*1 Pending before the Court is Plaintiff Local Access, LLC’s Motion to Disqualify and/or Discipline Kelley Drye for Litigation Misconduct (Doc. 230). Defendant Peerless Network, Inc. and law firm Kelly Drye & Warren LLP have filed a response in opposition to the motion (Doc. 264). Local Access has filed a related motion for sanctions against Peerless for litigation misconduct (Doc. 229; Doc. 245-sealed) and Peerless has filed its response (Doc. 265; Doc. 274-sealed). The motions allege that Peerless and its attorneys at Kelley Drye improperly disclosed and used documents Local Access had designated as “Confidential” and “Highly Confidential,” in violation of the Protective Order I entered on July 10, 2017 (Doc. 44). Peerless and Kelley Drye acknowledge the inappropriate disclosure and that “certain personnel used information derived from the confidential litigation material for reasons other than their responsibilities in connection with this case” (Doc. 188). But they say the disclosures were inadvertent and caused little harm. Local Access alleges the opposite, and that violation of the Protective Order warrants a panoply of sanctions against Peerless and Kelley Drye.

Due to the seriousness of the allegations, I allowed discovery on these issues and stayed all unrelated litigation in the case (See Doc. 275-sealed, Docs. 276, 281, 298, 299, 371, 389). By sealed Order dated January 3, 2019, I granted the motions to the extent they sought issuance of Orders to Show Cause and the scheduling of evidentiary hearings and denied Local Access’ request for the imposition of sanctions and other relief, without prejudice to renewal, if appropriate, following conclusion of the hearings (See Doc. 458 – sealed).[1]

Because Local Access sought to disqualify Peerless’ chosen attorneys, I decided it was appropriate to address that issue first and deferred hearing on the motion to impose sanctions against Peerless until the conclusion of the motion to disqualify or discipline Kelley Drye (Id. at 6). Kelley Drye was ordered to show cause why it should not be held in civil and criminal contempt and sanctions should not be imposed for failing to comply with the Protective Order, and an evidentiary hearing was held over the course of several days (Docs. 557-562; 564; 567, 569, 571). I allowed post-hearing briefing and the parties have made their submissions (Docs. 574-578). The matter is now ripe for final resolution.

Background

This is not the first lawsuit between the parties and, remarkably, not even the first time the parties have accused each other of serious misconduct.[2] As Judge Byron observed, this is but the latest chapter in the conflict-ridden saga between Local Access and Peerless (Doc. 84 at 1). To say the discovery process has been excruciating is an understatement. I have held an extraordinary number of hearings and status conferences to moderate dozens of pretrial disputes. In order to place the current conflict in context, a brief background of the nature of this case and the parties’ relationship is necessary.

*2 Local Access and Peerless are competitive local exchange carriers which provide local telephone services, network connectivity and other related telecommunications products and services (Case No. 6:14-cv-399-Orl-40TBS, Doc. 185 at 4). Blitz Telecom Consulting, LLC is a marketing company which aggregates telephone numbers from various telecommunication carriers and markets and resells those services to its customers (Id.). In 2010, Blitz and Peerless entered into a business arrangement which they agreed to modify when the applicable law changed (Id., at 6- 7). This is why Blitz created Local Access to do business with Peerless (Id.).[3]

Local Access and Peerless entered into a five-year contract (“Contract”) in 2012, wherein Peerless agreed to provide Local Access with “Homing Tandem Service” (See Doc. 135, ¶ 12; Doc. 135-1). Under the Contract, the Homing Tandem Service was available to Local Access for use in providing local exchange and exchange access telecommunications services to “[its] ... end users within the Peerless Network or its affiliates[’] service areas.” (See Doc. 135, ¶ 13; see also Doc. 135-1, ¶ 5.16). The Contract provided that if Local Access received a competitive offer from another carrier for a service it was receiving from Peerless and Local Access furnished Peerless written proof of the competitive offer, then Peerless had the option to match the competitive offer, or if Peerless chose not to match the offer, Local Access had the option to reroute traffic to the competitor (Doc. 135, ¶14; 135-1, ¶ 3.3).

Local Access presented Peerless with what it claimed was a competitive offer on February 22, 2014 (Doc. 135, ¶ 15). Peerless refused to match the offer, finding that it was “not a valid competitive offer” and stated that “should Local Access move interexchange carrier homing tandem services to a competitor, Peerless will construe that act as an acknowledgement by Local Access that there is no agreement between the parties, or in the alternative, that Local Access is willing to breach its agreements” (Id. ¶¶ 16, 17). After Local Access received Peerless’ response it “neither accepted the competitive offer, nor rerouted any of its traffic to Peerless’ competitor ....” (Id. ¶ 18). Later, Local Access presented Peerless with a new competitive offer that Peerless agreed to match (Id. ¶¶ 19, 20). The parties amended the Contract to reflect: (1) Peerless’ agreement to match the competitive offer; (2) Peerless’ agreement to “share seventy-five percent (75%) of Collected Tandem Access revenue [it] received on traffic associated with Local Access;” and (3) the parties agreement to extend the termination date of the Contract from August 5, 2015 to August 4, 2018 (Id., ¶¶ 21, 22).

