1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Discovery Land Company LLC, et al., No. CV-20-01541-PHX-ROS
10 Plaintiffs, ORDER
11 v.
12 Berkley Insurance Company, et al.,
13 Defendants. 14 15 On February 3, the Court denied Plaintiffs’ various motions to seal and ordered them 16 to file a Consolidated and Amended Motion to Seal. (Doc. 203). Plaintiffs did so, 17 withdrawing many of their requests and seeking to seal two categories of information: 18 documents and information regarding a third-party settlement agreement, and documents 19 and information regarding Plaintiffs’ ownership structure and financial information. (Doc. 20 204). Plaintiffs also withdrew their assertions of attorney-client privilege with respect to 21 the Jirehouse documents. (Doc. 204 at 4). 22 Defendants responded to Plaintiffs’ Consolidated and Amended Motion to Seal, 23 arguing most of the documents identified by Plaintiffs do not meet the “compelling 24 reasons” standard required to warrant permanent placement under seal. (Doc. 207). Rather, 25 Defendants argue only certain personal identifying information should be redacted, such 26 as bank account numbers and birthdates. (Doc. 207 at 15). For the reasons below, the Court 27 agrees with Defendants. Accordingly, Plaintiffs’ Amended and Consolidated Motion to 28 Seal will be granted in part and denied in part. 1 LEGAL STANDARD 2 While there is a strong presumption in favor of access to judicial records, the 3 public’s right of access to judicial records is not absolute. Kamakana v. City and Cnty. of 4 Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006). The Court may seal portions of a summary 5 judgment record where “compelling reasons supported by specific factual findings . . . 6 outweigh the general history of access and the public policies in favor of disclosure.” Id. 7 (quoting Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). 8 “Compelling reasons” to seal court records exist when those documents “might have 9 become a vehicle for improper purposes, such as the use of records to gratify private spite, 10 promote public scandal, circulate libelous statements, or release trade secrets.” Id. at 1179 11 (quotations and citations omitted). When documents that were once confidential are “made 12 part of a dispositive motion,” they “‘lose their status of being raw fruits of discovery’ and 13 no longer enjoy protected status ‘without some overriding interests in favor of keeping the 14 discovery documents under seal.’” Foltz, 331 F.3d at 1136 (quoting Rushford v. The New 15 Yorker Magazine, 846 F.2d 249, 252 (4th Cir. 1988)). Cf. Ctr. for Auto Safety v. Chrysler 16 Group, LLC, 809 F.3d 1092, 1098-99 (9th Cir. 2016) (denying mechanistic rule applying 17 one standard to dispositive motions and another to nondispositive ones but explaining the 18 focus is on whether “the motion at issue is more than tangentially related to the underlying 19 cause of action”). 20 DISCUSSION 21 I. Settlement Documents 22 Plaintiffs first seek to seal copies of the Dragonfly Settlement Agreement and 23 related deposition testimony, along with other documents and information related to 24 settlement agreements relevant to the Second Loss. Plaintiffs again argue the 25 confidentiality provisions within the settlement agreements weigh in favor of sealing. 