Debbie Folitz, et al. v. State Farm Mutual Automobile Insurance Company, et al.

This case calls upon us to determine when parties other
than the original litigants may gain access to materials that a court has placed under protective seal. Private and Public
Intervenors appeal. Private Intervenors appeal from the district
court's refusal to unseal discovery materials and court
records. Public Intervenors appeal from the dismissal of their
second motion to unseal documents.

This case follows upon the settlement of a lawsuit that
charged State Farm Mutual Automobile Insurance Company
("State Farm") with fraud. In district court, intervenors representing
the public moved for public access to sealed court
records from that suit. Private Intervenors - individuals
involved in collateral litigation against State Farm - sought
access to both discovery materials and court records. The district
court denied Public Intervenors' renewed motion to
unseal documents. The district court granted in part the Private
Intervenors' motions to unseal. Three categories of documents,
however, remained under seal: (1) various discovery
documents, following the denial of the Private Intervenors'
motion to modify the protective order covering them; (2) the
summary judgment motions and supporting materials; and (3)
other court records that had previously been filed under seal
pursuant to the district court's blanket protective order in discovery.
These appeals followed.

We affirm the district court's denial of the Public Intervenors'
motion. We affirm in part and reverse in part the Private
Intervenors' motions to unseal, and remand with instructions.

I. FACTUAL AND PROCEDURAL BACKGROUND

In the underlying litigation, Debbie Foltz and others alleged
that State Farm conspired with California Institute of Medical
Research & Technology ("CMR"), which provided medical
review services, to defraud insureds of personal injury protection
owed to them under their State Farm automobile policies.
Both State Farm and CMR were named as defendants in the
Foltz litigation. During the discovery process, the defendants
requested and the district court entered three protective orders. The first kept confidential all documentary evidence
and testimony concerning a motion by State Farm to disqualify
the law firm representing the plaintiff. The second specifically
protected from disclosure a floppy disk produced by
CMR during discovery. The third was a blanket protective
order designed to keep secret all other "confidential information"
produced by the parties in discovery and/or filed with
the court, absent agreement or an order by the district court.
Reproduced in full in the appendix, the protective order in
pertinent part stated that: "Confidential Information shall not
be disclosed, disseminated, or conveyed in any way by the
Producing Party, the [Requesting/]Disclosing Party or Witnesses
except as provided herein." Neither State Farm nor the
plaintiffs in Foltz could disclose covered documents without
complying with the terms of this order.1

After four years of litigation, the parties agreed to a confidential
settlement and requested that the court file be sealed.
The district court granted the request to seal all documents in
the court file except those that the parties desired to remain
unsealed. On November 23, 1998, the court entered a final
judgment of dismissal pursuant to the confidential settlement
and a stipulated order releasing the court file to State Farm
with the exception of all minute orders, the Second Amended
Complaint, the Answers to the Second Amended Complaint,
the Stipulation for Final Judgment, and the Final Judgment.

On June 1, 1999, public interest groups Texas Watch, Consumer
Action, and United Policyholders (collectively, the
"Public Intervenors") moved to intervene and to make public
the court records in the Foltz litigation and to gain access to
the discovery material. On September 14, 1999, another set of
intervenors, Tierney Adamson and Kevin Snead (collectively,
the "Private Intervenors"), moved to intervene, to unseal the
court records, and to modify the protective orders to gain
access to discovery material.3 The Private Intervenors are
engaged in collateral litigation in state courts against State
Farm. According to their attorney, the plaintiffs in these collateral
lawsuits make accusations against State Farm and
CMR similar to those made in the Foltz litigation; they allege
that State Farm conspired with CMR to wrongfully deny personal
injury coverage under State Farm automobile policies
by preparing fraudulent medical reviews.

The district court initially ruled on the intervenors' motions
on December 14, 1999. The district court granted the motions
to intervene, partially granted the motions to unseal, and
denied the motion to modify the protective order. The district
court held that the intervenors would not be given access to
discovery materials, summary judgment materials, and other
materials originally filed under seal because they contain confidential,
third-party medical and personnel files as well as
proprietary information of State Farm.

