May 18, 1992 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 91-2088
BANCO POPULAR DE PUERTO RICO,
Plaintiff, Appellee,
v.
DAVID GREENBLATT, ET AL.,
Defendants, Appellees.
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THE OFFICIAL SECURED CREDITORS' COMMITTEE OF AMFESCO
INDUSTRIES, INC., ETC.,
Intervenor, Appellant.
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ERRATA SHEET
ERRATA SHEET
The opinion of the Court issued on May 13, 1992, is amended
as follows:
On page 5, footnote 2, line 13, delete hyphen in "nonparty"
On page 13, line 15, delete stray comma after "Although"
May 13, 1992
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No. 91-2088
BANCO POPULAR DE PUERTO RICO,
Plaintiff, Appellee,
v.
DAVID GREENBLATT, ET AL.,
Defendants, Appellees.
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THE OFFICIAL SECURED CREDITORS' COMMITTEE OF AMFESCO
INDUSTRIES, INC., ETC.,
Intervenor, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jaime Pieras, Jr., U.S. District Judge]
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Before
Selya, Circuit Judge,
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Feinberg,* Senior Circuit Judge,
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and Cyr, Circuit Judge.
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Gabriel B. Schwartz, with whom Jorge R. Jimenez, Anthony C.
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Acampora, and Hahn & Hessen were on brief, for appellant.
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Elihu Inselbuch, Caplin & Drysdale, Chartered, and Diaz
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Ascencio, Lopez & Orsini on brief for plaintiff, appellee.
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Stuart A. Summit, with whom Summit Solomon & Feldesman,
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Sanchez-Betances & Sifre, Curtis C. Mechling, Stroock & Stroock &
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Lavan, and O'Neill & Borges were on brief, for defendants,
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appellees.
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SELYA, Circuit Judge. The Official Secured Creditors'
SELYA, Circuit Judge.
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Committee of Amfesco Industries, Inc. sought to intervene in this
case for the purpose of modifying a protective order entered as
part of the final judgment. The district court refused to allow
intervention. We affirm.
I. BACKGROUND
I. BACKGROUND
This appeal is a tale of two lawsuits, both rising from
the rubble of Amfesco's collapse. In late 1985, Amfesco entered
bankruptcy in the Eastern District of New York. The bankruptcy
court constituted an Official Secured Creditors' Committee and
appointed Irving Trust Company, Chemical Bank, and Banco Popular
de Puerto Rico as members of it. On November 18, 1987, the
Committee sued Amfesco's former directors in a New York state
court. Some seven weeks earlier, however, Banco Popular, acting
to its own behoof, had sued Amfesco's former directors and
accountants in the United States District Court for the District
of Puerto Rico.
The two cases were spun from much the same yarn. The
federal action alleged fraud, negligence, and civil conspiracy;
the state action alleged waste and mismanagement. An insurer
provided counsel for the directors in both forums, acting
pursuant to a liability policy purchased by Amfesco in its salad
days. Because the policy was a corporate asset, the bankruptcy
court enjoined the insurer from disbursing the policy's avails
without prior bankruptcy court approval.
On September 9, 1988, the parties to the federal action
3
entered into a confidentiality agreement providing, inter alia,
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that any person producing discovery material (the "Designating
Party") could classify the information as "confidential," thus
restricting its dissemination to individuals directly involved in
the litigation. The agreement also provided for judicial review
of inter-party disputes anent classification. The district court
sanctioned the confidentiality agreement, embodying it in a
protective order. Paragraph ten of the protective order
stipulated that:
Promptly after final termination of this
action, each party or other person subject to
the terms hereof shall assemble and destroy
or return to the Designating Party all
material, documents and things in his or its
possession or control designated as
Confidential Information by any other party,
as well as all copies, summaries, and
abstracts thereof, and all other materials,
memoranda or documents, constituting or
containing information designated as
Confidential Information and not subsequently
relieved of that designation by the
Designating Party or by a court. If such
material, documents, or things are destroyed,
the person shall certify their destruction to
the Designating Party in writing. The
[nondisclosure] provisions of this
Stipulation . . . shall continue after the
conclusion of this action until such time as
the parties may otherwise agree in writing.
