Awuah v. COVERALL NORTH AMERICA, INC.

United States Court of Appeals
For the First Circuit

No. 09-1284

PIUS AWUAH, NILTON DOS SANTOS,
GERALDO CORREIA, BENECIRA CAVALCANTE,
DENISSE PINEDA, JAI PREM, ALDIVAR BRANDAO,
PHILLIP BEITZ, RICHARD BARRIENTOS,
MARIAN LEWIS, STANLEY STEWART, and all
others similarly situated,

Plaintiffs, Appellees,

v.

COVERALL NORTH AMERICA, INC.,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

Before

Boudin, Stahl and Lipez,
Circuit Judges.

Michael D. Vhay with whom Paul S. Ham, Norman M. Leon, John F.
Dienelt and DLA Piper LLP were on brief for appellant.
Hillary Schwab with whom Harold L. Lichten, Shannon Liss-
Riordan and Lichten & Liss-Riordan, P.C. were on brief for
appellees.

October 27, 2009
 BOUDIN, Circuit Judge. This is an attempted

interlocutory appeal by Coverall North America, Inc., seeking

review in this court of a discovery-related order by the district

court in litigation now pending before it. The case in the

district court is a class action by Coverall's "franchisees"

alleging that Coverall made misrepresentations, failed to keep its

contractual promises, and wrongly classified them as independent

contractors; the nature of Coverall's operations and other

pertinent background is described in Awuah v. Coverall North

America, Inc., 554 F.3d 7 (1st Cir. 2009).

During discovery, Coverall's former chief financial

officer, Steven R. Cumbow, was deposed and the deposition initially

sealed because of Coverall's claims that it revealed privileged and

confidential information about Coverall's business practices

including various accounting matters. Thereafter, in October 2008,

the plaintiffs moved to unseal the deposition so that they could

make fuller use of it. The district court held a hearing, reviewed

disputed passages and unsealed portions that it found not to be

privileged.

Coverall then sought a protective order as to certain

passages of Cumbow's deposition that it claimed revealed trade

secrets or competitively sensitive information, and after further

proceedings the district judge ruled against the trade secrets

claim but agreed that certain deposition passages--although not all

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those requested by Coverall--should remain sealed because they are

competitively sensitive. Although Coverall sought protection for

passages on 28 pages of Cumbow's deposition, protection was granted

for all passages on 15 pages and, on another page, for one passage

but not a second. Coverall has now appealed from the denial of

protection as to the remaining passages (and their disclosure has

been stayed pending this appeal).

The general rule is that interlocutory orders are not

immediately reviewable but must await a final judgment; however,

among a number of exceptions is that created by the collateral

order doctrine, Cohen v. Beneficial Indus. Loan Corp., 337 U.S.

541, 545-47 (1949), which allows interlocutory appeal of orders

that decide issues that meet all four of these criteria: they (1)

are distinct from the merits, (2) are definitive as to the issues

sought to be reviewed, (3) affect interests that could not be

vindicated by appeal after a final judgment, and (4) present an

important issue meriting immediate review. Gill v. Gulfstream Park

Racing Ass'n, Inc., 399 F.3d 391, 398 (1st Cir. 2005).1

1
Some of our cases condense the four factors into three, Lee-
Barnes v. Puerto Ven Quarry Corp., 513 F.3d 20, 25 (1st Cir. 2008)
(quoting Will v. Hallock, 546 U.S. 345, 349 (2006)), but the
substance is the same: a definitive decision, distinct from the
merits, on an important issue, which would effectively be
unreviewable at the end of the case. See also U.S. Fidelity &
Guar. Co. v. Arch Ins. Co., 578 F.3d 45, 54-55 & n.15 (1st Cir.
2009).

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 Many discovery orders are effectively reviewable on final

judgment, but disclosure of allegedly privileged or sensitive

information may threaten immediate harm that cannot later be undone

on review of the final judgment. The unsealing order in this case

meets that test and also definitively resolves the question whether

the disputed passages are to be made public. Plaintiffs dispute

that the confidentiality issue is "distinct from the merits" of the

case--a criterion whose application may in some instances not be

straightforward;2 but we bypass that question because we conclude

that the final requirement--importance--cannot be satisfied.

It might be asked why such requirements exist at all if

an order may cause irreparable harm that cannot be undone by later

review, but the final judgment rule implicitly accepts that some

harms may result from deferring appeals; for example, a court may

unreviewably refuse to dismiss a case on summary judgment prior to

trial, thereby imposing heavy costs on the defense. Digital Equip.