26 Plaintiffs additionally argue that interests of international comity warrant sealing because 27 the settlement was entered into in a foreign jurisdiction. Lastly, Plaintiffs argue that the 28 settlement agreement is between two non-parties, and disclosure here would potentially 1 put Plaintiffs in breach of the agreements. Defendants argue, on the other hand, that 2 confidentiality provisions alone do not warrant sealing settlement agreements, and that 3 Plaintiffs have not provided enough factual information about the harm disclosure would 4 cause. Defendants also note exposure to liability is generally not a compelling reason to 5 seal. 6 Indeed, as already explained, “[n]umerous courts have found that an agreement to 7 keep a settlement agreement confidential, absent other considerations, ‘fails to satisfy the 8 “compelling reasons” standard for dispositive motions.’” Tapestry on Central 9 Condominium Ass’n v. Liberty Ins. Underwriters Inc., 2020 WL 5632140, at *2 (D. Ariz. 10 Sept. 21, 2020) (quoting Alcaide v. Thomas, No. CV-11-01162-JAT-JFM, 2015 WL 11 6087560, at *3 (D. Ariz. Oct. 16, 2015)); Eagle View Techs., Inc. v. Nearmap US, Inc., 12 2023 WL 121234, at *2 (D. Utah, Jan. 6, 2023) (“The Tenth Circuit has held a 13 confidentiality provision in a settlement agreement or contract is insufficient, on its own, 14 to warrant sealing.”). Additionally, “[t]he mere fact that the production of records may lead 15 to a litigant’s . . . exposure to further litigation will not, without more, compel the court to 16 seal its records.” Kamakana, 447 F.3d at 1179 (citing Foltz, 331 F.3d at 1136). Plaintiffs 17 have rehearsed the same arguments made in their initial motions to seal and thus have failed 18 to articulate compelling reasons to seal these documents. Additionally, Plaintiffs have in 19 fact already filed in the public record the principal document they now seek to seal. (Doc. 20 181-10). The Court will not order these documents to be sealed. 21 The following documents will not be filed under seal and must be re-filed in the 22 public record: Doc. 144-22; Doc. 143 ¶¶ 42-43; Doc. 142, 4:15-17, 21:4-10, 22:15-17; Doc. 23 159-9, Doc. 159-10 at 107:19-24; Doc. 159 ¶ 27; Doc. 158, 3:11-13; Doc. 186-3; Doc. 186, 24 ¶ 37:11-13; Doc. 188-3; Doc. 188, ¶ 27:14-19; Doc. 159-20 at 134:13-17, 135 19-23, 25 142:12-25, 143:1-10, 152:1, 153:7-25; Doc. 159, ¶¶ 58-63; Doc. 158, 5:10-15, 15:4-9; Doc. 26 188-2 at 129:12-18, 139:19-25, 146:1-19, 137:6-25; 138:1-18, 142:3-25, 153:7-24; Doc. 27 188-5; Doc. 188-6; Doc. 188-9; Doc. 188, ¶¶ 59-63; Doc. 185, 3:19-23, 16:25-17:22; Doc. 28 1 192, 11:2-6.1 2 II. Business and Financial Information 3 Plaintiffs seek to seal six categories of documents related to its structure and 4 operations. 5 A. Octopus Property Loan 6 Plaintiffs and Defendants both agree the copies of this document in the record 7 should be redacted with respect to birthdates. See Fed. R. Civ. P. 5.2(a)(2). The Court 8 agrees with respect to this personal identifying information. Defendants’ proposed 9 redactions will be ordered, as they remove all three birthdates in the document. (Doc. 207- 10 2). Plaintiffs’ proposed redactions are incomplete because they only redact one birthdate, 11 not all three. Thus, the following documents are to be filed under seal: Doc. 144-5; Doc. 12 155-4 at 14-18; Doc. 186-4 at 9-13; Doc. 188-7 at 10-14. 13 B. Operating Agreement Documents 14 Plaintiffs seek to redact two categories of information in their operating agreement 15 documents: (i) “false and out-of-date information” identifying a non-party as a lender to 16 Plaintiffs; and (ii) confidential wire and banking information of that nonparty. 17 i. Information Identifying Non-Party Lender 18 Plaintiffs argue the name of the third-party lender should be redacted because it 19 “would risk spreading incorrect information about TCD’s ownership interests.” However, 20 the putative rescission documents speak for themselves. Plaintiffs also argue compelling 21 reasons exist to redact “sensitive business information” like this.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Discovery Land Company LLC, et al., No. CV-20-01541-PHX-ROS
10 Plaintiffs, ORDER
11 v.
