3D Systems, Inc. v. Wynne

District Court, S.D. California·Decided March 14, 2024·No. 3:21-cv-01141·Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 3D SYSTEMS, INC., Case No.: 21-cv-1141-AGS-DDL

12 Plaintiff, ORDER: 13 v. (1) GRANTING DEFENDANTS’ 14 MOTION TO SEAL EXHIBITS BEN WYNNE, et al., 15 2 & 4 Defendants. 16 and 17 (2) GRANTING PLAINTIFF’S 18 MOTION TO SEAL EXHIBIT 19 E

20 [Dkt. Nos. 292, 301] 21

22 23 I. 24 INTRODUCTION 25 Before the Court are Defendants’ Motion to Consider Whether Plaintiff’s 26 Documents/Material Should Be Sealed (“Defendants’ Motion to Seal”) [Dkt. No. 292] 27 regarding two exhibits filed in support of Defendants’ Motion to Compel and Motion for 28 Sanctions and Plaintiff’s Motion to Consider Whether Materials Should Be Sealed [Dkt. 1 No. 301] regarding one exhibit submitted in support of its opposition to Defendants’ 2 Motion to Compel and Motion for Sanctions (“Plaintiff’s Motion to Seal”). 3 For the reasons set forth herein, the Court GRANTS Defendants’ Motion to Seal at 4 Dkt. No 292, and further GRANTS Plaintiff’s Motion to Seal at Dkt. No 301. 5 Notwithstanding that compelling reasons exist to seal certain information in the parties’ 6 exhibits, the parties must narrowly tailor the material to be sealed by redacting the material 7 and re-filing the exhibits on the public docket. 8 II. 9 LEGAL STANDARDS 10 The public enjoys “a general right to inspect and copy public records and documents, 11 including judicial records and documents.” Nixon v. Warner Commc’ns, Inc., 435 U.S. 12 589, 597 (1978). When evaluating a request to seal judicial records, courts in this Circuit 13 start with “a ‘strong presumption in favor of access’” to those records. Kamakana v. City 14 & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citation omitted). The party 15 requesting sealing bears the burden of overcoming this strong presumption. Id. The 16 showing required depends upon whether the underlying motion is “closely related” to the 17 merits of the case—in which case the party must demonstrate “compelling reasons” to 18 seal—or is only “tangentially related” to them, which requires a less demanding showing 19 of “good cause.” See Ctr. for Auto Safety v. Chrysler Group, LLC, 809 F.3d 1092, 1097 20 (9th Cir. 2016). 21 III. 22 DISCUSSION 23 A. The “Compelling Reasons” Standard Applies 24 In determining which standard should govern a request to seal judicial records, the 25 Ninth Circuit cautions against adopting a “bright line rule” that would employ the 26 “compelling reasons” standard only where the underlying motion is “technically 27 dispositive.” Ctr. for Auto Safety, 809 F.3d at 1101-02. Here, the Court finds that 28 Defendants’ Motion to Compel and Motion for Sanctions (“Motion for Sanctions”) is 1 “more than tangentially related to the merits of [the] case,” id. at 1102. First, the Motion 2 for Sanctions (which the Court has denied) was based, in part, on Defendants’ contention 3 that Plaintiff spoliated evidence related to Plaintiff’s 2017 investigation of the individual 4 Defendants’ departure from their employment at 3D Systems, Inc., and that such evidence 5 was relevant to, and potentially dispositive of, Defendants’ statute of limitations defense 6 against Plaintiff’s misappropriation of trade secrets claim. See generally, Dkt. No. 294 at 7 6-12. Second, Defendants sought relief in the form of terminating and monetary sanctions. 