Local Access alleges that on August 24, 2015, it received another competitive offer, this time from Inteliquent, which Peerless chose not to match. (Id., ¶¶ 24–26). Local Access then began re-routing traffic from Peerless to Inteliquent. Local Access claims that its acceptance of Inteliquent’s offer did not void the Contract. It also alleges that due to the lengthy process of moving traffic from Peerless to Inteliquent, some of Local Access’ traffic remained on the Peerless’ network (Id., ¶¶ 27–30). Local Access maintains that Peerless is obligated to compensate it for that traffic. It also claims that despite repeated demands for payment, Peerless has failed to pay for traffic routed over the Peerless network on and after August 5, 2015 (Id., ¶¶ 31, 32). Local Access is now suing Peerless for breach of contract and contract implied in law (Doc. 135).

*3 Peerless denies that Local Access accurately represented the terms of any competitor’s offer to it (Doc. 193, ¶ 19). It also denies that Local Access properly performed under the Contract (Id., ¶ 23); denies that Local Access was permitted to route traffic away from the Peerless network at any time prior to December 31, 2017; and claims that any right to route traffic off the Peerless network was limited by Local Access’ obligation to route such traffic “pursuant to the terms of the alternative proposal” provided to Peerless, which Local Access allegedly did not do (Id., ¶27). Peerless argues in the alternative that to the extent Local Access permissibly executed an alternative agreement with a Peerless competitor, Peerless was released from its obligations under the Contract (Id.). Peerless admits that its network currently routes some amount of traffic associated with Local Access (Id., ¶30), but denies that it owes Local Access any compensation for that traffic. Peerless has interposed numerous affirmative defenses and counterclaims for declaratory judgment, damages for breach of contract, fraud, and a contract implied in law (Id.).

Peerless is represented by local counsel and Kelley Drye, including (during the time period at issue) attorneys Henry T. Kelly (partner); Catherine E. James (senior associate) and Brittany L. McElmury (junior associate).[4] The current dispute involves the terms of the Protective Order and the consequences which should result from the acknowledged violations of the Order.

The Protective Order

Early in the case, the parties filed a Joint Motion for Protective Order with an attached proposed Protective Order intended to “govern discovery production and the exchange of materials among the parties and third-parties in light of the expected exchange of information that is protected ‘Consumer Proprietary Network Information’ (“CPNI”).” (Doc. 43 at 1). Concerned that discovery “may result in the disclosure of CPNI, confidential or proprietary information among the parties and from third-party subpoena respondents that should not be publicly disclosed,” the parties prepared the Protective Order and “agreed to the contents thereof.” (Id., emphasis added; Doc. 43 at 3; and Doc. 43-1). The Court entered the tendered Protective Order after making certain modifications which are not pertinent to this dispute (Doc. 44).

The Protective Order defines two categories of information a party may designate as confidential:

(Doc. 44, § 2).

The Protective Order identifies categories of persons who may be given access to Confidential and Highly Confidential information (Doc. 44, §§ 13 & 14). Confidential information may be disclosed to: “those directors, officers, and employees of [a] corporate entity [party] who require the Confidential Litigation Material to perform his or her responsibilities in connection with the Civil Action, and who have executed Attachment A, but only to the extent required to perform his or her responsibilities in connection with the Civil Action.” (Doc. 44, § 13.e). Highly Confidential information may only be disclosed to outside counsel and retained experts; it cannot be disclosed to the parties themselves (Doc. 44, § 14).

*4 When Confidential or Highly Confidential information is disclosed to authorized persons, the Protective Order mandates that it “shall be used only for the prosecution or defense of the Civil Action. No party or person receiving Confidential or Highly Confidential Litigation Material shall use such material or the contents thereof for any other business, commercial, or competitive purposes.” (Doc. 44, § 15).

The Protective Order requires that certain categories of recipients (including personnel of the corporate parties) “be shown a copy of this Protective Order, and [they] shall not be provided Confidential or Highly Confidential information, unless agreeing in advance in writing to abide by the terms of this Protective Order, and by acknowledging their responsibilities to maintain the Litigation Material as Confidential or Highly Confidential by executing a copy of an acknowledgement set forth in Attachment A.” (Doc. 44, § 16.2). Unfortunately, when the parties submitted the proposed Protective Order to the Court for entry, they did not include Attachment A. As a consequence, when the Protective Order was entered, Attachment A was not included.

The Protective Order also provides:

(Doc. 44, § 18 – emphasis added).

The Admitted Violations

On June 1, 2018, Kelley Drye notified the Court in writing that Peerless “had access to information designated by Local Access as Confidential litigation material and certain personnel used information derived from the confidential litigation material for reasons other than their responsibilities in connection with this case.” (Doc. 188). Kelley Drye acknowledged two breaches of the Protective Order: (1) disclosure of Call Detail Records (“CDRs”) designated “Confidential” by Local Access were transmitted to Peerless employees who used the information for purposes other than litigation; and (2) Local Access CDRs that were designated Highly Confidential were transmitted to Peerless.

Issues and Analysis

Local Access seeks disqualification and sanctions against Kelley Drye based on its improper disclosure of Confidential and Highly Confidential information to Peerless and its part in causing the misuse of some of that information by Peerless. Local Access claims that Kelley Drye acted with “callous disregard” for the procedures established in the Protective Order to safeguard the information and did not act promptly or appropriately upon becoming aware of the unauthorized disclosures and misuse. Kelley Drye argues that the information it disclosed to Peerless was improperly designated and was in fact, not Confidential or Highly Confidential. It also argues that the disclosures were inadvertent and excusable, it acted appropriately and understandably under the circumstances, and that any resulting harm was insufficient to warrant sanctions. The following facts were developed through the testimony and exhibits at the show cause hearing, and the sworn depositions and declarations.

