UNITED STATES v. REAL PROPERTY LOCATED IN LOS ANGELES CALIFORNIA (2023)

Proceedings: ORDER RE: STATE OF KUWAIT'S MOTION FOR PROTECTIVE ORDER [Dkt. No. 182]

Before the Court is the Government of the State of Kuwait's Motion in Connection with Proposed Protective Order filed on October 16, 2023 (the “Motion”). (Dkt No. 182.) Claimant Al-Sabah joined in the Motion. On October 25, 2023, Plaintiff United States of America filed a Response to the Motion (dkt. no. 190) and the Noval Claimants filed their Opposition (“Oppo.”) to the Motion (dkt. no. 191). The Government of Kuwait filed a Reply in support of the Motion on November 1, 2023. (Dkt. No. 192.) On November 15, 2023, the Court heard oral argument via Zoom video conference and took the matter under submission. (Dkt. No. 196.)

For the reasons outlined below, the Motion is DENIED.

I. BACKGROUND

A. The Motion

Plaintiff United States of America (“Plaintiff”) commenced this civil forfeiture action pursuant to 18 U.S.C. §§ 981(a)(1)(A) and 981(a)(1)(C) on July 16, 2020 against certain real property located in Los Angeles, California. (Dkt. No.1 (Compl. at ¶ 5).)

In the Motion, the State of Kuwait asks the Court to include two specific provisions in a proposed stipulated protective order that would allow the State of Kuwait to make retroactive confidentiality designations of information previously produced by other parties in this lawsuit. First, the State of Kuwait seeks entry of a protective order that would afford all non-producing parties a “15-day period during which they may designate as confidential materials (including deposition testimony) that are produced or elicited by other Parties” in this action. (Notice of Motion at 2 (emphasis in original).) Second, it seeks “a 30-day lookback period during which it may review and designate as confidential any previously produced material containing information which the State of Kuwait deems to be confidential, as defined by the protective order.” (Id. (emphasis added).)

The State of Kuwait argues that these proposed deviations from the Court's Model Protective Order are necessary to protect sensitive information of the State of Kuwait because Claimant Al-Sabah previously served as “the former minister of Defense State of Kuwait.” (Motion at 2.) The State of Kuwait emphasizes that it “only joined this lawsuit as a claimant in March 2023 after nearly 200,000 pages of discovery had already been produced by other parties.” (Id.) Furthermore, the State of Kuwait maintains that the 30-day “look back” period will not delay the prosecution of this case and will not result in any “material prejudice” to other parties to the action. (Id.) More broadly, the State of Kuwait argues that information and documents in this Action – regardless of the source of the material or the producing Party – involve the State of Kuwait's confidential, proprietary and/or private information. (Id. at 3.) Further, the State of Kuwait asserts that “[a]ny look-back designations would need to be completed within 30 days of entry of the protective order.” (Id. at 4.)

B. The Opposition

In the Opposition, the Noval Claimants argue that the Motion “lacks any authority for a Court or a non-party to retroactively designate discovery produced by a different party, that has already been widely distributed and utilized, as confidential or subject to a protective order.” (Oppo. at 1.) The Noval Claimants also point out that the Motion does not identify any specific information that “would be a Kuwait State secret or confidential.” (Id. at 2.) Noval Claimants also point to settled Ninth Circuit law requiring a party to show “good cause” for a protective order by identifying specific documents and likely harm or prejudice to the party seeking the protective order. (Oppo. at 4 (internal citations omitted).)

Additionally, Noval Claimants emphasized that the Court has already allowed testimony that may be given in upcoming depositions by Al-Sabah or a Kuwait official to be designated as confidential, as necessary. (Id.)

In addition, to the extent Claimant Al-Sabah joined in the Motion, Noval Claimants point out that Al-Sabah has been a party to the case since its commencement and “has no basis now to seek to be able to retroactively designate discovery as confidential.” (Oppo. at 2, n.1.)

Finally, Noval Claimants argue that any order granting the State of Kuwait authority to retroactively make confidential designations for documents produced by other parties would be an illegal prior restraint insofar as it would restrict future speech or require already-published speech, i.e., documents previously exchanged in discovery without any limitations, to be withdrawn from circulation among the parties pursuant to subsequent confidential designations. (Oppo. at 5-6.)

C. The Reply

In the Reply, the State of Kuwait reiterates that deviations from the Court's Form Stipulated Protective Order are necessary and appropriate based on the “unique facts of this case.” (Reply at 2.) The State of Kuwait argues that its proposal is “designed to minimize the burden of any cross-designation on the Producing Party” and insists that it does not “seek to impose a prior restraint on speech, as the Parties would only be required to maintain discovery material as confidential from the time it is designated, not retroactively[.]” (Id.) (emphasis in original).

The State of Kuwait also argues that is has demonstrated good cause for its proposed provisions and returns to its primary argument, that the authority to order such retroactive designations and a “look-back” period for confidential designations is based solely on the Court's “broad discretion.” (Reply at 3-4.)

The State of Kuwait urges that it “merely requests protection of its confidential information at the discovery stage.” (Id. at 5.)