On December 29, 1999, the Private Intervenors filed a
Motion to Clarify/Modify the district court's December 14,
1999 order. On January 17, 2000, the Public Intervenors filed a motion to set a deadline for State Farm to return the court
file. On January 25, 2000, the district court entered an order
partially allowing and partially denying the Private Intervenors'
Motion to Clarify/Modify and dismissing the Public
Intervenors' motion to set a deadline for returning the court
file as moot because the file had been returned to the court.
The district court further clarified which documents in the
court file were to remain sealed in an order entered on February
17, 2000; the district court unsealed certain documents
that previously had been sealed under the original order.

On February 24, 2000, the Private Intervenors filed a
Notice of Appeal from the district court's order of January 25,
2000. On February 28, 2000, the district court filed a record
of its order setting forth the document numbers of unsealed
and sealed documents covered by its February 17, 2000 order.
The Private Intervenors filed a notice of appeal from the February
17, 2000 order on March 13, 2000.

The Public Intervenors did not appeal from the district
court's December 14, 1999, January 25, 2000, or February 17,
2000 orders. Instead, they waited until December 7, 2000 to
file a Renewed Motion to Unseal Court Records or to Compel
Showing of Confidentiality ("Renewed Motion"). The district
court denied the Renewed Motion in an order dated January
9, 2001; it held that it did not have jurisdiction to rule on the
motion and that, even if it had jurisdiction, the motion would
be denied on the merits. The Public Intervenors filed a notice
of appeal from this last order on January 31, 2001. This court
consolidated for our review their appeal with the appeals by
the Private Intervenors.

II. APPEAL BY PRIVATE INTERVENORS

A. JURISDICTION

The Private Intervenors appeal from the district court's
order dated January 25, 2000, which denied in part the motions to unseal and the motion to modify the protective
order. They also appeal from the order dated February 17,
2000, which modified the earlier order. There were no other
matters pending before the district court upon entry of the
February 17th order. Therefore, the order is appealable either
as a final order under 28 U.S.C. § 1291 or as a collateral
order. Beckman Indus., Inc. v. Int'l Ins. Co., 966 F.2d 470,
472 (9th Cir. 1992); United Nuclear Corp. v. Cranford Ins.
Co., 905 F.2d 1424, 1426 (10th Cir. 1990). See also Wilk v.
Am. Med. Ass'n, 635 F.2d 1295, 1298 (7th Cir. 1980) (appeal
from modification of protective order proper under collateral
order doctrine); Martindell v. Int'l Tel. & Tel. Corp., 594 F.2d
291, 293-94 (2d Cir. 1979) (appeal from orders granting intervenor
status and modification of protective order proper under
28 U.S.C. § 1291 because no other matter pending before the
court).

State Farm complains that the Private Intervenors failed to
appeal from what it considers to be the final order of the district
court, the minute entry on February 28, 2000, recording
the document numbers of sealed and unsealed documents.
However, the February 28, 2000 minute entry is not denominated
an "ORDER," nor does it purport to order anything. It
merely records, on a document-by-document basis, the documents
covered by the February 17, 2000 order. We find no
merit in State Farm's contention that the February 28, 2000
minute entry, rather than the February 17, 2000 order, was the
final order on the Private Intervenors' motions.

B. ACCESS TO SEALED DOCUMENTS

State Farm asserts that two categories of documents should
remain under seal: those produced during discovery under the
blanket protective order and never filed with the court, and
those filed with the court under seal regardless of whether
they were produced during discovery. Each category of document
is subject to different rules for preserving its secrecy. We will apply as relevant separate analysis to discovery documents
and to court records.

1. Right of Access to Unfiled Discovery Materials

The district court refused to modify its protective order to
allow the Private Intervenors access to unfiled discovery
materials from the Foltz litigation for use in their collateral litigation.
We review this decision for abuse of discretion. Beckman,
966 F.2d at 472.