*5 Findings of Fact

On December 20, 2017, Local Access (through counsel) produced to Kelley Drye a set of CDRs identified as “LA_0001865–CONFIDENTIAL.zip.” and designated as “Confidential” under the terms of the Protective Order (the “12/20/17 Production”). On January 30, 2018, Local Access supplemented this production by providing additional months of CDRs (“the 1/30/18 Production”). Local Access designated the 1/30/18 Production “Highly Confidential.” (See, generally, Doc. 229). In her Declaration, Kelley Drye attorney Catherine E. James states:

(Doc. 264-4).

In deposition testimony, Ms. James explained that Mr. Sherman and/or Mr. Kell created a spreadsheet of the unique names of Local Access’ customers from the information contained in the CDRs from the 12/20/17 Production. (Deposition of Catherine James, 109:5-110:4). This spreadsheet was named “LA_Confidential.” (Id. at 108:17-24). Ms. James printed the column of Local Access customer names from that spreadsheet to a native .pdf document she named “LA Customers.pdf.” (Id., 110:5-21; Local Access Exhibits 2 & 3). She did not include the word “Confidential” in the file name and the word “Confidential” does not appear anywhere in the .pdf file itself (Id. at 110:9-111:2). On February 12, 2018, Ms. James sent the “LA Customers.pdf” file to Mr. Knight via email. (Local Access Exhibits 2 & 3). The email transmitting the file did not inform Mr. Knight that the file “LA Customers.pdf” contained Confidential information protected by the Protective Order. Before sending the February 12, 2018 email to Mr. Knight, Ms. James had not sent Mr. Knight a copy of the Protective Order and she had not obtained a written acknowledgment of the Order from him (James, 51:11-15).

*6 From there the information, not protected by a designation of “Confidential” was distributed within Peerless. Mr. Knight shared the Local Access confidential customer information contained in the file “LA Customers.pdf” with Mr. Brabson, Ms. McNerney and Mr. Davis, either by sending them the file or by reading the contents over the telephone. (Deposition of Richard Knight, 56:2-21). Mr. Brabson testified that he was never advised that the list was derived from Confidential Litigation Material (Deposition of Brian Brabson, 34:13-45:4). Ms. McNerney and Mr. Davis were also not told that the list was derived from Confidential Litigation Material (Deposition of Margaret McNerney, 26:20-27:10; Deposition of Jeff Davis, 19:12-20). Mr. Davis created a spreadsheet from the list of Local Access customer names provided to him by Mr. Knight (Davis, 44:6-11). He distributed this spreadsheet to Mr. Walther and several other Peerless employees (Id. at 45:7-10). Mr. Walther testified that nobody within Peerless told him he had been given Confidential information (Deposition of Steven Gregory Walther, 28:23-29:15).

On April 12, 2018, Kelley Drye attorney Henry T. Kelly received an email from counsel for Local Access asserting that Local Access’ customers were being solicited by Peerless and requesting information about Local Access’ Highly Confidential information (Doc. 265-10, ¶ 13). Beginning that day, Mr. Kelly and other lawyers representing Peerless had conversations with Peerless employees to gather information to respond to Local Access’ concerns (Id., ¶¶ 14-18). According to Mr. Kelly:

(Id.).

What Mr. Kelly and Ms. James fail to mention in their declarations is that Ms. McElmury was asked to confirm the confidentiality designations for Local Access CDRs in response to Local Access’ query and, on April 12, 2018, she “informed my team that the January 30, 2018 production, which was sent to Scott Kell, was designated as ‘Highly Confidential.’ ” (Doc. 265-5). Ms. McElmury “immediately” and within “seconds” reported that information to Ms. James and “collectively we reported it to Hank Kelly.” (Deposition of Brittany McElmury, 79:2-23, 81:1-23, 89:16-24, 90:1-3).

Although Kelley Drye attorneys knew by April 12, 2018 that they had already disclosed the 1/30/18 Highly Confidential information to Peerless,[5] Ms. McElmury sent an email to an attorney for Local Access on May 7, 2018, which reads in part:

*7 (Doc. 229-11, emphasis added). Although Ms. McElmury sent the email, Mr. Kelly and Ms. James were involved in its drafting (See, e.g., Deposition of Henry T. Kelly; 151:24-25; 152:1-18).[6] The email did not disclose that Kelley Drye had already transmitted the Highly Confidential CDRs to Peerless.

On May 10 or 11, 2018, Mr. Kelly was informed that Messrs. Walther, McDonald, Trento, Cook and Ms. McNerny contacted some of the entities named in the 12/20/17 Production to market Peerless’ services (Doc. 264-3, ¶¶ 14–21). Mr. Kelly notified Local Access of this on May 25, 2018 (Doc. 188 at ¶10). On May 16, 2018, Local Access was informed that Kelley Drye “inadvertently produced Local Access’s CDRs produced on January 30, 2018 to Peerless.” (Doc. 229-17). The Court was notified of these violations on June 1, 2018 (Doc. 188 at ¶¶ 5–10). Mr. Kelly testified that the reason for the delay was the need to investigate the extent of the disclosures and gather the necessary facts.

