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Healthwerks Inc. v. Howmedica Osteonics Corp.

United States District Court, E.D. Wisconsin

February 1, 2016



HON. PAMELA PEPPER United States District Judge.

Defendant Howmedica removed this case from state court to the Eastern District of Wisconsin on January 28, 2014. Dkt. No. 1. The parties have heavily litigated most aspects of this case since it arrived in federal court. Judge J.P. Stadtmueller originally presided over the case, and he had scheduled the case for trial on September 8, 2015. Dkt. No. 65. On December 29, 2014, however, the case was reassigned to Judge Pepper as part of the case redistribution process when she joined the court. Since that time, defendant Howmedica has filed four different motions to seal; Biomet Spine has filed one; and the plaintiffs/third-party defendants have filed three. On June 22, 2015, the court held a hearing on Howmedica’s first motion to seal. Dkt. No. 89. At that hearing, the court noted that the only ground the defendant had stated for sealing the documents was that the documents were subject to the agreed protective order. The court noted that Seventh Circuit case law made clear that the simple fact that a document had been designated confidential pursuant to a protective order was not sufficient ground to constitute cause for sealing. The defendant argued that the documents contained proprietary customer lists and financial information. Id. at 1. During the hearing, the court reviewed the documents the parties had asked to seal, and had difficulty finding anything that looked like proprietary information (other than the customer lists-the court accepted, at that time, Howmedica’s argument that those were proprietary). Counsel for the involuntary plaintiffs suggested that the court adjourn the hearing and give the parties time to talk through which documents truly needed redacting. The court reminded the parties that the fact that they agreed something needed redacting or sealing did not establish that it did, in fact, need to be sealed, and scheduled an adjourned hearing for July 1, 2015. Id. at 2. At the July 1 hearing, the court agreed to the parties’ redactions.

Over four months later, however, Biomet filed a motion to seal. Dkt. No. 104. The court again scheduled a hearing to find out the cause for Biomet’s request. Before the hearing date even arrived, the defendant filed another motion to seal, Dkt. No. 111, and the plaintiffs and third-party defendants filed their own motion to seal, Dkt. No. 117. At the November 23, 2015 hearing on Biomet’s motion, the court observed that it had tried to go through, line by line, the items Biomet had asked the court to seal, but that it appeared that Biomet sought new and additional sealing beyond what the court already had allowed, and that the court couldn’t figure out why. Id. at 1. Counsel for Biomet responded that he didn’t necessarily think many of the items needed sealing, but that he was concerned about violating the protective order. After discussion, counsel for Biomet suggested (as counsel for the plaintiffs had done at the prior hearing) that the court adjourn the hearing to allow the parties to again determine which documents actually presented concern that would give rise to cause. Id. The court set a deadline of December 11, 2015 by which the parties should submit to the court a list of the items they believed should be sealed, along with proof of cause, and adjourned the hearing to December 18, 2015. Id. at 2.

At the December 18, 2015 hearing, the court expressed concern about the continued requests to seal so many documents, reminding the parties that they’d sought to bring this case in court-a public forum-and wondered why the parties would seek to seal so many documents being filed in a public dispute. Dkt. No. 169. Counsel for defendant Howmedica told the court that the spinal product industry was such that competitors could gain unfair advantage over a manufacturer if they learned the percentage it paid its distributors, or the discounts it granted certain customers. He argued that the spinal product industry was not a free, open market, where everyone knew everyone else’s prices, inventory or customers. The court responded by wondering whether that was a good thing. The court also noted some of the documents Howmedica wished to keep confidential dated back to 2009 or 2011, and wondered how that information could be confidential now; counsel for Howmedica responded that many documents involved multi-year agreements. Id. at 1-2. Counsel for the plaintiffs, third-party defendants and involuntary plaintiff indicated that they had tried to narrow the redactions as much as possible. Id. at 2. Again, the court spent time, on the record, going through each requested redaction, and approving, disapproving or modifying the redactions. Id. at 2-6. The December 18 hearing (which admittedly also involved some motions to compel) lasted just shy of two hours.

Despite the amount of time the parties and the court have spent on the sealing of information at Howmedica’s request, the parties now have filed additional motions to seal. On December 21, 2015-three days after the December 18 hearing-Howmedica filed a motion to seal its response to the plaintiffs’/third-party defendants’ proposed material facts. Dkt. No. 157. This motion stated that the parties, “consistent with the procedure set forth in the Court’s Minute Order dated June 22, 2015, ” were going to meet and confer to discuss what redactions they’d propose to the court, and that the redactions would “take into account the Court’s guidance from the December 18, 2015 hearing.” Id. at 2.

