a Delaware corporation, )
)Judge Leinenweber
)Magistrate Judge Keys
an Illinois corporation,)


Pursuant to order of this Court dated August 12, 1998, defendant American Medical Association ("AMA"), by its attorneys, submits this opposition to the Motion for Leave to Intervene, Motion to Rescind Protective Order, and Motion for Preservation of Discovery Materials filed by proposed intervenor Association of American Physicians & Surgeons, Inc. ("AAPS").

This case has been settled and dismissed with prejudice. Nevertheless, AAPS seeks to intervene in an effort to rescind the stipulated protective order that was agreed to by the parties and entered by this Court. In reliance on that order, the AMA produced numerous confidential documents to Sunbeam and thereby facilitated discovery in a fair and orderly manner. Those documents had nothing to do with the AMA/HCFA licensing contract that AAPS claims may be the subject of a lawsuit that it might someday file against the AMA.

Second, with regard to the argument that the protective order should be rescinded so AAPS can report on the case in its publications, the Seventh Circuit has held that "the media's right of access does not extend to information gathered through discovery that is not part of the public record." Grove Fresh Distributors. Inc. v. Everfresh Juice Co., 24 F.3d 893, 898 (7th Cir. 1994). While the media may challenge a protective order for "abuse or impropriety," id., no such showing has been or could be made here. The fact that some members of AAPS also belong to the AMA makes no difference in the analysis.

This Court should also deny AAPS' request to enjoin the AMA from destroying any of the documents it has produced in this case. AAPS has not even attempted to make the showing required to justify such extraordinary relief.

Sunbeam Products, Inc. ("Sunbeam") filed this lawsuit after the AMA announced that it would not go forward with a Trademark Licensing Agreement that purported to give Sunbeam the right to use the AMA's name and logo on certain health-related products, such as blood pressure monitors and thermometers. Massive discovery ensued. In all, the AMA produced more than 26,000 pages of documents to Sunbeam, and Sunbeam produced more than 42,000 pages of documents to the AMA.

The parties recognized that each would be called upon to produce numerous documents containing confidential information. Accordingly, they negotiated a Stipulated Protective Order Governing Confidentiality. The protective order was presented to and approved by the Court. It provides that a party producing documents may designate as "Confidential" any documents which (1) have not been made public, and (2) contained "trade secrets, product research and development, confidential financial information, strategic business planning or marketing information, or [information which] is otherwise considered confidential under the law." Exhibit A to AAPS Mot., 1.

In reliance on the protective order -- which complied in all respects with Fed. R. Civ. P. 26, and which this Court approved -- the AMA produced numerous documents to Sunbeam that otherwise would not have been produced. Most notably, the AMA produced confidential documents relating to its potential and actual commercial relationships with other companies, including business plans, internal financial analyses, and confidential contractual arrangements. While questioning the relevance of many of the requested documents to the Sunbeam litigation, the AMA nevertheless produced them. Without a protective order, the AMA would have refused to do so.



At the outset, it is important to note what AAPS' motion does not seek. It does not seek access to court files or to any other traditionally open aspect of the judicial process. Nor does AAPS seek direct access to the documents produced by the AMA under the protective order. Rather, AAPS apparently seeks to allow Sunbeam to be freed from the confidentiality restrictions it agreed to, presumably so that AAPS can attempt to obtain AMA-produced documents from Sunbeam.

This request cannot be squared with either the protective order entered in this case or the nature of discovery under the Federal Rules of Civil Procedure. As the Supreme Court has stated, "[d]iscovery rarely takes place in public." Seattle Times Co. v. Rhinehart, 467 U.S. 20, 33 n. 19 (1984) (upholding issuance of protective order against First Amendment challenge). The liberal scope of modern discovery means that "[m]uch of the information that surfaces during pretrial discovery may be unrelated, or only tangentially related, to the underlying cause of action." Id. at 33. In part because of the wide-ranging scope of discovery, trial courts have broad discretion to issue orders protecting parties and others from "annoyance, embarrassment, oppression, or undue burden or expense." Fed.R.Civ.P. 26(c).

In this case, the protective order was entered by stipulation of the parties and with the approval of the Court. Because both parties agreed to the entry of the order, AAPS bears an even heavier burden than it would if the order had been opposed. American Telephone and Telegraph Co. v.Grady, 594 F.2d 594, 597 (7th Cir. 1978) ("where a protective order is agreed to by the parties before its presentation to the court, there is a higher burden on the movant to justify the modification of the order").

