Hindsight No Help After Negotiating a Confidentiality Order

Hindsight No Help After Negotiating a Confidentiality Order

You have to make sure everyone on your side keeps the promises you make! When you and your adversary enter into a confidentiality stipulation about the return or destruction of confidential business information you received as a result of a lawsuit, you have to make sure that you and your outside counsel fully comply with this agreement, even if it turns out to be more costly than you anticipated. This applies even to inadvertently backed-up information by your outside counsel, as it did to the Plaintiff in Oxxford Information Technology, Ltd. V. Novantas LLC.

In Oxxford Information Technology, the plaintiff asked defendants to produce confidential business information. It was only after the plaintiff had agreed to the return or destruction of the received business information at the end of litigation, that defendant turned over the demanded information.

After the action was settled, plaintiff’s attorneys realized that they had inadvertently made backed up tapes of defendant’s information to their law firm’s computer system. The plaintiff asked the court to modify the Confidentiality Order because it claimed that it would be too expensive to delete the information from the tapes. Permission was sought for its counsel to retain the information. In return, the plaintiff proposed safeguards that were said to be designed to protect the confidentiality of the information.

The court did not grant the modification of the previous stipulation. It found that the extra cost of destruction did not outweigh defendant’s bargained-for interest in the post-litigation destruction of the business information in outsiders’ hands or otherwise warranted the proposed modification.

Several factors led to this decision. First, the plaintiff voluntarily consented to the Confidentiality Order. Second, plaintiff’s counsel had demonstrated experience in and sophisticated knowledge of electronic discovery matters. Therefore counsel should have foreseen the problem of inadvertently backed up information and addressed it in the initial negotiation. Third, the defendants relied on the Confidentiality Order when they afforded the plaintiff access to the business secrets. Fourth, the safeguards against access by third parties proposed by plaintiff were less than a guarantee.

The reason why this information was backed up is not known but you now know this: When you enter into a confidentiality agreement you and your counsel have to make sure to address all foreseeable problems that could arise in connection with the particular agreement. If you don’t, in addition to a headache, it could cost you more money than you anticipated.

Jessica K. Rauskolb is currently a third year law student at Seton Hall University and an attorney in Germany.

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Comments (4):

  1. Nicely done! The bargained for interest was preserved by the Court and rightly so. I applaud the Court for ensuring that the agreed upon destruction of records was enforcable without regard to cost. Great lesson here.

  2. Excellent post. It definitely highlights the need for all counsel and clients involved in litigation to be on the same page with respect to information exchanges and agreements. The court’s ruling was quite correct, as the unanticipated discovery of backup tapes should not have been enough to defeat the initial agreement.

  3. The court was on point in this case. When parties negotiate for and agree to a confidentiality agreement it should be strictly adhered to. It would be inequitable to allow the party to re-negotiate the terms of their agreement AFTER the party already relied upon it when turning over their confidential information.

  4. I think in many situation we should “Think before we make promise” ,what do u think of this?

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