On that same date-December 21, 2015-the plaintiffs/third-party defendants filed a motion to seal exhibits to their oppositions to defendant Howmedica’s motion for summary judgment. Dkt. No. 166. This motion appears to be another attempt by the plaintiffs/third-party defendants to avoid having defendant Howmedica accuse them of violating the protective order.

A month later, on January 19, 2016, Howmedica filed a motion asking the court to seal its response to Biomet’s Rule 56 statement of additional facts and supporting exhibits. Dkt. No. 172. Howmedica again indicates that the parties will meet and confer to decide what really needs sealing. The plaintiffs/third-party defendants filed such a motion. Finally, on January 19, 2016, the plaintiffs/third-party defendants filed a motion asking to seal their reply to Howmedica’s statement of additional facts. Dkt. No. 178.

So-since the two-hour hearing on sealing that took place on December 18, 2015, the parties have filed four additional motions to seal. At the December 18, 2015 hearing, counsel for the plaintiffs/third-party defendants argued that enough was enough. The court was inclined at that time (and times prior) to agree, but despite that inclination, agreed to seal various documents. The filing of these additional motions to seal has caused the court to go back to the Seventh Circuit’s guidance, as well as to look at recent decisions from some of its colleagues on the district court. That review has convinced the court that it is time to bring the sealing marathon in this case to an end.

As long ago as 1999, the Seventh Circuit expressed its concern about the kinds of arguments Howmedica has made in this case. In Citizens First Nat’l Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943, 944 (7th Cir. 1999), the district court had signed a protective order that “[kept] out of the public record of the litigation, any document ‘believed to contain trade secrets or other confidential or governmental information, including information held in a fiduciary capacity.’” (Citation omitted) One of the parties then asked to submit an appendix to the Seventh Circuit, under seal, and cited to the protective order as grounds. Id.

The court explained that the law required that a district court must make a determination “of good cause to seal any part of the record of a case.” Id. (citing Fed.R.Civ.P. 26(c); Seattle Times Co. v. Rhinehard, 467 U.S. 20, 37 (1984); Jepson, Inc. v. Makita Elec. Works, Ltd., 30 F.3d 854, 858 (7th Cir. 1994); Pansy v. Borough of Stroudsburg, 23 F.3d 772, 785-87 (3d Cir. 1994)). Noting that “parties to a lawsuit are not the only people who have a legitimate interest in the record compiled in a legal proceeding, ” the court observed that “the public at large pays for the courts and therefore has an interest in what goes on at all stages of a judicial proceeding.” Id. at 944-45 (internal citations omitted). While the court allowed that the public interest “does not always trump the property and privacy interests of the litigants, ” it stated that the public interest could be overridden “only if the latter interests predominate in a particular case, that is, only if there is good cause for sealing a part or the whole of the record in that case.” Id. at 945 (citations omitted). The court specifically stated,

The determination of good cause cannot be elided by allowing the parties to seal whatever they want, for then the interest in publicity will go unprotected . . . . The judge is the primary representative of the public interest in the judicial process and is duty-bound therefore to review any request to seal the record (or part of it).

Id. (citing Arthur R. Miller, Confidentiality, Protective Orders, and Public Access to the Courts, 105 Harv. L. Rev. 427, 492 (1991)). Finding that the district court’s order had been too broad-sealing not just trade secrets, but things that were not trade secrets; sealing “other confidential . . . information” and all “governmental information”-the Seventh Circuit remanded to the district court for a determination of which portions of the appendix, if any, ought to be kept out of the public record. Id. at 945-46.

A year later, in Union Oil Co. of California v. Leavell, 220 F.3d 562, 567 (7th Cir. 2000), the court confronted a situation where “[a]lmost every document filed in this case, even the district court’s opinions, orders, and judgment, bears the legend ‘FILED UNDER SEAL.’” The plaintiff argued that the parties agreed to keep the settlement confidential, and it appears expressed concerns about trade secrets. Id. The Seventh Circuit responded, “Litigation about trade secrets regularly is conducted in public; the district court seals only the secrets (and writes an opinion omitting secret details); no one would dream of saying that every dispute about trade secrets must be litigated in private.” Id. Indeed, the court pointed out, ...

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