Unreported / Non-Citable
Background
KC Pharmaceuticals, Inc. filed suit on May 7, 2026 against The Hartford Steam Boiler Inspection and Insurance Company, The Hanover American Insurance Company, and Does 1 through 20 in the U.S. District Court for the Central District of California, Case No. 2:26-cv-06582-HDV (SKx). Gordon Rees Scully Mansukhani, LLP represents the two named insurer defendants, and Engstrom, Lipscomb & Lack represents plaintiff KC Pharmaceuticals.
On October 14, 2026, counsel for both sides signed a joint stipulation, and on October 15, 2026 the proposed joint stipulated protective order was filed as Document 15. The parties stipulated that discovery is likely to involve confidential, proprietary, or private information—including trade secrets and commercial, financial, and proprietary information—warranting special protection from public disclosure and from use for any purpose other than prosecuting the litigation.
The stipulation expressly acknowledges that the order does not confer blanket protections on all disclosures or responses to discovery; protection extends only to the limited information or items entitled to confidential treatment under applicable legal principles. It also provides that the order does not entitle the parties to file confidential information under seal, and that Civil Local Rule 79-5 sets forth the procedures and standards that apply when a party seeks permission to file material under seal.
The Court’s Holding
Magistrate Judge Steve Kim entered the order on October 15, 2026, stating that for good cause shown, it is so ordered. The order establishes procedures for designating material as CONFIDENTIAL, requires each designating party to limit designations to specific qualifying material, and prohibits mass, indiscriminate, or routinized designations, warning that clearly unjustified or improper designations may expose the designating party to sanctions.
The order permits use of protected material only for prosecuting, defending, or attempting to settle the action, and limits disclosure of CONFIDENTIAL material to enumerated categories: outside counsel of record and their staff; the receiving party's officers, directors, and employees (including House Counsel) as reasonably necessary; experts, professional vendors, jury consultants, and mock jurors who sign the Acknowledgment and Agreement to Be Bound; the court and its personnel; court reporters; document authors, recipients, and custodians; deposition witnesses under stated conditions; and mediators. It provides a challenge mechanism under Local Rule 37-1 et seq., places the burden of persuasion on the designating party, and requires challenged material to remain protected until the court rules.
The order provides that its terms do not extend beyond the commencement of trial, at which point previously confidential court-filed information becomes presumptively available to the public unless compelling reasons supported by specific factual findings justify otherwise, citing Kamakana v. City and County of Honolulu, 447 F.3d 1172 (9th Cir. 2006). After final disposition, receiving parties must return or destroy protected material within 60 days of a written request, subject to counsel's right to retain archival copies that remain subject to the order. Any violation may be punished by contempt proceedings or monetary sanctions.
Key Takeaways
- The court entered the parties' joint stipulated protective order, which governs all discovery material designated CONFIDENTIAL in this action, including trade secrets and commercial, financial, and proprietary information.
- Designating parties must exercise restraint and care; mass, indiscriminate, or routinized designations are prohibited and may expose the designating party to sanctions.
- Confidentiality challenges proceed under Local Rule 37-1 et seq., with the burden of persuasion on the designating party, and challenged material remains protected until the court rules.
- Protected material may be used only for the litigation and disclosed only to enumerated recipients, including outside counsel, necessary employees, experts and vendors who sign Exhibit A, the court, court reporters, document authors and custodians, deposition witnesses, and mediators.
- The order does not authorize filing under seal (Civil Local Rule 79-5 applies), its protections end at the commencement of trial, and after final disposition receiving parties must return or destroy protected material within 60 days of a written request, with counsel's archival copies remaining subject to the order.
Why It Matters
This stipulated protective order establishes the framework for handling confidential discovery material in the coverage litigation between KC Pharmaceuticals and its insurers. It balances the parties' interest in protecting trade secrets and proprietary business information against the public's presumptive right of access to court records, expressly incorporating the Ninth Circuit's distinction in Kamakana between the good-cause standard for discovery materials and the compelling-reasons standard for merits-related filings.
The order's detailed provisions on designation, challenge, disclosure, subpoenas in other litigation, non-party material, inadvertent production, and final disposition provide a comprehensive mechanism for managing confidential information throughout the litigation, while preserving the parties' rights to seek modification of the order and to object to discovery on grounds not addressed by it.