Wednesday, November 26, 2008
Court Upholds Sanctions Over Misfiled Sealed Document
By SHERRI M. OKAMOTO, Staff Writer
The Third District Court of Appeal yesterday upheld sanctions of $43,678.42 against Granite Bay attorney Joanna Mendoza and her clients for violating a protective order by disclosing information contained in a document which purported to have been filed under seal, but was inadvertently placed in the court’s public file.
The court ruled that the protective order applied to the document which was mistakenly made public, regardless of whether it actually contained trade secrets.
PHL Associates Inc. filed the declaration of its attorney, Tory E. Griffin, in the Yolo Superior Court with attachments containing what PHL alleged were trade secrets in the course of a long-running dispute between PHL and its former employee, Dale Wallis, who was represented by Mendoza.
The cover of the declaration stated that it was filed under seal, contained confidential information, and was not to be displayed or revealed to anyone except by order of the court. The bottom of each page of the declaration identified the document as the “Declaration of Tory E. Griffin In Support of Opposition to Motion for Reconsideration (Filed Under Seal).”
But after the documents were filed, they were placed in a file available to the public, where Mendoza subsequently discovered them.
Mendoza testified that she advised her client about the public availability of the documents because the State Bar ethics hotline had advised her that she had a “paramount” duty to tell her clients about the public availability of the alleged trade secrets and to advise them concerning the legal effect of such disclosure on the status of the information.
Eventually, various individuals and a copy service all viewed the declaration and attachments before PHL discovered the documents had not been maintained under seal.
A discovery referee ascribed no fault or responsibility to PHL for the disclosure of the documents, and recommended the trial court issue an order sealing the documents. Yolo Superior Court Judge David Rosenberg adopted the findings, and granted PHL’s motion for sanctions.
Rosenberg found that Mendoza and her clients had ignored the protective order’s procedures for declassifying confidential documents, knew that the documents were intended to be confidential, and engaged in a scheme of using third parties to view the documents in order to secure a finding that PHL had waived the alleged trade secrets.
However, Justice George Nicholson explained on appeal that the totality of the circumstances surrounding the declaration and its attachments “made it clear, and would have made it clear to any reasonable attorney, that the declaration was filed under seal,” adding that no reasonable attorney could have believed that PHL’s prior waivers of confidentiality in unsealed filings would justify a conclusion that the alleged trade secrets in the Griffin declaration and attachments had been waived.
Although he acknowledged that PHL made some “minor deviations from the requirements of the protective order for a confidential filing,” Nicholson wrote that denying PHL the protection of the protective order because it did not mark some of the pages as confidential would be an unreasonably strict application of the order’s requirements, and that substantial compliance with the order was sufficient to obtain the order’s protection.
“If Mendoza truly thought that the failure of PHL’s counsel to conform to the protective order’s requirements denied confidentiality to the Griffin declaration, her remedy was to bring the issue to the attention of the court and have the court make the determination,” the jurist concluded.
Nicholson also rejected Mendoza’s claim that she had informed PHL of the disclosure and the company had failed to act, noting that Mendoza’s comment in a memorandum of points and authorities soon after the filing of the Griffin declaration, stating that PHL had “put all of PHL’s alleged trade secrets on display for the world to see,” was not effective notice of the public availability of the Griffin declaration in the court file.
Even if the alleged trade secrets attached to the declaration and attachments lost their secret status because they were revealed to the public in the court’s file, Nicholson reasoned, Mendoza violated the protective order by informing her clients and indirectly informing others of the accessibility of the documents because the protective order applied regardless of whether the documents actually contained trade secrets.
The panel also rejected Mendoza’s argument that her phone call to the State Bar ethics hotline should demonstrate her good faith and shield her from sanctions.
“[I]t is clear to us, as it must have been to the trial court, that Mendoza did not discuss with the person at the ethics hotline the requirements of the protective order, which Mendoza was bound to obey,” Nicholson wrote.
Presiding Justice Arthur G. Scotland and Justice Harry Hull joined Nicholson in his opinion.
Mendoza tearfully told the MetNews the court’s decision was “heart-breaking to see,” and that she plans to appeal because she believed “very passionately, they got it wrong.”
The attorney claimed the court “did not state the facts correctly,” ignoring her testimony that she had informed PHL several times of the disclosure, and that she had informed the ethics hotline about the protective order when she consulted the resource.
“I did not act until I had looked into it as fully as I possibly could,” she said. “All I did was advise my clients as I was advised by the ethics hotline to do.”
While Mendoza said she thinks the hotline’s advice was correct, she opined that the court’s decision “seems to add a new requirement” with which she said the hotline had specifically disagreed: a duty to explicitly advise PHL of the disclosure.
“Does this mean our duty to our clients is now trumped by a duty owed to the opposing party and their attorneys?” she asked. “That is certainly how this feels, because that is the side the court came down on.”
William R. Warne of Downey Brand, who represented PHL with Tory E. Griffin, opined that the court “properly performed its function in this case and issued a decision that is well reasoned.”
“We’re happy with the decision and I’m going to leave it at that.”
The case is Wallis v. PHL Associates, Inc., 08 S.O.S 6413.
Copyright 2008, Metropolitan News Company