The protective order limited the universe of persons to
whom “confidential” and “highly confidential” documents could be
disclosed and limited the use of such documents to the Iowa litigation. It
further required the parties either return to the producing party or
destroy all “confidential” or “highly confidential” documents within thirty
days of the termination of the Iowa litigation. However, the protective
order did expressly anticipate its modification by a subsequent court
order upon the request of “[a]ny party or third party.”
In February 2007, Microsoft and the Iowa plaintiffs agreed to settle
the case. The parties stipulated that
[a]ll discovery materials and information . . . produced or
provided by any of the parties or non-parties either before,
on or after the date of this Settlement Agreement, whether
produced or provided informally or pursuant to discovery
requests, shall be governed by all Confidentiality/Protective
Orders in force as of the date of this Settlement Agreement,
subject to such modifications, if any, that the Court may
make to such Confidentiality/Protective Orders as the result
of any agreements between Lead Counsel for the Iowa Class
and Microsoft or as the result of any future motions or
proceedings.
The settlement agreement was approved by the district court on
August 31, 2007.
At the time the settlement agreement was reached, several
antitrust suits were still pending against Microsoft in Mississippi,
Arizona, British Columbia, Quebec, and Ontario. According to Microsoft,
____________________________
produced in the Iowa action were initially produced in similar lawsuits in other
jurisdictions.
5
plaintiffs in those cases requested discovery from Microsoft after the
settlement agreement was reached but before it was approved by the
district court in this case. 2 On September 25, 2007, Microsoft filed a
motion requesting modification of the protective order to permit Microsoft
to retain the documents from the Iowa action until the suits in
Mississippi, Arizona, and Canada were resolved. The next day, the
plaintiffs in the Canadian actions 3 filed a motion in the district court
seeking to intervene in the Iowa action to gain access to the Iowa
discovery.
The district court granted Microsoft’s motion to modify the
protective order on October 16, 2007, allowing Microsoft to retain the
discovery documents until the litigation in Canada, Arizona, and
Mississippi is resolved. Six days later, the Iowa plaintiffs moved the
court to make the modification of the protective order mutual, permitting
the Iowa plaintiffs to retain discovery documents in their possession until
the termination of the lawsuits in Canada, Mississippi and Arizona. On
December 3, the district court granted both the Canadian intervenors’
and the Iowa plaintiffs’ motions. Microsoft appealed.
II. Scope of Review.
A trial court has wide discretion to enter a protective order
pursuant to Iowa Rule of Civil Procedure 1.504. 4 See Farnum v. G.D.
2In addition to the discovery request, counsel in the Mississippi litigation sent
Microsoft a letter demanding all discovery in the Iowa case be preserved and alleging
any willful destruction of the documents would be deemed spoliation. Iowa plaintiffs
allege this demand was later withdrawn.
3The “Canadian actions” consist of Pro-Sys Consultants Ltd. v. Microsoft
Corporation, Supreme Ct. No. L043175, British Columbia, Canada; K.L. & K. (London)
Limited v. Microsoft Corporation, Sup. Ct. Justice File No. OS-CV-4308, Ontario,
Canada; and Marc Lefrancois v. Microsoft Corporation, Supreme Ct. No. 06-000087-075,
Quebec, Canada.
4Iowa Rule of Civil Procedure 1.504 was previously Rule 123.
6
Searle & Co., 339 N.W.2d 384, 389 (Iowa 1983). We review the district
court’s decisions regarding discovery for an abuse of discretion. Id.;
Mediacom Iowa, L.L.C. v. Inc. City of Spencer, 682 N.W.2d 62, 66 (Iowa
2004).
III. Discussion.
Microsoft does not appeal the district court’s decision to allow the
Canadian plaintiffs to intervene in the Iowa case. Microsoft contends the
district court abused its discretion by modifying the protective order to
allow the Canadian plaintiffs access to the discovery documents and to
allow the Iowa plaintiffs to maintain the discovery documents until the
litigation in Mississippi, Arizona, and Canada is resolved.
A. Iowa Rule of Civil Procedure 1.504. Iowa Rule of Civil
Procedure 1.504 addresses the availability of protective orders during
discovery in civil litigation. Upon a showing of good cause, the district
court
a. [m]ay make any order which justice requires to
protect a party or person from annoyance, embarrassment,
oppression, or undue burden or expense, including one or
more of the following:
....
