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Environmental Dimensions, Inc. v. Energysolutions Government Group, Inc.

United States District Court, D. New Mexico

November 13, 2019

ENVIRONMENTAL DIMENSIONS, INC., A New Mexico Corporation, Plaintiff,
ENERGYSOLUTIONS GOVERNMENT GROUP, INC. (n/k/a Atkins Energy Government Group, Inc., ) a foreign for profit corporation, Defendant.



         This matter comes before the Court on Energysolutions Government Group, Inc.'s (“ESGG”) Motion to Enforce Protective Order and Maintain Confidentiality Designation [Doc. 141], filed July 18, 2019. At issue in the Motion is whether the Court should protect a confidential settlement agreement between Los Alamos National Security (“LANS”) and ESGG - which the Court ordered produced to EDi when it denied ESGG's Motion to Quash EDi's subpoenas seeking the same - and whether ESGG has standing to move for a protective order in these circumstances. Relatedly, the Court must determine whether to award attorney's fees to either party for the present motion practice. The Court has reviewed Environmental Dimensions, Inc.'s (“EDi”) Response to the Motion [Doc. 142], and ESGG's Reply [Doc. 144]. Having done so, the Court concludes that ESGG's Motion must be granted in part.

         I. BACKGROUND

         EDi is in the business of providing environmental services to the United States Department of Energy and other governmental agencies. [Doc. 1-1, p. 3');">p. 3');">p. 3');">p. 3]. As such, during the relevant time period it was competing for contracts with Los Alamos National Laboratory (“LANL”) which were set aside for small businesses in New Mexico. [Id.]. Ultimately, EDi was awarded a contract with LANS which provided that EDi would manage, treat, and package radioactive waste for LANS at the LANL facility. [Id., p. 4]. Prior to the award of the LANS contract, EDi contracted with ESGG, the prior prime contractor to LANS, to “provide expert waste management personnel experienced in the LANS [Transuranic] Waste Program and knowledgeable of specific processes and procedures.” [Id.]. Included among these duties was “waste treatment and packaging for shipment to the DOE Waste Isolation Pilot Plaint (hereinafter ‘WIPP').” [Id., p. 5].

         The WIPP facility is an underground repository for the disposal of transuranic and other radiological waste. [Doc. 87, p. 4]. Prior to the contract underlying this case, ESGG was the prime contractor responsible for remediating and repackaging waste at LANL under LANS' direction. [Id.]. On February 14, 2014, there was a release of radiological materials at the WIPP facility “allegedly from” a drum of transuranic waste that had been repackaged and shipped to WIPP from LANL by ESGG. [Id., p. 6]. In the meantime, on April 16, 2014, LANS notified EDi that it had been awarded the prime contract relating to waste disposal. [Id.]. After the parties' relationship soured, EDi sued ESGG in New Mexico State Court. [See Doc. 1-1]. ]. ESGG timely removed this matter to federal court on September 23, 2016. [See generally Doc. 1].

         Discovery in this case has been fraught with discord, and the Court has issued seven substantive Orders addressing the parties' discovery disputes, not counting Orders addressing motions for attorney fees associated with such disputes. [See Docs. 50, 73, 74, 76, 123, 124, 139]. Many of these disputes have centered around a settlement agreement between ESGG and LANS resulting from the WIPP release. After the Court denied ESGG's Motion to Quash EDi's subpoenas seeking the settlement agreement from non-parties, [see Docs. 123, 138], and before the non-parties produced the settlement agreement, ESGG produced it subject to the Agreed Order Governing the Confidentiality of Discovery Materials (“the Protective Order”), entered by the Court on October 3, 2017. [See Doc. 37');">37]. The Protective Order has a two-tiered designation system; documents may be labeled “Confidential” or “Attorneys Eyes Only” (“AEO”). [Doc. 37');">37, p. 2');">p. 2]. Pertinent here, ESGG labeled the settlement agreement AEO. [See Doc. 141-1]. The next day, the attorney representing the subpoenaed non-parties also produced the settlement agreement to EDi, also subject to the AEO designation. [Doc. 141-2].

