*1 This matter is before this court on three motions: (1) that of Defendant-Counterclaimant Joybees, Inc. and Defendant Kellen McCarvel for sanctions against Plaintiff/Counterclaim Defendant Crocs, Inc. (“Crocs”), for filing 1:23-cv-01719-GPG-SBP (the “Second Action”) based on information that Joybees designated under the protective order in 1:21-cv-02859-GPG-SBP (the “First Action”), ECF No. 194/195 (the “Motion for Sanctions”); (2) Crocs's Motion to Consolidate the two cases, ECF No. 197/200; and (3) Defendants’ Motion to Stay Discovery in the Second Action, 23-cv-1719, ECF No. 22. The undersigned considers the Motions pursuant to 28 U.S.C. § 636(b) and the Memoranda referring the Motions. See also Order Referring Case, ECF No. 5.[1] For the reasons that follow, this court DENIES the Motion for Sanctions, RECOMMENDS granting the Motion to Consolidate, and DENIES the Motion to Stay Discovery.

The court has previously summarized the procedural history of the parties’ pleadings in the First Action. See, e.g., ECF No. 261 (Order of October 6, 2023). The court assumes familiarity with that history.

In a sixty-two page amended complaint, Crocs alleges (among other things) that when Mr. McCarvel left his employment with Crocs in June 2018, unbeknownst to Crocs he had “plans to form a new shoe company, Joybees, that would create similar knockoff injection-molded footwear and compete directly with Crocs.” ECF No. 85 at 11 ¶ 37. In January 2020, Mr. McCarvel publicly launched Joybees. Id. He is Joybees's chief executive officer.

At some point in 2020, Crocs alleges it forensically investigated the Crocs laptop that had been Mr. McCarvel's prior to his departure. The forensic investigation showed that he had made a “Take” folder of thousands of Crocs documents containing highly confidential information, and that just before his departure, he copied them to a personal USB drive. He also took with him a copy of his “entire Crocs email account.” Crocs alleges that Mr. McCarvel used those documents to form Joybees and give it a leg up in competing with Crocs. Id. ¶¶ 38-42. Crocs further alleges that Mr. McCarvel retained additional highly confidential information from Crocs that he has used at Joybees to compete with Crocs. Id. ¶ 44.

Crocs brings twelve claims (against both Defendants, unless noted):

In its seventy-two page, second amended counterclaims (ECF No. 262/267-1), Joybees answers the amended complaint (including raising several affirmative defenses) and brings sixteen counterclaims. Fourteen of the counterclaims are for declaratory judgment of:

Crocs moves to dismiss the antitrust counterclaims. ECF No. 272. That motion is not referred to this court.

On January 12, 2022, Magistrate Judge Hegarty entered the parties’ stipulated protective order to govern confidential discovery. ECF No. 30. In the Motion for Sanctions, the parties focus primarily on two provisions in the protective order. Defendants point to Paragraph 7.1, “Basic Principles,” which reads:

ECF No. 30 ¶ 7.1 (emphasis added). Crocs points to Paragraph 1, “Purpose and Limitations”:

ECF No. 30 ¶ 1 (emphasis added).[2]

*3 On July 6, 2023, Crocs filed the Second Action. In the 29-page, publicly-filed complaint, Crocs brings seven new claims alleging

23-cv-1719, ECF No. 1 at 3 ¶ 5. In this complaint, Crocs brings claims (against both Defendants, unless noted) for

On the same day as the complaint, Crocs also filed a notice of case association identifying the First Action. 23-cv-1719, ECF No. 3. The Second Action was originally assigned to Magistrate Judge Neureiter, who set a scheduling conference for October 31, 2023. 23-cv-1719, ECF No. 5 (July 7, 2023). On July 20, 2023, Crocs filed the Motion to Consolidate in the First Action. ECF No. 197/200. On August 17, 2023, Defendants filed motions to dismiss the Second Action. 23-cv-1719, ECF Nos. 9, 10. The motions to dismiss are not referred to this court.

On October 18, 2023, after non-consent to magistrate judge jurisdiction, the Second Action was assigned to Judge Daniel D. Domenico.