II. DISCUSSION

A. Legal Standard

Rule 26 (c) governs protective orders and provides in relevant part:

A party or any person from whom discovery is sought may move for a protective order in the court where the action is pending ․ [.] The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following:

(A) forbidding the disclosure or discovery;

(B) specifying terms, including time and place of the allocation of expenses, for the disclosure or discovery;

(C) prescribing a discovery method other than the one selected by the party seeking discovery;

(D) forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters;

(E) designating the persons who may be present while the discovery is conducted;

(F) requiring that a deposition be sealed and opened only on court order;

(G) requiring that a trade secret, or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way; and

(H) requiring that the parties simultaneously file specified documents or information in sealed envelopes, to be opened as the court directs.

Fed. R. Civ. P. 26(c). “A party asserting good cause bears the burden, for each particular document it seeks to protect, of showing that specific prejudice or harm will result if no protective order is granted.” Phillips ex rel. Estates of Byrd v. General Motors Corp., 307 F.3d 1206, 1212 (9th Cir. 2002). District courts have broad discretion in controlling discovery. Slater v. Morton, 797 F. App'x 323, 325 (9th Cir. 2020) (explaining that district court rulings on discovery will not be overturned unless there is an abuse of discretion).

B. Analysis

As an initial matter, the Court has not located any decision, published or unpublished, where a federal court, in this Circuit or beyond, has entered a protective order that permits retroactive confidentiality designations by a non-producing party or look-back designations by non-producing parties after information has already been widely disseminated in discovery.

Second, the plain language of Rule 26(c) refers to “any party or any person from whom discovery is sought.” Fed. R. Civ. P. 26(c) (emphasis added). The Rule unequivocally indicates that the producing party or person has the right to protect the disclosure of the information it is producing and bears the burden of showing good cause for doing so. Nothing in Rule 26 or the Advisory Committee Notes thereto allows or even suggests the propriety of allowing non-producing parties or persons to designate as confidential information already produced by other parties.

The State of Kuwait's arguments for the Court's authority to include such provision in the proposed protective order rest solely on the Court's “broad discretion to enter a protective order upon a showing of good cause.” (Motion at 6.) However, the Court's broad discretion does not relieve a party requesting confidential treatment of its own “burden, for each particular document it seeks to protect, of showing that specific prejudice or harm will result if no protective order is granted.” Foltz v. State Farm. Mut. Auto. Ins., 331 F.3d 1122, 1130 (9th Cir. 2003) (internal citations omitted).

At the hearing, the State of Kuwait asserted that it only seeks to retroactively designate a small number of documents as confidential, but it has not articulated any specific harm or prejudice that will result from the use of documents already produced in discovery months, if not years, before the State of Kuwait joined in this action. Oddly, the State of Kuwait's insistence that other parties would “only be required to maintain discovery material as confidential from the time it is designated, not retroactively” belies the need for confidentiality in the first place. (See Reply at 2.) If documents and information are only “confidential” on a forward-going basis, then they necessarily were not confidential to begin with and no good cause has been shown to support a confidential designation going forward either.

Thus, even if a retroactive procedure for designation by a non-producing party were permitted under Rule 26(c), the State of Kuwait has not met its burden of making a particularized showing of good cause nor has it alleged specific prejudice or harm. See Beckman Industries, Inc. v. Int'l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (“Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.”) (citing Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir. 1996)).

The Motion states in broad terms that “good cause exists for the Court to enter a protective order to allow the State of Kuwait to designate as confidential any discovery materials produced by other Parties in this Action prior to its entry into the case, and which reflect sensitive information of the State of Kuwait.” (Motion at 6.) Further, the State of Kuwait asserts that “much of the discovery material, even that in the custody of other Parties, contains information relating to the State of Kuwait, its government, finances, and operations.” (Id.) But general assertions that the information may relate to a nation's “government, finances and operations” does not articulate how such information necessarily may harm or prejudice the non-producing nation. Indeed, this is precisely the type of generalized assertion that the Ninth Circuit rejected as inadequate to establish “good cause” in Beckman and that this Court also finds inadequate here.

Thus, the Court concludes that the State of Kuwait's request for a modified protective order is wholly inconsistent with Rule 26(c), and neither necessary nor appropriate. The State of Kuwait has not made a particularized showing of prejudice or harm that may arise from any documents that have already been produced by other parties and distributed among the litigants for months.

The precedent that the State of Kuwait asks this Court to set would upend discovery in any litigation where a party is later joined and claims that discovery produced by other parties months or years prior should be retroactively designated as confidential. The burden, expense, and delay such a provision would entail directly contravenes the Court's and the parties’ obligations under Rule 1 of the Federal Rule of Civil Procedure, which require that the rules be construed and administered “to secure the just, speedy and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1.

III. CONCLUSION

Accordingly, for the reasons stated above, the Motion is DENIED in its entirety.¹

IT IS SO ORDERED.

FOOTNOTES

1.   Because the Court fully resolves the Motion based on its procedural deficiencies, the Court need not reach Noval Claimants’ prior restraint arguments.

Karen L. Stevenson, Chief United States Magistrate Judge