Hall v. Sprint Spectrum L.P. ( 2006 )

NO. 5-05-0314
N O T IC E
Decision filed 10/31/06. The text of
IN THE
this dec ision m ay b e changed or
corrected prior to the filing of a
APPELLATE COURT OF ILLINOIS
P e t i ti o n for Re hea ring or the
disposition of the same.
FIFTH DISTRICT
________________________________________________________________________
JESSICA HALL, Individually and on Behalf
) Appeal from the
of Others Similarly Situated, ) Circuit Court of
) Madison County.
Plaintiffs-Appellees, )
)
v. ) No. 04-L-113
)
SPRINT SPECTRUM L.P., d/b/a SPRINT )
PCS GROUP, and SPRINTCOM, INC., )
d/b/a SPRINT PCS GROUP, ) Honorable
) Nicholas G. Byron,
Defendants-Appellants. ) Judge, presiding.
________________________________________________________________________
JUSTICE GOLDENHERSH delivered the opinion of the court:
Plaintiff, Jessica Hall, individually and on behalf of others similarly situated, filed suit
against defendants, Sprint Spectrum L.P., doing business as Sprint PCS Group, and
SprintCom, Inc., doing business as Sprint PCS Group. The parties stipulated to a protective
order entered by the circuit court of Madison County. Pursuant to a motion by plaintiff, the
circuit court later modified the protective order. On appeal, defendants raise issues
regarding whether the trial court erred in modifying the protective order. We affirm and
remand.
FACTS
Plaintiff filed suit alleging the abuse of an "Early Termination Fee" (ETF). The ETF
was a part of a contract to provide cellular phone service. Under the terms of the contract,
a customer is obligated to pay the ETF if he or she chooses to end the contract before the
expiration of an agreed period of service. Defendants contend that the ETF is a valid part
of a term rate plan. Plaintiff contends that the ETF operates as an unlawful penalty to
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prevent cancellation.
Plaintiff won class certification and thereafter sought voluminous discovery.
Defendants contended that plaintiff sought the discovery of proprietary documents reflecting
revenues, pricing information, systems, and business strategy. The parties entered into a
stipulated protective order under which either party could label documents as "Confidential"
or "Attorneys [sic] Eyes Only." The protective order limited access to the documents
according to how they were labeled and provided that the labeled documents were to be used
solely for the lawsuit.
In a separate lawsuit, a South Carolina state court directed a different
telecommunications provider to file a petition before the Federal Communications
Commission (FCC) seeking a declaratory ruling on whether a fee is a "rate charged" under
the Federal Communications Act of 1934 (47 U.S.C. §332 et seq. (2000)). Neither plaintiff
nor defendants are parties to the South Carolina suit. After the petition was filed, the
Cellular Telecommunications and Internet Association (CTIA) filed a similar petition with
the FCC. Defendants contend that the CTIA is a trade association representing virtually all
wireless service providers and manufacturers, approximately 139 member organizations and
102 associate member organizations.
Plaintiff filed a motion to set aside and stay the protective order, alleging that the
CTIA was acting on behalf of defendants in the petition for a declaratory ruling and that the
discovery in this case contradicted the positions taken by Sprint and the CTIA in the FCC
filings. Defendants are members of the CTIA.
On May 20, 2005, the court entered an order granting plaintiff's motion:
"Parties present by counsel[,] and after oral argument the Court grants
plaintiff's motion and vacates the Stipulated Protective Order. However, plaintiff is
restricted in the use of confidential or 'attorneys [sic] eyes only' documents for
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purposes of submitting public comment and otherwise responding to the FCC matter
styled WT Docket No. 05-193."
Defendants filed a motion to stay and requested leave to appeal. On May 25, 2005, the court
ordered:
"However, the court[,] being mindful of [d]efendants' position with respect to
protection of its trade secrets and proprietary information, modifies its order of
5/20/05 vacating the Stipulated Protective Order by requiring [p]laintiff to identify
the documents, pleadings, or other discovery in this case produced by [d]efendants
that she intends to submit to the FCC prior to their submissions. Defendants shall
have 24 hours therefrom to review said material and bring to the court's attention any
objections based upon protection of their trade secrets and proprietary information.