On October 31, 2023, Judge Neureiter briefly held a scheduling conference, but in light of Defendants’ Motion to Stay Discovery filed the day before (23-cv-1719, ECF No. 22), he did not set a schedule.

On November 1, 2023, pursuant to the Notice of Related Cases and Local Rules for this District, the Second Action was reassigned to Judge Gallagher and the undersigned magistrate judge. Id., ECF Nos. 30, 31. The Motion to Stay Discovery in the Second Action is fully briefed, and this court heard oral argument. ECF No. 38 (taking the Motion to Stay Discovery under advisement).

Whether under Federal Rule of Civil Procedure 37(b) (for violation of a discovery-related order), Federal Rule of Civil Procedure 16(f) (violation of a pretrial order), or its inherent powers, the court is authorized to exercise its discretion in determining whether to impose sanctions for violations of stipulated protective orders. See, e.g., Kaufman v. Am. Family Mut. Ins. Co., 601 F.3d 1088, 1092 (10th Cir. 2010). The court's decision is reviewed only for abuse of discretion, a “deferential standard of review” in which the Tenth Circuit recognizes that “a district court is in the best position to define the scope of the discovery orders and attendant protective orders it issues.” Id. at 1093. “Determination of the correct sanction for a discovery violation is a fact-specific inquiry, and in making such a determination[,] trial courts are accorded broad discretion.” Gates Rubber Co. v. Bando Chem. Indus., Ltd., 167 F.R.D. 90, 102 (D. Colo. 1996) (internal citation and quotation marks omitted, quoted with approval in E. Colo. Seeds, LLC v. Agrigenetics, Inc., No. 19-cv-01885-LTB-KMT, 2020 WL 2769792, at *2 (D. Colo. May 28, 2020)).

*4 The standard for non-dispositive sanctions is the preponderance of the evidence, while dispositive sanctions require clear and convincing evidence. Gates Rubber, 167 F.R.D. at 108-09. In addition, to the extent Defendants seek a finding of civil contempt as a sanction (ECF No. 194 at 8), “[a] district court enjoys broad discretion in using its contempt power to require adherence to court orders. A moving party must prove liability for civil contempt by clear and convincing evidence. A violation need not be willful to result in a finding of civil contempt.” Nichols v. Denver Health & Hosp. Auth., No. 19-cv-02818-DDD-KLM, 2021 WL 3287279, at *4 (D. Colo. Aug. 2, 2021) (order of special master, internal citations and quotation marks omitted, citing O'Connor v. Midwest Pipe Fabrications, Inc., 972 F.2d 1204, 1209 (10th Cir. 1992); Ross v. Univ. of Tulsa, 225 F. Supp. 3d 1254, 1264 (N.D. Okla. 2016); Reno Air Racing Ass'n, Inc. v. McCord, 452 F.3d 1126, 1130 (9th Cir. 2006)).

However, sanctions must be appropriate, i.e., commensurate with the nature and extent of harm occasioned by the violation. See, e.g., Olcott v. Del. Flood Co., 76 F.3d 1538, 1557 (10th Cir. 1996); Cook v. City of Arvada, 20-cv-00212-RBJ, 2021 WL 243451, at *11 (D. Colo. Jan. 25, 2021) (prohibiting plaintiff from using information that had been improperly disclosed in violation of protective order). To determine whether dismissal is an appropriate sanction, the court would apply the factors set forth in Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992) (factors include prejudice to defendant, amount of interference with the judicial process, the culpability of the litigant, advance warning of dismissal as a potential sanction, and the efficacy of lesser sanctions).

“If actions before the court involve a common question of law or fact, the court may (1) join for hearing or trial any or all matters at issue in the actions; (2) consolidate the actions; or (3) issue any other orders to avoid unnecessary cost or delay.” Fed. R. Civ. P. 42(a). Here, Crocs requests consolidation of the actions under Rule 42(a)(2).[3]

“[C]onsolidation is permitted as a matter of convenience and economy in administration, but does not merge the suits into a single cause, or change the rights of the parties, or make those who are parties in one suit parties in another.” Hall v. Hall, 584 U.S. ---, 138 S. Ct. 1118, 1127 (2018) (quoting Johnson v. Manhattan R. Co., 289 U.S. 479, 496-97 (1933)). “[O]ne of multiple cases consolidated under the Rule retains its independent character, at least to the extent it is appealable when finally resolved, regardless of any ongoing proceedings in the other cases.” Id. at 1125. See also Cooper Clark Found. v. Oxy USA Inc., 785 F. App'x 579, 584 (10th Cir. 2019) (citing Hall).