In April 1989, following protracted discovery, the
director-defendants sought the bankruptcy court's permission to
use insurance monies for settlement of the federal action. On
May 1, the Committee filed a motion beseeching the bankruptcy
judge to condition approval of the directors' application on a
requirement that the settling parties share the fruits of their
4
federal-court discovery with the Committee. The bankruptcy
judge, hesitant about fiddling with another tribunal's protective
order, granted the directors' application but stayed disbursement
of the needed funds for sixty days (during which period the
Committee, if it so desired, might have asked the Puerto Rico
federal district court to modify the protective order). The
Committee made no overtures to the district court. After the
sixty-day grace period had passed, the district court, unaware of
the Committee's misgivings, entered the settlement agreement as a
final judgment. The judgment expressly reaffirmed the protective
order.
Some three weeks thereafter (on August 10, 1989, to be
exact), the Committee moved to intervene in the federal action
for the purpose of enjoining the destruction of discovery
documents. All parties to the federal action objected. The
district court pondered the motion for over two years.1 On
September 6, 1991, the court finally heard oral argument.
The objectors (appellees before us) urged that
intervention should be denied for four reasons: (1) the motion
was untimely; (2) the Committee had no standing to intervene; (3)
the court lacked authority to grant the relief requested; and (4)
modification of the protective order would undermine the
settlement. Five days later, the district court ruled. The
court stated that it lacked authority to impose "new, affirmative
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1During this period, one of Amfesco's directors, David
Greenblatt, died. Greenblatt had earlier been deposed in the
federal action.
5
requirements" on the appellees after the underlying litigation
had been concluded. Accordingly, the court denied the
application for intervention without addressing appellees' other
asseverations. This appeal ensued.
II. DISCUSSION
II. DISCUSSION
The matter of when, and under what circumstances, a
protective order may be lifted at the insistence of a nonparty
after entry of final judgment is a complicated one. It is
unnecessary for us to meet that issue head-on. After all, an
appellate court is not wedded to the district court's reasoning
but, instead, can affirm a judgment on any independently
sufficient ground reflected in the record, see, e.g., Garside v.
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Osco Drug, Inc., 895 F.2d 46, 48-49 (1st Cir. 1990);
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Polyplastics, Inc. v. Transconex, Inc., 827 F.2d 859, 860-61 (1st
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Cir. 1987); and in cases of this stripe there is a prevenient
question: timeliness stands as a sentinel at the gates whenever
intervention is requested and opposed.2 Here, the temporal
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2The Committee moved for intervention as of right and
permissively, citing both Fed. R. Civ. P. 24(a) and (b). While
both of these sections are subject to the precondition that an
application for intervention be "timely," we have written that
"the standards of timeliness for a Rule 24(a) motion are less
strict than for a Rule 24(b) motion because greater interests are
at stake in the former case." Fiandaca v. Cunningham, 827 F.2d
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825, 833 (1st Cir. 1987). Since the Committee has furnished us
with no developed argumentation on this point, and since we find
that the Committee's application was untimely under either
section of Rule 24, we see no reason to probe the distinction
more deeply. We note, however, that other courts have differed
as to which section of the rule governs when a nonparty seeks to
intervene for the purpose of modifying a protective order that
insulates discovery materials. Compare, e.g., United States v.
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Kentucky Utils. Co., 927 F.2d 252, 255 (6th Cir. 1991) (analyzing
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attempt at intervention under Rule 24(a)) with, e.g., United
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6
inquiry is dispositive.
We have made it pellucidly clear that Rule 24's
timeliness requirement is of great importance. See Caterino v.
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Barry, 922 F.2d 37, 40 (1st Cir. 1990); United Nuclear Corp. v.