[1] a. General application of Rule 26. Federal Rule of
Civil Procedure 26(c) states that when a party or other person
from whom discovery is sought makes a motion asserting
good cause for a protective order, "the court in which the
action is pending . . . may make any order which justice
requires to protect a party or person from annoyance, embarrassment,
oppression, or undue burden or expense," based on
any of several listed reasons. Those that appear pertinent to
the present case include specifying "terms and conditions" of
discovery, limiting "the scope of the disclosure . . . to certain
matters," requiring that "a deposition, after being sealed, be
opened only by order of the court," and particularly "that a
trade secret or other confidential research, development, or
commercial information not be revealed or be revealed only
in a designated way . . . ." FED. R. CIV. P. 26(c)(2), 26(c)(4),
26(c)(6), 26(c)(7). Any such order, however, requires that the
court's determination "identify and discuss the factors it considered
in its ‘good cause' examination to allow appellate
review of the exercise of its discretion." Phillips v. Gen.
Motors, 307 F.3d 1206, 1212 (9th Cir. 2002).

[2] 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. Id. at 1210-11 (citing San Jose Mercury News, 187
F.3d at 1102); see also Beckman, 966 F.2d at 476 ("[B]road
allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.")
(quoting Cipollone v. Liggett Group, Inc., 785 F.2d 1108,
1121 (3d Cir. 1986) (internal quotation marks omitted));
Deford v. Schmid Prods. Co., 120 F.R.D. 648, 653 (D. Md.
1987) (requiring party requesting a protective order to provide
"specific demonstrations of fact, supported where possible by
affidavits and concrete examples, rather than broad, conclusory
allegations of potential harm").

Two protective orders address unfiled discovery documents
in the instant case. One regards a floppy disk produced by
CMR. This disk does not appear in the court record, and State
Farm fails to tie any documents in the court record to the disk.
Unless the court articulates good cause for the disk to remain
under seal, that seal must be removed.

[3] Second, the district court issued a blanket protective
order, forbidding both parties to disclose any information produced
in discovery absent permission from the other party or
from the district court. Some discovery documents sealed
under this order contained confidential information that would
satisfy the "good cause" standard of Rule 26(c).4 Under the
blanket protective order, however, the district court never
required State Farm to show that specific discovery documents,
whether eventually filed with the court or not, contained
such information. While this course of action was
understandable for the unfiled documents given the onerous
burden document review entails, the blanket order makes
appellate review difficult now that an intervenor is questioning
the propriety of the original order.

[4] Apart from generally noting the existence of confidential
third party information, which may or may not have been
filed, State Farm has not asserted, much less shown, specific harm or prejudice that it expects will arise from disclosure of
any particular documents produced in discovery, as required
by Beckman. With the exception of asserting the presence of
information in medical records identifying third parties, the
confidentiality of which can be protected using procedures
described below, State Farm has failed to meet the burden
imposed by Rule 26(c) of making a "particular showing" of
good cause, nor has it alleged "specific prejudice or harm
now." Beckman, 966 F.2d at 476 (emphasis added). State
Farm has not identified any documents containing trade
secrets and financial information. In light of Beckman, without
more we cannot sustain the district court's ruling.

Now that the Private Intervenors have challenged the contention
that the unfiled discovery documents belong under
seal, the district court must require State Farm to make an
actual showing of good cause for their continuing protection
under Federal Rule of Civil Procedure 26(c). See Phillips, 307
F.3d at 1212 (remanding to district court with instructions to
conduct a "good cause" analysis); Deford, 120 F.R.D. at 653
("The burden is on the party requesting a protective order to
demonstrate that (1) the material in question is a trade secret
or other confidential information within the scope of Rule
26(c), and (2) disclosure would cause an identifiable, significant
harm.").