“District courts enjoy substantial discretion in deciding whether and to what extent to consolidate cases.” Hall, 138 S. Ct. at 1131 (citing 9A C. Wright & A. Miller, Federal Practice & Procedure § 2383 (3d ed. 2008)). “The purpose of Rule 42(a) is to give the court broad discretion to decide how cases on its docket are to be tried so that the business of the court may be dispatched with expedition and economy while providing justice to the parties.” Decoteau v. Raemisch, 304 F.R.D. 683, 691 (D. Colo. 2014) (internal quotation marks omitted). The court should thus consider whether “the rights of the parties will be adequately protected” and fairness. Harris v. Illinois-California Exp., Inc., 687 F.2d 1361, 1368 (10th Cir. 1982). “Rulings on motions to consolidate shall be given priority.” D.C.COLO.LCivR 42.1.

*5 “The power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance.” Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936) (citing Kan. City S. Ry. Co. v. United States, 282 U.S. 760, 763 (1931)).

Staying discovery pending a ruling on a motion to dismiss is generally disfavored in this District, see, e.g., Chavez v. Young Am. Ins. Co., No. 06-cv-02419-PSF-BNB, 2007 WL 683973, at *2 (D. Colo. Mar. 2, 2007), but “good cause may exist to stay discovery if a dispositive motion has been filed that could resolve the case and a stay does not unduly prejudice the opposing party.” Namoko v. Milgard Mfg., Inc., No. 06-cv-02031-WDM-MEH, 2007 WL 1063564, at *1 (D. Colo. Apr. 6, 2007). Certain questions, however— particularly questions of immunity and jurisdiction—should be resolved at the earliest stages of litigation and may present more compelling grounds for a stay. See, e.g., Clarendon Nat'l Ins. Co. v. Glickauf, No. 18-cv-02549-CMA-NYW, 2019 WL 1897845, at *2 (D. Colo. Feb. 14, 2019) (recognizing that courts in this District “may be more inclined to stay discovery pending the resolution of a Motion to Dismiss impacting immunity or jurisdictional issues”). Regardless of the basis for the stay request, the decision to stay discovery remains firmly in the sound discretion of the trial court. See Wang v. Hsu, 919 F.2d 130, 130 (10th Cir. 1990).

In deciding whether to stay discovery, courts in this District typically consider five factors: (1) the plaintiff's interests in expeditiously litigating the “action and the potential prejudice to plaintiff of a delay; (2) the burden on the defendants; (3) the convenience to the court; (4) the interests of persons not parties to the civil litigation; and (5) the public interest.” String Cheese Incident, LLC v. Stylus Shows, Inc., No. 1:02-cv-01934-LTB-PAC, 2006 WL 894955, at *2 (D. Colo. Mar. 30, 2006).

Defendants contend that Crocs should be sanctioned for violating the protective order. The complaint in the Second Action, according to Joybees, improperly relies on “confidential and proprietary documents produced by Joybees in [the First Action]—including dozens of documents designated by Joybees as ‘Highly Confidential—Attorneys’ Eyes only[.]”[4] Motion for Sanctions at 2. Joybees imputes to Crocs a sinister “strategic rationale for initiating the 2023 Lawsuit in violation of the provisions of the Protective Order”: specifically, an alleged media campaign purportedly designed to cast Joybees in a negative light. Id. at 3 (asserting that, as a result of the alleged violation of the protective order, “Joybees has been inundated with inquiries from long-time customers concerned by Crocs's allegations in the 2023 Complaint”). As sanctions against Crocs, Defendants ask “[t]his Court to appoint a Special Master—at Crocs's sole expense—to make findings of fact regarding Crocs's use of documents and information produced by Defendants under the Protective Order.” Id. at 16. Ultimately, however, it appears that Defendants intend to ask the court to exercise its discretion to dismiss the Second Action with prejudice. Id. (referencing this and other relief, including an anticipated request for attorney's fees and a “public admonishment for Croc's willful violation of the Protective Order to gain a competitive advantage”); see also Fed. R. Civ. P. 37(b)(2)(A)(v) (sanction for not obeying a discovery order may include “dismissing the action or proceeding in whole or in part”).

