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Defendant’s proposed definition of “Protected Information,” on the other hand, finds no support in the Court’s rules or applicable law, and is so broad that it undoubtedly would, by its plain terms, cover virtually all information produced in discovery in this case. Under Defend- ant’s proposal, the category of Protected Information would include not only proprietary, trade- secret, or market-sensitive information, but also all “financial” and “operational” information. Given the subject matter at the heart of this case, which involves decisions relating to the “financial” structure of two “financial” institutions as well as decisions relating to the “operations” of the Treasury Department and the Federal Housing Finance Agency (FHFA), it is almost certainly true that all information that will be produced in this case could be characterized as “financial”or “operational” in nature.

To make matters worse, Defendant’s definition goes on to provide that Protected Information will also include “any information disclosed in this litigation that has not been released to the public previously” (emphasis added). Since it is quite unlikely that much if any of the information that will be produced in discovery will have been previously released to the public – there is, after all, little reason for the parties to focus on publicly available information in their discovery efforts – this provision removes any remaining doubt that Defendant wants all discovery materials to be accorded confidential treatment. Thus, under Defendant’s proposal, regardless of how innocuous the nonpublic information, no matter how dated or stale it may be, and even if it is undisputed that its disclosure would cause no harm to any legitimate interest of the producing party, such information will be considered “protected,” and the receiving party will labor under onerous restrictions governing the use, treatment, and disclosure of that information, and will be subject to severe penalties and sanctions for running afoul (even inadvertently) of those restrictions.

There can therefore be no question that under Defendant’s proposed definition, little if any information produced in discovery would avoid qualifying as Protected Information. Indeed, Defendant has confirmed to Plaintiffs that it intends to designate all of the documents it is currently preparing for production to Plaintiffs as Protected Information.4

Defendant has even objected to a provision (modeled on a provision in the protective order entered by the Court in Starr International Co. v. United States (Fed. Cl. No. 11-779C) (Doc. 104)) making clear that information that would be available to the public under the Free- dom of Information Act (FOIA) should not be considered Protected Information. Defendant is therefore taking the position that material that any member of the public could ask for, receive, and use without any restriction under FOIA can nevertheless be designated as protected, and be subjected to numerous restrictions on use and disclosure, when requested by a party in discovery not support such wholesale, indiscriminate designation of discovery material as confidential. The Federal Circuit has noted with disapproval that “[p]arties frequently abuse Rule 26(c) by seeking protective orders for material not covered by the rule,” and has observed that other courts of appeals “have repeatedly condemned the improper use of confidentiality designations.” In re Violation of Rule 28(d), 635 F.3d at 1358 (citing Jepson, Inc. v. Makita Electric Works, Ltd., 30 F.3d 854, 858 (7th Cir. 1994) and Procter & Gamble Co. v. Bankers Trust Co., 78 F.3d 219, 222 (6th Cir. 1996)). Defendant’s expansive definition of Protected Information presents exactly the type of scenario that the Federal Circuit and other courts have cautioned against.

Defendant’s proposal also cannot be reconciled with black letter law placing the burden on the party seeking a protective order to demonstrate good cause for the protections it seeks. As this Court has emphasized, the party seeking to limit discovery or seeking other protections un- der Rule 26(c) “must make a particularized factual showing of the harm that would be sustained if the court did not grant a protective order.” Lakeland Partners, L.L.C. v. United States, 88 Fed. Cl. 124, 133 (2009) (citations and internal quotation marks omitted). See also AG-Innovations, Inc. v. United States, 82 Fed. Cl. 69, 78 (2008) (same). “For good cause to exist, the party seek- ing to limit the disclosure of discovery materials must show that specific prejudice or harm will result if no protective order is granted.” In re Violation of Rule 28(d), 635 F.3d at 1357-58 (cita- tion and internal quotation marks omitted). “[B]road allegations of harm, unsubstantiated by specific examples, are insufficient to justify issuance of a protective order.” Lakeland, 88 Fed. Cl. at 133. Defendant’s proposal, which would authorize a producing party to indiscriminately and on a wholesale basis designate everything it produces as confidential, runs afoul of these principles.

Moreover, the Government’s own actions illustrate the overbreadth of its proposal and undermine any claim that such a broad and all-encompassing definition of Protected Information is necessary or justified. In the district court litigation challenging the Net Worth Sweep, among other theories, under the Administrative Procedure Act, Treasury and the FHFA served, and pub- licly filed, document compilations that included both internal analyses of Fannie’s and Freddie’s expected financial performance and internal documents discussing aspects of the operation of the Fannie and Freddie conservatorships. There has been (and can be) no claim that the public re- lease of these materials, which would clearly fall within Defendant’s definition of Protected In- formation if they had not already been publicly filed by the Government itself, has caused any harm to the markets or to any public or private entity.