[5] b. Discovery by Collateral Litigants. In addition to
access to material that should not have been placed under seal
in the first instance, collateral litigants may be entitled to
modification of the original protective order permitting them
access to the properly covered material, subject to the terms
of that order. This court strongly favors access to discovery
materials to meet the needs of parties engaged in collateral litigation.
Beckman, 966 F.2d at 475. Allowing the fruits of one
litigation to facilitate preparation in other cases advances the
interests of judicial economy by avoiding the wasteful duplication
of discovery. Id.; United Nuclear, 905 F.2d at 1428
(quoting and adopting the standard laid down by the Seventh Circuit in Wilk, 635 F.2d at 1299, "that where an appropriate
modification of a protective order can place private litigants
in a position they would otherwise reach only after repetition
of another's discovery, such modification can be denied only
where it would tangibly prejudice substantial rights of the
party opposing modification."); 8 Charles Alan Wright,
Arthur R. Miller & Richard L. Marcus, Federal Practice and
Procedure § 2044.1 (2d ed. 1994). Where reasonable restrictions
on collateral disclosure will continue to protect an
affected party's legitimate interests in privacy, a collateral litigant's
request to the issuing court to modify an otherwise
proper protective order so that collateral litigants are not precluded
from obtaining relevant material should generally be
granted. Beckman, 966 F.2d at 475; Olympic Refining Co. v.
Carter, 332 F.2d 260, 265-66 (9th Cir. 1964).

[6] Nonetheless, a court should not grant a collateral litigant's
request for such modification automatically. As an initial
matter, the collateral litigant must demonstrate the
relevance of the protected discovery to the collateral proceedings
and its general discoverability therein. Requiring a showing
of relevance prevents collateral litigants from gaining
access to discovery materials merely to subvert limitations on
discovery in another proceeding. See Wilk, 635 F.2d at 1300.
Such relevance hinges "on the degree of overlap in facts, parties,
and issues between the suit covered by the protective
order and the collateral proceedings." Laurie Kratky Dore,
Secrecy by Consent: The Use and Limits of Confidentiality in
the Pursuit of Settlement, 74 Notre Dame L. Rev. 283, 366-67
(1999).

[7] We take this opportunity to clarify the mechanics of this
relevance inquiry. The case law suggests that the court that
entered the protective order should satisfy itself that the protected
discovery is sufficiently relevant to the collateral litigation
that a substantial amount of duplicative discovery will be
avoided by modifying the protective order. See Wilk, 635 F.2d
at 1300 (comparing complaints to conclude that "much, if not most," of the protected discovery would be eventually discoverable
in the collateral suit); United Nuclear, 905 F.2d at 1428
(upholding the modification of a protective order but admonishing
the district court to leave the specific "[q]uestions of
the discoverability in the [collateral] litigation of the materials
discovered in [this] litigation" to the collateral courts (quoting
Superior Oil Co. v. Am. Petrofina Co., 785 F.2d 130, 130 (5th
Cir. 1986) (internal quotation marks omitted)). No circuits
require the collateral litigant to obtain a relevance determination
from the court overseeing the collateral litigation prior to
requesting the modification of a protective order from the
court that issued the order.5 The court that issued the order is
in the best position to make the relevance assessment for it
presumably is the only court familiar with the contents of the
protected discovery.

[8] Because the district court that issued the order makes
only a rough estimate of relevance, however, the only issue it
determines is whether the protective order will bar the collateral
litigants from gaining access to the discovery already
conducted. Even if the issuing court modifies the protective
order, it does not decide whether the collateral litigants will
ultimately obtain the discovery materials. As the Fifth and
Tenth Circuits have noted, once the district court has modified
its protective order, it must refrain from embroiling itself in
the specific discovery disputes applicable only to the collateral
suits. Superior Oil, 785 F.2d at 130; United Nuclear, 905
F.2d at 1428 ("[B]ecause the underlying controversy [is] no
longer alive, ‘the court simply lack[s] power to impose any new, affirmative requirements on the parties relating to discovery.'
" (quoting Pub. Citizen v. Liggett Group, Inc., 858
F.2d 775, 781 (1st Cir. 1988)).

[9] The disputes over the ultimate discoverability of specific
materials covered by the protective order must be
resolved by the collateral courts. Id. Allowing the parties to
the collateral litigation to raise specific relevance and privilege
objections to the production of any otherwise properly
protected materials in the collateral courts further serves to
prevent the subversion of limitations on discovery in the collateral
proceedings. These procedures also preserve the proper
role of each of the courts involved: the court responsible for
the original protective order decides whether modifying the
order will eliminate the potential for duplicative discovery. If
the protective order is modified, the collateral courts may
freely control the discovery processes in the controversies
before them without running up against the protective order
of another court.

