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In re Northshore University Healthsystem

November 26, 2008


The opinion of the court was delivered by: Magistrate Judge Morton Denlow

This Document Relates To: All parties.


This matter concerns Plaintiffs' request for production of all documents received from non-parties by Defendant, NorthShore University HealthSystem, f/k/a Evanston Northwestern Healthcare Corp. ("ENH"), and produced in discovery to the Federal Trade Commission ("FTC") in connection with an earlier FTC administrative proceeding. Paintiffs seek production by ENH of these non-party documents subject to a protective order Judge Lefkow entered earlier in this proceeding ("Stipulated Protective Order"). Dkt. 93 (6/12/08).*fn1 On August 7, 2008, this Court, being aware that the non-parties did not participate in drafting the Stipulated Protective Order, entered an order giving them the opportunity to object. Dkt. 132. The large majority of non-parties made no objection and their documents were produced subject to the Stipulated Protective Order. Eight non-parties objected ("Objecting Non-Parties").*fn2 During the course of the oral argument on October 29, 2008, the Plaintiffs, ENH and the Objecting Non-Parties consented to a revised protective order entitled Additional Stipulated Protective Order Governing Confidential Information of Objecting Third Parties ("Additional Order"), under which ENH would produce all of the Objecting Non-Parties' documents. Dkt. 225 (11/21/08).

The Court writes this opinion to address the necessity of protective orders when non-party confidential commercial documents are sought in discovery and the role of non-parties in the protective order process. Under the circumstances presented, the Objecting Non-Parties have demonstrated good cause for adopting the Additional Order because they were not present during the crafting of the original Stipulated Protective Order, the documents to be produced contain confidential commercial information, the current Stipulated Protective Order does not adequately protect this information, and the Additional Order does not offend the public interest in open proceedings. Accordingly, the Court enters the Additional Order to govern the documents produced by the Objecting Non-Parties to ENH in the FTC proceeding and directs ENH to produce the Objecting Non-Parties' documents to Plaintiffs. As a point of clarity, this Additional Order only applies to the Objecting Non-Parties' documents. The Stipulated Protective Order applies to the documents from the other non-parties who chose not to object.


The Plaintiffs in this putative class action are individuals and entities who purchased inpatient and outpatient healthcare services directly from ENH from January 1, 2000 through the present. Dkt. 1. ENH delivers health care services to the public through its wholly owned hospitals, Evanston Hospital, Glenbrook Hospital and Highland Park Hospital. Id. Plaintiffs' complaint alleges that ENH violated Section 2 of the Sherman Act. Id.; 15 U.S.C. § 2.

Prior to the filing of the present lawsuit, ENH was involved in an administrative proceeding before the FTC. See In the Matter of Evanston Northwestern Healthcare Corporation, 2005 US FTC 9315 (hereinafter "FTC Action"). In the course of the FTC Action, ENH subpoenaed documents from multiple non-parties, including, among others: Vista Health Systems ("Vista"), St. Alexius Hospital ("St. Alexius"), Blue Cross Blue Shield of Illinois ("BCBSI"), Swedish Covenant Hospital ("Swedish"), Humana, Inc ("Humana"), Unicare Healthcare Plans of the Midwest, Inc. ("Unicare"), Private Healthcare System, Inc. ('Private")*fn3 and Interplan Health Group, Inc. f/k/a the Chandler Group of Companies ("Interplan"). With varying degrees of specificity, these Objecting Non-Parties alleged in briefs filed with this Court that these documents contained confidential and proprietary contracts, contractual amendments, documents containing negotiation strategy, pricing analyses and strategy, and, in some cases, confidential patient information. Dkt. 139, 161, 163, 171, 173, 174, 189, 200.

On March 24, 2004, a Protective Order was entered governing the treatment of discovery materials during the FTC action. Dkt. 139-3, Ex. 4. On January 26, 2005, the FTC granted in camera treatment to all non-parties' documents for a period of ten years. Dkt. 139-3, Ex. 5. The protective order specified that the non-parties had shown good cause because disclosure of the documents would result in a clearly defined, serious injury to the person or corporation whose records were involved. Id. The FTC protective order stated, however, that a producing party (i.e., any party that produced documents to the FTC whether a party or non-party) had the burden to assert any objection to production of documents pursuant to a discovery request in another proceeding.*fn4 Dkt. 139-3, Ex. 4.

In the present matter, District Judge Joan H. Lefkow entered the Stipulated Protective Order on June 12, 2008. Dkt. 93. The Stipulated Protective Order pertained to "all documents (hardcopy, electronic format or otherwise), testimony, written responses to discovery and all other information in whatever form produced or given by any party or third party in this action which is designated under the terms of this Stipulated Protective Order." Id.

While both the Plaintiffs and ENH stipulated to the order, the non-parties were not involved in its drafting. Plaintiffs moved to compel the production by ENH of the non-party documents produced in the FTC proceeding. ENH objected. On August 7, 2008, this Court entered an Agreed Order requiring a copy of the Agreed Order and the Stipulated Protective Order to be sent to all non-parties who produced documents in the FTC Action. Dkt. 132. The Order granted interested non-parties the opportunity to object to the production of their documents. Id.

Each of the Objecting Non-Parties timely submitted an objection to ENH's production of their documents. BCBSI, St. Alexius, Vista, Swedish, and Interplan claimed their documents were not relevant because their operations never concerned ENH, nor was ENH ever consulted. Dkt. 139, 161, 163, 171 and 189. Id. Moreover, several alleged their documents were not relevant because their hospitals were not within the relevant geographic area alleged in Plaintiffs' Complaint. Id.

In addition, Humana, Unicare and Private contended the Stipulated Protective Order was inadequate to protect their confidential documents from disclosure to competitors or subscribing hospitals. Dkt. 173, 174 and 200. These non-parties described how paragraph nine of the Stipulated Protective Order permitted deposition witnesses-who could potentially be competitors or subscribing hospitals-to review their confidential documents even if they failed to consent to the Stipulated Protective Order. These non-parties were concerned that such unbridled disclosure would be costly in future negotiations and would destroy their competitive advantage.

In the course of the October 29 oral argument, the parties and the Objecting Non-Parties reached an agreement as reflected in the Additional Order. The need to strike a balance between the Plaintiffs' evidentiary needs and the Objecting Non-Parties' fears of disclosure to competitors and hospitals served as the impetus for the agreement. At oral argument, Plaintiffs explained that their experts required the Objecting Non-Parties' commercial information to create a control group by which they could compare ENH's business practices. The Objecting Non-Parties responded that given the potential breadth of the class, it was likely that competitors and subscribing hospitals would become privy to their confidential information. The Court found both of these interests to be legitimate. Consequently, to enable Plaintiffs to perform their ...

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