Pachulia v. Usow
2:16-cv-01531
E.D. Wis.May 5, 2017Background
- Plaintiffs Pachulia and Alavidze sued R. Usow Accounting LLC and Randy Usow alleging improper preparation of plaintiffs’ tax returns; parties stipulated to a protective order covering sensitive discovery.
- Parties asked the Court to enter a protective order to avoid public disclosure of tax returns, bank, tax, and business records.
- Court recognizes protective orders are an exception to the general principle of public pretrial discovery and require good cause and narrow tailoring.
- Court finds good cause here because sensitive financial and tax materials are central to the dispute.
- Court approves the parties’ proposed protective order but modifies it to (1) prefer redaction where only portions of filings are confidential rather than blanket sealing, and (2) expressly permit public challenges to confidentiality designations.
- Court warns it will not seal its decisions and adopts usual district practices for filing redacted and sealed unredacted versions when sealing is sought.
Issues
| Issue | Plaintiffs' Argument | Defendants' Argument | Held |
|---|---|---|---|
| Whether a protective order may issue for sensitive discovery | Need protection for tax, bank, business records to litigate claims | Same—parties jointly requested protection | Court: Good cause shown; protective order granted |
| Scope: blanket sealing vs. redaction | Seek broad protection (proposed blanket language) | Agree to broad protection in stipulation | Court: Prefer redaction when only portions are confidential; modified order to require narrow redactions where feasible |
| Designation categories and timing | Designate materials CONFIDENTIAL or ATTORNEYS’ EYES ONLY at production or promptly after depositions | Same; proposed procedures included | Court: Approved categories and timing rules, allowed 10–30 day windows for late designation |
| Public access and challenges to confidentiality | Parties sought to prevent public disclosure | Agreed to protective order but did not eliminate public challenge rights | Court: Order must allow members of public to challenge designations; designating party bears burden; prevailing challenger may recover fees |
Key Cases Cited
- Am. Tel. & Tel. Co. v. Grady, 594 F.2d 594 (7th Cir. 1979) (recognizing that protective orders are an exception to public discovery rule)
- Citizens First Nat’l Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943 (7th Cir. 1999) (parties must show good cause and protective orders must be narrowly tailored)
- Jepson, Inc. v. Makita Elec. Works, Ltd., 30 F.3d 854 (7th Cir. 1994) (agreement to protective order does not obviate need to show good cause)
- County Materials Corp. v. Allan Block Corp., 502 F.3d 730 (7th Cir. 2006) (broad protective orders permissible if parties act in good faith and public may challenge sealing)
- Hicklin Eng’r, L.C. v. Bartell, 439 F.3d 346 (7th Cir. 2006) (litigation should be public to the maximum extent consistent with protecting trade secrets)