[10] Of course, before deciding to modify the protective
order, the court that issued it must consider other factors in
addition to the relevance of the protected discovery to the collateral
litigation. In particular, it must weigh the countervailing
reliance interest of the party opposing modification
against the policy of avoiding duplicative discovery. See
Beckman, 966 F.2d at 475. However, we have observed that
"[r]eliance will be less with a blanket [protective] order,
because it is by nature overinclusive." Id. at 476. As noted
above, a party seeking the protection of the court via a blanket
protective order typically does not make the "good cause"
showing required by Rule 26(c) with respect to any particular
document. Thus, reliance on a blanket protective order in
granting discovery and settling a case, without more, will not
justify a refusal to modify. "[A]ny legitimate interest . . . in
continued secrecy as against the public at large can be accommodated
by placing [the collateral litigants] under the same
restrictions on use and disclosure contained in the original protective order." United Nuclear, 905 F.2d at 1428; see also
Beckman, 966 F.2d at 476.

c. The Protective Order in This Case. We now turn to the
district court's refusal to modify its protective order as to discovery
documents in this case, examining it in light of the
procedures and considerations we have delineated above.
Here, the Private Intervenors purport to be engaged in litigation
against State Farm with allegations substantially similar
to those involved in the Foltz litigation. The Private Intervenors
accuse State Farm of conspiring with CMR to fraudulently
deny personal injury claims under its automobile
policies during a period of time overlapping that involved in
Foltz's conspiracy claim. They moved to modify the protective
order to permit access to the Foltz discovery materials for
use in their collateral litigation.

[11] The district court denied the motion to modify with little
explanation. The entire disposition with respect to this
motion consisted of the following:

[T]he proposed intervenors' motion to modify the
protective orders in this case is denied. A collateral
litigant will not be permitted to exploit another's discovery
in the sense of instituting the collateral litigation
simply as a device to obtain access to sealed
information. See Wilk v. Am. Medical Assoc., 635
F.2d 1295, 1300 (7th Cir. 1981). Federal Discovery
may not be used to merely subvert limitations on discovery
in other proceedings. Id. Thus, a collateral litigant
has no right to obtain discovery materials that
are privileged or otherwise immune from eventual
discovery in the collateral litigation.

Dec. 14, 1999 Dist. Ct. Order at 6. While these are correct
statements of legal principles, the district court utterly fails to
apply them to the facts of this case. It articulates no basis for
concluding that the information contained in the Foltz discovery would not be discoverable in the collateral litigation or
that the Private Intervenors are not bona fide litigants.

[12] Because the district court failed to undertake the relevance
determination, we find that it abused its discretion in
denying the Private Intervenors' motion to modify. If any
properly protected Foltz discovery is relevant to the collateral
suits, the district court should have modified the protective
order in the interest of avoiding duplicative discovery; the
courts overseeing the collateral litigation can settle any disputes
as to whether particular documents are discoverable in
the collateral litigation. Consistent with the law as outlined
above, State Farm's reliance on the overinclusive blanket protective
order is an insufficient reason to refuse to modify the
protective order. See Olympic Refining, 332 F.2d at 265 ("All
that may be done is to afford such protection from disclosure
as is practicable, consistent with the right of access thereto for
purposes of litigation."). Any trade secrets, financial information,
and third-party medical or personnel information can be
protected by placing the Private Intervenors under the same
use and disclosure restrictions contained in the original protective
order.

We therefore remand to the district court with instructions
to make a relevance determination based upon a comparison
of the complaints in the Foltz litigation and the collateral
suits, the contents of the protected discovery, the general rules
on the scope of discovery in the collateral jurisdictions, and
any other relevant factors that are in conformity with this
opinion.