*6 Defendants do not assert that any specific portions of the complaint in the Second Action disclose highly confidential information from Joybees's documents. Notably, Defendants have not moved to restrict public access to the complaint, which has remained on the public docket since the filing of the Second Action on July 6, 2023.[5] Defendants also do not assert that the documents in question (identified in their motion) involve any third party's confidential information. Nor does the court see how any of Crocs’ allegations in the Second Action could potentially involve any third party's confidential information. Therefore, the only issue for this court to resolve is whether Defendants’ designation of documents as highly confidential under the protective order prohibited Crocs from bringing a separate lawsuit based on information contained in those designated documents. For the reasons that follow, the court concludes that the answer to that question is no.

It is undisputed that the complaint in the Second Action, 23-cv-1719, ECF No. 1, is based on information that Crocs learned from documents Joybees produced and designated as “Highly Confidential” under the protective order in the First Action. Defendants argue that this “use” of information derived from Joybees's documents designated as highly confidential violates the protective order, which limited such use to the First Action: “[a] Receiving Party may use Protected Material that is disclosed or produced by another Party ... in connection with this case only for prosecuting, defending, or attempting to settle this litigation.” ECF No. 30 ¶ 7.1 (in relevant part) (emphasis added); see also Motion for Sanctions at 9-10.

“The starting point for interpretation of a protective order lies in its plain language.” Nichols, 2021 WL 3287279, at *1 (quoting S.E.C. v. Merrill Scott & Assocs., Ltd., 600 F.3d 1262, 1271 (10th Cir. 2010)). Public access to information is the default standard: “Unless restricted by ... court order, the public shall have access to all documents filed with the court and all court proceedings.” D.C.COLO.LCivR 7.2(a) (emphasis added); see also Nichols, 2021 WL 3287279, at *1 (“The Protective Order provides a process for designating material, which otherwise is publicly accessible, that a party deems to be confidential or for attorneys’ eyes only.”) (emphasis added).

While the protective order in the First Action does not define the term “use,” another judge on this court has recognized that “[t]he plain meaning of the term ‘use,’ in the Court's view, requires something more than the mere use of one's knowledge that documents exist, and would instead require the substantive reliance on or utilization of the documents themselves to achieve a specific purpose.” City of Fort Collins v. Open Int'l, LLC, No. 21-cv-02063-CNS-MEH, 2022 WL 7582436, at *5 (D. Colo. Aug. 16, 2022) (finding that defendant's request for documents under the Colorado Open Records Act, using the bates numbers under which they were produced as confidential in the litigation revealed no confidential information and thus did not violate a protective order). “Use” involves reliance on or utilization of “the confidential content within those documents.” Id. at *4 (citing Milwaukee Elec. Tool Corp. v. Snap-on Inc., No. 14-cv-1296-JPS, 2016 WL 1719657, at *1, 4 (E.D. Wis. Mar. 16, 2016)).

Here, Crocs does not appear to dispute that it “used” the confidential content of Joybees's documents in framing its complaint in the Second Action, though it did not disclose that content in the complaint. However, that does not conclude the analysis. The court must decide whether this particular type of “use”—filing a lawsuit based on information derived from documents designated as highly confidential in the First Action—is one that the protective orders bars.

*7 The court must interpret the protective order reasonably in light of its express terms and stated purposes. See In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 696 (9th Cir. 1993) (“For the protective order to comply with common sense, a reasonable reading must connect its prohibitions to its purpose—protection against disclosure of commercial secrets.”). In the protective order, “[t]he Parties acknowledge that this Order does not confer blanket protections on all disclosures or responses to discovery and that the protection it affords from public disclosure and use extends only to the limited information or items that are entitled to confidential treatment under the applicable legal principles.” ECF No. 30 ¶ 1 (emphasis added). While this sentence primarily focuses on what information can be designated as confidential, it also recognizes that the protective order remains subject to “applicable legal principles.”

