United States District Court, D. South Dakota, Western Division
ORDER ON DEFENDANT'S MOTION FOR PROTECTIVE ORDER
WOLLMANN, UNITED STATES MAGISTRATE JUDGE
is Defendant Employers Mutual Casualty Company's Motion
for Protective Order (Doc. 17). United States District Court
Judge Jeffrey L. Viken, Chief Judge, referred Defendant's
Motion to this magistrate judge for determination. (Doc. 22).
case is a diversity action alleging bad faith insurance
practices on the part of Defendant Employers Mutual Casualty
Company. The action stems from Defendant's alleged
bad-faith denial of Plaintiff Jimmy Hobbs' worker's
seeks production of documents regarding, among other things,
Defendant's personnel files and compensation information,
well as documents related to the worker's compensation
claim. Defendant requests that Plaintiff agree to a
Stipulated Protective Order under Federal Rule of Civil
Procedure 26(c). In its proposed order, Defendant requests
that information “qualifying for protected status shall
be limited to private, non-public information (including
non-public financial and business records, personnel data and
files, and information obtained from third parties pursuant
to a nondisclosure agreement), trade secrets or other
research, development or commercial information, and is
generally treated as confidential or proprietary by the
designating party.” (Doc. 20-2).
agrees that a protective order should issue, but Plaintiff
and Defendant dispute the terms of the proposed order.
Defendant's proposed order allows the party producing
sensitive documents to designate them as confidential. (Doc.
20-2). Plaintiff opposes this provision and requests that the
Court approve whether an item should be protected. (Doc.
Rule of Civil Procedure 26(c) governs the issuance of
protective orders, and requires that “good cause”
be shown for a protective order to issue. “The burden
is therefore upon the movant to show the necessity of its
issuance, which contemplates a ‘particular and specific
demonstration of fact, as distinguished from stereotyped and
conclusory statements[.]'” Gen Dynamics
Corp. v. Selb Mfg. Co., 481 F.2d 1204, 1212 (8th
Cir. 1973) (quoting Wright & Miller, Fed. Practice &
Procedure: Civil § 2035 at 264-65).
In considering whether good cause exists for a protective
order, the federal courts have generally adopted a balancing
process. . . . [T]he court . . . must balance the requesting
party's need for information against the injury that
might result if uncontrolled disclosure is compelled. When
the risk of harm to the owner of [a] trade secret or
confidential information outweighs the need for discovery,
disclosure [through discovery] cannot be compelled, but this
is an infrequent result.
Once the court determines that the discovery policies require
that the materials be disclosed, the issue becomes whether
they should be disclosed only in a designated way, as
authorized by the last clause of Rule 26(c)(7). . . . Whether
this disclosure will be limited depends on a judicial
balancing of the harm to the party seeking protection (or
third persons) and the importance of disclosure to the
public. Courts also have a great deal of flexibility in
crafting the contents of protective orders to minimize the
negative consequences of disclosure and serve the public
Burke v. Ability Ins. Co., No. 12-CV-4051-KES, 2013
WL 842512, at *2 (D.S.D. Mar. 6, 2013) (quoting Pansy v.
Borough of Stroudsburg, 23 F.3d 772, 787 (3d Cir.
trial court has significant discretion in either granting or
denying a protective order, and “only an abuse of
discretion would be cause for reversal.” Gen.
Dynamics Corp., 481 F.2d at 1212. Similarly, Rule 26(c)
confers “broad discretion on the [district] court to
decide . . . what degree of protection is required.”
Misc. Docket Matter No. 1 v. Misc. Docket Matter No.
2, 197 F.3d 922, 925 (8th Cir. 1999) (internal
quotations omitted). Courts routinely grant protective orders
that limit access to sensitive or proprietary information.
Burke, 2013 WL 842512 at *3 (internal citation
issue before this court was previously addressed by the
District Court of South Dakota in Pochat v. State
Farm, No. 08-CV-5015-JLV, Doc. 44 (D.S.D. Dec. 11, 2008)
and in Burke. In both Pochat and
Burke, plaintiffs submitted claims for bad faith
insurance practices. Plaintiffs in both cases sought
discovery of information concerning the insurance
companies' claims handling polices, practices, and
procedures, including personnel files, compensation
information, and other sensitive information. The insurance
companies requested protective orders. The district court
found that plaintiffs' requests were reasonable and
relevant to the bad faith claims. However, the district court
also found that the requested information in both cases
implicated the insurance companies' confidential and
proprietary business practices, and the companies established
the requested information constituted a trade secret. See
Burke, 2013 WL 842512 at *5 (citing Pochat, No.
08-CV-5015-JLV, Doc. 44).
case, Defendant does not object to the disclosure of the
requested information subject to a protective order at this
time. Therefore, the court will assume without deciding that
the information is relevant and necessary to litigate
Plaintiff's claims. See Burke, 2013 WL 842512 at
*5. The court finds that, like Pochat and
Burke, a limited protective order is appropriate
because it will satisfactorily protect both parties'
interests: Plaintiff will have access to the requested
information, and competitors will be unable to exploit
Defendant's internal policies. See Burke, 2013
WL 842512 at *5. The potential harm to Defendant that would
result from unrestricted disclosure outweighs ...