8 See Keating v. Jastremski, No. 3:15-cv-00057-L-AGS, 2020 WL 1813549, at *2 (S.D. Cal. 9 Apr. 9, 2020) (analyzing motion to seal records related to motion for terminating sanctions 10 under compelling reasons standard because “the motion for terminating sanctions is more 11 than tangentially related to the merits of this case. . . . The dispositive nature of the motion 12 for terminating sanctions therefore also counsels against applying the good cause 13 standard”); see also Charles v. Target Corp., No. 20-CV-07854-HSG, 2022 WL 3205047, 14 at *3 (N.D. Cal. July 6, 2022) (applying compelling reasons standard to motion for 15 spoliation sanctions). As such, the Court applies the “compelling reasons” standard to both 16 motions to seal. 17 A party may meet that standard through a showing, supported by specific facts, that 18 the records at issue could “‘become a vehicle for improper purposes’” if not kept 19 confidential. Kamakana, 447 F.3d at 1179 (citation omitted). See Charles, 2022 WL 20 3205047, at *2 (listing examples of compelling reasons to justify sealing, “such as the use 21 of records to gratify private spite, promote public scandal, circulate libelous statements, or 22 release trade secrets”). The Court must then “balance the competing interests of the public 23 and the party seeking to seal judicial records.” In re Midland Nat. Life Ins. Co. Annuity 24 Sales Prac. Litig., 686 F.3d 1115, 1119 (9th Cir. 2012) (citation omitted). 25 B. Defendants’ Motion to Seal (Dkt. No. 292) 26 Defendants move to seal Exhibits 2 and 4 to the Declaration of Jeffrey J. Catalano 27 in Support of Defendants’ Motion to Compel and Motion for Sanctions, both of which 28 / / / 1 contain documents that were “produced and designated as CONFIDENTIAL pursuant to 2 the Stipulated Protective Order.” Dkt. No. 292 at 2. 3 Plaintiff filed a joinder in Defendants’ Motion to Seal. Dkt. No. 298. In the joinder, 4 Plaintiff categorized the documents in three groups as follows: (1) “emails that . . . contain 5 information related to 3DS’s customers and vendors, both of which have been identified as 6 3DS’s trade secret information in this case,” (2) “emails that . . . contain information about 7 the tools 3DS uses to develop its technology, and contains the email address and telephone 8 number of a third party, Win Childers,” and (3) “an email chain and an attachment 9 that . . . include URLs that were presumably used in connection with 3DS and file pathways 10 indicating where documents may be located on company servers.”1 Id. at 2-3. 11 1. Plaintiff’s Trade Secret Customer and Vendor Information 12 Plaintiff contends that certain emails in Exhibit 4 “include the identity of a 3DS 13 customer combined with sufficient information for a competitor to identify 3DS’s vendor 14 related to 3DS’s Figure 4 technology,” and that taken together, the information “is 15 confidential and competitive information of 3DS that it would not want in the public 16 domain.” Dkt. No. 298 at 4. In further support of its joinder in the motion to seal, Plaintiff 17 describes several measures it takes to maintain the secrecy of its customer and vendor 18 information, including limitations on access to the physical workspace and computer 19 system; mandatory confidentiality agreements for employees and mandatory non- 20 disclosure agreements for existing and prospective customer and vendors; established 21 policies for encryption, data storage, and acceptable uses of Plaintiff’s information 22 technology systems; and limited sharing of trade secret information solely to those on a 23 need-to-know basis. See id. at 4. 24 25 26 1 In its joinder, Plaintiff references specific ranges of Bates numbers. The record 27 before the Court reflects that the following Bates numbers were not included in the sealed exhibits lodged by Defendants at Dkt. No. 293: 3DSCORP_000046, 3DSCORP_000067, 28 1 As the Kamakana court explained, the potential disclosure of trade secrets is an 2 improper purpose sufficient to satisfy the “compelling reasons” standard to seal a court 3 record. See Kamakana, 447 F.3d at 1179 (“In general, ‘compelling reasons’ sufficient to 4 outweigh the public’s interest in disclosure and justify sealing court records exist when 5 such ‘court files might have become a vehicle for improper purposes,’ such as the use of 6 records to . . .

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