On May 11, 2018, well after the horse had left the barn, Kelley Drye created a document for recipients of confidential information to acknowledge that they have “read and understand the terms of the Protective Order.” (Doc. 264-3, ¶ 4). And, although Kelley Drye represented that all improperly disclosed information was returned or destroyed, at least one Peerless employee continued to maintain copies of Confidential information until just before the contempt hearing (See Doc. 536).

Discussion

Although Mr. Kelly testified to the lack of any malicious intent on the part of the firm, it is clear from the admitted account that Kelley Drye:

(1) Failed to ensure that all persons authorized to receive Confidential or Highly Confidential Litigation Materials under the Protective Order were first shown a copy of the Protective Order and signed written acknowledgements agreeing to abide by its terms before such litigation materials were disclosed.

(2) Delivered Confidential and Highly Confidential litigation material to Peerless, without first reviewing such material to ascertain how the material had been designated.

(3) Delivered Highly Confidential material to persons not authorized to receive it.

(4) Failed to “immediately” disclose the unauthorized disclosures and breaches of the Protective Order.

(5) Failed to make every reasonable effort to prevent further disclosure by Peerless by delaying its response to Local Access’ inquiries.

The Court must decide whether these actions, or inactions, constitute civil contempt, criminal contempt, or warrant sanctions including disqualification or other discipline. The parties have presented declarations and deposition testimony, thousands of pages of exhibits, live witnesses, case law and argument. After much thought, I have concluded that while Kelley Drye acted below the standard expected of members of the bar of this Court and its actions are sanctionable, they do not constitute criminal contempt and the sanction of disqualification is not warranted.

*8 Contempt

18 U.S.C. § 401.

A party seeking remedies for civil contempt must establish by clear and convincing evidence that the alleged contemnor violated the court’s prior order. Chairs v. Burgess, 143 F.3d 1432, 1436 (11th Cir. 1998); see also Ameriprise Fin. Servs., Inc. v. Lawton, No. 2:11-cv-573-FtM-29SPC, 2011WL6412424, at * 1 (M.D. Fla. Dec. 21, 2011) (the evidence must establish that the order was violated). The clear and convincing proof must demonstrate that: “1) the allegedly violated order was valid and lawful; 2) the order was clear and unambiguous; and 3) the alleged violator had the ability to comply with the order.” See Georgia Power Co. v. N.L.R.B., 484 F.3d 1288, 1291 (11th Cir. 2007). “Ambiguities should be resolved in favor of the party charged with contempt.” United States v. Barnette, 902 F. Supp. 1522, 1532 (M.D. Fla. 1995).

Once a prima facie showing of a violation is made, the burden shifts to the alleged contemnor “to produce evidence explaining his noncompliance” at a “show cause” hearing. Citronelle–Mobile Gathering, Inc. v. Watkins, 943 F.2d 1297, 1301 (11th Cir.1991).

Chairs, 143 F.3d at 1436.

If the alleged contemnor makes a sufficient showing, the burden shifts back to the party seeking to show contempt to prove the ability of the alleged contemnor to comply with the court’s prior order. Michael Grecco Prods., Inc. v. Soffersapp, LLC, No. 16-24966-CIV, 2017 WL 5665370, at *3 (S.D. Fla. Sept. 27, 2017), report and recommendation adopted, No. 16-24966-CIV, 2017 WL 5665382 (S.D. Fla. Nov. 8, 2017). Importantly, “[s]ince the purpose [of civil contempt] is remedial, it matters not with what intent the defendant did the prohibited act.... An act does not cease to be a violation of a law and of a decree merely because it may have been done innocently.” McComb v. Jacksonville Paper Co., 336 U.S. 187, 191, 69 S.Ct. 497, 93 L.Ed. 599 (1949).

*9 In addition to a finding of civil contempt, Local Access seeks a referral for prosecution of criminal contempt. The three elements for a finding of criminal contempt are a lawful and reasonably specific order; that the defendant has violated; willfully. Romero v. Drummond Co., 480 F.3d 1234, 1242 (11th Cir. 2007), citing United States v. Bernardine, 237 F.3d 1279, 1282 (11th Cir. 2001); see 18 U.S.C. § 401(2) and (3).

The Protective Order governs “the parties and their respective counsel.” (Doc. 44 at 1). Peerless, through Mr. Kelly, has admitted that “the Protective Order was valid and lawful, the Protective Order was clear and unambiguous, and Peerless had the ability to comply with the Protective Order.” (Doc. 265 at 13). If Peerless had the ability to comply with the Protective Order, so did its lawyers. At issue then is whether the non-compliance was willful or if it is excusable.

The violations fall into three categories: (1) failure to comply with the pre-disclosure requirements in the Protective Order; (2) failure to adhere to the Order’s prohibition against sharing Highly Confidential information with unauthorized persons; and (3) failure to promptly disclose the violations and take all reasonable steps to mitigate the damage. Each category warrants close analysis.

