In re BofI Holding, Inc. Sec. Litig.
In re BofI Holding, Inc. Sec. Litig.
2021 WL 3700749 (S.D. Cal. 2021)
July 27, 2021
Crawford, Karen S., United States Magistrate Judge
Summary
The court granted the motion to compel the disclosure of the identities of confidential witnesses, but imposed limitations on the parties' use of the information and interactions with the witnesses. The court also denied defendants' request for documents related to plaintiff's pre-filing investigation, and ordered that defendants shall not request documents related to plaintiff's prefiling investigation from any confidential witness.
Additional Decisions
In re BofI HOLDING, INC. SECURITIES LITIGATION
Case No.: 15-cv-2324-GPC-KSC
United States District Court, S.D. California
Filed July 27, 2021
Crawford, Karen S., United States Magistrate Judge
ORDER GRANTING IN PART AND DENYING IN PART JOINT MOTION FOR DETERMINATION OF DISCOVERY DISPUTE No. 3 and GRANTING MOTION TO SEAL
Before the Court is the parties' Joint Motion for Determination of Discovery Dispute No. 3, in which defendants move for an order compelling plaintiff to: (1) identify the confidential witnesses (the “confidential witnesses” or “CWs”) cited in plaintiff's Third Amended Complaint (the “Complaint” or “TAC”) in response to defendants' Interrogatory No. 9 and Request for Production No. 27; and (2) produce plaintiff's communications with the confidential witnesses in response to defendants' Request for Production No. 29 (the “Motion to Compel” or “Mot.”). Doc. No. 203. Also before the Court is plaintiff's motion to seal its most recent Rule 26(a) disclosures, which were filed at the Court's request (the “Motion to Seal,” and, with the Motion to Compel, the “Motions”). Doc. No. 208.
The Motions are fully briefed, and the Court finds them suitable for disposition without oral argument. See CivLR 7.1.d.1. The Court has carefully considered the materials submitted, the arguments of counsel and the applicable law. For the following reasons, the Motion to Compel is GRANTED IN PART and DENIED IN PART and the Motion to Seal is and GRANTED.
I. BACKGROUND
A. Procedural History
Plaintiff brings this putative class action against BofI Holding, Inc. (“BofI” or “the Bank”) and its officers and directors Gregory Garrabrants, Andrew J. Micheletti, Paul J. Grinberg, Nicholas A. Mosich, and James S. Argalas (collectively with BofI, “defendants”), alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. See generally Doc. No. 136. The TAC pleads facts gleaned from plaintiff's prefiling investigation, including interviews with the confidential witnesses that purportedly support plaintiff's allegations of securities fraud. See id. at 5. The confidential witnesses are former employees of the Bank who spoke on condition of anonymity and are not identified in the Complaint by name.
As the District Court has observed, “[t]he combination of the PSLRA's strict pleading requirements and the discovery stay” has rendered the use of confidential witnesses in securities litigation “common,” and this case is no exception. See Doc. No. 64 at 30-31 (citing Gideon Mark, “Confidential Witnesses in Securities Litigation,” 36 J. CORP. L. 551, 554-55 (2011)). Plaintiff has filed three complaints following its lead-plaintiff appointment, each of which have included facts purportedly told to plaintiff or its agents by former BofI employees. See generally Doc. Nos. 26, 79 and 136.
In 2016, while defendants' motion to dismiss plaintiff's First Amended Complaint (the “FAC”) was pending, plaintiff moved for a protective order regarding defendants' and their counsel's contacts with former BofI employees. See Doc. No. 39. Plaintiff represented that defendants (or their counsel) had contacted former BofI employees they believed to be confidential witnesses and falsely informed those employees that they were “named” in the FAC. Id. at 2. Plaintiff also asserted that defendants had attempted to obtain its counsel's confidential work product from the witnesses. Id.
On August 26, 2016, this Court issued the requested protective order over defendants' objection. See Doc. No. 49. In doing so, the undersigned found that the record before it “portray[ed] an effort to mislead witnesses” and expressed concern for the “potential ... disclosure of attorney work product.” Id. at 4. The Court therefore prohibited defendants, including their counsel and other agents, from contacting any former BofI employee for any purpose related to the litigation. Id. at 5.