It is true that, as discussed in more detail below, both parties’ proposed orders include mechanisms that would allow receiving parties to challenge the designation of produced materi- als as Protected Information. But that procedure does not come close to addressing the problems posed by Defendant’s expansive definition of Protected Information, since it is that expansive definition itself that would presumably govern the resolution of any such challenge.

For these reasons, Plaintiffs respectfully submit that the Court should adopt Plaintiffs’ proposed definition of Protected Information, and reject Defendant’s proposed definition.

B. Defendant’s Statement

A fundamental provision of the Protective Order is the definition of “Protected Infor- mation” set forth in Paragraph 2. We propose that the following definition be employed to allow the Government – the only party producing documents at this stage of the litigation – to safeguard sensitive documents:

2. Protected Information Defined. “Protected Information” as used in this Protective Order means proprietary, financial, operational, confidential, trade secret, or market-sensitive information, as well as information that is otherwise protected from public disclosure under applicable law. Protected Information also means any information disclosed in this litigation that has not been released to the public pre- viously . . . .

Ex. 3.
This definition of “Protected Information,” consistent with our previous motion for pro-

tective order, anticipates that public disclosure of the documents plaintiffs seek may have a real and destabilizing effect on the housing market and broader economy. See Def.’s Mot. for Prot. Order at 7. These include materials that, although sensitive and non-public, may not qualify as privileged and will, therefore, be subject to production. Public disclosure of sensitive documents that have not been previously released risks harming investor confidence in Fannie Mae and Freddie Mac, leading to broad market instability. Id. at 7-9. Further, public disclosure may not only affect financial markets, but could have a profound chilling effect on ongoing agency and inter-agency discussions as to the future of housing finance reform in the United States, as de- scribed in the declarations supporting the Government’s previous motion for protective order. Id. at App. (Declarations of Melvin L. Watt, Dr. Michael A. Stegman, and Christopher H. Dick- erson.)

Plaintiffs’ proposal fails to account for these concerns. Drawing from the context of a bid protest, plaintiffs seek to restrict the definition of “Protected Information” to a narrow class of competitively sensitive documents. Plaintiffs’ focus on proprietary and trade secret information is inappropriate in the context of this case, where plaintiffs seek documents that by their nature reflect sensitive, non-public policy discussions by the Conservator and within and among Government agencies. Plaintiffs offer no legitimate reason – and none exists – to limit the definition of Protected Information in this manner. The materials related to the policy decisions that are the subject of this case require an entirely different framework for protection.

The definition of Protected Information proposed by the Government will facilitate pro- duction of documents responsive to plaintiffs’ requests without subjecting the Government and the public to the harmful effects of disclosure of sensitive, non-public materials. Significantly, plaintiffs’ counsel will be able to review these sensitive documents for developing their argu- ments; we only seek to have the documents shielded from release to the general public.

Finally, plaintiffs propose that the definition of “Protected Information” exclude docu- ments that would be available to the public under the Freedom of Information Act (FOIA). This standard is inappropriate. Inserting the FOIA statute and interpretive case law into the standards for determining whether information is protected would introduce a substantial degree of com- plexity into what ought to be a simple-to-apply rule. Plaintiffs’ proposed language would require the United States (the only party to whom FOIA applies) to undertake a separate FOIA examina- tion of each document before deciding whether a document would be designated protected. This is unwarranted and unworkable.

II. Burden of Challenging Protected Information Designations The Parties’ Proposals

Plaintiffs

Defendant

19. Seeking Relief From the Protective Order. . . . If the receiving party desires to disclose Protected In- formation to a person not otherwise authorized under this Protective Order to receive such information, or if it disagrees with the protected designation by the pro- ducing party, then the receiving party shall so notify, in writing, counsel for the producing party. The par- ties shall first try to resolve such dispute within five (5) business days after receipt of the receiving party’s notice. If the dispute is not resolved, and if the producing party wishes to maintain the Protected Infor- mation designation, the producing party, within ten (10) business days after the receipt of the receiving party’s notice, and upon no fewer than three (3) busi- ness days’ written notice to the receiving party must, by specifying the basis on which it claims that desig- nation of the material at issue as Protected Information is appropriate or that such disclosure is im- proper, seek a ruling from the Court that the infor- mation is properly designated or that such disclosure should otherwise not be allowed. In connection with any such request for a ruling by the Court, the burden of persuasion shall rest with the party seeking the rul- ing. Pending a determination by the Court, the docu- ment(s) shall be treated under this Protective Order as Protected Information. For purposes of this para- graph, the term “producing party” includes non-parties who produce material that has been designated as Pro- tected Information.