12 Berkley Insurance Company, et al.,
13 Defendants. 14 15 On February 3, the Court denied Plaintiffs’ various motions to seal and ordered them 16 to file a Consolidated and Amended Motion to Seal. (Doc. 203). Plaintiffs did so, 17 withdrawing many of their requests and seeking to seal two categories of information: 18 documents and information regarding a third-party settlement agreement, and documents 19 and information regarding Plaintiffs’ ownership structure and financial information. (Doc. 20 204). Plaintiffs also withdrew their assertions of attorney-client privilege with respect to 21 the Jirehouse documents. (Doc. 204 at 4). 22 Defendants responded to Plaintiffs’ Consolidated and Amended Motion to Seal, 23 arguing most of the documents identified by Plaintiffs do not meet the “compelling 24 reasons” standard required to warrant permanent placement under seal. (Doc. 207). Rather, 25 Defendants argue only certain personal identifying information should be redacted, such 26 as bank account numbers and birthdates. (Doc. 207 at 15). For the reasons below, the Court 27 agrees with Defendants. Accordingly, Plaintiffs’ Amended and Consolidated Motion to 28 Seal will be granted in part and denied in part. 1 LEGAL STANDARD 2 While there is a strong presumption in favor of access to judicial records, the 3 public’s right of access to judicial records is not absolute. Kamakana v. City and Cnty. of 4 Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006). The Court may seal portions of a summary 5 judgment record where “compelling reasons supported by specific factual findings . . . 6 outweigh the general history of access and the public policies in favor of disclosure.” Id. 7 (quoting Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). 8 “Compelling reasons” to seal court records exist when those documents “might have 9 become a vehicle for improper purposes, such as the use of records to gratify private spite, 10 promote public scandal, circulate libelous statements, or release trade secrets.” Id. at 1179 11 (quotations and citations omitted). When documents that were once confidential are “made 12 part of a dispositive motion,” they “‘lose their status of being raw fruits of discovery’ and 13 no longer enjoy protected status ‘without some overriding interests in favor of keeping the 14 discovery documents under seal.’” Foltz, 331 F.3d at 1136 (quoting Rushford v. The New 15 Yorker Magazine, 846 F.2d 249, 252 (4th Cir. 1988)). Cf. Ctr. for Auto Safety v. Chrysler 16 Group, LLC, 809 F.3d 1092, 1098-99 (9th Cir. 2016) (denying mechanistic rule applying 17 one standard to dispositive motions and another to nondispositive ones but explaining the 18 focus is on whether “the motion at issue is more than tangentially related to the underlying 19 cause of action”). 20 DISCUSSION 21 I. Settlement Documents 22 Plaintiffs first seek to seal copies of the Dragonfly Settlement Agreement and 23 related deposition testimony, along with other documents and information related to 24 settlement agreements relevant to the Second Loss. Plaintiffs again argue the 25 confidentiality provisions within the settlement agreements weigh in favor of sealing. 26 Plaintiffs additionally argue that interests of international comity warrant sealing because 27 the settlement was entered into in a foreign jurisdiction. Lastly, Plaintiffs argue that the 28 settlement agreement is between two non-parties, and disclosure here would potentially 1 put Plaintiffs in breach of the agreements. Defendants argue, on the other hand, that 2 confidentiality provisions alone do not warrant sealing settlement agreements, and that 3 Plaintiffs have not provided enough factual information about the harm disclosure would 4 cause. Defendants also note exposure to liability is generally not a compelling reason to 5 seal. 6 Indeed, as already explained, “[n]umerous courts have found that an agreement to 7 keep a settlement agreement confidential, absent other considerations, ‘fails to satisfy the 8 “compelling reasons” standard for dispositive motions.’” Tapestry on Central 9 Condominium Ass’n v. Liberty Ins. Underwriters Inc., 2020 WL 5632140, at *2 (D. Ariz. 