United States District Court, W.D. Washington, Seattle
S. ZILLY UNITED STATES DISTRICT JUDGE.
MATTER comes before the Court on (i) a motion, docket no.
115, brought by Brian Wright and Sound Product Sales L.L.C.
(collectively, “Sound Product”), to confirm the
arbitral award issued on June 23, 2017, docket no. 101-3;
(ii) a motion, docket no. 107, brought by Brian Wright, Sound
Product Sales L.L.C., Hydro-Blok USA, LLC, and Hydroblok
International Ltd. (collectively, “Hydro-Blok”),
for an order to show cause why wedi Corp. and its attorneys
should not be held in contempt for violating the Stipulated
Protective Order, docket no. 41; and (iii) a motion, docket
no. 119, filed by wedi Corp. concerning whether its response
to Hydro-Blok's motion, as well as its supporting
declaration and exhibits, should remain under seal. Having
reviewed all papers filed in support of, and in opposition
to, each motion, the Court enters the following order.
Confirming the Arbitral Award
to agreements between wedi Corp. (“wedi”) and
Sound Product, docket nos. 101-1 & 101-2, the parties
were directed to arbitrate wedi's breach of contract,
breach of fiduciary duty, civil conspiracy, and unjust
enrichment claims against Sound Product. See Order
(docket no. 26); see also Am. Compl. at Counts I-IV
(docket no. 17). The parties also arbitrated wedi's
allegation that Sound Product violated Washington's
Uniform Trade Secrets Act, which had been pleaded as a
counterclaim in this matter. See Am. Counterclaims
at Count VII (docket no. 64). The arbitrator found against
wedi and in favor of Sound Product on all claims other than
breach of contract; on the contract claim, the arbitrator
awarded to wedi only nominal damages of $1.00. See
Award (docket no. 101-3). The arbitrator denied wedi's
request for attorneys' fees, concluding that the
“fair and just result is to leave the parties where
they stand.” Id. (docket no. 101-3 at 17). The
arbitrator further indicated that Sound Product had waived
its ability to recover attorneys' fees against wedi.
Id. (docket no. 101-3 at 5). On Sound Product's
motion, the Court struck this portion of the arbitral award.
See Order (docket no. 111).
Product now seeks to confirm the arbitral award, as modified.
In response, wedi does not dispute the propriety of
confirming the arbitral award pursuant to the Federal
Arbitration Act, see 9 U.S.C. § 9, but it takes
issue with the form of Sound Product's proposed order,
docket no. 115-1. The Court declines to adopt Sound
Product's proposed form of order, but otherwise GRANTS
the motion to confirm the arbitral award. Seeing no just
reason for delay, see Fed.R.Civ.P. 54(b), the Court
will enter an appropriate partial judgment.
Violating the Stipulated Protective Order
to the parties' stipulation, the Court entered a
protective order in this case that tracks the district's
model order. See Stip. Prot. Order (docket no. 41);
see also Local Civil Rule 26(c)(2). The Stipulated
Protective Order provides that a party receiving confidential
material from another party may use it “only for
prosecuting, defending, or attempting to settle this
litigation.” Stip. Prot. Order at ¶ 4.1 (docket
no. 41). In addition, a party receiving confidential material
must confer with the party designating the material as
confidential before filing, discussing, or referencing such
material in court filings. Id. at ¶ 4.3.
Hydro-Blok alleges that wedi and its attorneys violated these
provisions of the Stipulated Protective Order by filing a
complaint in the Northern District of Illinois against
Seattle Glass Block Window, Inc. (“Seattle
Glass”), another entity owned by Brian Wright, which
contained or referenced confidential material received by
wedi in this matter. The complaint against Seattle Glass was
filed on September 1, 2017, see Ex. A to Anable
Decl. (docket no. 108-1), and it remained available for
public view until October 2, 2017, when it was temporarily
sealed on wedi's motion. See Notification of
Docket Entry (N.D. Ill. Case No. 1:17-cv-6368, docket no.
13). A motion is currently pending in the Northern District
of Illinois to dismiss for lack of personal jurisdiction and
improper venue or, in the alternative, to transfer the case
to this district.
response to Hydro-Blok's motion for an order to show
cause why wedi and its attorneys should not be held in
contempt, wedi argues that the complaint against Seattle
Glass does not use or disclose material designated
confidential by Hydro-Blok, but instead relies on wedi's
own information, some of which Brian Wright, on behalf of
Seattle Glass, allegedly improperly disclosed to wedi's
competitors. The Court is not persuaded by wedi's
analysis. In several paragraphs of the complaint against
Seattle Glass, the key factual assertions are based on
confidential documents disclosed by Hydro-Blok in this case.
Compare wedi's Am. Counterclaims at ¶¶
69, 74, & 77 (docket no. 52-1) with Compl. at
¶¶ 30, 42, 45, & 46, Ex. A to Anable Decl.
(docket no. 108-1); see also Minute Order at ¶
4 (docket no. 63). Although the sales and other substantive
information contained in the Hydro-Blok material might have
actually belonged to wedi, the fact that Brian Wright
forwarded such data to others was learned only from the
disclosures made in this matter pursuant to the Stipulated
Protective Order. Thus, wedi and its counsel were precluded
by the Stipulated Protective Order from using such evidence
to craft a pleading in a different proceeding.
Stipulated Protective Order would not, however, have
prevented wedi from relying on confidential material
disclosed in this matter to join Seattle Glass as a party in
this action, and the real issue here is not that wedi asserts
claims against Seattle Glass, but rather that it has done so
in the Northern District of Illinois. Given that Brian
Wright, a resident of Washington, is already a party in this
litigation, and that Seattle Glass is a Washington
corporation, see Ex. A to Anable Decl. (docket no.
108-1), wedi's behavior appears to be sheer forum
shopping. The Court disapproves of such gamesmanship, but
also recognizes that, if wedi's allegations have any
truth to them, the Hydro-Blok entities and Seattle Glass do
not have entirely clean hands.
wedi has violated the Stipulated Protective Order, the Court
is not convinced that Hydro-Blok's proposed remedy of
forcing wedi's attorneys to withdraw is appropriate, and
the Court declines to do so. The Court DEFERS ruling on
whether wedi and its lawyers were “substantially
justified” in their position, see Fed.R.Civ.P.
26(c)(3) & 37(a)(5)(A)(ii), or whether Hydro-Blok should
be awarded attorney's fees and costs in connection with
its motion and/or with the litigation in the Northern
District of Illinois, until after the remaining claims and
counterclaims in this matter are resolved. If the pending
action against Seattle Glass is transferred from the Northern
District of Illinois to this district, it shall be treated as
related to this case, and the parties shall file the
requisite notice of related case. See Local Civil
in connection with Hydro-Blok's motion to show cause,
wedi filed its response, docket no. 120, and supporting
declaration, docket no. 121, under seal, wedi contends that,
with a few exceptions, these documents should be available
for public view. See Reply at 1 & n.1 (docket
no. 127) (agreeing that Exhibits 3 & 5-11 to the
supporting declaration should remain ...