John J. Tollefsen Complex Litigation Law Blog on Lawyers.com

McCallum v. Allstate Property and Cas. Ins. Co., --- P.3d ----, 2009 WL 824428 (Wash.App. Div. 2 Mar 31, 2009) (NO. 36624-0-II)

The trial court found that Allstate Insurance Company’s claim manuals, training manual, and claim bulletins were not subject to a protective order and could be made public. Division Two granted discretionary review.

This case is part of a nationwide battle between Allstate and plaintiffs lawyers to force the company to change its practices and make reasonable settlement offers.

Typically parties to litigation agree on broad protective orders because the plaintiff wants to recover damages, not to make a public point. The plaintiff in this case wanted to share the documents among attorneys in other cases being litigated against Allstate. According to the plaintiff, Allstate has been playing a game of “hide and seek” in responding to discovery requests in bad faith throughout the country, thereby requiring plaintiffs to expend significant resources litigating discovery disputes to obtain the documents.

This unusual case provided the court with an opportunity to recite the legal standard for issuance of a protective order.

In determining whether court records may be sealed from public disclosure, a court begins with the presumption of openness. Dreiling v. Jain, 151 Wn.2d 900, 907, 93 P.3d 861 (2004). The Washington State Constitution requires that “[j]ustice in all cases shall be administered openly.” A party may overcome this presumption of openness by establishing certain court records should be sealed “to protect other significant and fundamental rights.”

The Washington Supreme Court has outlined standards applicable for sealing records in three distinct categories: the raw fruits of discovery, trial proceedings, dispositive motions, and records attached to those motions. Seattle Times Co. v. Rhinehart, 467 U.S. 20, 33, 104 S.Ct. 2199, 81 L.Ed.2d 17, cert. denied, 467 U.S. 1230 (1984). The documents at issue in this case are the fruits of raw discovery.

 CR 26(c) provides the court may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including ... (7) that a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way.

Washington recognizes a distinction between protecting documents attached to dispositive motions and raw documents produced in discovery because “‘[m]uch of the information that surfaces during pretrial discovery may be unrelated, or only tangentially related, to the underlying cause of action.’

 The Dreiling court  adopted the principles and standards that the Ninth Circuit articulated in Foltz v. State Farm Mutual Automobile Insurance Company, 331 F.3d 1122 (9th Cir.2003). In Foltz, public interest groups moved to intervene to gain access to the sealed discovery material. The Ninth Circuit, interpreting Federal Rules of Civil Procedure 26(c), held that trial courts should generally refrain from approving blanket protective orders.

 A party seeking a protective order bears the burden of showing good cause for each particular document it seeks to protect. To establish good cause, the party must show that specific prejudice or harm will result if no protective order is granted. Unsubstantiated allegations of harm will not suffice. Where possible, the party must provide specific factual demonstrations supported by affidavits and concrete examples rather than by broad or conclusory allegations of potential harm. Rhinehart used the same legal standard.

Since Allstate did not establish harm or that competitors would gain an advantage from the availability of the documents, there was no basis for a protective order.

Plaintiff attempted to obtain an award of attorney fees but since it had not prevailed at trial yet, the request was premature.

Will the release of the documents turn Allstate into a “good hands” company? The jury is still out.