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Cannon, 696 F.2d 141, 143 (1st Cir. 1982); see also NAACP v. New
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York, 413 U.S. 345, 365 (1973). When, as here, the district
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court fails to make an explicit timeliness determination, the
court of appeals can nevertheless do so, provided that the record
is adequately developed. See, e.g., Fiandaca v. Cunningham, 827
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F.2d 825, 832-35 (1st Cir. 1987) (conducting a timeliness
analysis, "a step not taken by the district court," in deciding
that the court erred in denying intervention).3 In this case,
we are well positioned to conduct the inquiry ab initio: the
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record is ample to allow an independent timeliness determination;
the parties have briefed and argued the point; and the Rule 24
motion was pending before the district court, without resolution,
for over two years a circumstance which makes the further delay
that remand would entail particularly rebarbative.
There is no bright-line rule delineating when a motion
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Nuclear Corp. v. Cranford Ins. Co., 905 F.2d 1424, 1427 (10th
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Cir. 1990) (analyzing attempt at intervention under Rule 24(b)),
cert. denied, 111 S. Ct. 799 (1991).
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3The trial court here made no explicit finding on
timeliness, although it suggested in dictum that appellant had an
arguably valid position on this, and other, issues. Had the
trial court made a finding on timeliness, we would review that
determination for abuse of discretion. See NAACP, 413 U.S. at
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366; Culbreath v. Dukakis, 630 F.2d 15, 17 (1st Cir. 1980).
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7
to intervene is or is not timeous. Instead, courts must decide
the question on a case by case basis, examining the totality of
the relevant circumstances. See NAACP, 413 U.S. at 366; Public
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Citizen v. Liggett Group, Inc., 858 F.2d 775, 784 (1st Cir.
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1988), cert. denied, 488 U.S. 1030 (1989); Culbreath v. Dukakis,
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630 F.2d 15, 17 (1st Cir. 1980). One highly relevant
circumstance implicates the status of the case at the time when
intervention is attempted. See Fiandaca, 827 F.2d at 833. The
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more advanced the litigation, the more searching the scrutiny
which the motion must withstand. Cf. Garrity v. Gallen, 697
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F.2d 452, 455 n.6 (1st Cir. 1983) (commenting that courts
ordinarily "look with some disfavor upon motions to intervene
filed after entry of final judgment").
In this circuit, four factors all of which are
informed to some degree by the case's posture must be
considered in ruling on the timeliness of a motion to intervene:
(1) the length of time the applicant knew or reasonably should
have known that its interest was imperilled before it moved to
intervene; (2) the foreseeable prejudice to existing parties if
intervention is granted; (3) the foreseeable prejudice to the
applicant if intervention is denied; and (4) idiocratic
circumstances which, fairly viewed, militate for or against
intervention. See Public Citizen, 858 F.2d at 785-87; Fiandaca,
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827 F.2d at 834; Culbreath, 630 F.2d at 20-25. We will examine
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these factors seriatim.
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1. Knowledge. The first factor focuses on actual or
1. Knowledge.
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8
constructive knowledge of possible jeopardy. While knowledge of
the existence of litigation, simpliciter, does not invariably
trigger one's obligation to seek intervention, the count begins
no later than the time "when the intervenor became aware that its
interest in the case would no longer be adequately protected by
the [existing] parties." Public Citizen, 858 F.2d at 785. This
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does not mean, however, that a potential intervenor can sit idly
by and await the receipt of infinitely precise information about
every ramification of a pending case. Complete knowledge is
unlikely to be attained short of final judgment. Leaving aside
constructive knowledge for the time being, the law contemplates
that a party must move to protect its interest no later than when
it gains some actual knowledge that a measurable risk exists.
Culbreath, 630 F.2d at 21; Alaniz v. Tillie Lewis Foods, 572 F.2d
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657, 659 (9th Cir.) (per curiam), cert. denied, 439 U.S. 837
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(1978).
Once a potential intervenor has acquired such
knowledge, the tempo of the count accelerates. The applicant
must then act reasonably promptly. See United Airlines, Inc. v.
