Blum v. Merrill Lynch Pierce Fenner & Smith Inc.
712 F.3d 1349
9th Cir.2013Background
- Blum sued Merrill Lynch in a 2003 federal action; a blanket protective order issued in 2004 and a 2005 settlement required destruction of confidential documents, including Blum's deposition transcript.
- In 2009 Blum sued KPMG in Los Angeles Superior Court; he acknowledged the transcript's existence but refused production citing the protective order and settlement; KPMG inadvertently received the transcript from the court reporter.
- In March 2011 Blum moved to reopen the federal case and enforce the protective order and settlement, and KPMG moved to intervene; the district court granted intervention and allowed preservation of the transcript pending relevancy review.
- The Los Angeles Discovery Master found the transcript relevant to the state action; Blum dismissed the state action without prejudice, and the federal court later found it lacking jurisdiction to enforce the settlement but acknowledged relevance of the transcript.
- In April 2011 the federal court, believing enforcement would contravene public policy, modified the protective order to allow the transcript's use in the state action; in May 2011 the court ordered the transcript placed in escrow with potential future release if relevant to pending litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of intervention | KPMG's motion to intervene was timely given post-settlement collateral issue. | N/A | Timely |
| Potential undue prejudice from intervention | Intervention would not unduly prejudice Blum since underlying dispute was settled. | Intervention could prejudice Blum by altering settled rights. | No undue prejudice |
| Modification of the protective order | District court should reject modification to protect confidentiality. | Modification necessary to avoid duplicative discovery and to meet collateral needs. | District court did not abuse discretion in escrow modification |
| Relevance and public policy | Transcript destruction should be enforced; its use is unfairly prejudicial and contrary to policy. | Transcript remained relevant to pending or potential collateral proceedings. | Transcript remained relevant; destruction would contravene public policy |
| Standard of review | N/A | N/A | Abuse-of-discretion review applied |
Key Cases Cited
- Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122 (9th Cir. 2003) (need to weigh reliability and public policy in modifying protective orders)
- Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470 (9th Cir. 1992) (permissive intervention standard; protective-order considerations)
- United Nuclear Corp. v. Cranford Ins. Co., 905 F.2d 1424 (10th Cir. 1990) (intervention to challenge protective orders timely when underlying dispute settled)
- Public Citizen v. Liggett Group, Inc., 858 F.2d 775 (1st Cir. 1988) (delayed intervention for protective-order issues may cause little prejudice)
- Olympic Refining Co. v. Carter, 332 F.2d 260 (9th Cir. 1964) (intervenor access to materials after termination of govt. action)
- Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994) (intervention to challenge confidentiality orders may occur after case termination)
- Leucadia, Inc. v. Applied Extrusion Techs., Inc., 998 F.2d 157 (3d Cir. 1993) (district court may modify protective orders post-termination)
- Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470 (9th Cir. 1992) (intervention timing and prejudice considerations)
- Hinkson v. United States, 585 F.3d 1247 (9th Cir. 2009) (abuse of discretion standard with de novo legal ruling step)