(7) [t]hat a trade secret or other confidential research,
development, or commercial information not be disclosed or
be disclosed only in a designated way.
Iowa R. Civ. P. 1.504(1)(a). 5
____________________________
5The language of Iowa rule 1.504(1)(a) is virtually identical to its federal
counterpart. Federal Rule of Civil Procedure 26(c) provides a party from whom
discovery is sought may move for a protective order.
The court may, for good cause, issue an order to protect a party or
person from annoyance, embarrassment, oppression, or undue burden
or expense, including one or more of the following:
....
7
Although the district court has wide discretion to fashion an
appropriate protective order, a protective order is not entered lightly. We
have previously discussed the good cause showing required to obtain a
protective order: “We . . . insist[] on ‘a particular and specific
demonstration of fact, as distinguished from stereotyped and conclusory
statements in order to establish good cause.’ ” State ex rel. Miller v. Nat’l
Dietary Research, Inc., 454 N.W.2d 820, 823 (Iowa 1990) (quoting
Farnum, 339 N.W.2d at 389). A district court should consider three
criteria when evaluating the factual showing establishing good cause:
(1) whether the harm posed by dissemination will be substantial and
serious; (2) whether the protective order is precisely and narrowly drawn;
and (3) whether any alternative means of protecting the public interest is
available that would intrude less directly on expression. Nat’l Dietary
Research, 454 N.W.2d at 823. “ ‘[T]hese criteria strike a balance between
the policy favoring discovery and free expression on one side and a
party’s interest in avoiding commercial damage and preventing an abuse
of discovery on the other.’ ” Id. (quoting Farnum, 339 N.W.2d at 390).
In this case, there is no indication that any factual showing of good
cause was made to the Iowa district court when the protective order was
initially obtained. Instead, the protective order was agreed upon by the
parties as a means to expedite and simplify what they correctly
anticipated would be an extraordinary discovery process. The order is
____________________________
(G) requiring that a trade secret or other confidential research,
development, or commercial information not be revealed or be revealed
only in a specified way[.]
Fed. R. Civ. P. 26(c)(1).
8
adapted from the one used in the federal MDL action then pending
against Microsoft. 6
Although the district court has wide discretion to enter protective
orders, when reviewing district courts’ decisions entering or declining to
enter protective orders, we have scrutinized the record to determine
whether the need for secrecy was justified. In Farnum, we affirmed the
district court’s decision denying the request for a protective order despite
the defendants’ concern that the discovery would be “traffick[ed] . . .
among attorneys for use in other litigation,” because the defendant had
not made a particularized showing of harm and the protective order was
not narrowly drawn. 339 N.W.2d at 388, 391; see also Mediacom Iowa,
682 N.W.2d at 68 (holding the district court abused its discretion by
entering a protective order because the defendant city had not presented
any evidence that the information sought constituted a trade secret);
Nat’l Dietary Research, 454 N.W.2d at 824 (holding the district court
abused its discretion by entering a protective order because defendants
had not made a showing that the protected information actually qualified
as a trade secret or confidential information or that disclosure would
cause them harm).
B. Standard for Modifying Protective Orders. Although our
decisions clearly require a showing of “good cause” when a party seeks
an order protecting sensitive information, we have not previously been
6Unlike the Iowa protective order, the MDL protective order allowed counsel in
any actions “arising out of the same facts and circumstances alleged” in the MDL action
to obtain access to the “confidential” and “highly confidential” MDL discovery
documents if counsel agreed to the terms of the MDL protective order and submitted to
the jurisdiction of the MDL court for enforcement of the order. Additionally, before
counsel in any collateral action could further disclose the MDL confidential discovery, a
no-less-restrictive protective order was required to be entered in the collateral litigation.
Accordingly, the Iowa protective order was consistent with the requirements of the MDL
protective order.
9
asked to determine the standard to be applied when an intervenor
involved in similar litigation in another jurisdiction seeks to modify a
protective order to gain access to discovery in this jurisdiction.