Corp. v. Desktop Direct, Inc., 511 U.S. 863, 872 (1994). But

piecemeal appeals impose costs of their own by multiplying

proceedings and delaying resolution. Will, 546 U.S. at 350;

2
See, e.g., Van Cauwenberghe v. Biard, 486 U.S. 517, 527-29
(1988); United States v. MacDonald, 435 U.S. 850, 859-60 (1978);
15A Wright, Miller & Cooper, Federal Practice and Procedure §
3911.2, at 378-95 (2d ed. 1991) (discussing cases relevant to this
factor).

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Spiegel v. Trs. of Tufts Coll., 843 F.2d 38, 46 (1st Cir. 1988).

The final judgment rule, tempered by exceptions, is a compromise.

Further, in the course of a single case, discovery-

related orders are often numerous and often close calls. Yet they

are rarely overturned on appeal, because review is normally for

abuse of discretion, Mack v. Great Atl. & Pac. Tea Co., 871 F.2d

179, 186 (1st Cir. 1989); typically such orders involve balancing

conflicting interests and depend on the trial judge's hard-won

familiarity with the course of proceedings. The benefits of

routinely allowing such appeals are judged not to outweigh the

unquestionable costs. Reise v. Bd. of Regents of Univ. of Wis.

Sys., 957 F.2d 293, 295 (7th Cir. 1992); Donlon Indus., Inc. v.

Forte, 402 F.2d 935, 937 (2d Cir. 1968) (Friendly, C.J.).

The "importance" requirement in the collateral order

doctrine thus serves as a mediating device, just as it does with

mandamus, another vehicle for review of interlocutory orders with

somewhat different criteria. See United States v. Horn, 29 F.3d

754, 769-70 (1st Cir. 1994). Although Coverall says that trade

secrets should be treated differently than other subjects sought to

be reviewed on an interlocutory basis, claims that revealing

information will cause irreparable harm can be made as to many

types of material, and the circuits have regularly denied

interlocutory appeals in which litigants sought to challenge

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discovery orders governing what information needs to be disclosed

and to whom.

This is the settled rule in this circuit, In re Insurers

Syndicate for the Joint Underwriting of Medico-Hosp. Prof'l Liab.

Ins., 864 F.2d 208, 210 (1st Cir. 1988), and most others; a

collection of such decisions appears in an addendum to this

decision. As a leading treatise explains:

[C]ourts routinely dismiss appeals from orders
granting discovery, denying discovery,
granting protective orders, granting a
protective order narrower than requested,
denying protective orders, refusing to modify
protective orders, or dealing with the
procedures for conducting discovery.

15B Wright, Miller & Cooper, supra, § 3914.23, at 124-30. While

one circuit has created an automatic exception when a party is

ordered to disclose trade secrets, In re Carco Elecs., 536 F.3d

211, 213 & n.3 (3d Cir. 2008), it recognized that "[o]ther courts

of appeals have rejected our approach."

The situation is different where a discovery order is

directed to a non-party who is not otherwise part of the

litigation, e.g., Gill, 399 F.3d at 393-94, 399 (allowing appeal

by a non-party ordered to disclose claimed privileged information),

and thus cannot ordinarily appeal from a final judgment. Nat'l

Ass'n of Chain Drug Stores v. New England Carpenters Health

Benefits Fund, Nos. 09-1577, 09-1580, 09-1578, 09-1579, 2009 WL

2824867, at *6 (1st Cir. Sept. 3, 2009). Similarly, when an

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individual is held in contempt for refusing to produce information,

the contempt order may be immediately appealable. Corporacion

Insular de Seguros v. Garcia, 876 F.2d 254, 256-57 (1st Cir. 1989).

But Coverall is a party and lacks contempt as a means of testing

the order (because the deposition material is already in court

files but temporarily sealed).

Turning then to the importance criterion, cases deemed to

qualify usually present a disputable legal issue whose importance

turns on the likelihood that it will arise in other cases. E.g.,

Cohen, 337 U.S. at 547; U.S. Fidelity, 578 F.3d at 56; United

States v. Filippi, 211 F.3d 649, 651 (1st Cir. 2000). In such

cases there are special benefits to "the system" from getting the

issue resolved and, in addition, the de novo standard of review for

legal issues makes a different outcome on appeal a far more

realistic possibility than with fact-specific discovery rulings

tested for abuse of discretion. In re Cont'l Inv. Corp., 637 F.2d

1, 7 (1st Cir. 1980).

There is no "legal" issue presented by the merits of the

discovery order in this case. The district court's decisions on

virtually all of the disputed passages involved routine judgments

about the likelihood that competitive harm will be done by

disclosures about particular aspects of Coverall's business

operations. It would be hard to think of more fact-bound

controversies or ones more likely to turn on largely speculative

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judgments about a business with which the district court is now

familiar as a result of managing the case and its extensive review

of the disclosure issues. Coverall does not even attempt to frame

an abstract legal issue for our review.