Without question, Kelley Drye dropped the ball in failing to timely transmit the Protective Order to Peerless employees who were to receive Confidential information, and in failing to obtain a written acknowledgement from those employees prior to delivering Confidential information to them. Kelley Drye’s explanations offered to excuse this noncompliance are weak at best. The firm says it gave “Peerless” a copy of the Protective Order and there are vague assertions of discussing the Protective Order with certain employees, but many employees who received Confidential information were not aware of the Protective Order and its applicability to the information they received.[7] Written acknowledgements were not obtained until well after the Confidential information was shared. That said, I see no evidence that this failure was intentional and find instead that it was negligent. Kelley Drye gained nothing by it and has paid dearly for its sloppiness. For reasons that may never be clear, Kelley Drye and specifically Ms. James, simply overlooked this obligation prior to tendering Confidential information to their client. Considering the totality of the evidence, I agree with Kelley Drye that there is no support for a finding that the failure to obtain acknowledgements prior to making the disclosures was an intentional act of contempt.

Category two is more problematic. Sharing Highly Confidential information with Peerless is prohibited in clear terms and Kelley Drye did just that. In its defense, it argues that the wrongful disclosure was Local Access’ fault because CDRs are inherently not highly confidential, the parties never intended them to be so, and Local Access wrongly designated them as such. Kelley Drye claims that it “reasonably relied” on its belief and experience that such records were, in fact, not Highly Confidential and, as Local Access claims no harm from the disclosure, sanctions are inappropriate. This argument would have more teeth if Kelley Drye had bothered to open and review the information produced before transmitting it to Peerless.[8] I don’t know how the lawyers at Kelley Drye could form a reasonable belief that information was mis-designated when they were unaware of the designation in the first place. One of two things happened. Either the lawyers neglected to review the productions to ascertain their designations when they were received and before they were transmitted to Peerless, or the lawyers did review the productions on receipt, saw the designations and disagreed, but failed to abide by the Protective Order’s requirement to “first provide the Disclosing Party with written notice of its objections” and treat the document as Highly Confidential “until the Court issues a ruling on the dispute....” (Doc. 44 at 8, 9). Either way, Kelley Drye’s actions violated the Protective Order.

*10 As Mr. Kelly argued in a prior related case: “Playing fast and loose might have worked well for William Shakespeare, but in this Court, it should not be tolerated.” Case 6:14cv399-PGB-TBS; Doc. 343 at 17.[9] Whether the information was properly designated in the first place is irrelevant. It does not give Kelley Drye leave to ignore the protections afforded documents so designated. Therefore, I find Kelley Drye’s failure to fulfill its obligations as a recipient of protected information violated the clear terms of the Protective Order. However, I am not persuaded that Kelley Drye acted willfully, sufficient to implicate criminal contempt. This brings me to the third and most troubling violation.

The Protective Order anticipates that unauthorized disclosures may occur, and provides:

(Doc. 44, ¶ 18, emphasis added). The timeline here shows:

(1) April 12, 2018: Local Access advised Kelley Drye that Local Access’ customers were being solicited by Peerless and asked Kelley Drye “to confirm to whom Local Access’s Highly Confidential information has been disseminated.” (Doc. 229-10). Kelley Drye did not respond to this email.

(2) April 12: Ms. McElmury discovered that the Highly Confidential January 30, 2018 production had been shared with Peerless. She informed Ms. James and Mr. Kelly but no one told Local Access.

(3) April 12 through April 20: Mr. Kelly communicated with Peerless CEO John Barnicle and Mr. Knight to inquire about the issue, then Mr. Kelly went on vacation (Doc 264-3, ¶¶ 14, 15). There was still no response to Local Access.

(4) May 7, 2018: Mr. Kelly spoke with Mr. Barnicle and determined that he would have further discussions with Peerless employees. That same day, Mr. Kelly, Ms. James and Ms. McElmury formulated and sent the email objecting to the designation of Highly Confidential given to the CDRs produced on January 30, 2018 and April 10, 2018 and offered to “strip” certain information “prior to transmitting” the CDRs to Peerless for review. No divulgence was made of the disclosure that had already occurred.

(5) May 9: Local Access responded to the May 7 email and asked for a response to its April 12, 2018 email (Doc. 229-12). Kelley Drye did not provide a substantive response.

(6) May 10 or 11, 2018: Mr. Kelly says he discovered Peerless had used Confidential information for non-litigation purposes.

(7) May 16: Kelley Drye finally informed Local Access that it had inadvertently provided the January 30, 2018 CDRs to Peerless (Doc. 229-17).

(8) May 25: Kelley Drye notified Local Access of the improper solicitation of its customers by Peerless.

*11 (9) June 1, 2018: Kelley Drye notified the Court.

When faced with an accusation that the Protective Order was likely being violated and after having been asked for a list of persons who had received protected information, Kelley Drye did not react with the level of concern and promptness the accusation warranted.[10] I might be inclined to understand this initial lack of zealousness were it not for the firm’s actions upon discovering the violations. The Protective Order required an “immediate” disclosure. That did not happen. Instead, under the guise of gathering the facts, Kelley Drye took an inordinate amount of time to disclose the violations it discovered. Its failure to take sufficiently prompt measures amounted to a failure to make all reasonable efforts to secure the information from further misuse.

To be clear, I am mindful of the difficult situation Kelley Drye was facing upon discovery of its own noncompliance and that of its client. I expect any competent lawyer, upon finding that the firm or client had acted inappropriately, would be concerned about possible personal and professional peril. Given this legitimate concern, it would not be unreasonable for a lawyer to take a few days to determine just how big the sword is before falling on it. Nor would it be beyond the pale for a firm to first seek professional advice in ways to mitigate the expected injury. What a lawyer cannot do is delay indeterminately or seek to minimize or cover up the wrongdoing in an effort to avoid the sword entirely. The obligation of candor owed to the court, other counsel, and the profession itself is paramount and trumps any business interest in non-disclosure. This is true even if the wrongdoing was unintentional, unanticipated, or harmless. Disclosing an error - fully, freely and in a timely fashion - is a hallmark of integrity, both personal and professional. The Court expects this from lawyers and lawyers should expect this from themselves.

