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Federal Trade Commission v. Sysco Corporation

United States District Court, District of Columbia

March 31, 2015

Federal Trade Commission, et al., Plaintiffs,
v.
Sysco Corporation, et al., Defendants.

MEMORANDUM OPINION AND ORDER

AMIT P. MEHTA, District Judge.

One of the key features of our civil justice system is that parties to a lawsuit are required to exchange information relevant to their dispute before a trial. The reason for this practice is relatively simple-resolving conflicts in a court of law is not a game of "blind man's bluff, " but "a fair contest with the basic issues and facts disclosed to the fullest practicable extent." United States v. Proctor & Gamble Co., 356 U.S. 677, 682-683 (1958). An open exchange of information prevents trial by ambush. Each side must have the opportunity to fully present its case and to test the other side's evidence through cross-examination of witnesses and presentation of contrary evidence. Such transparency also aids the judge or jury tasked with deciding a case. If the parties are better informed, so too will be the judge or jury who bears the responsibility of deciding which side will prevail.

The importance of transparency is heightened in cases in which the government seeks to block or sanction private behavior. For any private actor, whether an individual or a large corporation, to be named a defendant in a lawsuit brought by the government is no small matter. The stakes in such lawsuits are often of great consequence. Money-sometimes vast amounts of it-is on the line. So, too, are personal and institutional reputations. And then there is the fundamental question at the heart of each such lawsuit: whether a private actor's behavior violated the law or, as in this case, whether its proposed behavior will exceed what the law allows. Because the stakes are so high and the consequences so profound when the government is the plaintiff, the rules that require a transparent exchange of information take on particular importance in promoting and ensuring a fair process.

One of the key pieces of information that parties exchange in every case is the identity of witnesses. In fact, the Federal Rules of Civil Procedure-the rules that apply to all civil lawsuits filed in federal courts-require the parties to exchange "the name and, if known, the address and telephone number of each individual likely to have discoverable information." Fed.R.Civ.P. 26(a)(1)(A)(i). It was not always this way. "[T]he traditional view had been that a party could not be required to disclose the names of its witnesses in order that there should be no opportunity to tamper with them." 8 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure ยง 2013 (3d ed. 2010). Today, however, the rule requiring the disclosure of witnesses is "based on the principle that persons having knowledge of relevant facts are not necessarily the witnesses of any particular party." Id. (footnote omitted). Such disclosure serves two primary purposes. First, it enables a party directly to interview or depose the witness or collect evidence from the witness to test his or her statements. And, second, it allows a party to develop its own evidence through available sources, such as its own employees, to rebut the witness's statements. This tug-of-war of obtaining witness testimony to support one side's position, and the corresponding effort by the opposing side to rebut that same witness, is foundational to our adversarial system.

A. The Motions for a Protective Order

It is against this backdrop that the court has considered the 24 motions for a protective order that it received from various competitors and customers of Defendants Sysco Corp., USF Holding Corp., and U.S. Foods, Inc., who provided declarations to the Plaintiff Federal Trade Commission ("FTC") during its investigation. Before March 18, 2015, when the court issued its Memorandum Opinion and Order ("March 18th Opinion"), the declarants' identities were available only to outside counsel and a limited number of in-house lawyers at each Defendant company. ECF No. 92 at 1. In the March 18th Opinion, the court permitted Defendants to disclose the declarants' identities to their employees for the limited purpose of preparing their defense. Id. at 2. The March 18th Opinion prohibited Defendants from disclosing to their employees a declarant's trade secrets, competitive intelligence or similar information designated as "Confidential Material" under the Protective Order . Id.

