Demartini v. Microsoft Corporation

District Court, N.D. California·Decided June 26, 2023·No. 3:22-cv-08991·Unknown

Opinion

1 2 3 6 7 DANTE DEMARTINI, et al., Case No. 22-cv-08991-JSC

8 Plaintiffs, ORDER RE MOTIONS TO SEAL AND 9 v. DISCOVERY DISPUTE

10 MICROSOFT CORPORATION, Re: Dkt. Nos. 88, 89, 119, 133, 134, 161, 11 Defendant. 162, 167, 173, 185, 186

12 Before the Court are several party and non-party (“designating parties”) requests to seal 13 from public disclosure information designated as varying degrees of confidential, including 14 portions of Plaintiffs’ first amended complaint, portions of and exhibits to Plaintiffs’ motion for 15 preliminary injunction and related papers, portions of and exhibits to Microsoft’s motion to 16 dismiss, and portions of and an exhibit to parties’ joint letter brief. The Court rules on these 17 motions below. (Dkt. Nos. 88, 89, 119, 133, 134, 161, 162, 167, 173, 185.)1 Designating parties 18 are given notice they have 14 days from the date of this Order to respond to this Court’s denial 19 without prejudice of any portion of a document or exhibit that those parties believe should be 20 partially or wholly sealed due to compelling reasons in compliance with this Court’s local rules. 21 (See Dkt. Nos. 88, 133, 134.) This Court also addresses Plaintiffs’ request to undesignate “Exhibit 22 K” below. (Dkt. No. 186.) 24 There is a right of public access to judicial records and documents. Nixon v. Warner 25 Commc'ns, Inc., 435 U.S. 589, 597 (1978). In considering motions to seal, courts recognize that 26 “a strong presumption in favor of access is the starting point.” Kamakana v. City & County of 27 1 Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (cleaned up). Designating parties seeking to seal 2 judicial records relating to motions that are “more than tangentially related to the underlying cause 3 of action,” Ctr. for Auto Safety v. Chrysler Grp., 809 F.3d 1092, 1099 (9th Cir. 2016), bear the 4 burden of overcoming the presumption with “compelling reasons supported by specific factual 5 findings that outweigh the general history of access and the public policies favoring disclosure, 6 such as the public interest in understanding the judicial process,” Kamakana, 447 F.3d at 1178–79 7 (cleaned up). A court must identify “a compelling reason [to impose the restriction] and articulate 8 the factual basis for its ruling, without relying on hypothesis or conjecture.” Id. at 1179; see also 9 Ctr. for Auto Safety, 809 F.3d at 1097 (finding the court must “conscientiously balance the 10 competing interest of the public and the party who seeks to keep certain judicial records secret”) 11 (quoting Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). 12 In addition, designating parties moving to seal their own or another party’s materials must 13 comply with Civil Local Rule 79-5. The rule supplements the “compelling reasons” standard. 14 Scramoge Tech. Ltd. v. Apple, Inc., No. 22-cv-03041-JSC, 2023 WL 3168322, at *5 (N.D. Cal. 15 Apr. 17, 2023). Parties’ requests must be “narrowly tailored to seek sealing only of sealable 16 material.” Civil L.R. 79-5. Parties “must explore all reasonable alternatives to filing documents 17 under seal . . . and avoid wherever possible sealing entire documents.” Id. at 79-5(a). A request to 18 seal needs to include “a specific statement” with the reasons for keeping a document under seal 19 explaining the interests warranting sealing, the injury that will result without sealing, and why a 20 less restrictive alternative is not sufficient. Id. at 79-5(c)(1). Under Civil Local Rule 79-5(f), 21 parties seeking to seal documents designated confidential by another party or non-party must file a 22 statement or response in accordance with Civil Local Rule 79-5(c)(1). 23 A request to seal may be supported by compelling reasons if the documents or portions of 24 documents at issue are “sources of business information that might harm a litigant’s competitive 25 standing.” Ctr. for Auto Safety, 809 F.3d at 1097; see also Nixon, 435 U.S. at 598. “The mere fact 26 that the production of records may lead to a litigant’s embarrassment, incrimination, or exposure 27 to further litigation will not, without more, compel the court to seal its records.” Kamakana, 1 terms, details of confidential licensing negotiations, and business strategies” can be “compelling 2 reasons” to prevent competitors from leveraging this information to harm the designating parties 3 in future negotiations. See Exeltis USA Inc. v. First Databank, Inc., No. 17-cv-04810-HSG, 4 2020 WL 2838812, at *1 (N.D. Cal. 2020) (citation omitted); In re Qualcomm Litig., No. 3:17-cv- 5 0108-GPC-MDD, 2017 WL 5176922, at *2 (S.D. Cal. 2017). If publicly disclosing that 6 information would harm a designating party’s competitive standing and divulge terms of 7 confidential contracts or contract negotiations, compelling reasons may exist to seal that 8 information. See FTC v. Qualcomm Inc., No. 17-cv-00220-LHK, 2019 WL 95922, at *3 (N.D. 9 Cal. Jan. 3, 2019). 10 The Court balances the public’s understanding of the judicial process against such 11 confidential information within the context of the gravamen of this case, the alleged anti- 12 competitive effects of the Microsoft-Activision merger on Plaintiff recreational video gamers. See 13 Epic Games, Inc. v. Apple Inc., No. 4:20-cv-05640-YGR, 2021 WL 1925460, at *1 (N.D. Cal. 14 Apr. 30, 2021) (balancing confidentiality of third-party information “with the [c]ourt’s ultimate 15 resolution of the instant dispute which should be transparent in its analysis”); Ctr. for Auto Safety, 16 809 F.3d at 1097 (stating a court must balance the interests of the public against the party seeking 17 to seal judicial records). The Court also considers a more lenient approach when sealing non-party 18 information, but this distinction is not dispositive. See Epic Games, Inc., 2021 WL 1925460, at 19 *1. 20 Accordingly, the Court makes the following findings based upon the current state of the 21 record:2 23 A. Plaintiffs’ First Amended Complaint 24 A complaint is more than tangentially related to the underlying cause of action because it 25 forms the foundation of the lawsuit. See In re Yahoo! Inc. Customer Data Security Breach Litig., 26

27 2 Designating parties are advised that if the Court decides that certain now-sealed information is 1 No. 16-MD-02752-LHK, 2018 WL 9651897, at *2 (N.D. Cal. Jan. 3, 2018) (citing cases); Ctr. for 2 Auto Safety, 809 F.3d at 1099. Accordingly, this Court applies the “compelling reasons” standard 3 to Plaintiffs’ first amended complaint (“FAC”). Plaintiffs move to consider sealing material in 4 their FAC that Microsoft and Sony have designated as highly confidential and highly confidential 5 – outside counsel only, respectively. (Dkt. Nos. 88, 89.) 6 1. Microsoft’s Materials 7 Microsoft filed a statement and declaration modifying Plaintiffs’ motion which this Court 8 considers, but it is overbroad. (See Dkt. No. 114.) Microsoft requests to seal “sensitive business 9 information” from three categories: confidential contracts, business strategy, and competitive 10 analysis. (Id at 2.) For example, Microsoft requests redactions regarding Microsoft and 11 Activision’s competitive relationship or the value of Activision games to Microsoft given the 12 public merger, but this is important to understanding how the merger would affect competition and 13 it does not appear to reveal information that would damage Microsoft’s competitive position. 14 (See, e.g., Dkt. No.

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