Blum v. Merrill Lynch Pierce Fenner & Smith

A motion to intervene in a long-concluded case is not untimely when the purpose of the motion is to seek modification of a protective order; the order can be modified to prevent the destruction of documents relevant to pending litigation.

In 2003 Scott Blum sued Merrill Lynch for advice regarding an initial public offering of Buy.com in federal court. He alleged that he would have sold his shares for $500 million in 1999 were it not for the advice of Merrill Lynch. In 2005, the case was settled with a blanket protective order containing the term that all confidential documents be destroyed, including Blum’s deposition transcript. In 2009, Blum sued KPMG LLP in California state court, making similar allegations as against Merrill Lynch. KPMP requested a copy of the earlier transcript during discovery, however Blum refused. KPMG accidentally obtained a copy of this transcript, after which Blum moved to reopen the earlier case and enforce the protective order to destroy the transcript in KPMG’s possession, KPMG moved to intervene in that case to prevent the destruction. The district court granted the motions to reopen and intervene but denied the destruction of the transcript. The district court ordered that the transcript be placed into escrow and be available should a future party show that it is relevant to litigation. Blum appealed claiming that the motion to intervene was untimely and would unfairly prejudice him. The Ninth Circuit affirmed the district court and held that it did not abuse its discretion granting the motion to intervene. The panel held the motion was timely even though the underlying litigation was long over, because KPMG’s need to intervene did not arise until its suit, and was timely in relation to Blum’s motion to reopen. The panel further held that this would not prejudice Blum, since his previous litigation had concluded and a new protective order requiring KPMG to keep the transcript confidential could be available. Furthermore, the modification of the protective order was appropriate; in this case the enforcement of the protective order regarding a relevant document would be “Court-sanctioned destruction of evidence.” AFFIRMED.