2. Right of Access to Judicial Records

[13] Phillips notes that "[m]uch of the information that surfaces
during pretrial discovery may be unrelated, or only tangentially
related, to the underlying cause of action. Therefore,
restraints placed on discovered, but not yet admitted, information
are not a restriction on a traditionally public source of information." 307 F.3d at 1213 (quoting Seattle Times Co. v.
Rhinehart, 467 U.S. 20, 33 (1983)). When discovery material
is filed with the court, however, its status changes. If the documents
are not among those which have "traditionally been
kept secret for important policy reasons," Times Mirror Co.
v. United States, 873 F.2d 1210, 1219 (9th Cir. 1989), then
"the public policy reasons behind a presumption of access to
judicial documents (judicial accountability, education about
the judicial process etc.)," Phillips, 307 F.3d at 1213, apply.
In Nixon v. Warner Communications, 435 U.S. 589, 597
(1978), the Supreme Court recognized a federal common law
right "to inspect and copy public records and documents."
This right extends to pretrial documents filed in civil cases,
including materials submitted in connection with motions for
summary judgment. San Jose Mercury News, 187 F.3d at
1102; Republic of the Philippines v. Westinghouse Elec.
Corp., 949 F.2d 653, 660 (3d Cir. 1991).

In this circuit, we start with a strong presumption in favor
of access to court records. Hagestad v. Tragesser, 49 F.3d
1430, 1434 (9th Cir. 1995) (recognizing strong presumption
in context of civil trial); accord United States v. Edwards, 672
F.2d 1289, 1294 (7th Cir. 1982) (same in context of criminal
trial); United States v. Criden, 648 F.2d 814, 823 (3d Cir.
1981) (same). The common law right of access, however, is
not absolute and can be overridden given sufficiently compelling
reasons for doing so. San Jose Mercury News, 187 F.3d
at 1102. In making the determination, courts should consider
all relevant factors, including:

the public interest in understanding the judicial process
and whether disclosure of the material could
result in improper use of the material for scandalous
or libelous purposes or infringement upon trade
secrets. . . . After taking all relevant factors into consideration,
the district court must base its decision on
a compelling reason and articulate the factual basis for its ruling, without relying on hypothesis or conjecture.

Hagestad, 49 F.3d at 1434 (internal citations and quotations
omitted). This process allows for meaningful "appellate
review of whether relevant factors were considered and given
appropriate weight." Id. If the district court conscientiously
balances the competing interests and articulates compelling
reasons supported by specific factual findings, its decision
will be reviewed only for an abuse of discretion. San Jose
Mercury News, 187 F.3d at 1102-03 (reviewing for clear error
a district court decision "based on a failure to recognize the
existence of a pre-judgment federal common law right of
access to civil court documents").

[14] In Phillips, however, we carved out an exception to the
presumption of access. The issue presented in that case was
whether the presumption of access applies to material filed
with the court under seal pursuant to a valid protective order.
307 F.3d at 1213. We held that "when a party attaches a
sealed discovery document to a nondispositive motion, the
usual presumption of the public's right of access is rebutted."
Id. (emphasis added). We reasoned that the presumption of
access was rebutted because "[w]hen a court grants a protective
order for information produced during discovery, it
already has determined that ‘good cause' exists to protect this
information from being disclosed to the public by balancing
the needs for discovery against the need for confidentiality."
Id. Applying the presumption of access in such a circumstance
would undermine a district court's power to fashion
effective protective orders. In short, "good cause" suffices to
warrant preserving the secrecy of sealed discovery material
attached to nondispositive motions. As we noted previously,
to have been sealed at all, the discovery material in this case
should have met the "good cause" standard of Rule 26(c).

[15] Our holding in Phillips was expressly limited to the
status of materials filed under seal when attached to a non-dispositive motion. Here, some of the sealed materials in the
public record are attached to the summary judgment motions.
There are good reasons to distinguish between dispositive and
nondispositive motions. In Seattle Times, the Supreme Court
noted that "[m]uch of the information that surfaces during
pretrial discovery may be unrelated, or only tangentially
related, to the underlying cause of action." 467 U.S. at 33.
The same cannot be said for materials attached to a summary
judgment motion because "summary judgment adjudicates
substantive rights and serves as a substitute for trial." Rushford
v. The New Yorker Magazine, 846 F.2d 249, 252 (4th Cir.
1988). As the Fourth Circuit held in Rushford, "once the
[sealed discovery] documents are made part of a dispositive
motion [e.g., a summary judgment motion ruled upon by the
court] . . . they lose their status of being raw fruits of discovery,"
and no longer enjoy protected status "without some
overriding interests in favor of keeping the discovery documents
under seal." Id. at 252.