Microsoft urges that our earlier decision in Tratchel v. Essex Group,
Inc., 452 N.W.2d 171 (Iowa 1990), answers the question. We are not
convinced. In Tratchel, at the beginning of litigation, the parties entered
into a “Stipulation of Nondisclosure” prohibiting the disclosure of
documents identified by the defendant as trade secrets or confidential
information. 452 N.W.2d at 181. The district court issued a protective
order consistent with the parties’ stipulation. Later, at the close of the
trial, the plaintiffs requested the protective order be lifted, but the district
court ordered compliance with the order. Id. The plaintiffs appealed the
ruling, contending there was no reason to maintain trade secrets
because the defendant no longer manufactured the product at issue and
the documents should be available for use by other potential plaintiffs.
Id. In summary fashion, with no articulated analysis, we noted the
district court “carried out the agreement of the parties,” and the
“[p]laintiffs have not demonstrated extraordinary circumstances, a
compelling need to prevent the enforcement of their agreement nor
shown that the trial court abused its discretion.” Id.
We are not persuaded the standard applied in Tratchel should
apply in this case. 7 We shall examine the issue anew and conduct a full
7
We also note the plaintiffs in Tratchel sought to have the protective order lifted
entirely and the protected documents and data made available to any other party who
might wish to use it for purposes of litigation. 452 N.W.2d at 181. Here, specific,
identifiable plaintiffs with nearly identical, currently pending claims against Microsoft
seek access to documents and data while agreeing to be bound by the terms of the
existing protective order. The Canadian plaintiffs do not claim the documents and data
which Microsoft seeks to protect do not qualify as trade secrets nor do they seek the
release of the information to the general public. However, despite these factual
distinctions between Tratchel and this case, we still think it prudent to revisit the issue
10
analysis of the appropriate standard to apply when the court is requested
to modify a protective order under the circumstances presented here.
The standard we referenced without explanation or elaboration in
Tratchel, and the standard Microsoft urges is controlling in this case, was
articulated by the Second Circuit Court of Appeals in Martindell v.
International Telephone & Telegraph Corp., 594 F.2d 291, 296 (2d Cir.
1979). In Martindell, the federal government intervened in a stockholder
derivative lawsuit seeking access to transcripts of pretrial depositions.
Id. at 292–93. The depositions had been taken pursuant to a court-
approved stipulation requiring the depositions be treated as confidential
and be used solely for the prosecution or defense of the civil action. Id.
at 293. The government sought the depositions because it speculated
that the testimony might be relevant to its investigation of perjury
charges against some of the defendants in the Martindell case and hoped
to avoid any potential invocation of Fifth Amendment rights by the
defendants. Id. The federal district court declined to modify the
protective order and denied the government access to the depositions.
Id. The government appealed. Id. at 292. The Second Circuit Court of
Appeals concluded that
absent a showing of improvidence in the grant of a Rule 26(c)
protective order or some extraordinary circumstance or
compelling need, none of which appear here, a witness
should be entitled to rely upon the enforceability of a
protective order against any third parties, including the
Government, and that such an order should not be vacated
or modified merely to accommodate the Government’s desire
to inspect protected testimony for possible use in a criminal
investigation, either as evidence or as the subject of a
possible perjury charge.
Id. at 296.
____________________________
of the appropriate standard to apply when modifying a protective order because of the
lack of analysis in the Tratchel decision.
11
Although the language quoted above, and much of the rest of the
opinion, suggests the stringent “extraordinary circumstances” test
applies only when the government seeks to circumvent the Fifth
Amendment rights of suspects in a criminal investigation by accessing
confidential depositions taken in a civil case, the Second Circuit has
since made clear it will apply the same standard in other contexts as
well. See S.E.C. v. TheStreet.com, 273 F.3d 222, 229 n.7 (2d Cir. 2001)
(affirming that although some courts have incorrectly concluded the
Martindell rule applies only when the government seeks modification of a
protective order, the Martindell “extraordinary circumstances” test
applies when any third party seeks to modify a protective order). 8
Other circuits that have considered the issue have applied
standards more amenable to modification of protective orders. The
Seventh Circuit Court of Appeals was faced with a factual and procedural
scenario strikingly similar to this case in Wilk v. American Medical Ass’n,
635 F.2d 1295 (7th Cir. 1980). In Wilk, five chiropractors filed suit
against the American Medical Association (AMA) and others alleging a
nationwide conspiracy to eliminate the chiropractic profession. 635 F.2d
at 1296. Numerous lawsuits were filed against the AMA in other
jurisdictions including the State of New York, alleging essentially the
same facts. Id. Discovery consisting of over 100,000 documents had
been produced in the Wilk case, and over one hundred witnesses had
been deposed. Id. New York intervened in the Wilk litigation and
8We can find no instance in which the Second Circuit Court of Appeals has been
faced with circumstances such as are presented here—an intervening plaintiff seeking
access to millions of pages of documents and data under the terms of an existing
protective order so as to avoid the burdens of time and expense associated with
rediscovering and reorganizing the same information in collateral litigation against the
same defendant. Even though the “exceptional circumstances” test is a stringent one, it
is possible the Second Circuit would conclude intervenors such as the Canadian
plaintiffs in this case would meet that strict standard.