On November 30, 2016, the District Court reversed the undersigned's protective order in part, finding it too broad. See Doc. No. 80 at 11-12. Recognizing defendants' legitimate needs” to “prepare their defense,” the District Court nevertheless found that plaintiff had raised “valid concerns” regarding defendants' contacts with the former employees. Id. Specifically, the District Court found that the language defendants used in communicating with the employees “had and has the potential to mar the credibility of Lead Plaintiff's counsel in the eyes of the witnesses, to influence them so as to not cooperate with Lead Plaintiff moving forward, or even to pressure confidential witnesses to give untruthful statements.” Id. The District Court further observed that if defendants were to question the former employees about “interactions or communications” with plaintiff or its agents, such questioning “would raise serious concerns about the exposure of Lead Plaintiff's attorney work product.” Id. Given these concerns, the District Court ordered that:
Defendants, their attorneys, agents or representatives may contact and interview former BofI employees for purposes of the informal investigation of the litigation pending before this Court. In the event that the former employees are willing to speak with the defense, Defendants are prohibited, during such interviews, from: (1) telling such former BofI employees that they have been “named in the complaint” or otherwise identified by the Plaintiffs in any pleading; (2) seeking to obtain Lead Plaintiff's attorney work product from such former employees; and/or (3) publicly disclosing the identities of such former employees as confidential witnesses.
Id. at 12-13.
Plaintiff's FAC was dismissed, but not before the parties engaged in further motion practice regarding the confidential witnesses. See Doc. Nos. 45, 50, 51. In support of their motion to dismiss, defendants proffered the declarations of two confidential witnesses, wherein the witnesses averred that the statements attributed to them in the FAC did not accurately reflect their statements to plaintiff's attorneys and investigators (the “Declarations”). Doc. No. 42-3 and 42-4 (under seal). Plaintiff moved to strike the Declarations and submitted its counsel's sworn statement describing some communications with the declarants and stating that both witnesses had confirmed the accuracy of the allegations attributed to them. See Doc. No. 45-2. Plaintiff surmised that the confidential witnesses' “about-face” was caused by defendants' “pressure tactics.” See Doc. No. 45-1 at 4, 6. The District Court ultimately denied the motion to strike because it did not rely on the Declarations in dismissing the FAC, and thus did not make any findings with respect to the accuracy of the FAC or whether defendants had engaged in improper tactics in obtaining the Declarations. Doc. No. 64 at 29 n.8.
B. The Instant Discovery Dispute
On February 26, 2021, defendants served plaintiff with a First Set of Requests for Production of Documents (“RFPs”) and a First Set of Interrogatories, among which were the following discovery requests currently in dispute:
RFP No. 27: DOCUMENTS sufficient to identify any “confidential witness” referenced in the [Third Amended] COMPLAINT.RFP No. 29: All COMMUNICATIONS between YOU and any “confidential witness” referenced in the [Third Amended] COMPLAINT.Interrogatory No. 9: IDENTIFY each “confidential witness” referenced in YOUR [Third Amended] COMPLAINT.
See Doc. No. 203-1 at 14, 15, 28. Defendants requested that plaintiff produce documents or information not only in its possession or knowledge, but in the possession or knowledge of its attorneys or other agents. Id. at 7, 9, 24, 26.
Plaintiff responded to defendants' discovery requests on March 29, 2021. In addition to general objections that the discovery sought was, inter alia, irrelevant, disproportional to the needs of the case, cumulative and overbroad, plaintiff specifically objected to RFPs No. 27 and 29 as calling for information protected by the attorney-client privilege and work product doctrine. See id. at 35-40, 53-54. Plaintiff likewise stated general objections to the Interrogatories and specifically objected to Interrogatory No. 9 on the basis that it sought information that was protected by the work product doctrine and further that the information was already known to defendants or their counsel. Id. at 72-75, 80-81. In its responses, plaintiff also objected to defendants' instruction to provide information or documents in the possession of plaintiff's counsel or its agents. Id. at 36, 71. On the basis of the foregoing objections, plaintiff refused to respond to the discovery.
The parties met and conferred regarding plaintiff's responses to these and other requests but remained at an impasse concerning RFPs No. 27 and 29 and Interrogatory No. 9. Id. at 2. Pursuant to the undersigned's Chambers' Rules and Pretrial Procedures, counsel for the parties then contacted the Court and explained the dispute, following which the Court ordered the parties to submit the Joint Motion. Id. at 3; Doc. No. 195.