AAPS has not met its burden here. AAPS offers essentially three justifications for its request. First, it asserts that it might sue the AMA over a contract between the AMA and a federal agency, the Health Care Financing Administration ("HCFA"), and claims -- based solely on rank speculation-- that the discovery produced by the AMA in this case may somehow be relevant to the possible lawsuit regarding the HCFA agreement. Second, AAPS claims that, as an interested member of the public and a member of the news media, it should be allowed to review confidential discovery materials so that it can report more fully on the case. Third, AAPS asserts that it has a right to see these materials on behalf of its members who are also members of the AMA. None of these arguments withstand analysis and, more importantly, none of them demonstrate that this Court acted improperly by entering a protective order for discovery which both the AMA and Sunbeam agreed was appropriate.

A. AAPS Has No Right to Rescind the Protective Order as a Potential Litigant Because It Has Not Filed Any Lawsuit and Because Any Possible Lawsuit Would Be Unrelated to This Case.

AAPS contends that the protective order should be rescinded because AAPS "may bring a legal proceeding" to challenge a February 1, 1983 agreement between the AMA and HCFA. AAPS Mot. at 3, 4. That agreement gives HCFA a royalty-free license to use the AMA's work of medical nomenclature, Current Procedural Terminology, in connection with federal health care programs such as Medicare. See Practice Management Information Corp. v. AMA, 121 F.3d 516, 517(9th Cir. 1997), modified on reh'g, 133 F.3d 1140(9th Cir. 1998).' But the 1983 HCFA

1 AAPS asserts that "the AMA/HCFA contract provides the AMA with a monopoly over a mandatory billing system that is imposed on all physicians," speculates as to the value of the purported "monopoly," and alleges that the contract "imposes an extra annual cost of about $250 on each practicing physician." AAPS Mot. at 5, 8. These assertions are blatantly incorrect. The billing system that physicians must follow under Medicare is imposed by Congress -- not by the AMA/HCFA contract. See, e.g., 42 U.S.C. §§ 1395u & 1395w-4. The contract hardly creates a monopoly given that it can be unilaterally terminated by HCFA on 90 days notice. See PMIC, 121 F.3d 516. Moreover, the figures thrown out by AAPS are wildly inaccurate. In any event, the entire assertion demonstrates the irrelevance of the Sunbeam matter to the HCFA contract.

agreement has nothing to do with the 1997 agreement between the AMA and Sunbeam that was at issue in this case. The latter agreement -- until repudiated by the AMA -- would have allowed Sunbeam to use the AMA's name and logo on Sunbeam products, thereby creating the false impression that the AMA was endorsing Sunbeam's products. Not surprisingly, the discovery that the AMA produced in the Sunbeam litigation did not concern the HCFA agreement. Moreover, the discovery that was produced by the AMA has neither been introduced as evidence nor relied on by the Court in issuing any opinion.

AAPS' claim of entitlement is fatally flawed because it is based on a lawsuit which has not been filed and which may never be filed. That AAPS at some future date "may bring" a lawsuit challenging the agreement with HCFA does not mean that it is entitled to launch a preemptive strike to obtain pre-filing (and irrelevant) discovery. AAPS has not cited, and the AMA has not found, a single case in which a non-party was given access to confidential discovery from another case merely because it "may bring" a lawsuit against one of the parties.

The fact that AAPS has not filed a lawsuit based on the HCFA agreement should be dispositive. In essence, AAPS is asking this Court to determine the proper scope of discovery in a separate and not yet existing case -- but without the benefit of a complaint or any other pleading to use as a benchmark. In any discovery dispute, such a benchmark is an essential starting point (and sometimes the ending point) for deciding whether a request for information is reasonable. Without knowing the precise scope of the lawsuit that AAPS "may bring," rescinding the protective order would amount to a court-sanctioned fishing expedition into the AMA's discovery materials, none of which have been shown to be relevant to AAPS' as-yet unfiled lawsuit.