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McDonald, 432 U.S. 385, 394 (1977); United States v. South Bend
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Community School Corp., 710 F.2d 394, 396 (7th Cir. 1983), cert.
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denied, 466 U.S. 926 (1984). Promptness is a concept, not a
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constant and the concept is inevitably informed by the
attendant circumstances. It should come as no surprise,
therefore, that courts have historically viewed post-judgment
intervention with a jaundiced eye in situations where the
9
applicant had a reasonable basis for knowing, before final
judgment, that its interest was at risk. See, e.g., United
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States v. United States Steel Corp., 548 F.2d 1232, 1235 (5th
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Cir. 1977).
The knowledge factor cuts rather sharply against the
Committee. At least by May 1, 1989, when it asked the bankruptcy
court to modify the protective order, the Committee was fully
aware of the potential hazards and likely consequences of
inaction.4 The bankruptcy court gave the Committee a generous
opportunity to challenge the protective order prior to the entry
of final judgment. The Committee squandered this opportunity,
waiting until after the protective order was embodied in a final
judgment before attempting to intervene in the federal action.
We find the Committee's failure to act for over three months,
though armed with full knowledge, to be inexpiable. Compare,
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e.g., NAACP, 413 U.S. at 367-68 (motion untimely where applicant
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procrastinated for eighteen days); FTC v. American Legal
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Distribs., Inc., 890 F.2d 363, 365 (11th Cir. 1989) (per curiam)
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(same; delay of two months).
2. Prejudice to Appellees. The second prong of the
2. Prejudice to Appellees.
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test focuses on whether the delay in seeking intervention
prejudiced the existing parties. This is a vital element of a
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4It seems highly probable that the Committee should have
known of the protective order, and its dangers, well before May
1, 1989. We need not explore the incidence and effect of
constructive knowledge, however, for even assuming that the
Committee's earlier knowledge was somehow imperfect, it
nonetheless slept upon its rights in a thoroughly inexcusable
fashion once it possessed actual knowledge.
10
timeliness inquiry. See Fiandaca, 827 F.2d at 834.
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As a general rule, prejudice to existing parties is
less likely in a case where post-judgment intervention does not
seek to disturb the core judgment, but merely to reconfigure an
ancillary term. See Caterino, 922 F.2d at 41; Public Citizen,
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858 F.2d at 786. Even then, however, post-judgment intervention
can beget prejudice to existing parties. "[T]he purpose of the
basic requirement that the application to intervene be timely is
to prevent last minute disruption of painstaking work by the
parties and the court." Culbreath, 630 F.2d at 22. Prior to
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settlement, litigants often negotiate the terms of their
conciliation with zeal and, sometimes, with ferocity. If a
putative intervenor acts seasonably to contest a prospective
settlement term, the existing parties can make an informed
decision about whether to continue their attempt to strike a
bargain, for they would be on notice that certain settlement
provisions might have to withstand the intervenor's challenge.
Delaying the intervention attempt until after final judgment robs
litigants of this flexibility and can thus prejudice "parties who
. . . invested significant amounts of time, money, and effort in
an attempt to compose their differences." Fiandaca, 827 F.2d at
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834.
Prejudice can inhere in other respects as well. Once
settlement efforts are completed and embodied in a final
judgment, the parties expect to be able to tailor their future
actions and decisions in reliance on that judgment. It follows
11
inexorably that modifying a settlement term can knock the props
out from under justifiable reliance of this sort. Moreover,
courts have long recognized the systemic benefits of policies
favoring the voluntary resolution of disputes. See United States
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v. Cannons Eng'g Corp., 899 F.2d 79, 84 (1st Cir. 1990);
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Culbreath, 630 F.2d at 22. Sneak attacks on the terms of a fully
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consummated settlement disserve these salutary policies,
undermining the finality of judicial decrees and depriving the
original litigants of choices that were theirs to make.
These considerations have obvious pertinence here,
leading us to believe that post-judgment intervention would
circumvent the settlement and cause unfair prejudice to the
appellees.