Here, those “applicable legal principles” include the fundamental principle that parties have a First Amendment right to petition the government for redress, subject only to an exception for sham litigation. See, e.g., CSMN Invs., LLC v. Cordillera Metro. Dist., 956 F.3d 1276, 1278 (10th Cir. 2020) (“The First Amendment guarantees the people a right ‘to petition the Government for a redress of grievances.’ The right immunizes litigants from liability for their petitioning activities, unless the petitioning is a sham.”); cf. City of Fort Collins, 2022 WL 7582436, at *5-6 (recognizing the “statutory right to request public records” under the Colorado Open Records Act “independent of the discovery procedures set forth in the Federal Rules of Civil Procedure,” and questioning in dicta whether the court would have authority to prohibit a party from availing itself of that right).[6] There is no provision in the protective order here reflecting an agreement between the parties to refrain from suing each other with respect to conduct disclosed in their confidential discovery; indeed, the protective order makes no mention of this subject whatsoever. And as reflected in the definitions of confidential[7] and highly confidential information,[8] the protective order is clearly focused on protecting against disclosure of commercial secrets (or with respect to Mr. McCarvel, privacy interests).

*8 Viewing the facts here in light of these legal principles, the court finds that Crocs did not violate the protective order in filing the complaint in the Second Action. As an initial matter, the complaint exposes no details or facts form Joybees's documents other than certain benign data that does not divulge highly confidential information. As Crocs notes, no highly confidential information is exposed in the complaint's reference to dates, the names of several individuals, and the fact that Joybees either (1) communicated with these individuals concerning Crocs's material specifications and other standards or (2) included terms in its contracts concerning those specifications and other standards. Crocs did not specifically describe in the pleading the contents of documents and information that Joybees designated as highly confidential, and this court perceives no such information in that filing.

Moreover, the weight of authority supports the conclusion that the protective order does not deprive Crocs of the right to file a separate lawsuit merely because the supporting information bears a confidential designation. See, e.g., Dual-Deck, 10 F. 3d at 696 (“Privacy of proprietary information, not immunity from suit, was the legitimate purpose of the protective order.”); Feed.ing BV v. Principle Sols., LLC, No. 14-C-1241, 2015 WL 136402, at *3 (E.D. Wis. Jan. 8, 2015) (holding that the filing of a second action did not violate a protective order where the complaint did not divulge confidential information: “the protective order was designed to protect the privacy of information, ... not “to shield [the defendant] from such a lawsuit”); Static Media LLC v. Leader Accessories LLC, 38 F.4th 1042, 1048 (Fed. Cir. 2022) (noting “decisions holding that the use of information gained by an attorney under a protective order in one case may appropriately be used by the same attorney to develop a strategy applicable to a second action”); Arconic Inc. v. Univ. Alloy Corp., No. 1:15-cv-01466-ELR-RGV, 2018 WL 4839225, at *2 (N.D. Ga. July 31, 2018) (finding good cause to modify protective order to clarify that use of confidentially-designated documents “as a basis for filing a second suit” was not prohibited), aff'd, 2019 WL 12528945 (N.D. Ga. Mar. 4, 2019); Royal Park Invs. SA/NV v. Deutsche Bank Nat'l Tr. Co., 192 F. Supp. 3d 400, 406 (S.D.N.Y. 2016) (finding prohibition on use of discovery materials in other cases particularly “problematic” when “two lawsuits have been filed by the same plaintiff, in the same court, on the same legal theories, against two defendants who already share the same counsel”); Suture Exp., Inc. v. Cardinal Health 200, LLC, No. 12- 2760-DDC, 2015 WL 5021959, at *4-5 (D. Kan. Aug. 24, 2015) (noting that protective order was “not intended to immunize individuals or even parties from subsequent suits, should information justifying such action become known during discovery,” and modifying the protective order to allow use of certain documents in “any potential suits against” the plaintiff or others; the protective order “does not require [the defendants] to turn a blind eye to potential claims”); Streck, Inc. v. Rsch. & Diagnostic Sys., Inc., 250 F.R.D. 426, 433-34 (D. Neb. 2008) (finding that reference to confidential documents in a related patent interference proceeding, without disclosing confidential information in that proceeding, did not violate protective order). In finding that protective order did not bar Crocs from bringing the Second Action, the court finds particularly instructive the courts’ analyses in Dual-Deck and Static Media.