[16] In short, we follow the lead of the Fourth Circuit and
hold that the presumption of access is not rebutted where, as
here, documents subject to a protective order are filed under
seal as attachments to a dispositive motion. Id. The Hagestad
‘compelling reasons' standard continues to apply.

In the instant case, the district court denied the Private
Intervenors access to approximately eighty-five documents
that had been filed with the court in the Foltz litigation,
including discovery and summary judgment motions and supporting
materials. At first glance, it appears that the district
court identified compelling reasons for maintaining a seal on
certain court records. It conducted an in camera review of the
documents in the court file6 and recognized the proper legal standards for denying access to court records as described
above. It also acknowledged that "[a] litigant who might be
embarrassed, incriminated, or exposed to litigation through
dissemination of materials is not, without more, entitled to the
court's protection . . . ." Dec. 14, 1999 Dist. Ct. Order at 12
(citing Nestlé Foods Corp. v. Aetna Cas. and Sur. Co., 129
F.R.D. 483, 486 (D.N.J. 1990); Wauchop v. Domino's Pizza,
Inc., 138 F.R.D. 539, 546-47 (N.D. Ind. 1991); Culinary
Foods, Inc. v. Raychem Corp., 151 F.R.D. 297, 301 (N.D. Ill.
1993)). The court concluded that State Farm failed to provide
"articulable facts" showing a compelling reason to seal the
entire court file. Therefore, it granted the intervenors' motion
to unseal in part.

State Farm has asserted what it considers to be compelling
reasons to retain the seal on the remaining court records. At
trial, State Farm argued that these materials contain confidential
financial information, third-party medical records, personnel
files, and trade secrets. The district court deemed these
compelling reasons to maintain the seal on the summary judgment motions and supporting materials as well as other materials
originally filed under seal. The district court rejected the
Private Intervenors' argument for redaction of confidential
information, concluding that redaction would leave only
meaningless connective words and phrases that would be of
no benefit in collateral litigation.

The district court's analysis is misleading. We have previously
noted State Farm's failure to identify where in the documents
confidential financial information and trade secrets are
to be found. Our review of the record also reveals that, in fact,
very few of the documents contain any third-party medical or
personnel information. Most of the material in the sealed
record is composed of depositions of doctors and CMR
employees regarding CMR's relationship with State Farm,
CMR's boilerplate medical reports, and the forgery of doctors'
signatures on the reports. Contrary to the district court's
conclusion, the limited number of third-party medical and
personnel records can be redacted easily to protect third-party
privacy interests while leaving other meaningful information.

In considering the Private Intervenors' redaction argument,
the district court overestimated the amount of private information
that would have to be concealed. Simply redacting the
identifying information of third parties (e.g., their names,
addresses, telephone numbers, and social security numbers)
from these records and disclosing the remaining information
would not injure the third parties but would reveal only State
Farm's actions in processing personal injury claims. This disclosure
might harm State Farm by exposing it to additional
liability and litigation, as noted above, but a litigant is not
entitled to the court's protection from this type of harm. See
Nestlé Foods, 129 F.R.D. at 486.

We do not see how the presence of a small number of thirdparty
medical and personnel records that can be redacted with
minimal effort constitutes "good cause," let alone a compelling
reason, for this protective order to overcome the strong presumption in favor of public access. The district court
abused its discretion in concluding that this first proposed
compelling reason justified maintaining the seal on these judicial
records. See Hagestad, 49 F.3d at 1434 (observing that
meaningful appellate review of an order sealing court records
entails determining "whether relevant factors were considered
and given appropriate weight").