II. MOTION TO COMPEL
A. Legal Standards
“Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). Although broad, however, “[t]he scope of discovery is not unlimited.” Cabell v. Zorro Prods., 294 F.R.D. 604, 607 (W.D. Wash. 2013). The Court “must limit” any discovery that it determines to be “outside the scope permitted by Rule 26(b)(1).” Fed. R. Civ. P. 26(b)(2)(C)(iii). “District courts have wide latitude” in making this determination. U.S. Fid. and Guar. Co. v. Lee Inv. LLC, 641 F.3d 1126, n.10 (9th Cir. 2011).
B. Analysis
1. Relevance
“The threshold inquiry [of] ... any discovery dispute[ ] is relevance.” Weiland v. City of Concord, No. 13-cv-5570-JSC, 2014 WL 5358756, at *3 (N.D. Cal. Oct. 20, 2014); see also Fed. R. Civ. P. 26(b)(1). As the moving party, defendants here “bear[ ] the burden of demonstrating that the information [they] seek[ ] is relevant.” Hancock v. Aetna Life Ins. Co., 321 F.R.D. 383, 390 (W.D. Wash. 2017). Defendants, however, give only cursory attention to the question of relevance. The sum of their argument is that the requested discovery is “plainly relevant” because the confidential witnesses' “[p]urported statements” form the basis of plaintiff's allegations of fraud. Mot. at 5, 10.
The Court agrees that defendants are entitled to know about witnesses with information “relevant to any party's claim or defense.” Fed. R. Civ. P. 26(b)(1). The Court notes that the pleadings have been tested and have withstood scrutiny. See In re BofI Holding, Inc. Sec. Litig., 977 F.3d 781 (9th Cir. 2020). Thus, it is not the pleadings that are “at issue” (Mot. at 5, 12), but the claims and defenses raised in those pleadings – namely, plaintiff's allegation that defendants committed securities fraud, and defendants' denial of wrongdoing. The task before the parties now is to gather evidence to prove or disprove the Complaint's allegations, and the confidential witnesses have knowledge of the inner workings of the Bank during the time of the alleged fraud that is indeed “plainly relevant” to this task. Mot. at 5. Accordingly, the Court finds that the identities of the confidential witnesses are relevant. See In re Amgen Inc. Sec. Litig., No. CV 07-2536-PSG (PLAx), 2013 WL 12139088, at *3 (C.D. Cal. Dec. 2, 2013) (finding that the “identi[ty] [of] those individuals whose information plaintiff[ ] found significant enough to include in their Complaint ... is the very essence of discovery”).
However, the Court emphasizes that the “the relevance of the [confidential] witnesses' testimony is their knowledge of the underlying facts” of the alleged fraud and not their participation – months or even years later – in plaintiff's counsel's prefiling investigation. Plumbers & Pipefitters Local 572 Pension Fund v. Cisco Sys., Inc., No. C01-20418JW, 2005 WL 1459555, at *8 (N.D. Cal. June 21, 2005) (emphasis added). Stated another way, there is a difference between information that is “relevan[t] to the disposition of the action” (which is discoverable) and information that would facilitate a “post hoc investigation into the sourcing of a complaint's allegations” (which is not). Grae v. Corrections Corp. of Am., 326 F.R.D. 482, 486 (M.D. Tenn. 2018) (denying motion to compel confidential witness identities).
For the foregoing reasons, the Court will require plaintiff to disclose the identities of the confidential witnesses and hereby GRANTS the Motion to Compel as to Interrogatory No. 9. However, the Court finds that discovery into the conduct of plaintiff's counsel's prefiling investigation is neither relevant nor “importan[t] ... [to] resolving the issues” in the case. Fed. R. Civ. P. 26(b)(1). Thus, in disclosing the confidential witnesses' identities, plaintiff is not required to identify them by number or “link up any particular [confidential witness] with any paragraph” in the TAC.[1] Miller v. Ventro Corp., No. C01-01287 SBA (EDL), 2004 WL 868202, at *2 (N.D. Cal. Apr. 21, 2004) (ordering disclosure of witness identities without attribution to particular statements in complaint); see also In re Symbol Techs., Inc. Sec. Litig., No. CV 05-3923(DRH)(AKT), 2017 WL 1233842, at *13 (E.D.N.Y. Mar. 31, 2017) (finding that discovery into the conduct of counsel's investigation was “wholly divorced from the subject matter and claims in the underlying action” and denying motion to compel). Knowing who the confidential witnesses are, and within the confines of this and other extant protective orders, defendants are free to ascertain the confidential witnesses' knowledge of facts relevant to the alleged fraud and whether those support any claim or defense. Further, given the Court's ruling on Interrogatory No. 9, defendants' request for documents “sufficient to identify” the confidential witnesses is needlessly “cumulative or duplicative.” Fed. R. Civ. P. 26(b)(2)(C)(i). The Court therefore DENIES the Motion to Compel as to RFP No. 27.