In Dual-Deck, the protective order—not unliked the protective order here—provided that “ ‘Confidential Information’ shall be used solely in the preparation for trial and/or trial of this action, [and] shall not be used at any time for any other purpose whatsoever.” See 10 F.3d at 694 (emphasis added). The Ninth Circuit found that the filing of a second action by Go-Video, based on information that Dual-Deck had designated as confidential—information “that it would not have discovered so easily but for the protective order”—was a “technical violation” of the protective order. Id. at 695. But the court emphasized that, “[f]or the protective order to comply with common sense, a reasonable reading must connect its prohibitions to its purpose—protection against disclosure of commercial secrets.” Id. (emphasis added). Just so here. A reasonable reading of the protective order is that the designations “confidential” and “highly confidential” are designed to protect commercially sensitive information without adversely impacting the parties’ business and financial interests, see ECF No. 30 ¶¶ 2.2, 2.7, not to surrender the receiving party's legal right to challenge newly-revealed misconduct in court.[9]

*9 In Static Media, the plaintiff patent owner first sued a defendant in Wisconsin and entered into a protective order in that case. Later, the plaintiff sent a cease-and-desist letter to another company accusing it of infringing the same patent. The lawyer for the defendant in the Wisconsin case disclosed the plaintiff's confidential information to the lawyer for the other accused infringer for purposes of entering a joint defense agreement, and thereafter the plaintiff sued the second company in Florida. See 38 F.4th at 1044. In refusing to hold the two defense attorneys in contempt, the Federal Circuit noted that “there is a fair ground of doubt as to whether the protective order barred” that disclosure, and found that “the use of information gained by an attorney under a protective order in one case may appropriately be used by the same attorney to develop a strategy applicable to a second action.” Id. at 1048-49 (discussing inter alia, Dual Deck, and citing with approval Hu-Friedy Mfg. Co. v. Gen. Elec. Co., No. 99 C 0762, 1999 WL 528545, at *3 (N.D. Ill. July 19, 1999), as “declining to interpret order ‘barring future use of confidential information that is independently relevant and discoverable in a subsequent action into a restriction on an attorney's right to practice law’ ”).

This court agrees with the courts in Dual-Deck and Static Media that a party who has produced information in one action cannot shield itself from being sued in another action by designating its documents as confidential under a protective order where, as here, the complaint does not publicly disclose highly confidential information.[10] This court has located no cases reaching a contrary result under circumstances similar to those here, and Defendants have identified none.

Defendants point to several cases which stand for the general proposition that a party who violates a stipulated protective order is subject to sanctions, and that the court has discretion to determine what sanctions are necessary and appropriate. Motion for Sanctions at 8-9 (citing inter alia Garcia v. Dillon Cos., Inc., No. 05-cv-02339-MSK, 2006 WL 3512049, at *2 (D. Colo. Dec. 6, 2006) (modifying protective order to add a provision concerning the potential for sanctions if a person subject to that order violated its terms); Digit. Advert. Displays, Inc. v. Newforth Partners, LLC, No. 12-cv-00682-WJM-MEH, 2014 WL 128010, at *2, 4 (D. Colo. Jan. 10, 2014) (awarding attorney's fees against a party who violated a protective order by attaching confidential documents as public exhibits to response to summary judgment motion, then exhibited “a disinterested attitude in correcting the public disclosure of the confidential documents”)). These cases, however, do not support Defendants’ argument that Crocs violated the protective order in the First Action by filing the Second Action.