12
requested the court modify the extant protective order to allow the state
access to the discovery materials on the same terms as the Wilk
plaintiffs. Id. at 1297. The district court applied an “exceptional
circumstances” test, giving great weight to the interests of the Wilk
defendants in maintaining the protective order and concluding most of
the Wilk discovery was irrelevant to the New York litigation. Id. at 1297–
98. The district court denied New York’s motion without prejudice,
allowing the state to make later motions for access to specific discovery
relevant and discoverable in the New York action. Id. at 1298.
On appeal, the Seventh Circuit Court of Appeals considered the
standard articulated in Martindell, but concluded it was not appropriate
to require a collateral plaintiff to demonstrate “exceptional
circumstances” to gain access to protected discovery. Id. at 1299–1300.
Balancing the interests at stake, the Court of Appeals noted that
[p]articularly in litigation of this magnitude, we . . . are
impressed with the wastefulness of requiring the State of
New York to duplicate discovery already made. . . . We
therefore agree with the result reached by every other
appellate court which has considered the issue, and hold
that where an appropriate modification of a protective order
can place private litigants in a position they would otherwise
reach only after repetition of another’s discovery, such
modification can be denied only where it would tangibly
prejudice substantial rights of the party opposing
modification. Once such prejudice is demonstrated,
however, the district court has broad discretion in judging
whether that injury outweighs the benefits of any possible
modification of the protective order.
Id. at 1299 (citations omitted).
The Seventh Circuit Court of Appeals acknowledged the concern
that a collateral litigant might exploit another’s discovery by filing a
frivolous lawsuit only for the purpose of gaining access to the sealed
discovery in the first case and emphasized that federal discovery is not to
13
be used “merely to subvert limitations on discovery in another
proceeding.” Id. at 1300. The court concluded, however, that there was
“no suggestion that New York is anything but a bona fide litigant who
needs access for bona fide litigation purposes” and that most of the Wilk
discovery would be discoverable in the New York action. Id. The court
was not persuaded by the AMA’s argument that allowing New York
access to the Wilk discovery might encourage litigation by other plaintiffs
in hopes of obtaining access to the same discovery material.
There is no merit whatever to this argument. A bona fide
litigant is entitled to his day in court. That the expense of
litigation deters many from exercising that right is no reason
to erect gratuitous roadblocks in the path of a litigant who
finds a trail blazed by another. Any legitimate interests in
secrecy can be accommodated by amendment of the
protective order to include the new litigants within its
restrictions, rather than simply vacating it.
Id. at 1301.
The court concluded that the district court’s decision to deny New
York unlimited access to the Wilk discovery but allow New York to move
for access for specific discovery demonstrably relevant to the New York
action was of little value. “If counsel for New York knew exactly what
documents were relevant to that suit, he would not have needed to
request modification of the Wilk protective order at all; he could simply
have made a discovery request for those documents before the New York
court.” Id.
Other jurisdictions, both federal and state, have rejected the strict
Martindell standard and favored approaches similar to Wilk when
determining whether a collateral plaintiff should have access to protected
discovery. See Pansy v. Borough of Stroudsburg, 23 F.3d 772, 790 (3d
Cir. 1994) (holding that when determining whether to modify protective
orders, courts should apply same balancing test used initially to
14
determine whether to enter a protective order but also consider the
party’s reliance on the protective order); Pub. Citizen v. Liggett Group,
Inc., 858 F.2d 775, 791 (1st Cir. 1988) (rejecting Martindell standard in
favor of less restrictive standard to modify protective order when party
seeking modification can point to some relevant change in
circumstances); Wolhar v. Gen. Motors Corp., 712 A.2d 464, 469 (Del.