The Court is also not persuaded that communications between the confidential witnesses and plaintiff (or its agents), as would be responsive to RFP No. 29, are relevant. Defendants do not explicitly address the relevance of these documents, but state that they are entitled to “test the reliability of statements attributed to the CWs.” Mot. at 15. On the record before it, the Court finds that defendants' request is more concerned with “the actions of lawyers ... than [with] the knowledge of witnesses.” E.E.O.C. v. Collegeville/Imagineering Ent., No. CV-05-3033 PHX-DGC, 2007 WL 1089712, at *1 (D. Ariz. Apr. 10, 2007) (denying motion to compel). As such, defendants have not carried their burden of demonstrating the relevance of the discovery sought. Hancock, 321 F.R.D. at 390. The Court therefore DENIES the Motion to Compel as to RFP No. 29.
2. Work Product
Even assuming defendants had established relevance, the Court must also evaluate whether the requested discovery is protected from disclosure by the work product doctrine. See Mot. at 12-13, 15-16. “The work product doctrine is a ‘qualified’ privilege that protects ‘from discovery documents and tangible things prepared by a party or his representative in anticipation of litigation.’ ” United States v. Sanmina Corp., 968 F.3d 1107, 1119 (9th Cir. 2020) (citations omitted); see also Fed. R. Civ. P. 26(b)(3). As the parties note, the Ninth Circuit has not spoken on the question of whether confidential witness identities and documents related to a plaintiff's prefiling investigation are protected by the work product doctrine. Mot. at 11 n.8. District Courts faced with the issue have come to widely varying conclusions, demonstrating the difficulty in “balanc[ing] ‘the necessity of protecting an attorney's preparation under the adversary system and the policy of full and open discovery underlying the’ [Federal] [R]ules.” Republic of Ecuador v. Mackay, 742 F.3d 860, 867 (9th Cir. 2014) (describing the competing interests the work product doctrine is designed to address) (citation omitted).
a. Witness Identities
The identity of persons interviewed by counsel in formulating the Complaint is work product. However, the Court agrees with those courts that have found that when the information provided by those persons becomes the foundation of plaintiff's allegations, defendants' need for the information is heightened and outweighs the minimal risk of exposure of counsel's work product from disclosure of the witnesses' identities alone. See, e.g., In re Harmonic, Inc. Sec. Litig., 245 F.R.D. 424, 429 (N.D. Cal. 2007) (finding the “de minimis” work product protection for confidential witness identities was “overcome” by defendants' need for the information); Schueneman v. Arena Pharms., Inc., No. 10cv1959-CAB (BLM), 2017 WL 3118738, at *7 (S.D. Cal. July 21, 2017) (holding that where witness statements are included in a complaint, “ ‘reciprocal and robust fact-gathering’ ” takes “ ‘priority’ ” over any work-product protection) (citation omitted).
The greater threat to counsel's work product, as the District Court has already recognized, arises when defendants or their counsel “interview” the witnesses and “ask questions regarding the witnesses' interactions or communications with” plaintiff or its agents. Doc. No. 80 at 12. Indeed, defendants have confirmed their intention to do just that, explaining that “[r]esolution of th[e Motion to Compel] has implications beyond the discovery requests at issue ... because [d]efendants intend to depose the CWs and would likely inquire into their communications” with plaintiff and plaintiff's agents. Mot. at 14 n.11. Therefore, to protect counsel's work product and in light of the Court's finding that the witnesses' participation in counsel's prefiling investigation is not relevant, the Court finds it appropriate to limit defendants' interactions with the witnesses. Specifically, defendants are not to inquire of the witnesses about any prefiling communications with plaintiff's counsel or investigators. Furthermore, defendants shall not request any documents related to plaintiff's prefiling investigation from the confidential witnesses.
