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Iowa Court Asserts Balancing Test for Foreign Intervenors in Microsoft Antitrust Case

By Kent A. Lambert, Litigation News Associate Editor – February 16, 2010

According to the Iowa Supreme Court, plaintiffs in Canadian antitrust suits against Microsoft Corp. were properly granted access to millions of pages of documents that had been previously produced, under a protective order, in Comes v. Microsoft [PDF].


Under a newly pronounced balancing test, the state high court in Comes, in essence, concluded that the Canadian intervenors had the ability to appear in the Iowa action and to gain access to documents that Microsoft classified as confidential, simply by agreeing to be bound by the protective order Microsoft had earlier entered into with the Iowa action’s plaintiffs.


Noting its concern with “the extraordinary waste of time and expense that will result if the Canadian plaintiffs are forced to repeat the work already completed by the Iowa plaintiffs,” the Iowa Supreme Court held that so long as the Canadian litigants were willing to abide by the terms of the previously entered protective order, the requested modification did not unduly impair Microsoft’s legitimate interests.


Impact on Confidentiality Orders
“The decision of the Iowa Supreme Court is consistent with a national trend towards limiting the availability and scope of protective orders,” according to Mark S. Davidson, Seattle, cochair of the ABA Section of Litigation’s Business Torts Litigation Committee.


“The decision is not unique to the antitrust arena and, as written, not only has broad applicability, but potentially significant consequences for litigants involved in copy-cat or overlapping suits stretching across multiple jurisdictions,” observes D. Alicia Hickok, Philadelphia, cochair of the Section’s Antitrust Committee.


Trial Court Proceedings
During discovery in the Iowa action, Microsoft had produced approximately 24 million pages of documents and data at a cost approaching $5.6 million. These productions were made pursuant to a protective order that required designated confidential documents be destroyed or returned to the producing party within 30 days of the conclusion of the litigation.


In August 2007, Microsoft reached a settlement agreement with the plaintiffs in the Iowa action. At that time, several similar suits were pending in both the United States and Canada. Before the Iowa court could approve the settlement, the Canadian plaintiffs sought discovery from Microsoft implicating materials produced in the Iowa action.


In response to the Canadian discovery requests, Microsoft filed a motion in the Iowa action to modify the protective order in that case to permit Microsoft to retain confidential documents produced by the plaintiffs even after the conclusion of the suit pending resolution of the Canadian actions.


The next day, the Canadian plaintiffs intervened in the Iowa action, seeking to gain access to Microsoft’s productions from that case.


The Iowa trial court granted the Canadian plaintiffs access to the Microsoft productions. Microsoft appealed, arguing that the trial court had abused its discretion in amending its prior protective order to give the Canadian litigants access to Microsoft’s confidential records.


New Standard for Modifying Protective Orders
Noting it had never addressed the appropriate standard for modification of a protective order by a third-party intervenor, the Iowa Supreme Court adopted a fact-specific balancing of interests test, “taking into account the reasons for the issuance of the protective order in the first place and whether the legitimate interests of the parties can still be protected with the suggested modification.”


The court declined to follow a stricter standard outlined in an earlier decision, Tratchel v. Essex Group, Inc. [PDF], that had affirmed the denial of a plaintiff’s motion seeking to modify a consensual protective order after the close of a case to allow the plaintiff to share the defendant’s confidential documents with non-parties.


The Iowa Supreme Court discounted Microsoft’s concern that many of the documents produced in the Iowa suit would not be discoverable in the Canadian action. The potential for disparate access to documentation in the Canadian action was not addressed.


Davidson observes that although consideration of the interests of parties in related litigation is not necessarily novel, “by including foreign litigation in the category of ‘related litigation,’ especially without discussion of the distinction between foreign and domestic proceedings, the Iowa Court has extended the sweep of this factor dramatically.”


“The lack of discussion on this point may reflect growing judicial recognition of the significance of international legal cooperation,” adds Davidson.


Keywords: Antitrust, discovery, protective orders


 

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