Local Access raised its concerns on April 12, 2018. That very day, Ms. McElmury confirmed to her team that indeed, an unauthorized disclosure had occurred. Mr. Kelley poked around a bit and then went on vacation. No substantive response was tendered to the April 12 email until well over a month later and even then, only after Local Access had repeated its concerns. Given the gravity of the accusations and the readily discoverable nature of the disclosure of Highly Confidential information to Peerless, this delay was unreasonable and inexcusable.

The Protective Order provides that “counsel of record for the party involved shall (after learning of such disclosure or breach) immediately give notice of such unauthorized disclosure or breach, including a reasonable description of all pertinent facts, to counsel of record for the party who initially produced the Confidential or Highly Confidential Litigation Material.” (Doc. 44, ¶ 18 – emphasis supplied). Kelley Drye maintains that it complied with this provision, as the firm was under an obligation to include a description of the facts in its notice and this necessarily anticipates a delay for investigation. I am not persuaded. Allowance of an open-ended delay is belied by the inclusion of the word “immediately.” To the extent the provision requires that this immediate notice include a description of all pertinent facts, the description is modified by the word “reasonable,” making it clear that disclosure should occur upon learning of the noncompliance, and the disclosure should include all pertinent facts reasonably known at that time. A delay until such time as a party determines, in its own judgment, that all facts are discovered is not “immediate” notice and does not comply with the Protective Order. Indeed, the firm knew this and had taken a similar position in this very lawsuit. In a motion brought by Peerless for issuance of an order to show cause against Local Access, Kelley Drye argued that Local Access violated the same provision of the Protective Order in failing to “ ‘immediately’ advise Peerless of the breach and all the pertinent facts” regarding an inappropriate disclosure made by Local Access just one day prior. (See Doc. 400 at 3, and 4-5; Doc. 412).

*12 Even if the Court were to find that “immediately” includes a period of time for investigation of the facts, there is no showing that the delay here was due to an investigation concerning the disclosure of Highly Confidential material. Even if the Court allows a few days for the lawyers to collect themselves and (perhaps) seek independent advice, the delay was excessive. No later than April 12, 2018, Kelley Drye knew it had provided the January 30, 2018 Highly Confidential CDRs to Peerless.[11] Yet, rather than disclose this to Local Access, and with full knowledge that it had already made the inappropriate disclosure, Kelley Drye sent an email asking Local Access to identify what information it considered Highly Confidential in the CDRs so that Kelley Drye could “consider stripping that information from the CDRs prior to transmitting them to Peerless.”[12] This email was not sent to investigate; it was sent to mitigate. Kelley Drye had an affirmative duty to promptly disclose what it knew to Local Access and the Court and its failure to do so until well over a month had passed from discovery of the violation is an intentional violation of the Protective Order.

Kelley Drye also acted unreasonably in failing to mitigate the effect of the violations, which led directly to its client’s misuse of Confidential information. While I find that the initial failure to obtain written acknowledgements of the receipt of the Protective Order prior to the disclosure was not intentional, this was a significant oversight and led to additional disclosures within Peerless which were not without consequence. The evidence shows that Ms. James gave Confidential information to Mr. Knight on February 12, after she had removed the “Confidential” designation. Although the record contains various statements regarding the particulars of when the Protective Order was discussed and given to Mr. Knight,[13] he testified that when he received the Confidential information he had not yet received, reviewed and signed the Protective Order (Knight, 125:12-21). Knight transmitted Local Access’ customer list within his organization and his salespeople went to work. This misuse of Confidential information was made possible by the actions of Kelley Drye in stripping the Confidential designation from the information (itself a violation of the Protective Order) and transmitting it to Peerless’ Executive President of Sales and Marketing without assuring adherence to the provisions of the Protective Order designed to safeguard that information.

The firm argues that “the evidence is undisputed that Kelley Drye sent the Protective Order to Peerless upon its entry.” (Doc. 574 at 23). But the document cited shows only that the Protective Order was transmitted to Mr. Barnicle and Ms. Oost. (Kelley Drye Exhibit 1). There is no showing that the Protective Order was transmitted to Mr. Knight or anyone else within Peerless.[14]

*13 Kelley Drye’s post hoc argument that the information contained in the Confidential and Highly Confidential records was not truly confidential because Peerless could have gleaned the same information from its own records also does not persuade. Even if the Court were to credit the contention that Peerless, if so motivated, could have gathered its records and eventually figured out the identities of Local Access’ customers, that does not change the fact that Peerless did not do so, but instead impermissibly used Local Access’ information in an effort to solicit business – a task clearly not a proper litigation purpose. The Court can find that the customer list was useful to Peerless because it was, in fact, used. While Peerless’ actions are the subject of another motion that will be heard shortly and I make no conclusions regarding Peerless’ culpability at this time, the fact remains that it would not have had the information if Kelley Drye had not supplied it.

