Litigants Seeking Information Sharing Need Better Protections

The Bottom Line

• Information sharing is becoming a common area of dispute in civil litigation.
• Courts haven’t reached consensus on whether and when to allow information-sharing provisions in protective orders.
• Courts should consider the relevance of the collateral actions and ensure appropriate safeguards remain when evaluating requests to share confidential information.

As civil litigation grows more complex, an opportunistic desire to share information with outside parties as a “shortcut” is becoming a prevalent theme in discovery disputes.

Protective orders typically prohibit dissemination of confidential and proprietary materials to outside parties that are uninvolved in the litigation. This has long served as a cornerstone of modern civil litigation, enabling the exchange of sensitive business information, trade secrets, and other restricted materials during discovery without fear of public disclosure.

Given the costs of conducting and obtaining discovery, many litigants—typically plaintiffs—argue that keeping confidential and proprietary materials confined to individual matters is inefficient when the same defendant faces substantially similar claims in collateral proceedings.

Litigants in cases alleging widespread harm—such as in antitrust and product liability claims, mass torts, and data privacy breaches—assert that courts may need to re-examine longstanding confidentiality safeguards where dozens or even hundreds of related proceedings may unfold across jurisdictions.

To address these perceived inefficiencies, plaintiffs’ counsel often propose adding information-sharing provisions (sometimes called “common interest” or “litigation sharing” clauses) to protective orders that expressly permit disclosure of protected materials to parties and counsel in related proceedings.

Provisions that allow sharing beyond core litigation participants remove control from the court and create a downstream effect that increases the risk of irreparable proprietary harm or misuse of sensitive, confidential materials.

Though one court described the state of the jurisprudence on such clauses as “without a general consensus as to outcome” and that “federal and state courts across the country, applying similar protective-order rules, are increasingly fractured on the issue,” some patterns are emerging as the jurisprudence continues to develop.

Proposed Sharing Provisions

How courts view and handle sharing provisions can range from outright rejection to allowing broad sharing with parties in other loosely defined “related” litigation. Courts that allow sharing provisions often impose differing degrees of safeguards and limitations on the scope of permissible sharing.

But we’re seeing some common positions emerge as courts face more protective order disputes regarding sharing. For example, courts may be more likely to allow sharing provisions when they believe there is a sufficient “degree of overlap in facts, parties, and issues between the suit covered by the protective order and the collateral proceedings.”

They also are more open to sharing provisions when they include explicit limitations on sharing based on the relevance of the collateral actions. But there are differing interpretations of what constitutes overlap. Given the risks of trade secret protection waiver, misuse of materials, and proprietary harm, litigants at risk of information exposure must carefully educate courts when the risks outweigh the rewards of sharing, as well as why limited overlap may not warrant sharing.

Courts have expressed skepticism on broad sharing provisions that lack clear limits or protections. They may limit or reject sharing provisions that don’t clearly define the collateral cases to which they apply, particularly if they could permit sharing in future unrelated or dissimilar collateral actions.

Additionally, courts have recognized that broad sharing provisions can undermine a court’s ability to properly control and supervise a case and deprive parties of procedural safeguards around their information, such as the opportunity to object to disclosures. Specifically, sharing clauses can risk placing “the power solely in the hands of plaintiffs’ counsel to determine which outside attorneys meet the criteria for disclosure of defendants’ confidential information, with no advance notice or opportunity to object given to defendants.”

Broad sharing provisions can cause additional unforeseen implications, as collateral litigants who obtain information from other cases through sharing provisions may have their own sharing provisions that might be broader in scope. This could allow additional sharing of information beyond what the original sharing provision contemplated, creating a risk that could repeat itself multiple times, as confidential information is shared repeatedly across multiple cases, further eroding confidentiality protections.

Discovery Sharing Limitations

To mitigate these risks, courts often try to find “bright lines” to assess the true scope of a sharing provision by understanding who the specific collateral litigants are, the nature of the confidential information subject to the sharing, and the issues involved in the collateral case.

In Shipley v. Instant Brands, Inc., a case involving Instant Pot pressure cookers, the plaintiff sought a broad preemptive sharing provision that would have applied to any other lawsuits by plaintiffs’ counsel involving injuries allegedly arising from the use of an Instant Pot pressure cooker. The plaintiff argued that the provision would allow for efficiencies across related cases.

The court found that the language in the proposed sharing provision was too broad because, among other things, it would apply to all models of Instant Pot pressure cookers, as opposed to the specific or substantially similar models as the one at issue.

The court in Deljanin v. Mercedes-Benz USA, LLC took a slightly broader view, allowing a limited sharing provision for cases where a broader list of vehicles and systems were at issue, but not permitting sharing of the information with Mercedes’ competitors and requiring recipients of the materials to execute a stipulation agreeing to be bound by the terms of the protective order.

Courts assessing sharing provisions often consider case-specific risks of harm that the disclosure of confidential information would cause to the disclosing party. In Rosas v. Goodyear Tire & Rubber Co., the court considered a declaration from an engineer regarding the risk of irreversible damage that disclosure of its confidential and trade-secret information to a competitor would cause and concluded that a sharing provision wasn’t appropriate.

By contrast, the court in Deljanin found that Mercedes’ “concerns and predictions” of harm were conclusory and relied on a law review article stating that violations of protective orders “are relatively rare and violations involving a leak to a competitor are virtually nonexistent.”

A Growing Resistance

While courts’ approaches to sharing provisions remain an inconsistent patchwork, some have observed that “the trend appears to be away from inclusion of sharing in protective orders,” and “other courts, particularly in the federal system, have been hostile to upfront sharing provisions.” As many federal district courts promulgate and publish model protective orders for parties to use, the model orders rarely include broad information-sharing provisions.

Courts are more likely to adopt sharing provisions that include the features and protections discussed above—that is, where a litigant can demonstrate a specific relevance and need; where the scope is narrowly tailored rather than blanket or preemptive; and where there are procedural and substantive protections.

For parties seeking to prevent exposure of confidential information, it’s important to emphasize that protective orders exist because of the need to safeguard sensitive information. The inquiry isn’t just whether the material is relevant in another matter, but whether disclosure is truly necessary and whether it’s consistent with preserving the producing party’s legally protected interests.

Even absent a sharing provision, collateral litigants can still obtain the discovery at issue by following the appropriate procedures, including establishing the relevance and proportionality of that information in their own litigation matters. Parties can make requests when specific confidential information should be disclosed in other actions, and courts can make their own determinations in each case.

This ensures a request is relevant and proportional to the needs of the case. It also allows a court to conduct a close evaluation of confidentiality, risks, and safeguards. Multiple courts have adopted this limited approach.

Given the need to protect parties’ sensitive confidential information and prevent the downstream risk of losing control of the information and resulting harms, courts should ensure that appropriate safeguards remain in place when considering requests to share confidential information across matters.

A law review article quoted in one case aptly noted that “Discovery sharing is a particularly interesting problem….Courts have not been consistent in their treatment of these situations; the nature of the problem probably makes that inconsistency inevitable.”

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Erica B. Zolner is a partner at Redgrave with experience in high-stakes business, multidistrict, and class action litigation, focusing on proactive, strategic e-discovery and information law counsel.

Rana B. Dawson is a partner at Redgrave with experience handling e-discovery and information law issues in complex litigation, concentrating on trial, appellate, and alternative dispute resolution matters.

Kevin Benedicto is a partner at Benedicto & Simonovich and is based in San Francisco.

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