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Ingalsbe v. Henderson Health Facilities, L.P.

United States District Court, W.D. Kentucky, Owensboro Division

March 24, 2017

LINDA INGALSBE, as Personal Representative of the Estate of Mae Jarvis, Deceased PLAINTIFF
v.
HENDERSON HEALTH FACILITIES, L.P. d/b/a Henderson Nursing and Rehabilitation Center and HENDERSON HEALTH FACILITIES GP, LLC DEFENDANTS

          MEMORANDUM, OPINION AND ORDER

          H. Brent Brennenstuhl United States Magistrate Judge.

         BACKGROUND

         Defendants, Henderson Health Facilities, L.P. d/b/a Henderson Nursing and Rehabilitation Center and Henderson Health Facilities GP, LLC (“Henderson Health”), have moved the Court for entry of a protective order pursuant to Fed.R.Civ.P. 26(c)(1)(G), and requested a hearing (DN 21). Plaintiff, Linda Ingalsbe, as personal representative of the estate of Mae Jarvis, deceased, has filed a memorandum in opposition (DN 22). Henderson Health has filed a reply memorandum (DN 23).

         NATURE OF THE MOTION

         Henderson Health seeks entry of a protective order addressing the documents that are responsive to Ingalsbe's first requests for production of documents (DN 21). Henderson Health explains that the documents contain confidential business information and confidential personal information pertaining to its employees (Id.). Henderson Health asserts that the responsive documents include, but are not limited to, employee personal files; contracts with service providers; training and attendance records; company policies, procedures and guidelines; compensation structures; cost reports; and any documentation regarding Mae Jarvis's residency at the facility (Id.). Henderson Health explains that defense counsel alerted opposing counsel of the need for a protective order as soon as defense counsel received and reviewed the documents (Id.). Henderson Health seeks a protective order that merely limits the use of these documents to this litigation because any use or dissemination of this confidential information outside this litigation would prejudice Henderson Health and its employees, as it would allow Henderson Health's competitors to view confidential information concerning Henderson Health's business practices. Henderson Health further argues unfettered dissemination of the documents would allow the public to view this information which could improperly open up Henderson Health to further litigation (Id.). Henderson Health has submitted a proposed protective order that in pertinent part reads as follows:

It is hereby ORDERED that information to be produced or otherwise made available by the Defendants shall be subject to a Protective Order and the Defendant shall, without compromising the information in the documents, marked the documents as Confidential and for use in this case. All documents produced subject to a Protective Order shall be for use by Plaintiff and her attorneys and staff in this case only and may be given only to the parties in this action, their counsel and staff, as necessary, and witnesses, as necessary, in the prosecution and defense of this case, unless otherwise agreed upon by counsel for both parties.

(DN 21-1). Henderson Health requests a hearing on its motion (DN 21).

         Ingalsbe asks the Court to deny Henderson Health's motion for a protective order as untimely (DN 22). Ingalsbe accuses Henderson Health of proposing an agreed protective order merely to delay the discovery process (Id.). Ingalsbe contends that Henderson Health could have proposed an agreed protective order months ago because it knew or should have known that the documents requested may be confidential (Id.). Ingalsbe points out that Henderson Health refuses to produce any documents, even Ms. Jarvis' medical chart, until the Court rules on the protective order motion (Id.). Additionally, Ingalsbe argues the motion should be denied because Henderson Health has failed to show that disclosure of these documents would cause a “clearly defined and very serious injury” (Id. citing Owens v. Liberty Life Assur. Co., No. 4:15-CV-00071, 2016 U.S. Dist. LEXIS 115477, at *6-7 (W.D. Ky. Aug. 29, 2016)). Ingalsbe contends that Henderson Health is made only vague and conclusory allegations that production of the requested documents will put it at a competitive disadvantage or subjected to further litigation (Id.). Ingalsbe asserts that a hearing is not necessary and the Court should rule on the motion based on the memoranda submitted by the parties (Id.).

         In reply, Henderson Health asserts that the documents to be produced contain “confidential business information” concerning the facility's operation, its financial condition, its financial agreements with third parties, its employees, and company practices (DN 23 citing Owens, 2016 U.S. Dist. LEXIS 115477, at *6-7). Henderson Health contends that “good cause” exists for entry of the proposed protective order because if any of the documents are disseminated outside this litigation there would be nothing to stop the public at large and its competitors from using the documents for their own litigious and competitive advantage (Id.). Henderson Health asserts that the public could use these documents in an attempt to bring frivolous claims against Henderson Health and that it would have to expend time and money to defend against such claims (Id.). Further, competing businesses would be able to use the information to destroy any competitive advantage that Henderson Health may have in the industry (Id.). Henderson Health points out that the proposed protective order does not limit the scope of discovery, rather, it merely requires that the documents only be used in this litigation (Id.). Henderson Health asserts that defense counsel could not seek a protective order before receiving and reviewing the documents from Henderson Health (Id.). Henderson Health contends that defense counsel contacted opposing counsel about the need for a protective order as soon as defense counsel determined that the information warranted protection from public dissemination (Id.). Therefore, Henderson Health argues, it has not waived the right to seek protection of the documents and it's motion is not untimely (Id.). Henderson Health asserts that due to the highly contested nature of this dispute a hearing with oral argument should be conducted (Id.).

