H.L. Hayden Co. of New York, Inc. v. Siemens Medical Systems, Inc.

• Citation: 797 F.2d 85
• Decision Date: 25 July 1986
• Docket Number: No. 729,D,729
• Parties: 1986-2 Trade Cases 67,204, 5 Fed.R.Serv.3d 1121 H.L. HAYDEN CO. OF NEW YORK, INC. and Schein Dental Equipment Corp., Plaintiffs-Amicus Curiae, v. SIEMENS MEDICAL SYSTEMS, INC., Healthco, Inc. and Patterson Dental Co., Defendants-Appellees, v. The STATE OF NEW YORK, Appellant. ockets 85-7619, 85-7821.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 85

797 F.2d 85

1986-2 Trade Cases 67,204, 5 Fed.R.Serv.3d 1121

H.L. HAYDEN CO. OF NEW YORK, INC. and Schein Dental

Equipment Corp., Plaintiffs-Amicus Curiae, v. SIEMENS MEDICAL SYSTEMS, INC., Healthco, Inc. and Patterson

Dental Co., Defendants-Appellees, v. The STATE OF NEW YORK, Appellant.

No. 729, Dockets 85-7619, 85-7821.

United States Court of Appeals,

Second Circuit.

Argued Feb. 3, 1986.

Decided July 25, 1986.

Alan Pfeffer, Asst. Atty. Gen., New York City (Robert Abrams, Atty. Gen. and Lloyd Constantine, Asst. Atty. Gen., New York City, of counsel), for appellant The State of N.Y.

Robert B. Bernstein, New York City (Kaye, Scholer, Fierman, Hays & Handler and Michael D. Blechman, New York City, of counsel), for defendants-appelles Siemens Medical Systems, Inc.

Anderson Russell Kill & Olick, P.C., Lawrence Kill, John E. Daniel and Deborah A. Swindells, New York City, for amicus curiae H.L. Hayden Co. of New York, Inc. and Schein Dental Equipment Corp.

Before FEINBERG, Chief Judge, VAN GRAAFEILAND and CARDAMONE, Circuit judges.

VAN GRAAFEILAND, Circuit Judge:

The State of New York, although not a party to this private action, appeals from two orders of the United States District Court for the Southern District of New York (Goettel, J.). The first order denied the plaintiffs' motion to modify a protective order; the second denied New York's motion to intervene for the purpose of appealing the first order. For the reasons stated herein, we affirm the district court's denial of intervention. Alternatively, we would dismiss the State's appeal from the first order for want of appellate jurisdiction.

On January 13, 1984, plaintiffs, H.L. Hayden Co. of New York, Inc. and Schein Dental Equipment Corp. (collectively "Hayden"), sued Siemens Medical Systems, Inc., Healthco, Inc. and Patterson Dental Co. (collectively "Siemens"), alleging various federal and State anti-trust violations. Prior to discovery, the district court entered a protective order to shield the various parties--four of whom competed with each other--from possible misuse of confidential business information. Under the protective order, the producing party could designate commercially sensitive information as falling within one of three levels of confidentiality, the highest level limiting disclosure exclusively to "outside counsel". The order provided that confidential information be filed under seal, receive in camera treatment on the trial and be returned or destroyed upon the termination of the litigation. It also provided that the protected material not be used for any purpose other than trial preparation, trial, and post-trial proceedings, and that the treatment accorded the protected material under the order survive the termination of the action.

In December 1984, the Attorney General of the State of New York served Hayden with subpoenas duces tecum pursuant to N.Y.Gen.Bus.Law Sec. 343. The subpoenas sought, among other things, all the documents produced to Hayden by Siemens in the instant litigation as well as all of Hayden's work product relating to those discovered documents.

Hayden indicated its willingness to comply with the subpoenas and to waive its work product privilege, on condition that New York keep the material confidential. Hayden informed the Attorney General, however, that a protective order prevented it from revealing any information produced by Siemens which had been marked confidential. Hayden then agreed to seek modification of the protective order and to waive its provisions insofar as they barred Siemens from revealing to the State confidential information which Siemens had received from Hayden.

Hayden filed a motion to modify on January 8, 1985. Affirming the magistrate's denial of the modification motion, the district court refused to authorize disclosure of the protected material to the New York State authorities. See 106 F.R.D. 551. Hayden appealed that decision to this Court.