Some collateral order cases suggest that only distinctly

legal issues can qualify; others, by referring only to importance,

might suggest that in rare cases the significance of the interest

at stake or even the magnitude of an error might qualify.3 We have

no reason to pursue those possibilities because nothing of the kind

has been established here. What is before us is a routine set of

arguments, none too strong in themselves, that the judge

underestimated the potential for competitive damage as a result of

the release of the limited number of passages he declined to

protect. See, e.g., Poliquin v. Garden Way, Inc., 989 F.2d 527,

532 (1st Cir. 1993).

Of course, Coverall has fought energetically and over a

considerable period against the disclosures and one might infer

that this resistance is a proxy demonstrating the extreme

competitive sensitivity of the information. The inference, not in

3
E.g., Digital Equip., 511 U.S. at 879 (stating that what
"qualifies as 'important'" is "being weightier than the societal
interests advanced by the ordinary operation of final judgment
principles"); Lee-Barnes, 513 F.3d at 26 (same); 15A Wright, Miller
& Cooper, supra, § 3911.5, at 430-32; see also Mitchell v.
Forsyth, 472 U.S. 511, 524-30 (1985) (holding rejection of
qualified immunity immediately appealable); Abney v. United States,
431 U.S. 651, 662 (1977) (holding rejection of a double jeopardy
claim immediately appealable).

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any case proof that the district court was mistaken, is hardly air-

tight: Coverall has been charged--it has not been found liable in

this case--with activities that could be viewed as highly

unattractive. See Awuah, 554 F.3d at 8-9. It is not necessarily

the disclosure to competitors that makes the district court's order

a matter of concern. Others, including enforcement agencies and

potential plaintiffs, may find the disclosures of interest in ways

that would not serve Coverall's interests.

Conversely, one may ask why plaintiffs are pressing for

unsealing since the protective order allows plaintiffs' counsel

access to the information; merely embarrassing a defendant into

settlement might not be an appealing ground for forced disclosure.

But, asked at oral argument how the sealing of available

information disadvantaged plaintiffs, plaintiffs' counsel offered

reasons why counsel were handicapped by the protective order--for

example, in working with experts or other potential witnesses and

during arbitration to which some plaintiffs may be subject--and the

reasons were not implausible.

The appeal is dismissed for want of a final judgment.

Costs are awarded in favor of appellees.

It is so ordered.

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 ADDENDUM

Many cases in other circuits disallow immediate appeals of

discovery orders that govern what information needs to be disclosed

and to whom. E.g., Chase Manhattan Bank, N.A. v. Turner & Newall,

PLC, 964 F.2d 159, 162-63 (2d Cir. 1992) (dismissing an appeal of

an order to produce privileged documents); MDK, Inc. v. Mike's

Train House, Inc., 27 F.3d 116, 120 (4th Cir.) ("The dangers of a

trade secrets exception to the nonappealability of discovery orders

should be apparent."), cert. denied, 513 U.S. 1000 (1994); Texaco

Inc. v. La. Land & Exploration Co., 995 F.2d 43, 43-44 & n.4 (5th

Cir. 1993) (dismissing an appeal of an order to produce privileged

documents and collecting cases holding that discovery orders are

not appealable); Coleman v. Am. Red Cross, 979 F.2d 1135, 1138 (6th

Cir. 1992) (en banc) ("We have held repeatedly that orders denying

or granting discovery are not appealable under the collateral order

doctrine."); Dellwood Farms, Inc. v. Cargill, Inc., 128 F.3d 1122,

1125 (7th Cir. 1997) (Posner, C.J.) ("It is true that a discovery

order is not deemed collateral even if it is an order denying a

claim of privilege."); Iowa Beef Processors, Inc. v. Bagley, 601

F.2d 949, 953 (8th Cir. 1979) (“Most courts, including this one,

have held that orders compelling the production of documents or

testimony are not appealable as collateral orders or otherwise. We

review an order partially lifting a protective order as the

functional equivalent of an order compelling production of

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documents or testimony . . . .” (citations omitted)); In re Nat'l

Mortgage Equity Corp. Mortgage Pool Certificates Litig., 821 F.2d

1422, 1424 (9th Cir. 1987) ("Review is not available to determine

whether previously disclosed material should be the subject of a

protective order . . . . These matters are for the district court

. . . ."); Boughton v. Cotter Corp., 10 F.3d 746, 749-50 (10th Cir.

1993) (denying an appeal of an order requiring production of

allegedly privileged information and attorney work product); Rouse

Constr. Int'l, Inc. v. Rouse Constr. Corp., 680 F.2d 743, 745-46

(11th Cir. 1982) (finding an order compelling production of

financial statements not appealable).

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