The court concludes by reiterating that it has located no Tenth Circuit case, or any other case in this District, in which the court found a violation of a protective order in a situation analogous to the one here. See, e.g., Kaufman, 601 F.3d at 1091 (upholding trial court's finding that an attorney violated a protective order by using confidential claims files to solicit additional clients for the class action, where the attorney “consistently and exclusively maintained that [he] needed the claims files to establish numerosity and to help prove the elements of Ms. Kaufman's substantive claims” and “never stated or suggested that [he] sought to use the files to solicit the claimants’ participation in the litigation as class representatives or class members or to secure the claimants as [the attorney's] clients”); In re Homeadvisor, Inc. Litig., No. 16-cv-01849-PAB-KLM, 2023 WL 196414, at *22, 31 (D. Colo. Jan. 16, 2023) (statement by a special master “that in all likelihood” the defendants could meet their burden of proof for establishing civil contempt for failure to comply with a protective order, where plaintiffs’ counsel shared the defendant's confidential discovery with the Federal Trade Commission for “a secondary—if not primary—goal of assisting the FTC in developing and prosecuting its case against the ... Defendants”) (emphasis in original); Cook, 2021 WL 243451, at *9-11 (imposing sanctions for violation of a protective order entered in a criminal case, which allowed use of personnel and internal investigation records “only for the purposes of this particular case,” where the plaintiff's attorney then explicitly disclosed that confidential information in a publicly-filed civil complaint). To the extent these cases, each markedly different from the one at hand, imposed sanctions for violations of protective orders, they are not inconsistent with the court's conclusion here.

*10 For these reasons, the court respectfully finds that Defendants have not shown by a preponderance of the evidence that Crocs violated the protective order. The Motion for Sanctions is accordingly DENIED.

Defendants oppose consolidation. They do not dispute that the First and Second Actions meet the criteria for consolidation under Federal Rule of Civil Procedure 42, but they assert that consolidating the two would be unfair in this instance. They argue many of the same points as in their Motion for Sanctions and contend that consolidation would unfairly reward Crocs for improperly filing the Second Action instead of moving to amend its amended complaint in the First Action. Defendants further assert that Crocs could and should have sought leave to amend months before it ultimately filed the Second Action.

The First and Second Actions plainly involve a common question of law or fact, which is all that Rule 42 requires. The two cases are between the same parties. The Second Action, in a sense, grew out of the First Action: Crocs learned of the factual bases for the claims in the Second Action through discovery in the First Action. The Second Action alleges that after Mr. McCarvel took Crocs's trade secrets and brought those to Joybees to compete with Crocs, he and Joybees continued down the path of misappropriating more of Crocs's trade secrets by inducing other individuals to divulge those secrets without Crocs's authorization. The two cases thus involve several common questions of law (e.g., application of the DTSA, CUTSA, and the Colorado common law of conversion and unjust enrichment, if not also Colorado civil theft). They also involve common questions of fact, or at least many facts (whether disputed or not) are relevant to both cases: for example, Mr. McCarvel's former employment with Crocs and how that gave him knowledge of individuals who might be induced to divulge Crocs's trade secrets after his departure.

It is also undisputed that Crocs could have sought to amend the operative complaint in the First Action instead of filing the Second Action, although Defendants make clear that they would have opposed that procedure as well. Still, Defendants argue that this was the required procedure for Crocs to employ here—“process matters,” counsel for Defendants emphasized at oral argument—but they do not cite any rule or law in support of that contention. They do not assert, for instance, that Crocs impermissibly split its claims. To the contrary, Defendants appear to acknowledge that the new claims really are that: new claims. Nor do Defendants dispute that consolidating the two cases is in the interest of judicial economy. Managing two separate cases between the same parties, both of which concern closely-related facts, unnecessarily compounds the resources that the court must devote to the matter.

The only real dispute is whether consolidation will provide justice to the parties. See Decoteau, 304 F.R.D. at 691. Defendants vigorously argue that no, it will not. As noted above, Defendants argue that Crocs violated the protective order in filing the Second Action. But (a) the court rejects that argument, and (b) even if the court had found Crocs violated the protective order, Defendants do not cite any cases in which a court has denied a motion to consolidate on that basis.

*11 It appears Defendants also contend that Crocs's alleged misrepresentations in its briefs that Joybees wrongfully delayed producing the documents in question make consolidation unfair to Defendants. Defendants assert that “[t]he documents at issue only became responsive when the Court later broadened the date range of responsive documents during a discovery hearing that was held on April 5, 2023.” Response, ECF No. 219 at 5 (citing ECF No. 133).