Moreover, even if AAPS were to sue the AMA based on the agreement with HCFA, such a suit would still provide no basis for rescinding the protective order. AAPS asserts that discovery in this case "will likely be relevant to the litigation concerning the validity of the AMA/HCFA contract." AAPS Mot. at 3, 4. Significantly, it does not explain why -- and with good reason. The documents that the AMA produced to Sunbeam do not discuss or analyze the HCFA agreement, and none of the witnesses who gave depositions testified about that agreement. AAPS has not made and cannot make any showing, let alone a particularized showing, of any need for the AMA materials produced in this case. To the contrary, its assertions (a) that the Sunbeam contract and the HCFA agreement are "analogous in legal respects" and (b) that discovery here "will likely be relevant to the litigation concerning the validity of the AMA/HCFA contract" are nothing short of frivolous.

In contrast, the cases that have allowed non-parties to overturn protective orders and gain access to discovery have involved actual litigants prosecuting nearly identical cases containing nearly identical claims. See Grady, 594 F.2d at 597 ("We are impressed with the wastefulness of requiring government counsel to duplicate the analyses and discovery already made."); Wilk, 635 F.2d at 1296 (noting that "the operative charges of wrongdoing in the two complaints are almost word for word the same"); Grove Fresh, 24 F.3d at 896 (intervenors would be entitled to access to discovery materials where "the allegations in the two matters were virtually identical"). Because the issues in this case and in the one that AAPS "may bring" are utterly dissimilar, the request by AAPS to rescind the protective order should be rejected.2

B. AAPS Has No Right to Rescind the Protective Order as a Member of the News Media Because It Has Not Shown That the Order Was Abused or Was Improperly Entered.

In addition to bringing its motion as a potential litigant, AAPS also seeks leave to intervene as a member of the news media and as an interested member of the public. AAPS Mot. at 2, 2-3. But in Grove Fresh, the Seventh Circuit made clear that "until admitted into the record, material uncovered during pretrial discovery is ordinarily not within the scope of press access." 24 F.3d at 897-98. See also id. at 898 ("the media's right of access does not extend to information gathered through discovery that is not part of the public record"); Seattle Times, 467 U.S. at 33 ("restraints placed on discovered, but not yet admitted, information are not a restriction on a traditionally public source of information").

Grove Fresh recognizes that the press may challenge protective orders for "abuse or impropriety." Id. AAPS, however, has not alleged any facts (much less provided any proof) that would support a challenge on those grounds. For example, AAPS has not alleged that the documents that the AMA designated confidential fell outside the definition of "confidential" set forth in the protective order. Instead, AAPS litters its brief with ad hominem attacks on the AMA, its purported wrongful motives, and its supposed breach of various duties to its members. See, e.g., AAPS Mot. at 5-6, 9 ("AMA members are deprived of any meaningful voting powers. . . ."); id. At

2 AAPS also asserts an interest in having the protective order rescinded because it has "a direct and substantial interest to avoid a precedent in this case that will adversely affect its rights in the dispute concerning the AMA/HCFA contract." AAPS Mot. at 3, 4. Whatever merit this argument may have had before this case settled (and the AMA submits that it had none), it has become moot in light of the dismissal of the case.

6, 10 ("The protective order sought and obtained by the AMA in this proceeding is yet another effort by the AMA officers to withhold important information from its own members and all physicians."); id. at 6-7, 11 ("Upon information and belie?, the AMA officers have advanced their own financial interests in a manner contrary to the interests of the physicians they purport to represent. . . ."). These and other accusations are based on nothing more than speculation, sometimes poorly masked by the phrase "on information and belief"

In fact, the AMA has been extraordinarily open in sharing information with its members about the Sunbeam transaction. If AAPS is dissatisfied with the officers of the AMA or the conduct of the litigation, it has recourse through the electoral processes of the Association. However, its dissatisfaction is not grounds to undo a protective order that was designed to facilitate discovery while protecting the legitimate interests of the parties in maintaining the confidentiality of sensitive business and personnel records.3

The cases cited by AAPS in support of its motion do not support its argument. In Wiggins v. Burge, 173 F.R.D. 226 (N.D. Ill. 1997), the court did not rescind any protective order. To the contrary, one of the bases of the court's decision to allow non-party access to discovery was that no protective order had ever been issued. In Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994), a non-party newspaper challenged the protective order because it prevented the newspaper from obtaining access to a settlement agreement involving a government entity pursuant to the state freedom of information act. The court held that "where it is likely that information is accessible under a relevant freedom of information law, a strong presumption exists against granting or maintaining an order of confidentiality whose scope would prevent disclosure of that information

3 The AMA understands that AAPS does not seek access to confidential information produced by Sunbeam.

pursuant to the relevant freedom of information law." Id. at 791. No Freedom of Information Act, federal or state, is remotely implicated in this case. Finally, in Glenmede Trust Co. v. Thompson, 56 F.3d 476 (3d Cir. 1995), the court declined to issue a writ of mandamus after the district court denied a motion for a protective order. As in Wiggins, no protective order had ever been entered by the Court.