The court will make itself available to the parties to address objections by
[d]efendants. Plaintiff is granted leave to file a written response to [d]efendants' Stay
Motion by 5/26/05."
Defendants appeal pursuant to Supreme Court Rule 307(a) (188 Ill. 2d R. 307(a)).
ANALYSIS
Supreme Court Rule 201(c) (166 Ill. 2d R. 201(c)) gives trial courts the authority to
enter protective orders. The rule is a part of a comprehensive scheme for discovery. 166 Ill.
2d R. 201(c); Kunkel v. Walton, 179 Ill. 2d 519, 531, 689 N.E.2d 1047, 1052 (1997). The
proper use of the rule requires a flexible application. Avery v. Sabbia, 301 Ill. App. 3d 839,
845, 704 N.E.2d 750, 754 (1998). Supreme Court Rule 201(c) provides:
"(c) Prevention of Abuse.
(1) Protective Orders. The court may at any time on its own initiative,
or on motion of any party or witness, make a protective order as justice
requires, denying, limiting, conditioning, or regulating discovery to prevent
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unreasonable annoyance, expense, embarrassment, disadvantage, or
oppression.
(2) Supervision of Discovery. Upon the motion of any party or witness,
on notice to all parties, or on its own initiative without notice, the court may
supervise all or any part of any discovery procedure." 166 Ill. 2d R. 201(c).
As noted above, the parties stipulated to a protective order. Stipulations are a useful
tool and tend to have the same binding effect as contracts made outside the context of a
lawsuit. Defendants contend the protective order, as a stipulation, should only be set aside
if it is inherently unreasonable, illegal, or fraudulent. See Strozewski v. Sherman Equipment
Co., 76 Ill. App. 3d 266, 270, 395 N.E.2d 38, 41 (1979); Kazubowski v. Kazubowski, 93 Ill.
App. 2d 126, 134, 235 N.E.2d 664, 668 (1968). They assert that the parties are bound by
the language of the agreement and that our review should be de novo. In re Marriage of
Sanborn, 78 Ill. App. 3d 146, 149, 396 N.E.2d 1192, 1195 (1979).
Defendants' contention that this action should be treated as a contract dispute fails to
consider the role a protective order plays in litigation and the discretion given to trial courts
in overseeing discovery. Protective orders are a part of the arsenal of tools a court may use
to oversee discovery and prevent harassment. Kunkel, 179 Ill. 2d at 531, 689 N.E.2d at
1052; see International Truck & Engine Corp. v. Caterpillar, Inc., 351 Ill. App. 3d 576, 580,
814 N.E.2d 182, 185 (2004) (discussing the use of a protective order for confidential
commercial information). The nature of a protective order depends on the facts of the
particular case. See Bush v. Catholic Diocese of Peoria, 351 Ill. App. 3d 588, 591, 814
N.E.2d 135, 137 (2004); May Centers, Inc. v. S.G. Adams Printing & Stationery Co., 153
Ill. App. 3d 1018, 1021, 506 N.E.2d 691, 694 (1987).
Similar to other discovery matters, the trial court is in the best position to weigh the
competing needs and interests of the parties affected by a protective order. Avery, 301 Ill.
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App. 3d at 845, 704 N.E.2d at 754. Absent an abuse of discretion, an order concerning
discovery will not be disturbed on appeal (Pickering v. Owens-Corning Fiberglas Corp.,
265 Ill. App. 3d 806, 823, 638 N.E.2d 1127, 1139 (1994)), and protective orders are no
exception. Avery, 301 Ill. App. 3d at 845, 704 N.E.2d at 754; see Citizens First National
Bank of Princeton v. Cincinnati Insurance Co., 178 F.3d 943, 944 (7th Cir. 1999)
(criticizing the excessive use of protective orders as an umbrella); San Jose Mercury News,
Inc. v. United States District Court–Northern District (San Jose), 187 F.3d 1096, 1103 (9th
Cir. 1999) (blanket protective orders should be inherently subject to challenge due to the
lack of a particularized showing regarding individual documents).
