“Is That Protected?”

Protective orders are on the rise as insurers have become increasingly reluctant to produce documents, including an insured’s claim and underwriting files, for fear of exposing confidential and proprietary information to competitors. Successfully protecting these documents is dependent on the issues in the case and how narrowly tailored the protective order is. Under Rule 26(c), Fed. R. Civ. P., a party may seek a protective order to limit the dissemination of proprietary and confidential information. The moving party must show good cause why the order should be granted. Courts have “broad latitude to grant protective orders to prevent disclosure of materials for many types of information, including, but not limited to, trade secrets or other confidential research, development, or commercial information.” Phillips ex rel. Byrd v. General Motors Corp., 307 F.3d 1206 (9th Cir. 2002). In determining whether to grant a protective order, courts weigh whether:

  1. disclosure will violate privacy interests;
  2. disclosure will cause embarrassment;
  3. the information is sought for a legitimate purpose;
  4. the information is important to public health and safety;
  5. sharing the information will promote fairness and efficiency;
  6. the party benefitting from the order is a private or public official; and
  7. the case involves issues important to the public.

Glenmede Trust Co. v. Thompson, 56 F.3d 476,483 (3rd Cir. 1995). When information being sought is important to public health and safety, is sought by a public official or entity, or involves issues important to the public in general, the courts are more apt to deny the motion for protective order. See Pansy v. Borough of Stroudsburg, 23 F.3d 72, 787-88 (3rd Cir. 1994).Conversely, the courts are more inclined to grant protective orders when the litigation involves private individuals and does not involve public issues. Id. Insurers can argue that a protective order should be granted because they are private entities and bad faith, breach of contract and rescission cases rarely involve matters of public concern. Insurers can further their likelihood for success by arguing that an insured’s underwriting and claim files, correspondence and phone logs reflect their policies, procedures and methods for evaluating and investigating claims and rescinding or extending coverage, and disseminating these documents outside of the litigation will expose those policies and procedures to their competitors, who could use it to the insurer’s financial detriment.

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