Although Local Access does not claim monetary losses due to the improper customer solicitation, Kelley Drye’s violations and less than forthright disclosure of the violations was not harmless as even a cursory look at the docket shows. Because of the nature of the violations and the lack of trust between the parties and their lawyers, the litigation on the merits came to a halt while the attorneys conducted an all-hands-on-deck approach to discover the extent of the non-compliance and its aftermath. Discovery of the particulars of the misfeasance was further complicated by Peerless’ assertion of attorney client privilege and Kelley Drye’s assertion of work product privilege. Countless hours have been spent by the parties and the Court in an effort to unravel what happened and how to go forward from here. While not easy to calculate in dollar figures, the cost to the orderly progression of this suit has been significant and the violations have escalated pre-existing tensions between opposing counsel.[15]

Whether the initial failures to assure compliance prior to tendering Confidential information to Peerless employees and the disclosures of Highly Confidential information to Peerless were due to mere oversight (as claimed by the firm) or recklessness (as claimed by Local Access), the firm’s actions upon and after discovering the violations and delaying compliance with the remedial provisions of the Protective Order were taken with knowledge of the violations and were not in compliance with the terms of the Protective Order.

On this record, the Court could find that Local Access has established by clear and convincing evidence that Kelley Drye violated the Protective Order by failing to immediately notify Local Access of the misuse of its Confidential information and the sharing of its Highly Confidential information in violation of the provisions cited above. While a finding of civil contempt is supportable, the Court need not resort to such a damning finding, as other avenues of sanction are available to redress the violations.[16]

Remedies

Kelley Drye argues that the Court is without authority to make a finding of civil contempt or impose any sanction, as civil contempt powers may only be exercised to coerce or to compensate and a party cannot be held in civil contempt simply to memorialize a past violation. See Langford v. Magnolia Advanced Materials, Inc., No. 1:15-CV-01115-AT-JFK, 2016 WL 10652005, at *4 (N.D. Ga. Apr. 22, 2016), report and recommendation adopted, No. 1:15-CV-1115-AT-JFK, 2016 WL 10654072 (N.D. Ga. May 13, 2016) (quoting United States v. McCorkle, 321 F.3d 1292, 1299 (11th Cir. 2003) (“We are at loss as to how a party can be adjudged in civil contempt when the underlying basis for the contempt citation is moot.”). Kelley Drye also argues that civil contempt cannot be used to sanction mere technical or de minimus violations. Schainberg v. Urological Consultants of S. Fla., P.A, No. 12-21721, 2013 WL 12086839, at *11 (S.D. Fla. Apr. 18, 2013), report and recommendation adopted sub nom. Schainberg v. Urological Consultants of S. Fla., P.A., No. 12-21721-CIV, 2013 WL 12086272 (S.D. Fla. Apr. 19, 2013) (citing 7 Moore’s Federal Practice § 37.51[7][b] (Matthew Bender 3d Ed.)). The firm notes that Local Access makes no damage claim (such as lost customers) leaving nothing to compensate, and the firm has since come into compliance with the Protective Order, leaving nothing to coerce. Thus, according to Kelley Drye, no harm, no foul. I do not find it quite as tidy.

*14 As Magistrate Judge McCoun observed:

Oxebridge Quality Res. Int’l, LLC v. Smith, 8:15-CV-11-T-17TBM, 2016 WL 11491577, at *13 (M.D. Fla. July 28, 2016).[17]

*15 A sanction to coerce Kelley Drye into compliance is not needed. Despite the saber rattling by Local Access, I see no evidence that the firm is not currently in compliance and, given the uncomfortable gauntlet it just ran, I trust it has no wish to violate the Protective Order again. That said, I disagree with Kelley Drye’s assertions that the violation here was de minimis and there is no factual or legal basis to award a sanction of any kind.

It must be remembered that, at the time of filing the motion for sanctions, the extent of the resulting harm was unknown. And although Kelley Drye took steps to corral the errant Confidential and Highly Confidential information it was only partially successful, in that at least one Peerless employee continued to have Confidential information until right before the show cause hearing. Because Kelley Drye did not promptly disclose with specificity exactly what information was improperly disclosed, who received it, and what was done with it, the parties were required to engage in robust discovery in preparation for the evidentiary hearing. Just as a court may award sanctions under Rule 37 if compliance is obtained after the filing of a motion to compel, Local Access’ motion for sanctions must be viewed through the lens of history and context, and in view of the situation that existed at the time of filing.

The nature of the violations belies any contention that these disclosures were technical or de minimis. The parties have gone to great lengths to protect their confidential information, as evidenced by the dozens of filings under seal and motions to strike or withdraw documents improperly filed in the public docket. Indeed, the requirement of confidentiality was deemed acute enough to warrant moving for entry of the Protective Order in the first place.

More importantly, “[d]isobedience of a court order unequivocally merits punishment save in instances in which compliance would necessarily result in an irrevocable and permanent surrender of a constitutional right.” Kleiner v. First Nat. Bank of Atlanta, 751 F.2d 1193, 1208 (11th Cir. 1985) (internal citation and quotation omitted). As the Eleventh Circuit has explained:

Kleiner, 751 F.2d at 1209 (11th Cir. 1985) (emphasis added). Now, I find the Court has ample inherent power to address and redress the conduct of Kelley Drye short of imposing a finding of contempt.[18]

Although Local Access has not attempted to show that it suffered any compensatory damages from the non-compliance, it has adequately shown that it incurred expenses in bringing this matter to the attention of the Court which would not have been incurred had Kelley Drye complied with the Protective Order. I conclude therefore, that an award of attorneys’ fees and costs for the investigation of these matters and the prosecution of this motion is warranted. See, generally, Stahl v. Mastec, Inc., 8:05-CV-1265-T-27TGW, 2008 WL 2127970, at *4 (M.D. Fla. May 20, 2008) (sanctions including motion fees and expenses imposed where counsel found to have acted without authority in taking an overly broad interpretation of an agreement and order, but counsel’s conduct was not egregious).