b. Notes, Memoranda, and Communications
The Court reaches a different result as to the documents called for by RFPs No. 27 and 29. Even assuming the relevance of any responsive documents, the Court agrees with plaintiff that those materials are protected work product. Plaintiff represents that the only documents in its possession responsive to RFP No. 27 (documents “sufficient to identify” the confidential witnesses) are “interview notes and memoranda” prepared by investigators retained by plaintiff's counsel. Mot. at 7. Such materials are plainly “documents ... prepared in anticipation of litigation or for trial” by plaintiff or its representatives and are not discoverable absent a showing of “substantial need” and that the information is not otherwise obtainable. Fed. R. Civ. P. 26(b)(3)(A)(ii). Plaintiff's counsel's communications with the witnesses (as requested in RFP No. 29) were made “to develop the factual allegations” in the Complaint, such that discovery of those communications would also likely reveal counsel's work product. Mot. at 16; see also Schoenmann v. Fed. Deposit Ins. Corp., 7 F. Supp. 3d 1009, 1014 (N.D. Cal. 2014) (finding that communications between a party, its counsel, and a nonparty witness were protected work product).
Defendants assert that they have a “substantial need” for the requested discovery because they do not want to “undertake the time and expense of deposing each individual” identified in plaintiff's initial disclosures to find out who are the confidential witnesses.[2] Mot. at 11. Since the Court has ordered disclosure of the identities of the nine confidential witnesses, defendants “ha[ve] the opportunity to depose [the confidential witnesses] to investigate any relevant information [they] may possess with respect to” the alleged fraud. Schoenmann, 7 F. Supp. 3d at 1014 (finding party had not established substantial need for opponent's work product). The Court therefore finds defendants' argument is moot and further that it is not an undue hardship for defendants to depose nine individuals. The Court is equally unpersuaded that defendants need the requested discovery to assess the “accuracy” of plaintiff's allegations. Mot. at 15. Defendants' insinuations aside, there has been no finding by the undersigned Magistrate Judge or Judge Curiel that plaintiff or its counsel has made assertions or allegations without a good faith basis. Should evidence of any such misrepresentation emerge during the litigation, it should immediately be brought to the Court's attention. Until then, the Court will not compel plaintiff to surrender its work product to defendants. See In re Symbol Techs., Inc. Sec. Litig., 2017 WL 1233842, at *13 (“It is not the Court's job to pave the way for Defendants to bring a Rule 11 motion.”). For these reasons, the Court finds that defendants have not shown substantial need or undue hardship as required by Rule 26(b)(3)(A)(ii) sufficient to justify discovery of plaintiff's counsel's work product.
Finally, the Court rejects defendants' argument that plaintiff waived its work product protection by opposing defendants' motion to dismiss, including by moving to strike the Declarations. Mot. at 14-15. As the Hatamian court explained, a contrary rule “would mean that any time a defendant challenges the accuracy of a complaint's allegations, and a plaintiff responds to that challenge by defending the good faith basis for making the claims, the plaintiff will be deemed to have waived work product” protections. Hatamian, 2016 WL 2606830, at *5. Enabling litigants to establish waiver so easily would effectively render the longstanding protections of the work product doctrine “meaningless.” Id. Counsel (in this and any other case) should not be forced to choose between defending their pleadings – or responding when their opponent raises the specter of Rule 11 – and protecting their work product. The Court therefore finds that plaintiff did not waive the protections of the work product doctrine.
