By Mathea K.E. Bulander and Maggie Y. Cass

Over the past few years, a growing pattern has emerged in the federal courts concerning challenges questioning the factual basis for confidentiality designations.  With increasing frequency, courts are applying enhanced scrutiny on confidentiality designations and requiring the party making the designations to provide specific fact testimony supporting each one.  This pattern continues to be on display, most recently in the District of New Jersey’s opinion in In re Valsartan N-Nitrosodimethylamine (NDMA), Losartan, & Irbesartan Prod. Liab. Litig., No. CV 19-2875 (RBK/JS), 2021 WL 75258 (D.N.J. Jan. 8, 2021).  The court’s opinion not only highlights the risks of insufficient factual support for confidentiality designations but brings to light the need for parties to evaluate whether they can take advance actions to anticipate challenges and avoid resulting consequences.

In Valsartan, the plaintiffs challenged defendant Torrent’s confidentiality designations for five “exemplar” documents and asked the court to extend its ruling to all similar documents. Plaintiffs argued the documents should be de-designated because (1) Torrent had failed to follow procedures to protect the same as required in the consent order, and (2) the documents failed to satisfy the required criteria for confidentiality.  2021 WL 75258 (D.N.J. Jan. 8, 2021).  The court agreed that there was no evidence that the documents contained information that could cause competitive harm if disclosed (it also agreed with the plaintiffs’ procedural arguments).  Characterizing Torrent’s affidavit in support of its designations as “conclusory” and “self-serving,” the court explained that “[i]t is not the case that the Court must accept Torrent’s affidavit at face value.”  Id. at *5.  

The court’s opinion makes significant reference to Torrent’s affidavit, including quoted statements that the defendant’s customers “expect that [Torrent] will keep their communications confidential” and “it would give competitors insight into [Torrent’s] communications with its suppliers and the process used.”  Id.  The court also reviewed the documents designated confidential and found that none of the emails met the standard for confidentiality but reflected routine business operations:

One, the emails do not contain ‘proprietary, trade secret and/or highly confidential information.’ Two, the emails do not have the potential ‘for causing [significant] competitive harm to [Torrent] or giving a competitive advantage to others.’  At bottom, [defendant’s] emails involve what appears to be routine business communications.

Id. at *6. 

Ultimately, the court concluded that “Torrent’s affidavit does not support a showing that a particularized serious harm would or could result from the de-designation of its documents.”  Id. at *7.

The conclusion in Valsartan underscores the need for specific factual support for confidentiality designations.  Courts are applying increasing scrutiny to producing parties’ designations, and a party merely “calling a document confidential does not make it so in the eyes of the court.”  Stroup v. United Airlines, Inc., No. 15-CV-01389-WYD-CBS, 2016 WL 7176717, at *4 (D. Colo. Sept. 16, 2016) (citing In re Estate of Martin Luther King, Jr., Inc. v. CBS, Inc., 184 F. Supp. 2d 1353, 1362 (N.D. Ga. 2002)); see also Heath v. Tristar Prod., Inc., No. 2:17-CV-02869-GMN-PAL, 2018 WL 4512052, at *2 (D. Nev. Sept. 20, 2018) (“[A] blanket protective order does not contain a particularized finding to keep any specific document confidential…”).  Even a good faith belief in a designation may be insufficient absent objective and specific factual support.  Stroup, 2016 WL 7176717, at *11 (“[A]s a general matter a ‘good faith’ standard for designating information as confidential is amorphous and prone to spark designation disputes.  Arguably, a subjective good faith standard could be satisfied if counsel claims an honest belief that the designation is proper, even if that designation is objectively unreasonable.”).  

Instead, producing parties must provide some specificity regarding the risks associated with disclosing designated documents, moving beyond generalized statements of competitive harm or disadvantage.  Compare Dotson v. Experian Info. Sols., Inc., No. CIV-17-575-D, 2019 WL 440588, at *2 (W.D. Okla. Feb. 4, 2019) (finding an “18-page affidavit explain[ing] in specific detail why each document is proprietary and identifies risks associated with disclosure, including identity theft and exploitation by competitors” sufficient to support designations) with Williams v. Baptist Healthcare Sys., Inc., No. 3:16-CV-00236-CRS, 2018 WL 989546, at *3 (W.D. Ky. Feb. 20, 2018) (explaining that although the producing party’s “affidavit provides an explanation of harm that could occur, this type of harm is too speculative to constitute a ‘clearly defined and serious injury.’”).

As shown in this recent example, not only are disputes over confidentiality designations disruptive, they can also be costly and time-consuming distractions from the merits of a case, yet are an “incessant dispute that plagues complex litigation.”  Valsartan, 2021 WL 75258, at *1.  Worse, failure to take mindful steps to create the record that supports a sealing order creates a significant risk of personal or corporate information that should not be publicly available is exposed unnecessarily.  Given the pattern of increased scrutiny across courts, producing parties should expect that requesting parties will bring increased intensity to confidentiality challenges in the next year.  It is important to carefully consider whether steps can be taken in anticipation of such challenges.