The Illinois Supreme Court has addressed the discretion given to trial courts to
modify protective orders. Skolnick v. Altheimer & Gray, 191 Ill. 2d 214, 730 N.E.2d 4
(2000). In Skolnick, an attorney filed suit against former fellow employees and alleged they
had falsely accused him of fabricating a document that had been the subject of an
investigation before the Attorney Registration and Disciplinary Commission (ARDC). The
circuit court entered an agreed protective order regarding discovery. One of the defendants
moved to modify the order, arguing that documents obtained in discovery showed that
Skolnick had engaged in misconduct and that the documents should be disclosed to the
ARDC. Skolnick, 191 Ill. 2d at 219, 730 N.E.2d at 10; see 134 Ill. 2d R. 8.3(a); In re
Himmel, 125 Ill. 2d 531, 539, 533 N.E.2d 790, 793 (1988). The defendant also sought leave
to file a counterclaim incorporating and attaching the documents. The circuit court denied
the motion to modify and ordered that the counterclaim be filed under seal.
The supreme court ruled that the trial court erred by not modifying the protective
order. The court began by noting that trial courts have considerable discretion to supervise
discovery. Skolnick, 191 Ill. 2d at 223, 730 N.E.2d at 12. In discussing Rule 201(c), the
court stated, "The flexibility enjoyed by trial courts in directing discovery extends to the
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entry of protective orders." Skolnick, 191 Ill. 2d at 223, 730 N.E.2d at 12. The court stated
that the parameters of protective orders are left to a trial court's discretion; nonetheless, the
court found that by failing to modify the protective order, the trial court had abused its
discretion. Because the trial court had failed to state any reasons for not modifying the
protective order, the interests of justice weighed in favor of a modification to allow the
disclosure to the ARDC. Skolnick, 191 Ill. 2d at 226, 730 N.E.2d at 14.
Defendants contend that Skolnick is limited to situations in which a stipulation
conflicts with a higher duty to report unethical conduct. This ignores the general import of
Skolnick. First, the supreme court made clear that a trial court has discretion in overseeing
a protective order. Thus, contrary to the position argued by defendants on appeal, the
modification should only be reversed if the trial court abused its discretion. Second, by
modifying the protective order on appeal, the supreme court applied the plain language of
Rule 201(c). Skolnick describes the "broad discretion" given to the trial court under
Supreme Court Rule 201(c) to prevent abuse (166 Ill. 2d R. 201(c), Committee Comments,
at lviii-lix). Skolnick, 191 Ill. 2d at 223, 730 N.E.2d at 12; see Stowers v. Carp, 29 Ill. App.
2d 52, 69, 172 N.E.2d 370, 378 (1961). The court concluded that the trial court erred
because "the interests of justice weigh decidedly in favor" of a modification. Skolnick, 191
Ill. 2d at 226, 730 N.E.2d at 14. In other words, a modification is appropriate "as justice
requires." 166 Ill. 2d R. 201(c)(1).
This case involves a collateral proceeding before a federal commission. The federal
courts have provided guidance for this situation. In Jepson, Inc. v. Makita Electric Works,
Ltd., 30 F.3d 854 (7th Cir. 1994), a modification was sought for the purpose of using
discovered documents in collateral proceedings before the United States International Trade
Commission (ITC). Jepson, Inc., filed an action under the Racketeer Influenced and Corrupt
Organizations Act (RICO) against Makita Electric Works, Ltd. (Makita), in the course of
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which a vice president of Black & Decker Corp. (Black & Decker) was deposed. Makita
and Black & Decker entered into a stipulated protective order. Subsequently, Black &
Decker filed a petition with the ITC alleging Makita was dumping professional power tools
in the United States. Makita referred to the vice president's RICO action deposition in
proceedings before the ITC. Pursuant to Black & Decker's motion, the United States District
Court for the Northern District of Illinois sanctioned Makita's counsel for violating the
protective order. Jepson, Inc., 30 F.3d at 857.