1997) (adopting Pansy standard for modification of protective orders);
Krahling v. Executive Life Ins. Co., 959 P.2d 562, 568 (N.M. Ct. App.
1998) (holding party opposing modification of the protective order must
show good cause for continuation of a blanket protection order when
plaintiff sought modification to share discovery with plaintiffs in other
jurisdictions); Garcia v. Peeples, 734 S.W.2d 343, 348 (Tex. 1987)
(applying a balancing test to conclude blanket protective order was
overbroad and plaintiff should be allowed to share discovery with other
similarly situated plaintiffs).
After considering the various approaches other courts have taken
to address requests to modify protective orders, we conclude the
soundest approach is to balance the interests at stake, taking into
account the reasons for the issuance of the protective order in the first
place and whether the legitimate interests of the parties can still be
protected with the suggested modification. The court should also
consider to what extent the party opposing modification has reasonably
relied on the terms of the protective order and whether the party would
have relied on the protective order had the suggested modification
initially been included in it. In a case such as this one, the court should
consider the value of the interests of the party seeking modification, as
well as any public interest in judicial economy and public disclosure, if
appropriate. The court should consider whether the party seeking
15
modification is attempting to circumvent discovery or evidentiary
restrictions in some other jurisdiction. Because each situation in which
a party or third party seeks modification will be different, we will not try
to list all the considerations the district court may take into account
when making its decision, but the court should fully and fairly consider
all the circumstances supporting the modification, as well as the
circumstances mitigating against it, and not employ any presumption for
or against modification. To the extent that our decision in Tratchel
implies there is a presumption against modification, we disavow it.
C. Balancing the Interests. In this case, the district court’s
order gave no indication of what factors it considered or what standard it
applied when it modified the protective order to allow the Iowa plaintiffs
to maintain possession of the discovery until the Canadian litigation was
resolved and to allow the Canadian plaintiffs access to the Iowa discovery
subject to the same restrictions as imposed on the Iowa plaintiffs and
Microsoft. Accordingly, we are unable to discern precisely why the
district court concluded modification of the order was justified. However,
after balancing the interests at stake, we conclude the district court
reached the correct result when it modified the protective order to extend
the destroy/return deadline for the Iowa plaintiffs until the litigation in
Arizona, Mississippi, and Canada is resolved. This modification
maintains the status quo while the other lawsuits are pending.
In determining whether the Canadian plaintiffs should be allowed
access to the Iowa discovery on the same terms as the Iowa parties, we
are profoundly influenced by the extraordinary waste of time and
expense that will result if the Canadian plaintiffs are forced to repeat the
work already completed by the Iowa plaintiffs and Microsoft in this case.
The parties estimate the documents and data at issue constitute
16
approximately twenty-four million pages. Microsoft acknowledges that
compliance with one particular discovery order, which required the
production of seventeen million pages of discovery from other similar
litigation, “was a huge undertaking. It was not a case of simply ‘pushing
a button’ to quickly and easily copy and produce old productions.” To
comply with that single discovery order in this case, Microsoft estimates
its staff spent a total of 2700 hours during eighteen weeks locating,
compiling, copying, and producing documents and duplicating and
converting video items. Microsoft incurred fees of $5.56 million to
comply with discovery requests from the Iowa plaintiffs during a four-
month period. Microsoft estimates that a “team of attorneys, which at
times exceeded 75 persons, worked full-time essentially continuously
from November 16, 2005, through September 22, 2006,” to comply with
discovery obligations in the Iowa lawsuit. These numbers are mind
boggling when one considers they represent only part of the work done
by Microsoft to address discovery requests in this case. When we add to
the mix the time, money, and effort expended by counsel and support
staff for the Iowa plaintiffs in organizing and analyzing the information
after Microsoft produced it, the staggering cost of repeating the process
in the Canadian litigation comes even more sharply into focus.