3. Prejudice to Appellant. The penultimate factor in
3. Prejudice to Appellant.
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the four-part test focuses on what prejudice an applicant will
suffer if intervention is denied. This requires that we
determine whether the movant, had intervention been allowed,
would have "enjoy[ed] a significant probability of success on the
merits." Garrity, 697 F.2d at 457; see also Culbreath, 630 F.2d
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at 23; United States v. Yonkers Bd. of Educ., 902 F.2d 213, 219
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(2d Cir. 1990). Because we see little chance that the Committee
could have succeeded in obtaining a broad modification of the
protective order, we conclude that this prong of the test also
cuts in appellees' favor.
This case does not involve a right of public access,
based either on the First Amendment or the common law, to records
12
and documents filed with the district court, compare, e.g.,
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Littlejohn v. BIC Corp., 851 F.2d 673, 677-78 (3d Cir. 1988);
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Anderson v. Cryovac, Inc., 805 F.2d 1, 10-13 (1st Cir. 1986);
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Bank of Am. Nat'l Trust & Savings Ass'n v. Hotel Rittenhouse
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Assocs., 800 F.2d 339, 343-44 (3d Cir. 1986), for the discovery
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materials at issue here are in the appellees' hands, not in the
Clerk's Office. Nor does this case involve a party bound by a
protective order who, if the order were modified, would
voluntarily circulate the discovered information to third
parties. Compare, e.g., Public Citizen, 858 F.2d at 777, 780;
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Wilk v. American Medical Ass'n, 635 F.2d 1295, 1297 (7th Cir.
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1980). Rather, the Committee, a nonparty, contends that it has
an entitlement to discovery information gathered and held by
others sufficient to warrant modification of a protective order
prohibiting the dissemination of that information,
notwithstanding that none of the existing parties wishes to share
the data. Without more, the law simply does not grant a right of
access to a nonparty in such circumstances.
In Seattle Times Co. v. Rhinehart, 467 U.S. 20 (1984),
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the Court stated that "pretrial depositions and interrogatories
are not public components of a civil trial. Such proceedings
were not open to the public at common law, and, in general, they
are conducted in private as a matter of modern practice." Id. at
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33 (citation omitted); see also Gannett Co. v. DePasquale, 443
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U.S. 368, 396 (1979) (Burger, C.J., concurring) ("[I]t has never
occurred to anyone, so far as I am aware, that a pretrial
13
deposition or pretrial interrogatories were other than wholly
private to the litigants. A pretrial deposition does not become
part of a 'trial' until and unless the contents of the deposition
are offered in evidence."). We, too, have held that, ordinarily,
there is no right of public access to documents dredged up in the
course of civil discovery if those documents have not become part
of the court record. Anderson, 805 F.2d at 10-13; accord In re
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Alexander Grant & Co. Litig., 820 F.2d 352, 355 (11th Cir. 1987)
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(per curiam) (rejecting claimed right of access "to information
collected through discovery which is not a matter of public
record"); Oklahoma Hosp. Ass'n v. Oklahoma Publishing Co., 748
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F.2d 1421, 1424 (10th Cir. 1984) (holding that litigants, as a
rule, cannot "be compelled to disseminate [discovered]
information"), cert. denied, 473 U.S. 905 (1985). When parties
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possessing discovered information do not desire to disseminate
it, "the public has no right to demand access to discovery
materials which are solely in the hands of private party
litigants." Public Citizen, 858 F.2d at 780.
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Because the Committee stands little chance of modifying
the protective order in any meaningful sense,5 denying
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5It is, of course, possible that, under certain
circumstances, the public may enjoy a right of access to
discovery materials held in the reluctant hands of private
parties based on Fed. R. Civ. P. 5(d) in conjunction with Fed. R.
Civ. P. 26(c). See In re "Agent Orange" Product Liability
___ __________________________________________
Litig., 821 F.2d 139, 145-47 (2d Cir.), cert. denied, 484 U.S.
