Michigan Business Court Enforces Protective Order Across Cases to Preclude Use of Confidential Documents

In a recent opinion, Michigan Business Court Judge Christopher Yates addressed whether a protective order against disclosure in one case could be enforced in a later case.

During the first case, a non-party bank produced discovery documents subject to a stipulated protective order, signed by Judge Yates. The first dispute was between two LLCs. The defendant LLC had subpoenaed the bank of the plaintiff LLC (“Blue Star”).

The second litigation involved claims by Blue Star’s creditors against Blue Star, the bank, an individual and his family members, and a third company not party to the original litigation.  The original LLC defendant, which had obtained the documents at issue in the first case, was not a party in the second case.

The bank, individual defendant, and the company sought a declaration blocking the creditors from using the documents produced under the protective order in the first litigation. The creditors were represented by the same counsel who represented the defendant LLC in the first action. That counsel still had copies of Bates numbered bank documents from the first litigation (the possession of which Judge Yates did not find improper). The issue, however, was whether those documents could be used in any way outside of that initial litigation.

The protective order provided that documents produced in the first litigation “shall be exclusively used for the purposes of prosecuting or defending the claims in” that litigation. Judge Yates found the “language unmistakably prohibits any use of the documents outside the context” of the first litigation.

In effect, the issue was whether the protective order somehow expired after the first litigation ended. Judge Yates rejected that notion, ruling that the clear language of the protective order would be rendered meaningless were it simply to expire once the first case ended.

He did, however, refuse to enter a contempt order dismissing the creditors’ claims in the second action, as a sanction for attempting to use the documents in violation of the protective order. Rather, enforcing the protective order in the second litigation was a sufficient remedy under the circumstances, where the case was in its early stages and use of the documents could be properly restricted.

Judge Yates found that the protective order prohibited any use in the second litigation, by any party, of the Bates numbered documents from the first litigation. Thus, “the creditors are free to develop claims as they see fit, but the Court shall flatly prohibit them from supporting their claims with any documents that [the bank] or anyone else surrendered during discovery under the protective order in the [first] litigation.”

A copy of the protective order is attached to Judge Yates’ opinion, both of which can be found here.

Posted by Lee Applebaum