State Farm also argues that a second compelling reason,
unarticulated by the district court, justifies maintaining a seal
on all records originally produced during discovery. Specifically,
State Farm contends that it relied on the confidentiality
provisions of the protective order issued by the district court
in consenting to discovery requests and settling the Foltz litigation.
We must therefore examine what heightened protection
exists for discovery materials that were filed.

[17] The central concern in determining whether access
should be granted to documents sealed under a protective
order is whether that order was relied upon in the decision to
produce documents. See Beckman, 966 F.2d at 475. It is axiomatic
that:

Among the goals furthered by protective orders is
reducing conflict over discovery and facilitating the
flow of information through discovery. Where that
has happened, changing the ground rules later is to
be avoided because protective orders that cannot be
relied upon will not foster cooperation through discovery.

Wright, Miller & Marcus § 2044.1. Of course, the extent to
which a party can rely on a protective order depends on the
extent to which the order did reasonably induce the party to
allow discovery as opposed to settling the case. Beckman, 966
F.2d at 475; Wright, Miller & Marcus § 2044.1 (commenting
that the effect of reliance depends on its reasonableness).

Here, two protective orders entered during discovery apply
in whole or part to documents eventually filed with the court.
The first protects evidence produced by State Farm in the
course of pursuing its motion to disqualify the law firm representing
the plaintiff. We do not upset this ruling. It deals with
the very narrow issue of whether plaintiff's counsel should be
disqualified. We accept the proposition that State Farm, to
present this issue, would be required to produce attorneyclient
communications and possibly work product that are traditionally
protected from disclosure. Neither the public nor
collateral litigants have any apparent right to or interest in
such disclosure. This does not foreclose independent discovery
in any collateral litigation. We see no conceivable policy
reason to serve up such information on a silver platter.

[18] The second protective order on which State Farm
allegedly relied is a blanket one treating all information produced
in connection with the discovery process as confidential.
As noted above, "[r]eliance will be less with a blanket
[protective] order, because it is by nature overinclusive."
Beckman, 966 F.2d at 476. Because State Farm obtained the
blanket protective order without making a particularized
showing of good cause with respect to any individual document,
it could not reasonably rely on the order to hold these
records under seal forever. See San Jose Mercury News, 187
F.3d at 1103; Olympic Refining, 332 F.2d at 264-66, cited
with approval in Beckman, 966 F.2d at 475-76. Thus, State
Farm's reliance interest fails to offer a compelling reason to
overcome the presumption in favor of access, and State Farm
offers no other.

[19] State Farm has thus identified no compelling reason to
justify sealing the documents in this court record, with the
exception of the court records covered by the protective order
dealing with the disqualification of plaintiff's counsel.
Because the district court abused its discretion in denying the
Private Intervenors' motion to unseal the court records unrelated
to the disqualification issue, we reverse and remand. On remand, we instruct the district court to redact identifying
information from third-party medical and personnel records.
Then, with the exception of the court records covered by the
disqualification protective order, which may remain under
seal, it must remove the seal from all other court records
unless it can specify sufficiently compelling reasons for maintaining
a seal over particular documents.

III. APPEAL BY PUBLIC INTERVENORS

The Public Intervenors appeal the district court's denial of
their Renewed Motion to Unseal the documents filed with the
court. We conclude that their appeal is not well taken. They
did not timely appeal from the February 17, 2000 order. They
are precluded from a second bite of the apple.

* * *

Click the case caption above for the full text of the Court's opinion.

On remand, the district court is instructed as follows:

1) the district court must require State Farm to show good
cause under Federal Rule of Civil Procedure 26(c) for continuing
protection against the collateral litigants of materials produced
in discovery but not made part of the court record;

2) the district court must make a relevance determination
with respect to the collateral litigants in conformity with this
opinion, and modify the protective order to authorize release of documents to collateral litigants in conformity with the
procedures set forth in this opinion;

3) the district court should keep under seal those court
records covered by the disqualification protective order;

4) the district court must redact identifying information
from third-party medical and personnel records, and release
them along with all other court records for which compelling
reasons for secrecy have not been demonstrated.

AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED WITH INSTRUCTIONS.