Nerium SkinCare Inc v. Nerium International LLC, 3:16-cv-01217

Background

Parties entered an Agreed Protective Order (Doc. 22) governing designation and filing of "Confidential" materials.
Defendants designated numerous documents as "Confidential" and filed a sealed appendix (Doc. 194) containing those materials.
Plaintiffs filed a public Brief in Support of Application to Compel Statutory Records Inspection (Doc. 193) that relied on, quoted, or reproduced information from the sealed, confidential appendix.
Plaintiffs later filed a Motion for Expedited Relief (Doc. 201) that likewise cited confidential appendix materials; Defendants moved to seal that motion and the Court granted the sealing.
Defendants then moved to enforce the Protective Order and seek sanctions; the magistrate judge found Plaintiffs violated the Protective Order and recommended sealing Doc. 193 and ordering Plaintiffs to show cause.
The district court reviewed the magistrate judge’s findings, overruled Plaintiffs’ objections, adopted the recommendation, ordered Doc. 193 sealed, and directed Plaintiffs to appear and show cause why they should not be held in civil contempt.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Plaintiffs violated the Agreed Protective Order by filing a public brief that used material from documents designated Confidential	Plaintiffs contend the Protective Order permits describing non-confidential aspects and that the cited information was not confidential	Defendants contend the Protective Order required sealing any materials designated Confidential and Plaintiffs improperly placed Confidential-derived material on the public record	Court held Plaintiffs violated the Protective Order; ordered the brief sealed and a show-cause appearance
Proper standard of review for the magistrate judge’s findings	Plaintiffs argued the findings were legal/contempt determinations warranting de novo review	Defendants argued the magistrate’s factual findings are reviewed for clear error under Rule 72(a)	Court treated factual findings as for clear-error but reviewed objections de novo and agreed with magistrate’s conclusions
Whether the confidential designation’s substantive correctness matters to violation finding	Plaintiffs argued the underlying material was not actually confidential or was already public	Defendants argued correctness of designation is irrelevant to compliance obligations under the Protective Order	Court held that challenge to confidentiality does not excuse noncompliance; parties must follow Protective Order procedures to dispute designations
Appropriate remedy/sanction	Plaintiffs sought to avoid contempt/sanctions and argued against sealing	Defendants sought sealing of the brief and a show-cause order for sanctions for noncompliance	Court ordered Doc. 193 sealed and directed Plaintiffs to appear and show cause why civil contempt sanctions should not be imposed

Key Cases Cited

Lahr v. Fulbright & Jaworski, L.L.P., 164 F.R.D. 204 (N.D. Tex. 1996) ("clearly erroneous" standard applies to magistrate judge's factual findings)
Smith v. Smith, 154 F.R.D. 661 (N.D. Tex. 1994) (discussing review standard for magistrate judge non-dispositive rulings)