3. Interests of Nonparties
“District courts ... have broad discretion to limit discovery to prevent its abuse.” Scherer v. FCA US, LLC, -- F. Supp. 3d --, 2021 WL 1921119, at *1 (S.D. Cal. May 12, 2021) (citing Fed. R. Civ. P. 26(b)(2)). The Court's “inherent power to protect witnesses” and “broad power[ ]” to control the conduct of litigants before it is also well established. See Wheeler v. United States, 640 F.2d 1116, 1123 (9th Cir. 1981). Defendants disclaim that they have “intimidated or pressured” any confidential witness (or at least that there is “admissible” evidence of any intimidation). Mot. at 8 n.4. That may be so. The Court is mindful, however, that the confidential witnesses provided information that may lead to their former employer's liability for securities fraud, which may have serious financial and other consequences for defendants. In such circumstances, a lay witness may very well feel intimidated, pressured, confused or threatened when being questioned by a lawyer about that information – even if that is not defendants' or counsel's intention. See Hatamian v. Advanced Micro Devices, Inc., No. 14-cv-00226-YGR, 2015 WL 511175, at *3 (N.D. Cal. Feb. 6, 2015) (noting that confidential witnesses are often “in the cross-hairs” of securities fraud cases). The District Court explicitly recognized this potential for coercion in its November 30, 2016 Order. See Doc. No. 80 at 12 (“Defendants' language in communication with the confidential witnesses...has the potential...to pressure confidential witnesses to give untruthful statements.”).[3] Retaliation is also a significant concern, as employees often rely on connections with, and recommendations or introductions from, former employers throughout their careers. See Plumbers & Pipefitters Local 572 Pension Fund, 2005 WL 1459555, at *7 (noting that “former whistleblowing employees may be subjected to harassment by new employers or dampen their job-searching efforts”). While the Court makes no finding of intimidation, harassment or retaliation, it is not necessary to await “admissible” evidence of such improprieties to take measures to protect the nonparty witnesses. Mot. at 12. Therefore, and with these considerations in mind, the Court will limit the disclosure and use of the confidential witnesses' identities and information, as set forth in detail below.
C. Conclusion
For the foregoing reasons, the Court finds that the confidential witnesses' identities are relevant and discoverable, subject to reasonable limitations to protect plaintiff's counsel's work product. Therefore, the Motion to Compel as to Interrogatory No. 9 is GRANTED consistent with the terms of this Order. The Court further finds that defendants have not shown plaintiff's communications with the confidential witnesses, and notes and memoranda of plaintiff's counsel's prefiling interviews with the confidential witnesses, are relevant to any claim or defense, and regardless of relevance are protected work product for which defendants have not shown a substantial need. Accordingly, the Motion to Compel as to RFPs No. 27 and 29 is DENIED. Finally, in consideration of the interests of the nonparty witnesses and in the exercise of the Court's discretion over discovery matters, the Court imposes limitations as described below on the parties' use of the information and interactions with the confidential witnesses going forward. The terms of this Order shall apply to the parties, their counsel, and any other person working at counsel's or the parties' direction.
III. MOTION TO SEAL
“[T]he courts of this country recognize a general right to inspect and copy public records and documents, including judicial records and documents.” Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 (1978). “Unless a particular court record is one ‘traditionally kept secret,’ a ‘strong presumption in favor of access’ is the starting point.” Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citation omitted). The party “seek[ing] to maintain the secrecy of documents” bears the burden of overcoming the strong presumption of access. See id. at 1180. Where, as here, the documents to be sealed are attached to a non-dispositive discovery motion, the moving party must make a “ ‘particularized showing’ ” of “ ‘good cause’ ” for sealing. Id. (citations omitted). This requires “the party seeking protection [to] show[ ] that specific prejudice or harm will result” if the request is denied. Anderson v. Marsh, 312 F.R.D. 584, 594 (E.D. Cal. 2015).
Plaintiff moves to seal its initial disclosures, which contain the names and addresses of 21 former BofI employees, including the nine confidential witnesses. See Doc. No. 208 at 2. Plaintiff asserts there is good cause to seal the disclosures to “protect the rights of privacy” of these individuals, and to prevent the “misuse” of this identifying information to harass the former employees. Id. Requests to seal personal information are often granted to protect an individual's privacy and prevent exposure to harm, particularly where the information relates to nonparties. See Fed. Trade Comm'n v. AAFE Prods. Corp., No. 17-cv-00575-AJB-JMA, 2017 WL 3721695, at *1 (S.D. Cal. Aug. 29, 2017) (sealing names and residential addresses of nonparties); see also Nursing Home Pension Fund v. Oracle Corp., No. C01-00988 MJJ, 2007 WL 3232267, at *2 (N.D. Cal. 2007) (granting motion to seal home addresses of four confidential witnesses). The District Court has previously found the same information sealable under the stricter “compelling reasons” standard for these very reasons. See Doc. No. 64 at 31-32. Therefore, Court finds that plaintiff has established good cause for sealing. The Motion to Seal is GRANTED.