Disqualification

As a remedy for violating the Protective Order, Local Access also seeks disqualification of Kelley Drye on the ground that its lawyers violated certain ethical rules. There are two sources for a court’s authority when it considers a motion to disqualify an attorney. First, attorneys are bound by the rules of the court in which they appear. Under this Court’s local rules, the professional conduct of all members of the bar, admitted generally or specially, is governed by the Model Rules of Professional Conduct of the American Bar Association as modified and adopted by the Supreme Court of Florida. L.R. 2.04(d). Second, their professional conduct is governed by federal common law, “because motions to disqualify are substantive motions affecting the rights of the parties.” Herrmann v. Gutterguard, Inc., 199 F. App’x. 745, 752 (11th Cir. 2006).

In deciding whether to grant a motion to disqualify, the court must first “identify a specific rule of professional conduct applicable to that court and determine whether the attorney violated that rule.” S. Visions, LLP v. Red Diamond, Inc., 2:18-CV-02039-RDP, 2019 WL 936666, at *5 (N.D. Ala. Feb. 26, 2019), quoting Herrmann, 199 F. App’x at 755; see also Schlumberger Techs., Inc. v. Wiley, 113 F.3d 1553, 1561 (11th Cir. 1997) (noting an alternate basis for disqualification if the conduct threatens the operations of the court or the judicial process as a whole, as the district court may regulate that conduct under its broad inherent power to conduct the general business of the court.).

*17 The party bringing the motion for disqualification “bears the burden of showing the grounds for disqualification.” In re BellSouth Corp., 334 F.3d 941, 961 (11th Cir. 2003) (citations omitted). “ ‘Because a party is presumptively entitled to the counsel of his choice, that right may be overridden only if ‘compelling reasons’ exist.’ ” (Id.) (citations omitted). Disqualification is a harsh sanction, often working substantial hardship on the client, especially in cases where extensive discovery and trial preparation have been completed. As such, “disqualification should be resorted to sparingly.” Norton v. Tallahassee Mem’l Hosp., 689 F.2d 938, 941 (11th Cir. 1982).

Mr. Kelly, Ms. James and Ms. McElmury are accused of violating R. Regulating Fla. Bar 4-3.3, which requires all attorneys to, at all times, demonstrate “Candor Toward the Tribunal” and R. Regulating Fla. Bar 4-3.4, which requires attorneys to demonstrate “Fairness to Opposing Party and Counsel”. Local Access also claims “spoliation” and possible violations of other rules, but in subsequent briefing, it focused on Rule 4-3.4(c): a lawyer shall not “knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists;” Rule 4-8.4(d): a lawyer shall not “engage in conduct in connection with the practice of law that is prejudicial to the administration of justice ...”; and Rule 4-41: “In the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by rule 4-1.6.”

I do not find sufficient proof to establish a violation of these rules. After an exhausting discovery process, a flurry of motions and filings (many under seal), hundreds of pages of deposition excerpts and exhibits and two days of testimony, Local Access succeeded in proving that Kelley Drye did not fully adhere to the terms of the Protective Order and, when that failure became clear, the firm compounded its error by failing to immediately confess. What Local Access does not appreciate is that the initial violation was an error and Kelley Drye did eventually (albeit belatedly) confess. While these actions are not acceptable, and will support a finding of contempt, I find that is unnecessary. Despite the verbose protestations of Local Access, there is no monster under the bed. The totality of the record shows that Kelley Drye attorneys made bad decisions, but their conduct is sufficiently redressable by sanctions (which I am recommending) and not by the extreme remedy of disqualification. Kelley Drye’s conduct, while disappointing, does not amount to actions that are so prejudicial to the administration of justice that they warrant disqualification.

Recommendation

Upon consideration of the foregoing, I respectfully recommend the Court award Local Access its reasonable attorney’s fees and other legal expenses incurred between December 21, 2017 and the present which relate to the investigation and discovery of Kelley Drye’s violation of the Protective Order and the prosecution of this sanctions motion. I also recommend that Peerless be prohibited from paying any part of the attorney’s fees and other legal expenses awarded to Local Access in connection with this matter. As Local Access’ request for the imposition of sanctions against Peerless remains outstanding, I further recommend that any motion for attorney’s fees and legal expenses pursuant to this recommendation (if adopted) be deferred until the conclusion of those proceedings.

Notice to Parties

*18 A party has fourteen days from this date to file written objections to the Report and Recommendation’s factual findings and legal conclusions. A party’s failure to file written objections waives that party’s right to challenge on appeal any unobjected-to factual finding or legal conclusion the district judge adopts from the Report and Recommendation. See 11th Cir. R. 3-1.

RESPECTFULLY RECOMMENDED at Orlando, Florida on June 21, 2019.