On August 20, 1985, the State moved under Fed.R.Civ.P. 24(a) and (b) to intervene for the purpose of also appealing the district court's refusal to modify the protective order. The district court denied that motion, whereupon New York sought review in this Court. The two appeals were consolidated for argument. On December 3, 1985, this Court dismissed Hayden's appeal, ruling that the district court's order denying modification was not final, at least as to Hayden, and therefore not appealable. Consequently, we are concerned here only with the appeal taken by New York.

We agree with the district court's ruling that New York was not entitled to intervene as of right under Fed.R.Civ.P. 24(a)(2). In addition, we hold that the district court did not abuse its discretion in denying permissive intervention under Rule 24(b)(2).

In order to establish a right to intervene under Rule 24(a)(2), a would-be intervenor must establish that its application is timely, that it has an interest in the subject of the action, that disposition of the action may as a practical matter impair its interest, and that representation of its interest by existing parties is inadequate. Restor-A-Dent Dental Laboratories, Inc. v. Certified Alloy Products, Inc., 725 F.2d 871, 874 (2d Cir.1984); United States Postal Service v. Brennan, 579 F.2d 188, 191 (2d Cir.1978). New York cannot meet this standard.

The State has no " 'significantly protectable interest' in the litigation" that will be impaired by the disposition of the action. Rios v. Enterprise Ass'n Steamfitters Local Union # 638, 520 F.2d 352, 357 (2d Cir.1975) (quoting Donaldson v. United States, 400 U.S. 517, 531, 91 S.Ct. 534, 542, 27 L.Ed.2d 580 (1971)). Although definitions in this area necessarily are flexible and imprecise, Restor-A-Dent Dental Laboratories, Inc. v. Certified Alloy Products, Inc., supra, 725 F.2d at 875, it is clear that to be "significantly protectable", a would-be intervenor's interest must be "direct and immediate", not "remote or contingent". Id. at 874. New York argues that its interest in the enforcement of its antitrust laws, in gaining access to Hayden's work product, and in reviewing the facts with all concerned, are so significantly protectable as to warrant intervention. We disagree. "Once a confidentiality order has been entered and relied upon, it can only be modified if an 'extraordinary circumstance' or 'compelling need' warrants the requested modification." FDIC v. Ernst & Ernst, 677 F.2d 230, 232 (2d Cir.1982). New York's power of subpoena raises a rebuttable presumption against its argument that it has no reasonable alternative to the method of investigation it seeks to pursue. Palmieri v. New York, 779 F.2d 861, 866 (2d Cir.1985).

Pursuant to its power of subpoena, New York has or will have copies of the same Siemens' records now in Hayden's possession. It is not at all clear that either the protective order or grand jury secrecy would bar the State from discussing these properly subpoenaed records with Hayden's attorneys, thus receiving the indirect benefit of Hayden's work product. See United States v. Interstate Dress Carriers, Inc., 280 F.2d 52 (2d Cir.1960); Fleet National Bank v. Export-Import Bank of the United States, 612 F.Supp. 859, 867-68 (D.D.C.1985); Capitol Indemnity Corp. v. First Minnesota Construction Co., 405 F.Supp. 929, 930-31 (D.Mass.1975). Assuming this cannot be done, the modest impairment of the State's enforcement efforts that results from the district court's decision is not sufficient to justify an automatic right of intervention, since New York's ability to enforce its anti-trust laws has not been destroyed or even significantly curtailed.

The decision in United States v. American Tel. & Tel. Corp., 642 F.2d 1285 (D.C.Cir.1980), upon which New York heavily relies, does not point to a contrary conclusion. Unlike the would-be intervenor in that case, New York fails to assert "a legal interest as distinguished from interests of a general and indefinite character...." Id. at 1292 (quoting Radford Iron Co. v. Appalachian Elec. Power Co., 62 F.2d 940, 942 (4th Cir.), cert. denied, 289 U.S. 748, 53 S.Ct. 691, 77 L.Ed. 1494 (1933)). In United States v. AT & T, supra, MCI Communications Corp. and MCI Telecommunications Corp. sought to intervene in order to prevent their own work product from being disclosed to their principal competitor, AT & T. Here, by contrast, New York asserts a Rule 24(a)(2) interest, not in its own confidential documents or work product, but rather in those of the original litigants, Siemens and Hayden. This latter interest hardly compares to the one recognized and protected in United States v. AT & T.

Where issues relating to the appellate process create a divergence of interests between the party representing the would-be intervenor's interest and the would-be intervenor, intervention for the purpose of protecting the latter's appellate rights may be appropriate. See, e.g., United States v. AT & T, supra, 642 F.2d at 1294; Smuck v. Hobson, 408...