ORDER
For the reasons stated herein, defendants' Motion to Compel [Doc. No. 203] is GRANTED IN PART and DENIED IN PART. Plaintiff's Motion to Seal [Doc. No. 208] is GRANTED. The Court further orders as follows:
1. No later than August 3, 2021, plaintiff shall respond to Interrogatory No. 9 and identify the nine confidential witnesses by name. Plaintiff need not identify the confidential witnesses by number or specify which paragraphs of the Third Amended Complaint correspond to which confidential witness. Plaintiff may elect to designate its response to Interrogatory No. 9 “Confidential” or “Confidential – For Counsel Only” under the terms of the operative protective order (Doc. No. 173).2. Plaintiff is not required to respond to Requests for Production Nos. 27 and 29.3. Any party may informally interview any confidential witness. Any party who contacts a confidential witness for an informal interview shall inquire at the outset whether the witness is represented by counsel. If the answer is yes, all future communications with the confidential witness must proceed exclusively through counsel. If the answer is no, before proceeding further the interviewer must advise the witness which party the interviewer represents and inform the confidential witness of his or her right to decline to be interviewed, and to have counsel for the opposing party present for the interview. Further, the interviewer shall ask if the witness is willing to be interviewed, and shall obtain an affirmative answer, before proceeding with the interview.4. Defendants shall not question any confidential witness, whether at deposition or otherwise, about his or her participation in plaintiff's prefiling investigation, including the manner, date, frequency or substance of the witnesses' contacts with plaintiff's counsel or anyone working at plaintiff's counsel's direction.5. Defendants shall not request, informally or by subpoena, documents related to plaintiff's prefiling investigation, including any correspondence between the witness and plaintiff's counsel or agents, from any confidential witness. If defendants do receive or have received any such documents, defendants shall sequester all documents received from the confidential witnesses, and shall notify plaintiff of their possession of the same. Plaintiff shall be provided a reasonable opportunity to review the documents and, if plaintiff determines that the documents contain work product, may request their return or destruction, and any other appropriate relief.6. Any confidential witness who has been deposed in this Action shall not be required to sit for further deposition without leave of this Court. If applicable, a confidential witness who has not been deposed in the Action shall be advised in a nonthreatening manner of the possibility that he or she will be subpoenaed for deposition, and of his or her right to object to the subpoena and to be represented by counsel at the deposition.7. No party shall identify any confidential witness in publicly filed documents in this Action or related litigation.8. Any declaration of any confidential witness purporting to change, clarify or recant information in the Complaint shall be accompanied by a declaration from counsel (and, if necessary, counsel's agents) confirming their compliance with this Order.9. The terms of this Order apply to the parties, their counsel, and any other persons working under the parties' or counsel's direction. The Court may impose sanctions on any party or counsel who fails to comply with this Order.10. Nothing in this Order shall be construed as modifying the District Court's November 30, 2016 Order [Doc. No. 80], which remains in effect.
IT IS SO ORDERED.
Footnotes
Defendants instructed plaintiff to “identify” the confidential witnesses by name, address and phone number. Doc. No. 203-1 at 25. However, the contact information for the witnesses was already produced to defendants in plaintiff's initial disclosures. Doc. No. 209. If plaintiff is aware that the witnesses' contact information has changed, it must supplement its Rule 26 disclosures, but otherwise is not required to provide contact information when identifying the confidential witnesses.
The 32 witnesses identified in plaintiff's Rule 26(a) disclosures include the five individual defendants, BofI's current general counsel, and five persons employed by or otherwise affiliated with plaintiff who have information about plaintiff's investment policies and strategies. See Doc. No. 209. The Court presumes none of these 11 individuals was a confidential witness, but its findings herein are not affected by this presumption.
The District Court identified the “potential to mar the credibility of [plaintiff's] counsel in the eyes of the witnesses [and] to influence them not to cooperate with [plaintiff]” as other “valid concerns” relating to communications with the confidential witnesses. Doc. No. 80 at 12. Although the District Court's Order specifically addressed these concerns as resulting from defendants' representations to the witnesses that they had been “named” in the complaint, see id., these concerns are not diminished simply because the case has proceeded to discovery. Although the procedures set forth herein are intended for the protection of the confidential witnesses, they should also mitigate these concerns.