         DISCUSSION

         Henderson Health is seeking an order that will allow it to designate the documents it intends to produce to Ingalsbe as confidential while in the hands of the parties during the case. Consequently, the motion presently before the Court does not implicate the scope or relevance of Ingalsbe's document requests or the withholding of documents on claim of privilege. Rather, it only deals with the confidentiality of documents that Henderson Health proposes to produce in response to Ingalsbe's document requests. Thus, Ingalsbe's contentions about the timeliness of the motion, the absence of specific objections to each document request, and the failure to raise a privilege and provide a privilege log are misplaced. The substantive consideration here is whether Henderson Health has sufficiently demonstrated entitlement to such an order.

         This Court has observed that:

Pursuant to Rule 26(c), the Court may enter a protective order "for good cause shown" to protect a party by requiring that confidential material not be revealed or be revealed only in a designated manner. When a business seeks protection of a trade secret or of commercial information under Rule 26(c), it must show that disclosure would cause "clearly defined and very serious injury." Waelde v. Merck, Sharp & Dohme, 94 F.R.D. 27, 28 (E.D. Mich. 1981). "[V]ague and conclusory allegations of confidentiality and competitive harm are insufficient. The movant must make 'a particularized showing that the information sought is confidential' and come forth with 'specific examples' of competitive harm." Id. (quoting Parsons v. General Motors Corp., 85 F.R.D. 724, 726 (N.D. Georgia 1980)). In sum, in order to satisfy Rule 26(c), [the movant] must show that (1) the interest for which protection is sought is an actual trade secret or other confidential business information, and (2) there is good cause for the entry of a protective order.

Mitchell v. Home Depot U.S.A., No. 3:11-CV-332, 2012 U.S. Dist. LEXIS 82562, at *4-5 (W.D. Ky. June 13, 2013).

         The Court has wide discretion in weighing any relevant factors and deciding whether to issue a protective order. Pansy v. Borough of Stroudsburg, 23 F.3d 772, 787 (3d Cir. 1994).

         In its motion, Henderson Health has indicated that the documents include, but are not limited to “employee personal files; contracts with service providers; training and attendance records; company policies, procedures, and guidelines; compensation structures; cost reports; and any documentation regarding Ms. Jarvis's residency at the facility” (DN 21). Henderson Health has asserted that the documents contain detailed information concerning the facility's operation, its financial condition, its financial agreements with third parties, its employees, and company practices (DN 23). Henderson Health explains that information within these documents qualify as “confidential business information, ” because it concerns details of Henderson Health's operation, from statements of its performance, the policies of how that performance is to be achieved, and information concerning the people who are responsible for that performance (Id.). Henderson Health further explains that the information within these documents provide an inside look into its business at every level (Id.). Clearly, the identified document categories do involve confidential business information. The documentation regarding Ms. Jarvis's residency are subject to federal and/or state law that restricts the dissemination of such records. Thus, Henderson Health has demonstrated the interest for which protection is sought is confidential business information.

         Public dissemination of any of the classes of documents identified above could have an adverse impact on Henderson Health. Competing businesses would be able to see the details of Henderson Health's business and finances, and to utilize that information to obtain an unfair competitive advantage over Henderson Health in the industry. Current or former employees may have a basis for bringing a lawsuit against Henderson Health if their private information is publicly disseminated. Further, Henderson Health might be at risk for federal and/or state fines if it fails to take adequate steps to protect the confidentiality/privacy of the records regarding Ms. Jarvis's residency at the facility. Thus, Henderson Health has demonstrated good cause for entry of a protective order with regard to the documents it proposes to produce to Ingalsbe.

         This order only concludes that Henderson Health has succeeded in its motion to sufficiently demonstrate that the document categories identified are confidential commercial information for which disclosure will cause a clearly defined and very serious injury and that there is good cause for entry of a protective order. The undersigned observes that Henderson Health's proposed protective order fails to address a number of important matters such as appropriate storage of the documents, deposition testimony concerning the documents, disclosure of the documents to experts, challenging the confidential designation of certain documents, and the procedures regarding the documents that will be followed upon conclusion of the case. For this reason, the parties are directed to confer regarding an appropriate agreed protective order in this case. The undersigned has attached a draft protective order that the parties may find helpful in reaching an accord regarding the provisions that will be included within their agreed protective order. Finally, the undersigned concludes that a hearing will not be necessary to address this matter.

         ORDER

         IT IS HEREBY ORDERED that Henderson Health's motion for a protective order (DN 21) is GRANTED in part and DENIED in part.

         IT IS FURTHER ORDERED that to the extent that Henderson Health seeks a protective order as to the confidential documents it intends to produce to Ingalsbe, Henderson ...


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