“The enormous and escalating cost of civil litigation, in this case
and many others, runs a great risk of placing redress in the . . . courts
beyond the reach of all but the most affluent.” Jochims v. Isuzu Motors,
Ltd., 148 F.R.D. 624, 632 (S.D. Iowa 1993). This danger can partially be
averted by allowing for shared discovery among similarly situated
plaintiffs.
[S]hared discovery makes the system itself more efficient.
The current discovery process forces similarly situated
parties to go through the same discovery process time and
17
time again, even though the issues involved are virtually
identical. Benefiting from restrictions on discovery, one
party facing a number of adversaries can require his
opponents to duplicate another’s discovery efforts, even
though the opponents share similar discovery needs and will
litigate similar issues. Discovery costs are no small part of
the overall trial expense.
Garcia, 734 S.W.2d at 347.
In addition to the overwhelming waste of private and judicial
resources that would be avoided if the Canadian plaintiffs were allowed
access to the Iowa discovery, we believe the sharing of discovery also
advances the important objectives of disclosure and efficiency in the trial
system. The goal of modern discovery rules is to “make a trial less a
game of blind man’s buff and more a fair contest with the basic issues
and facts disclosed to the fullest practicable extent.” United States v.
Procter & Gamble Co., 356 U.S. 677, 682–83, 78 S. Ct. 983, 986–87, 2
L. Ed. 2d 1077, 1082 (1958). However, this goal is often hindered by the
adversarial nature of discovery and the gamesmanship of parties locked
in litigation. Garcia, 734 S.W.2d at 347.
Shared discovery is an effective means to insure full and
fair disclosure. Parties subject to a number of suits
concerning the same subject matter are forced to be
consistent in their responses by the knowledge that their
opponents can compare those responses.
Id.
We are mindful as well of Microsoft’s assertion that it provided
these millions of pages of discovery in reliance on the protective order. 9
The purpose of the protective order is ostensibly to protect valuable
business information and trade secrets from disclosure to competitors.
However, the suggested modification of the protective order to allow the
9However, during oral argument, Microsoft was unable to estimate exactly how
many pages of the twenty-four million pages of discovery produced would not have been
disclosed if not protected by the order.
18
Canadian plaintiffs access to the Iowa discovery would continue to
protect Microsoft’s trade secrets and confidential business information
from disclosure to competitors or the public. The modification requested
by the Canadian plaintiffs does not seek to lift the protective order
entirely or release the confidential information to the public. Microsoft’s
legitimate interest in protecting the value of its confidential information
will be maintained as the Canadian plaintiffs will be bound by the
protective order just as the Iowa plaintiffs are obligated by its terms.
Our decision is also influenced by the fact that the protective order
provides for its modification. As we have already noted, Microsoft has
sought and obtained a modification protecting its interests. To the
extent that Microsoft disclosed documents and data to the Iowa plaintiffs
in reliance on the protective order, it relied upon an order that was
expressly made subject to modification upon proper motion. Any belief
Microsoft might have entertained that the protective order was inviolate
was therefore unreasonable.
Our decision in this case is also strongly influenced by the fact
that most of the discovery in this case has already been shared with
plaintiffs in several other federal and state lawsuits. There is no
allegation that the coordination and sharing of discovery among parties
in several different lawsuits in various jurisdictions has resulted in any
harm to Microsoft or unauthorized disclosure of confidential information.
We are not persuaded that a modification of the protective order allowing
the Iowa plaintiffs to share the documents and data in their possession
with the Canadian plaintiffs will jeopardize Microsoft’s legitimate
interests.
Additionally, given that the discovery in this case has been
coordinated with discovery in similar lawsuits in other jurisdictions,
19
Iowa’s limited judicial resources were conserved. It would be hypocritical
and unreasonable if, after realizing the benefits of a shared discovery
process, Iowa courts were to deny the same benefits to courts in British
Columbia, Ontario, and Quebec.
Microsoft’s main argument, and indeed the only argument against
modification that gives us pause, is that the Canadian plaintiffs may not
be entitled to any or all of the Iowa discovery. Microsoft points out the
Canadian litigation is still in the preliminary stages and has not yet been
certified as a class action. Indeed, a ruling entered by a Canadian court
concluded the documents and data in the possession of the Iowa
plaintiffs are not relevant at the certification stage. Pro-Sys Consultants
Ltd. v. Microsoft Corp., 2007 BCSC 1663, [2008] 3 W.W.R. 761, 76
B.C.L.R. (4th) 171, ¶¶25–28. Nonetheless the ruling expressly noted the
Canadian court did not discourage the Canadian plaintiffs from pursuing
efforts to gain access to the documents and data developed in the Iowa
litigation. Id. at ¶31–32. We thus do not interpret the Canadian court’s
ruling as an expression of the proposition that the documents and data
in the possession of the Iowa plaintiffs will not be relevant under
Canadian law at later stages of the litigation in that country.
