Dec 172015

Court Denies Disqualified Attorney-Relator’s Motion to “Correct” His Noncompliance with a Protective Order

Scott D. Stein and Emily Van Wyck
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Earlier this year, we wrote about a case in which a district court disqualified an attorney, Donald Holmes, from serving as a relator based, in part, on his use of information in violation of a protective order in a related case in another district court.  See “Court Disqualifies Attorney Relator for Ethical Violations” (June 15, 2015).  With Holmes’s appeal of that decision pending in the Fifth Circuit, he filed a motion in the District Court for the District of Columbia—the court that originally issued the protective order that Holmes violated—requesting that the court sanction him $1,000 and modify the protective order to permit disclosure of the confidential information to the DOJ and the qui tam court.  The court characterized Holmes’s motion as “a likely attempt to show the Fifth Circuit that he has already been sanctioned by this Tribunal in the hopes of having the dismissal there overturned” but explained that it had no power to alter sanctions levied by another court.

Turning to the merits of Holmes’s motion, the district court noted that Holmes was the wrong party to file the motion.  Holmes’s client—not Holmes—was a party to the proceeding in which the protective order was issued, and Holmes had failed to seek permission to intervene in the matter for purpose of modifying the protective order.  Although that error alone would be sufficient to deny the motion, the court stated that even if proper procedures were followed, applying a “good cause” standard to the merits of the matter would result in the same outcome.  In balancing the interests of the parties, the court found that “Holmes’s interest in mitigating the consequences of his misconduct and proceeding as a relator in a qui tam action pales in comparison to the Navy’s interest in protecting the trade secrets of its contractors and the details of how it conducts business.”  As the Court noted, “Holmes’s conduct here is precisely what Rule 26(c) is designed to prevent.”

The court further explained that “[e]ven if the defense contractors did defraud the Navy, the Navy’s interest in protecting the integrity of its contract operations still prevails,” particularly given that the government still has the option of pursing its own FCA action against the contractor.  In denying Holmes’s motion, the court also scolded the attorney for claiming that he did not intend to use the confidential information in a qui tam action when he sought the documents on behalf of his client and that his noncompliance with the protective order was “inadvertent,” noting that the facts clearly showed otherwise.

This decision serves as a reminder that relators and their attorneys are not free to use or disclose information subject to a protective order in pursuing FCA claims based on their belief that the qui tam provisions of the FCA trump court orders.

The case is Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München v. Northop Grumman Risk Management Inc., No. 10-551 (JEB) (D.D.C. Dec. 9, 2015).  A copy of the district court’s opinion can be found here.

Scott D. Stein

Chicago

sstein@sidley.com

Emily Van Wyck

EmilyVanWyck@sidley.com

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