The Seventh Circuit noted a growing trend in both federal and state courts to seal
documents produced during discovery. The court observed that stipulated protective orders
placed a trial court in an unusual position. Although judges usually ratify agreements
between parties, under federal rules a protective order should only be entered upon a
showing of good cause. Jepson, Inc., 30 F.3d at 858; Fed. R. Civ. P. 26(c). The district
court had failed to make a finding of good cause. In addition, the Seventh Circuit noted
there was no indication that the deposition had been reviewed to determine whether it
contained confidential information. After reviewing the submitted deposition testimony, the
court found there were no trade secrets or confidential information. The court reversed the
sanctions:
"Black & Decker has tried to use the stipulated protective order and the
[interim protective order] as shields to prevent highly relevant and nonconfidential
information from reaching the ITC. We refuse to assist Black & Decker with its
effort. Black & Decker has completely failed to show 'good cause' for the protective
order, in so far as the like-product portion of Galli's deposition is concerned.
Therefore, we reverse the district court's imposition of sanction's [sic] against
Makita's counsel." Jepson, Inc., 30 F.3d at 860.
The court then addressed Makita's motion to modify the interim protective order.
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Jepson, Inc. reiterated the proposition that discovery should take place in public:
" 'This presumption should operate with all the more force when litigants seek to use
discovery in aid of collateral litigation on similar issues, for in addition to the abstract
virtues of sunlight as a disinfectant, access in such cases materially eases the tasks of
courts and litigants and speeds up what may otherwise be a lengthy process.' "
Jepson, Inc., 30 F.3d at 860-61 (quoting Wilk v. American Medical Ass'n, 635 F.2d
1295, 1299 (7th Cir. 1980)).
Jepson, Inc. held that the reasons for modifying a protective order when there is
concurrent litigation applied to the hearings before the ITC. Thus, the district court erred
by not granting the motion to modify:
"Galli's deposition is relevant to an issue pending before the ITC and is thus
discoverable by the ITC. Accordingly, like the situation in Wilk, the district court's
refusal to modify the protective order forces Makita and the ITC to duplicate
discovery that has already been made. As we indicated in Wilk, such unnecessary
duplication is wasteful.
Duplication of discovery may be excused, however, if modification of the
protective order will 'tangibly prejudice substantial rights of the party opposing
modification.' Wilk, 30 F.2d at 1299. Black & Decker has made no showing that its
substantial rights will be prejudiced by modifying the [interim protective order] to
allow Galli's deposition to be used in the ITC proceedings. For instance, Black &
Decker does not claim that Galli's deposition is privileged from discovery by Makita
or the ITC." Jepson, Inc., 30 F.3d at 861.
In the case at hand, defendants contend that a modification of the protective order is
unnecessary because the FCC has subpoena powers. See 47 U.S.C. §409(e) (2000). This
does not distinguish Jepson, Inc., which noted that the ITC had similar powers. Jepson, Inc.,
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30 F.3d at 861; 19 U.S.C. §§1333(a)(1), (d) (1994). Instead, the test is whether the
modification would tangibly prejudice the substantial rights of a party. Jepson, Inc., 30 F.3d
at 861.
Under the powers and duties noted in Skolnick and considering the persuasive
reasoning and example in Jepson, Inc., the trial court correctly modified the protective order.
In modifying the protective order to allow for the submission of documents to the FCC while
maintaining a procedure for contesting the disclosure of particular documents, the trial court
made an appropriate modification, exercising its discretion to modify the protective order
as justice requires. See 166 Ill. 2d R. 201(c).
CONCLUSION
Accordingly, the order of the circuit court modifying the protective order is affirmed,
and the matter is remanded for enforcement pursuant to Supreme Court Rule 201(c) (166
Ill. 2d R. 201(c)).
Affirmed; cause remanded with directions.
CHAPMAN and McGLYNN, JJ., concur.
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