Before Defendants could disclose declarants' identities, the court permitted the declarants to seek protective orders under Rule 26(c) to maintain the secrecy of their identities. Id. at 6. The court initially allowed any declarant wishing to file a motion for protective order to do so within 24 hours of Defendants providing notice to the FTC of their intent to disclose a declarant's identity. Id. The court modified the 24-hour time period during a telephone conference on March 19, 2015, after learning that Defendants had indicated their intent to disclose the identities of every declarant. The court gave the FTC additional time to notify all of the declarants about the Defendants' intention to disclose, and ordered the FTC to provide to Defendants by noon on March 20, 2015, the names of any declarants who objected to disclosure. Minute Order, Mar. 19, 2015. The court further ordered that any objecting declarant who wished to seek a protective order would have until noon on March 24, 2015, to do so. Id. Recognizing that objecting declarants might have difficulty retaining local counsel in such a short period of time, the court permitted the FTC to file on the declarants' behalf. Id.

On March 24, 2015, the court received requests for a protective order from 24 declarants. ECF Nos. 98-101. The requests came in various forms-emails, letters, and formal pleadings. Whatever their form, the court treats them all as "motions" under Rule 26(c). The motions were properly filed under seal, because the declarants' identities are not presently on the public record. Consequently, the court will refer to declarants in this Memorandum as "Declarant A, " "Declarant B, " etc., except for the declarant for Third-Party Intervener Shamrock Foods Company, who shall be referred to as "Shamrock Foods Executive." Filed under seal as Exhibit A to this Memorandum is a list of the moving declarants, their respective letter designations, and the electronic docketing numbers of their respective motions.

The declarants generally asked the court to deny Defendants' employees access to their identities. A few asked the court to modify the Protective Order to add certain procedural safeguards to Defendants' disclosure and use of a declarant's name. See, e.g., ECF Nos. 100-11, 100-13, 101. Defendants opposed the motions, reiterating their need for disclosure of declarants' identities and arguing that none of the declarants had met its burden to justify a protective order. Defs.' Opp'n, ECF No. 102.

B. The Applicable Standard

The court starts by reiterating what it said in its March 18th Opinion. The Federal Rules of Civil Procedure were devised to provide for "liberal" pretrial discovery. Seattle Times Co. v. Rhinehart, 467 U.S. 20, 34 (1984). The liberality of the Rules applies to discovery sought from third parties, which as the Supreme Court observed in Seattle Times Co. "often allow[s] extensive intrusion into the affairs of both litigants and third parties." Id. at 30. However, a party's right to discovery from a third party is not without limits. Because "[l]iberal discovery is provided for the sole purpose of assisting in the preparation and trial, or the settlement, of litigated disputes... it is necessary for the trial court to have the authority to issue protective orders conferred by Rule 26(c)." Id. at 34.

Rule 26(c) allows a court for "good cause" to "issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Fed.R.Civ.P. 26(c)(1). Although Rule 26(c) does not speak explicitly to a person's privacy rights or interests, "such matters are implicit in the broad purpose and language of the Rule." Seattle Times Co., 467 U.S. at 35, n. 21. A person seeking a protective order "must make a specific demonstration of facts in support of the request as opposed to conclusory or speculative statements about the need for a protective order and the harm which will be suffered without one." Huthnance v. District of Columbia, 255 F.R.D. 285, 296 (D.D.C. 2008) (emphasis added) (citation omitted) (internal quotation marks omitted). "Accordingly, courts apply a balancing test, weighing the movant's proffer of harm against the adversary's significant interest in preparing for trial." Id. (citation omitted) (internal quotation marks omitted). This test reflects the Rules' preference for a liberal exchange of information to settle disputes, except where a party is using the tools of discovery in an abusive manner. See Seattle Times Co., 467 U.S. at 34-35.

C. The Customer Declarants

Eighteen of the 24 motions were filed by customers of either Sysco or U.S. Foods (collectively "Customer Declarants"). ECF Nos. 100-01-03, 100-05, 100-07-10, 100-12, 100-14, 100-15-22. Although each Customer Declarant expressed concerns unique to his or her own circumstances, the prevailing theme among them was the fear that Defendants would retaliate against them for providing information to the FTC. The Customer Declarants expressed worry that, if their identities became known to ...


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