         ESGG now moves the Court to maintain the AEO designation for the settlement agreement. [See generally Doc. 141]. EDi opposes and argues bad faith, asserting that ESGG has not met its burden under the Protective Order and that, even if it did, ESGG does not have standing to move for such protection given that the Court denied its Motion to Quash the subpoenas seeking the settlement agreement. [See generally Doc. 142]. ESGG's Reply points out that EDi's Response brief was filed a day late under this Court's Local Rules, and argues that it has standing to move for protection as a signatory to the settlement agreement. [See generally Doc. 144].


         “Federal Rule of Civil Procedure 26(c) expressly limits who may move for a protective order to parties or the person from whom discovery is sought.” S.E.C. v. Dowdell, 144 Fed.Appx. 716, 722 (10th Cir. 2005) (unpublished). Moreover, “[a]t least one court has recognized that objecting non-parties have a legitimate interest in obtaining a protective order to protect their confidential commercial documents from disclosure.” High Point SARL v. Sprint Nextel Corp., 280 F.R.D. 586, 592 (D. Kan. 2012) (citing In re Northshore Univ. Healthsystem, 254 F.R.D. 338, 342-43 (N.D. Ill. 2008)).

         Under Rule 26(c), the court “may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense[.]” Fed.R.Civ.p. 2');">p. 26(c)(1). If it concludes that a protective order is warranted, the Court may take a variety of action, including limiting the scope of disclosure or discovery to certain matters. See Fed. R. Civ. P. 26(c)(1)(D). “It is the party seeking the protective order who has the burden to show good cause for a protective order.” Clower v. GEICO Ins., CV 12-0472 JB/WDS, 2013 WL 1897832, at *6 (D.N.M. Apr. 16, 2013) (Browning, J.).

         “Federal district courts have broad discretion over discovery.” Id. As with all of the Federal Rules of Civil Procedure, the discovery rules are to be “construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.” Fed.R.Civ.P. 1. “Protective orders serve the vital function of securing the just, speedy, and inexpensive determination of civil disputes by encouraging full disclosure of all evidence that might conceivably be relevant.” S.E.C. v. Merrill Scott & Associates, Ltd., 1262');">600 F.3d 1262, 1272 (10th Cir. 2010) (quoted authority omitted). “The starting point for interpretation of a protective order lies in its plain language.” Id. at 1271. “As long as a protective order remains in effect, the court that entered the order retains the power to modify it[.]” United Nuclear Corp. v. Cranford Ins. Co., 905 F.2d 1424, 1427 (10th Cir. 1990). By extension, the court that entered the protective order has the power to construe it. “The modification of a protective order, like its original entry, is left to the sound discretion of the district court.” Rohrbough v. Harris, 549 F.3d 1313, 1321 (10th Cir. 2008).

         As the Tenth Circuit has recently noted, a “settlement's confidentiality does not bar [its] discovery.” Burke v. Regalado, 935 F.3d 960, 1048 (10th Cir. 2019) (citation omitted). However, the court did encourage district courts to “take appropriate measures such as a protective order to safeguard any legitimate privacy interests in the settlement.” Id.

         Rule 37');">37(a)(5) applies to the award of expenses where a protective order is sought. Fed.R.Civ.p. 2');">p. 26(c)(3). Under Rule 37');">37(a)(5)(A), the Court must award expenses against the nonmovant or its attorney if such a motion is granted unless the nonmovant's position was substantially justified or other circumstances make an award of expenses unjust. Fed.R.Civ.p. 3');">p. 3');">p. 3');">p. 37(a)(5)(A). If the motion is denied the Court instead must award expenses against the movant. Fed.R.Civ.P. 37');">37(a)(5)(B). If a motion to compel or for protective order is granted in part and denied in part, the Court may apportion the parties' reasonable expenses. Fed.R.Civ.P. 37');">37(a)(5)(C). Thus, “[t]he great operative principle of Rule 37');">37(a)(5) is that the loser pays, ” In re Lamey, 2015 WL 6666244 at *4 (D.N.M. 2015) (quoting Wright, Miller & Marcus, Federal Practice and Procedure (3d ed. 2010), § 2288, n.17), unless the losing position was substantially justified or an award of expenses would otherwise be unjust. Id. at *5. Moreover, any motion seeking an order from the court must “state with particularity the grounds for seeking the order[.]” Fed.R.Civ.p. 7(b)(1)(B).

         III. ...

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