Caremark LLC v. USRC Pharmacy LLC

• Court: District Court, D. Arizona
• Decided: April 17, 2023
• Docket: 2:22-cv-02127
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Caremark, LLC, et al., No. CV-22-02127-PHX-GMS

10 Petitioners, ORDER

11 v.

12 USRC Pharmacy, LLC,

13 Respondent. 14 15 16 Pending before the Court is Petitioner Caremark, LLC (“Caremark”)’s Motion to 17 Seal This Case (Doc. 1). For the following reasons, the motion is granted in part and denied 18 in part. 19 BACKGROUND 20 This motion arises from a commercial arbitration between Caremark and USRC 21 Pharmacy, LLC (“USRC”). The arbiter ultimately entered an award in Caremark’s favor. 22 That award is attached to Caremark’s Application to Confirm Arbitration Award (Doc. 2). 23 Caremark seeks to file the award under seal pursuant to the parties’ arbitration agreement. 24 It also seeks to seal the entire case because filings will contain “trade secrets and other 25 confidential information” like “discussions of the metrics and statistical methodologies 26 Caremark uses to assess pharmacy performance,” which is “not publicly available and that 27 took Caremark a tremendous amount of time and effort to develop.” (Doc. 1 at 3.) 28 1 DISCUSSION 2 Courts review all motions to seal with a “strong presumption in favor of [public] 3 access.” Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006). 4 However, sources of business information should be sealed when its’ publication would 5 harm a party’s competitive standing. Fed. R. Civ. P. 26(c)(1)(G); Ctr. for Auto Safety v. 6 Chrysler Grp., LLC, 809 F.3d 1092, 1097 (9th Cir. 2016). But parties’ mere allegations 7 that disclosure would harm their competitive standing are insufficient to justify sealing 8 court records. Kamakana, 447 F.3d at 1179). Instead, movants must offer compelling 9 reasons that show disclosure would harm their competitive standing, for example, by 10 alleging that the underlying documents contain trade secrets. Nixon v. Warner Comms., 11 Inc., 435 U.S. 589, 598 (1978); see also TriQuint Semiconductor, Inc. v. Avago Techs. Ltd., 12 2011 WL 4947343, at *2 (D. Ariz. Oct. 18, 2011). 13 The parties’ Provider Manual, which governed the terms of their relationship, states 14 that “neither a party nor an arbitrator(s) may disclose the existence, content, or results of 15 any dispute or arbitration hereunder without the prior written consent of both parties.” 16 (Doc. 1 at 3.) In light of the “liberal federal policy favoring arbitration,” Moses H. Cone 17 Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983), and the Federal Arbitration 18 Act’s requirement that courts “enforce covered arbitration agreements according to their 19 terms,” Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 1412 (2019), Caremark’s motion to 20 seal will be granted in part. 21 However, the motion will be denied to the extent that it seeks to seal the entire case 22 because Caremark has failed to allege trade secrets, methodologies, or other metrics with 23 sufficient particularity. In Arizona, the existence of a trade secret “is a mixed question of 24 law and fact” that requires a movant to prove that the (1) underlying information is not 25 generally known or ascertainable and (2) retains economic value because it is unknown to 26 others, and (3) the owner has taken steps to maintain its secrecy. Physics, Materials, & 27 Applied Mathematics Research LLC v. Yeak, WL 2557398, at *5 (D. Ariz. 2021) (citing 28 Calisi v. Unified Financial Services, LLC, 302 P.3d 628 (Ariz. Ct. App. 2013)). And the 1 definition of a trade secret is expansive under Arizona law. Phoenix v. Ehmke, 197 Ariz. 2 144, 149 (Ct. App. 1999). Still, the owner of a trade secret must identify the secret with 3 sufficient particularity, especially where the matter is highly complex. Ctr. for Auto Safety 4 v. Goodyear Tire & Rubber Co., 247 Ariz. 567, 570 (Ct. App. 2019); see also InteliClear, 5 LLC v. ETC Global Holdings, Inc., 978 F.3d 653, 658 (9th Cir. 2020) (citing Imax Corp. 6 v. Cinema Technologies, Inc., 152 F.3d 1161, 1167 (9th Cir. 1998)). 7 Caremark has not pointed to any specific trade secrets or other economically 8 valuable information that merits sealing the entire case. Instead, it cites only non-binding 9 authority and makes broad statements that later filings might implicate information that 10 would be properly sealed. Further, the only in-district case Caremark cites to support its 11 motion, Republic of Kazakhstan v. Lawler, No. MC-19-00035-PHX-DWL, 2019 WL 12 6971667, at *1 (D. Ariz. Dec. 19, 2019), involved a much narrower request to seal than the 13 one at issue here. In Lawler, Judge Lanza granted motions to seal documents that 14 “complied with LRCiv 5.6(b)’s procedural requirement of ‘set[ting] forth a clear statement 15 of the facts and legal authority justifying the filing of the document under seal,’” and many 16 filings in Lawler were not completely sealed. Id. at *2. (“The redactions relate to 17 arguments made before the tribunal, findings of the tribunal, actions taken (or not taken) 18 by the tribunal. In some cases, the redactions are so minor that they do not interfere with 19 public understanding.”). Thus, Lawler does not provide compelling grounds to seal this 20 case. Instead, the weight of authority in this district has rejected Caremark’s arguments on 21 similar motions for essentially the same reasons cited above. See, e.g., Caremark LLC v. 22 AIDS Healthcare Found., No. CV-21-01913-PHX-DJH, 2022 WL 4267791, at *13 (D. 23 Ariz. Sept. 15, 2022) (finding Caremark had not satisfied the Kamakana burden on an 24 application to confirm an arbitration award and rejecting its request to seal the entire case); 25 Senderra Rx Partners, LLC v. CVS Health Corp., No. 2:19–cv–05816–SPL (D. Ariz.) 26 (same); Mission Wellness Pharmacy LLC v. Caremark LLC, No. CV-22-00967-PHX- 27 GMS, 2022 WL 17039205, at *5 (D. Ariz. Nov. 17, 2022) (same); Mission Wellness 28 Pharmacy v. Caremark New Jersey Specialty Pharmacy LLC, No. CV-22-00331-PHX- 1] DJH, 2022 WL 657399, at *2 (D. Ariz. Mar. 4, 2022) (same but on a petition enforcing an 2|| arbiter’s hearing subpoena). 3 CONCLUSION 4 Accordingly, 5 IT IS HEREBY ORDERED that Caremark’s Motion to Seal This Case (Doc. 1) is || GRANTED in part and DENIED in part. 7 1. The Motion is granted as to the Application to Confirm Arbitration Award 8 || (Doc. 2). 9 2. It is denied as to all other respects. 10 IT IS FURTHER ORDERED that Caremark shall file on the public docket its 11 || Application to Confirm Arbitration Award with exhibits, excluding Exhibits 1, 2, and 3. 12 IT IS FURTHER ORDERED that Caremark shall file under seal Exhibits 1, 2, 13} and 3 to its Application to Confirm Arbitration Award. 14 IT IS FURTHER ORDERED directing the Clerk of Court to unseal this case 15 || except as to the sealed documents mentioned above. Hereafter, the case will proceed 16]| unsealed subject to the Court’s approval of the parties’ future motions to seal. 17 Dated this 17th day of April, 2023. 18 - 19 A Whacrsay Fotos Micrrey 20 Chief United States District Judge 21 22 23 24 25 26 27 28

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