Microsoft further suggests that if and when the class action is
certified in Canada, discovery rules in British Columbia, Ontario, and
Quebec may differ from discovery rules in Iowa. In this context,
Microsoft posits the Canadian plaintiffs’ effort to gain unlimited access to
the documents and data in the possession of the Iowa plaintiffs is
calculated to circumvent more restrictive Canadian discovery rules.
While we do not presume to interpret, and Microsoft has not cited, the
law prevailing in British Columbia, Ontario, and Quebec on the proper
scope of discovery in Canadian courts, Microsoft has not presented
20
evidence tending to prove the Canadian plaintiffs are exploiting liberal
discovery rules in Iowa in an effort to evade more restrictive Canadian
rules. Further, the Ontario Superior Court has indicated that it is not
offensive to Canadian discovery or evidentiary procedures for Canadian
litigants to seek access to discovery materials produced in litigation in
the United States. Vitapharm Canada Ltd. v. F. Hoffman-Laroche, Ltd.,
11 C.P.R. (4th) 230, 6 C.P.C. (5th) 245, [2001] O.J. No. 237, ¶50 (Ont.
S.C.J.) (affirmed on appeal, 18 C.P.R. (4th) 267, 20 C.P.C. (5th) 65,
[2002] O.J. No. 1400 (Ont. Div. Ct.)). “A Canadian court generally will be
reluctant to prevent someone from gathering evidence extraterritorially,
as its ultimate admissibility in a Canadian proceeding will be determined
by the Canadian courts.” Id. at ¶45. 10 Denying the motion of Canadian
defendants to prevent Canadian plaintiffs from intervening in litigation in
the United States to gain access to discovery already produced in the
U.S. action, the Ontario Superior Court concluded
plaintiffs’ request for access to discovery evidence [in the
United States] which they believe necessary to prepare their
case in Canada, a request made through means lawful in the
United States, does not violate the rules and procedure of
this court. There is no consequential unfairness to the
defendants in the Canadian class proceedings.
Id. at ¶50.
Thus, we conclude the Canadian plaintiffs are entitled to access to
all of the documents and data produced in the Iowa litigation on the
same terms as the Iowa plaintiffs. See Wilk, 635 F.2d at 1301; In re
Linerboard Antitrust Litig., 333 F. Supp. 2d 333, 342–43 (E.D. Pa. 2004)
10In Vitapharm, several class actions were pending in both Canada and the
United States alleging price fixing against various vitamin manufacturers. Vitapharm,
at ¶¶6–18. Discovery was already underway in the United States litigation, id. at ¶16,
but the Canadian class actions had yet to be certified. Id. at ¶13. Plaintiffs in the
Canadian actions intervened in the federal MDL action in the United States and sought
access to discovery covered by a protective order. Id. at ¶19.
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(concluding plaintiff in similar antitrust class action in Canada was
properly granted access to discovery materials subject to a protective
order in a federal antitrust action). The determination of which
documents are relevant to and admissible in the Canadian litigation is
preserved for the Canadian courts.
IV. Conclusion.
Upon consideration of the arguments of the parties, and after
balancing all of the interests at stake, we conclude the protective order
was properly modified to allow the Iowa plaintiffs to maintain the
discovery in their possession until the litigation against Microsoft in
Arizona, Mississippi, and Canada is terminated. The Canadian plaintiffs
shall be allowed access to the documents and data in the possession of
the Iowa plaintiffs under the terms of the protective order. Microsoft’s
important interest in confidentiality of the documents and data is
preserved because the Canadian plaintiffs are bound by the terms of the
protective order. The relevance of the documents and their admissibility
in the Canadian litigation are matters properly reserved for the Canadian
courts.
AFFIRMED.
All justices concur except Appel, J., who takes no part.