9. Seeking Relief From the Protective Order. . . . If the receiving party desires to disclose Protected In- formation to a person not otherwise authorized under this Protective Order to receive such information, or if it disagrees with the protected designation by the pro- ducing party, then the receiving party shall so notify, in writing, counsel for the party asserting the confidentiality of the information. The parties shall first try to resolve such dispute within five (5) business days after receipt of the receiving party’s notice. If the dis- pute is not resolved, the party challenging the protect- ed designation, upon no fewer than three (3) business days’ written notice to the producing party may, by specifying the basis on which it claims that such des- ignation is not appropriate or that such disclosure is proper, seek a ruling from the Court that the information is improperly designated or that disclosure is allowed. In connection with any such request for a ruling by the Court, the burden of persuasion shall rest with the party seeking the ruling. Pending a determi- nation by the Court, the document(s) shall be treated under this Protective Order as Protected Information. For purposes of this paragraph, the term “producing party” includes non-parties who produce material that has been designated as Protected Information.

A. Plaintiffs’ Statement

In addition to disagreeing over the definition of Protected Information, the parties also disagree about which party should bear the burden of proof in the event of disputes over the designation of produced materials as protected. Plaintiffs believe that that burden should rest with the party seeking to protect materials as confidential – i.e., the producing party – while Defendant believes the burden should rest with the receiving party.

The law is quite clear, as discussed above, that it is the “party seeking protection” who

“bears the burden of demonstrating that there is good cause for restricting the disclosure of the information at issue.” In re Violation of Rule 28(d), 635 F.3d at 1357. See also id. at 1357-58 (“For good cause to exist, the party seeking to limit the disclosure of discovery materials must show that specific prejudice or harm will result if no protective order is granted.”) (citation and internal quotation marks omitted). As the Federal Circuit made clear in another decision, “[o]ne seeking a protective order under [Rule 26(c)] must establish that the information sought is confi- dential” and “that disclosure might be harmful.” American Standard Inc. v. Pfizer Inc., 828 F.2d 734, 740 (Fed. Cir. 1987). This result is in fact compelled by the language of RCFC 26(c) itself, which makes clear both that it is the “party . . . from whom discovery is sought” who may move for a protective order and that an order limiting the disclosure of confidential information may only be issued upon a showing of “good cause.”

In keeping with the plain language of the rule, this Court has held that “[t]he burden of demonstrating ‘good cause’ rests with the party seeking to shield itself from discovery,” that that party “must make a particularized factual showing of the harm” it would suffer in the absence of a protective order, and that “broad allegations of harm, unsubstantiated by specific examples, are insufficient to justify issuance of a protective order.” Lakeland, 88 Fed. Cl. at 133 (citations and internal quotation marks omitted). There is no basis under the rules or relevant case law for the result to be any different when the party from whom discovery is sought seeks not to completely prevent discovery but instead to impose onerous restrictions, backed by the sanctions of this Court, on the use and treatment of materials produced in discovery.

For these reasons, the burden should rest with the party who has designated material as protected, and who is thereby seeking to invoke the numerous protections provided by an order of this Court for those materials, and to impose upon the receiving party the substantial burdens associated with compliance with that order, to defend that designation in the event of a dispute between the parties.

Defendant’s proposal is even more problematic in light of its expressed intention, as discussed above, to initially designate everything it produces as Protected Information. Under Defendant’s proposal, it would make wholesale and indiscriminate designations of material as confidential, and then place the burden on Plaintiffs to challenge whether such materials are deserving of such treatment. Plaintiffs respectfully submit that Defendant’s proposal is unreasonable on its face.

For these reasons, Plaintiffs respectfully submit that the Court should adopt Plaintiffs’ proposed version of Paragraph 19 of the Protective Order, and reject Defendant’s proposal.

B. Defendant’s Statement

The second area of dispute relates to the process for resolving party challenges to the des- ignation of documents as “Protected Information” in Paragraph 19 of the proposed Protective Order. See Ex. 3. The parties agree that the order should include a process for either party to challenge the designation of documents as “Protected.” Ordinarily, such challenges (similar to privilege challenges) are resolved by negotiations between the parties and, if negotiations are un- successful, a motion by the challenging party requesting that the Court resolve the dispute. Par- agraph 19 in our proposed Protective Order incorporates this straightforward process by directing that the party receiving “Protected” documents, if it chooses, file a motion challenging that designation