C. AAPS Cannot Rescind the Protective Order Merely Because Some of Its Members Are Also Members of the AMA.

Finally, AAPS asserts that the protective order should be rescinded because some of its members are also members of the AMA. AAPS Mot. at 2, 2. This argument is spurious. Notably, AAPS cites no authority for the proposition that overlapping membership gives one organization a special right to review documents or discovery belonging to another organization. For example, many lawyers in the Chicago area belong to both the Chicago Bar Association and the American Bar Association. That fact, however, does not entitle the CBA to review ABA files produced in litigation with a third party. Similarly, it would be ludicrous to suggest that Corporation A could obtain access to discovery materials produced by Corporation B simply because the two corporations have a few shareholders in common. And while the AMA has been extraordinarily open in discussing the Sunbeam transaction with its members, AMA members who want more information about this case have recourse through the procedures of the AMA's House of Delegates.

In sum, the request to rescind the protective order is not justified by the status of AAPS as a potential litigant in an unrelated case, by any "abuse or impropriety" in the entry or use of the protective order, or by the fact that some members of AAPS are also members of the AMA.

II. AAPS HAS NOT ALLEGED OR PROVEN ANY FACTS THAT WOULD JUSTIFY THE ISSUANCE OF AN INJUNCTION FORBIDDING THE DESTRUCTION OF DISCOVERY MATERIALS. As part of its request for relief, AAPS requests that the AMA be enjoined from destroying any of its discovery materials. AAPS Mot. at 11. AAPS does not cite a single case or other authority for the proposition that a non-party has standing to request injunctive relief against a party for the preservation of documents. The AMA has been unable to find any such authority.

Even if AAPS had standing to seek such relief-- and the AMA submits that it most definitely does not -- its motion should be denied. In cases where an actual party seeks the entry of a document preservation order, courts recognize that such an order "is, in reality, a form of Restraining Order," and that it may not be issued unless the usual requirements for injunctive relief, including irreparable harm in the absence of the order, are met. Pepsi-Cola Bottling Co. v. Cargill. Inc., 1995 WL 783610, at *3 (D. Minn. 1995) (citing Humble Oil & Refining Co. v. Harang, 262 F. Supp. 39, 42 (E.D. La. 1966)).

AAPS cannot satisfy these requirements. Most notably, it has not alleged that any documents that are relevant to the lawsuit that AAPS "may bring" are in imminent danger of destruction. It cannot do so in good faith. First, as discussed above, the discovery produced in this litigation is irrelevant to any issues AAPS might raise in its lawsuit. Second, contrary to the assertion that the protective order "allows and requires destruction of discovery materials upon settlement" (AAPS Mot. at 7, 12), the order only requires the parties to return or destroy confidential materials produced by the other side. The materials designated as confidential by the AMA may continue to exist in the AMA's files. But AAPS has offered absolutely no justification for the entry of an order requiring the AMA to maintain those records, upon penalty of contempt. Its motion should be denied.


For the foregoing reasons, the AMA requests that this Court deny the Motion of AAPS for Leave to Intervene, Motion to Rescind Protective Order, and Motion for Preservation of Discovery Materials.


By: Eric S. Mattson
One of Its Attorneys

Jack R. Bierig
David F. Graham
Eric S. Mattson
One First National Plaza
Chicago, IL 60603
(312) 853-7000

Dated: September 11, 1998


Eric S. Mattson, an attorney, hereby certifies that he caused copies of the foregoing Opposition of Defendant American Medical Association to Motion of the Association of American Physicians and Surgeons for Leave to Intervene, Motion to Rescind Confidentiality Order, and Motion for Preservation of Discovery Materials to be served on the following counsel via U.S. mail, first-class postage prepaid, on September 11, 1998:

Edward X. Clinton, Jr.
The Law Offices of Edward X. Clinton, P.C.
19 S. LaSalle St., Suite 1300 Chicago, IL 60603

Brent R. Austin
McDermott, Will & Emery
227 W. Monroe St.
Chicago, Illinois 60606