Assuming without deciding that Defendants are correct that the documents in question were not responsive to discovery until April 2023, the important point here is that Crocs filed the Second Action just three months later.[11] This is perhaps not quick, but considering that Crocs's second complaint runs 29 pages long and pleads seven new claims, taking a few months to digest the documents and draft the new pleading does not seem unduly or intentionally slow—particularly while the parties were in the thick of litigating the First Action.

The court sees no injustice to Defendants in consolidating the two actions regardless of the time that has elapsed. Trial is not yet set in the First Action. Indeed, the parties have not yet done third-party or expert discovery because such discovery is stayed pending resolution of the motion to dismiss Joybees's antitrust counterclaims. Granted, Defendants objected to that partial stay. But even as to party discovery, there are several discovery disputes still pending on the docket—and Joybees filed three of those motions. ECF Nos. 202, 259, 264.

Defendants further oppose consolidation because Crocs purportedly chose this procedural route—or detour, in Defendants’ eyes—so it could “launch a media campaign centered on allegations asserted in the 2023 litigation.” Response, ECF No. 219 at 12. They point to two news articles that quote comments from Crocs's officials. Id. Crocs does not appear to directly address this point in its reply but argues that it filed the Second Action because, by the time it received the documents in question, there was insufficient time to complete discovery under the current schedule in the First Action. Reply at 3.

Accepting Defendants’ contention that Crocs's comments in two articles reflect an intentional media campaign by Crocs, and that this was an unstated reason for Crocs's filing the Second Action instead of seeking to amend, the court finds in this no justification for declining to consolidate the cases. Defendants cite no case in which a court has denied consolidation on that basis. In Defendants’ briefing on the Motion for Sanctions (ECF Nos. 194, 227), they cite several online news articles reporting about the new complaint. They speculate that Crocs sent the new complaint to the media and argue that Crocs's filing of the Second Action has harmed their business relationships because customers have asked Joybees questions concerning the allegations therein. But customers’ questions concerning allegations in a complaint do not show any injustice or unfairness to Defendants, particularly not with respect to consolidation of the two cases. Defendants do not assert, for example, that the complaint in the Second Action contains material that should be stricken as scandalous. 23-cv-1719, ECF Nos. 9/10 (Defendants’ motions to dismiss).[12] Nor do they assert that the Second Action is sham litigation or that the comments of Crocs or its counsel to the media violated the law. See, e.g., Killmer, Lane & Newman, LLP v. BKP, Inc., 535 P.3d 91, 100 (Colo. 2023) (attorneys’ statements to media which “merely repeated, summarized, or paraphrased allegations in the class action complaint” were protected by the litigation privilege). Accordingly, this court finds no injustice or unfairness to Defendants in consolidating the cases, even if Defendants are correct that Crocs filed the Second Action to support a media campaign.[13]

*12 In sum, the cases meet the criteria for consolidating for all purposes under Rule 42(a)(2), and there is no unfairness or injustice in consolidating the two cases. The court therefore respectfully recommends granting the Motion to Consolidate.

In light of the recommendation to consolidate the First and Section Actions, the court also DENIES Defendants’ Motion to Stay discovery in case 23-cv-1719, without prejudice to refiling if this recommendation is not adopted. As noted above, such stays are generally disfavored in this District, see, e.g., Chavez, 2007 WL 683973, at *2, and there are no unique circumstances here that would prompt this court to invoke that disfavored procedure.

The court is not persuaded that Defendants have met the String Cheese factors. See 2006 WL 894955 at *2. The Motion to Stay assumes that the two cases would remain separate. Defendants’ arguments of prejudice and the interests of non-parties become moot when the cases are consolidated. And Defendants’ other arguments for a stay focus on the same issues they raised in the Motion for Sanctions, which the court denies in this ruling. Defendants have not shown a stay is warranted.

The Motion for Sanctions (21-cv-2859, ECF No. 194/195) is DENIED.[14]

The court RECOMMENDS granting the Motion to Consolidate (21-cv-2859, ECF 200) the cases 21-cv-2859 and 23-cv-1719. Unless this recommendation is rejected, within five business days of Judge Gallagher's ruling on the recommendation, the parties shall confer and file a motion to amend the current scheduling order (ECF No. 275) to apply to both cases.

The Motion to Stay Discovery (23-cv-1719, ECF No. 22) is DENIED without prejudice to refiling if the above recommendation is rejected.