Atlantic Wave Holdings, LLC v. Cyberlux Corporation

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ATLANTIC WAVE HOLDINGS, Case No.: 3:24-cv-00482-RBM-VET LLC; et. al., 12 ORDER DENYING DEFENDANT’S 13 Plaintiffs, MOTION TO FILE EXHIBIT A TO THE vs. DECLARATION OF MARK D. 14 SCHMIDT IN SUPPORT OF 15 CYBERLUX CORPORATION, DEFENDANT’S MOTION TO VACATE SISTER-STATE JUDGMENT UNDER 16 Defendant. SEAL 17 [Doc. 10] 18 19 20 On March 5, 2024, Plaintiffs Atlantic Wave Holdings, LLC and Secure Community, 21 LLC (“Plaintiffs”) filed an Application for the Entry of Judgment on Sister-State Judgment 22 in the Superior Court of California, County of San Diego (“San Diego Superior Court”). 23 (Doc. 1-5.) The same day, the San Diego Superior Court filed Judgment on the Sister-State 24 Judgment (“Sister-State Judgment”). (Doc. 1-9.) On March 11, 2024, Defendant Cyberlux 25 Corporation (“Defendant”) removed the Sister-State Judgment to this Court. (Doc. 1.) 26 On April 10, 2024, Defendant filed a Motion to Vacate the Sister-State Judgment 27 (“Motion to Vacate”) (Doc. 9) along with a Declaration of Mark D. Schmidt in Support of 28 Defendant’s Motion to Vacate (“Schmidt Declaration”) (Doc. 9-4). Defendant also filed a 1 Motion to File Exhibit A to the Schmidt Declaration Under Seal (“Motion to Seal”). (Doc. 2 10.) 3 In its Motion to Seal, Defendant explains that Exhibit A to the Schmidt Declaration 4 is a Confidential Settlement Agreement between the parties and that the Confidential 5 Settlement Agreement “contains robust contractual provisions that all ‘terms and 6 circumstances’ of the Confidential Settlement Agreement and all documents and 7 information disclosed in the Virginia Litigation shall not be disclosed to any other person, 8 and that any public disclosure of such information shall constitute a breach of the 9 Confidential Settlement Agreement.” (Id. at 3–4.) “Due to its confidentiality terms, 10 [Defendant] requests that the Confidential Settlement Agreement be sealed in full.” (Id. at 11 5.) 12 I. DISCUSSION 13 “[T]he courts of this country recognize a general right to inspect and copy public 14 records and documents, including judicial records and documents.” Nixon v. Warner 15 Commc’ns, Inc., 435 U.S. 589, 597 (1978). “Unless a particular court record is one 16 ‘traditionally kept secret,’ a ‘strong presumption in favor of access’ is the starting point.” 17 Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citing Foltz 18 v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). “The presumption 19 of access is ‘based on the need for federal courts … to have a measure of accountability 20 and for the public to have confidence in the administration of justice.’” Ctr. for Auto Safety 21 v. Chrysler Grp., LLC, 809 F.3d 1092, 1096 (9th Cir. 2016) (quoting United States v. 22 Amodeo, 71 F.3d 1044, 1048 (2d Cir. 1995)). 23 A party seeking to seal a judicial record bears the burden of overcoming the strong 24 presumption of public access. Foltz, 331 F.3d at 1135. The showing required to meet this 25 burden depends upon whether the documents to be sealed relate to a motion that is “more 26 than tangentially related to the merits of the case.” Ctr. for Auto Safety, 809 F.3d at 1102. 27 When the underlying motion is more than tangentially related to the merits, the 28 “compelling reasons” standard applies. Id. at 1096–98. Thus, “[t]o seal documents filed 1 in connection with a dispositive motion, such as motions to strike under California’s anti- 2 SLAPP statute, parties must show there are ‘compelling reasons’ for doing so.” Better 3 Meat Co. v. Emergy, Inc., Case No. 2:21-cv-02338-KJM-CKD, 2023 WL 316917, at *2 4 (E.D. Cal. Jan. 19, 2023). 5 “Trial courts have authority … to protect confidential settlement agreements.” 6 United Tactical Sys., LLC v. Real Action Paintball, Inc., No. 14-CV-04050-MEJ, 2015 WL 7 1534003, at *3, *5 (N.D. Cal. Apr. 2, 2015). However, “[p]roffering only the fact that the 8 parties agreed to keep the settlement agreement confidential is an insufficient basis for the 9 Court to seal a court record.” Gagliolo v. Kaweah Manor, Inc., Case No. 1:20-cv-01719- 10 NONE-SAB, 2021 WL 1549687, at *5 (E.D. Cal. Apr. 20, 2021) (applying the “compelling 11 reasons” standard); see also M.P. ex rel. Provins v. Lowe’s Cos., Inc., No. 2:11-cv-01985- 12 GEB-CKD, 2012 WL 1574801, at *2 (E.D. Cal. May 3, 2012) (“[T]he mere fact that the 13 parties’ agreement contains a confidentiality provision is an insufficient interest to 14 overcome the presumption that a court approved ... settlement agreement is a judicial 15 record, open to the public.”) (internal quotations omitted); Ambrosino v. Home Depot 16 U.S.A., Inc., Civil No. 11cv1319 L(MDD), 2014 WL 931780, at *2 (S.D. Cal. Mar. 10, 17 2014) (“[T]he parties contend that the agreement should be filed under seal because they 18 agree that it should be. This is woefully insufficient to meet the parties’ burden.”) 19 Here, Plaintiffs’ Motion to Vacate, currently pending before the Court, is dispositive; 20 therefore, the “compelling reasons” standard applies. See Kamakana, 447 F.3d at 1179; 21 Better Meat Co., 2023 WL 316917, at *2 (E.D. Cal. Jan. 19, 2023). However, the Court 22 finds that Defendants have not proffered “compelling reasons” to seal the Confidential 23 Settlement Agreement. As stated above, “[p]roffering only the fact that the parties agreed 24 to keep the settlement agreement confidential is an insufficient basis for the Court to seal 25 a court record.” Gagliolo, 2021 WL 1549687, at *5. Other than the Confidential 26 Settlement Agreement’s confidentiality clause, Defendants have not proffered any other 27 reasons the Confidential Settlement Agreement should be sealed. 28 1 II. CONCLUSION 2 Based on the foregoing, Defendants’ Motion is DENIED. Nevertheless, the Court 3 || will give the parties additional time to demonstrate “compelling reasons” why the 4 Confidential Settlement Agreement should be filed under seal. The Court ORDERS both 5 || parties to file supplemental briefing on this issue on or before July 12, 2024. 6 IT IS SO ORDERED. 7 ||DATE: July 10, 2024 et misls, Moitrygs 9 HON. RUTH BERMUBEZ MONTENEGRO UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4