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953 (1987). The Committee has, however, launched no such
contention. In view of our settled rule that theories neither
briefed nor argued are deemed waived, see Ryan v. Royal Ins. Co.,
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916 F.2d 731, 734 (1st Cir. 1990); United States v. Zannino, 895
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F.2d 1, 17 (1st Cir.), cert. denied, 494 U.S. 1082 (1990), we
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14
intervention does little to prejudice the Committee's cause.
4. Exceptional Circumstances. The last prong of the
4. Exceptional Circumstances.
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test necessitates consideration of unusual features militating in
favor of, or against, intervention. Here, the balance is
unaffected. Although the Committee will undoubtedly suffer some
inconvenience and expense in order to recreate the desired data,
it has shown no more. Inconvenience and expense are altogether
ordinary concomitants of the pretrial discovery pavane. Given
that the state action is a garden variety tort suit, implicating
parochial concerns, so modest a burden is not enough to tip the
scales.
In treating the state action as prosaic, it is
important to note what this case does not involve. First, there
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is no basis for any claim that the state action touches upon
matters of broad societal import or that an overriding public
interest will be served by modifying the protective order. Cf.,
___
e.g., Public Citizen, 858 F.2d at 787 (citing "strong public
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interest" in documents concerning the relationship between
cigarette smoking and lung cancer, "an important public health
issue"); Agent Orange, 821 F.2d at 148 (citing "enormous public
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interest in the Agent Orange litigation and the compelling need
for class members and non-class members alike to evaluate fully
the efficacy of settling th[e] litigation"). Second, this case
does not involve a total ban on access. We have located no
evidence that the Committee lacks the resources or wherewithal to
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leave this inquiry for another day.
15
conduct its own discovery. The Committee, then, is free to use
New York's elaborate panoply of pretrial discovery devices to
repastinate the same material that was previously unearthed in
the federal action.6
Finally, we reject the hypothesis that self-initiated
discovery would necessarily be futile. The protective order does
not provide that all discovery materials gathered in the federal
action are to be destroyed; neither the persons who solicited
information during discovery nor the persons who produced the
information are under any compulsion to atomize original records.
By the same token, the protective order in no way purports to
immunize the Designating Parties (who, presumably, now hold
whatever materials are still in existence) from state-court
discovery orders.
A slightly different situation may obtain with regard
to the deposition previously taken from the decedent, David
Greenblatt. Yet, the Committee has not limited its application
to this one identifiable needle but has sought relief affecting a
vast haystack of discovery materials. What is more, it has not
shown a clear need for a federal court order respecting even the
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Greenblatt deposition. Under the terms of the protective order,
the party that designated the deposition transcript as
"confidential" is not disabled from producing it if directed to
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6The existence of this alternative bolsters our conclusion,
see supra Part II(3), that the Committee will not suffer
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significant prejudice from the denial of its attempt at
intervention. See Garrity, 697 F.2d at 457.
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16
do so by a New York state court. Thus, the Committee may seek
the transcript by means of discovery in the state action.7
III. CONCLUSION
III. CONCLUSION
We need go no further. On this record, it seems
inequitable to allow a latecomer, who fiddled while Rome burned,
to collect a share of the fire insurance. Given appellant's
unrelieved tardiness and the absence of any mitigating
circumstances, we decline to disturb the district court's denial
of post-judgment intervention.
Affirmed.
Affirmed.
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7While we leave all questions regarding the discoverability
of information in the state action for adjudication by the state
courts, see United Nuclear Corp. v. Cranford Ins. Co., 905 F.2d
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1424, 1428 (10th Cir. 1990), cert. denied, 111 S. Ct. 799 (1991);
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Superior Oil Co. v. American Petrofina Co., 785 F.2d 130, 130
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(5th Cir. 1986) (per curiam), we have no basis for anticipating,
on the present record, that the Committee will prove unable to
secure the Greenblatt transcript through New York's discovery
mechanisms.
17