10 Sept. 21, 2020) (quoting Alcaide v. Thomas, No. CV-11-01162-JAT-JFM, 2015 WL 11 6087560, at *3 (D. Ariz. Oct. 16, 2015)); Eagle View Techs., Inc. v. Nearmap US, Inc., 12 2023 WL 121234, at *2 (D. Utah, Jan. 6, 2023) (“The Tenth Circuit has held a 13 confidentiality provision in a settlement agreement or contract is insufficient, on its own, 14 to warrant sealing.”). Additionally, “[t]he mere fact that the production of records may lead 15 to a litigant’s . . . exposure to further litigation will not, without more, compel the court to 16 seal its records.” Kamakana, 447 F.3d at 1179 (citing Foltz, 331 F.3d at 1136). Plaintiffs 17 have rehearsed the same arguments made in their initial motions to seal and thus have failed 18 to articulate compelling reasons to seal these documents. Additionally, Plaintiffs have in 19 fact already filed in the public record the principal document they now seek to seal. (Doc. 20 181-10). The Court will not order these documents to be sealed. 21 The following documents will not be filed under seal and must be re-filed in the 22 public record: Doc. 144-22; Doc. 143 ¶¶ 42-43; Doc. 142, 4:15-17, 21:4-10, 22:15-17; Doc. 23 159-9, Doc. 159-10 at 107:19-24; Doc. 159 ¶ 27; Doc. 158, 3:11-13; Doc. 186-3; Doc. 186, 24 ¶ 37:11-13; Doc. 188-3; Doc. 188, ¶ 27:14-19; Doc. 159-20 at 134:13-17, 135 19-23, 25 142:12-25, 143:1-10, 152:1, 153:7-25; Doc. 159, ¶¶ 58-63; Doc. 158, 5:10-15, 15:4-9; Doc. 26 188-2 at 129:12-18, 139:19-25, 146:1-19, 137:6-25; 138:1-18, 142:3-25, 153:7-24; Doc. 27 188-5; Doc. 188-6; Doc. 188-9; Doc. 188, ¶¶ 59-63; Doc. 185, 3:19-23, 16:25-17:22; Doc. 28 1 192, 11:2-6.1 2 II. Business and Financial Information 3 Plaintiffs seek to seal six categories of documents related to its structure and 4 operations. 5 A. Octopus Property Loan 6 Plaintiffs and Defendants both agree the copies of this document in the record 7 should be redacted with respect to birthdates. See Fed. R. Civ. P. 5.2(a)(2). The Court 8 agrees with respect to this personal identifying information. Defendants’ proposed 9 redactions will be ordered, as they remove all three birthdates in the document. (Doc. 207- 10 2). Plaintiffs’ proposed redactions are incomplete because they only redact one birthdate, 11 not all three. Thus, the following documents are to be filed under seal: Doc. 144-5; Doc. 12 155-4 at 14-18; Doc. 186-4 at 9-13; Doc. 188-7 at 10-14. 13 B. Operating Agreement Documents 14 Plaintiffs seek to redact two categories of information in their operating agreement 15 documents: (i) “false and out-of-date information” identifying a non-party as a lender to 16 Plaintiffs; and (ii) confidential wire and banking information of that nonparty. 17 i. Information Identifying Non-Party Lender 18 Plaintiffs argue the name of the third-party lender should be redacted because it 19 “would risk spreading incorrect information about TCD’s ownership interests.” However, 20 the putative rescission documents speak for themselves. Plaintiffs also argue compelling 21 reasons exist to redact “sensitive business information” like this. But, as Defendants note, 22 Plaintiffs have not argued any specific facts to support their general claim that their 23 competitive standing would be harmed, nor does the Court see such a risk. See In re Elec. 24 Arts, Inc., 298 F. App’x 568, 569 (9th Cir. 2008); X One, Inc. v. Uber Techs., Inc., No. 16- 25 cv-06050-LHK, 2020 WL 718310, at *3 (N.D. Cal. Feb. 12, 2020). Additionally, the 26 identity of the non-party lender and its relationship to Plaintiffs has been the topic of media 27
28 1 For ease of reference, the Court refers to the docket entries where the relevant documents have previously been lodged throughout this order. 1 attention,2 and Plaintiffs have withdrawn their assertions of confidentiality for this same 2 information in other parts of the record,3 belying the notion that such information is 3 confidential. Accordingly, Plaintiffs’ motion will be denied with respect to these 4 documents. 5 The following documents will not be filed under seal and must be re-filed in the 6 public record: Doc. 144-11 at 285:12-14, 22-24, 286:15-17; Doc. 159-4 at 285:12-13, 22- 7 24, 285:15-17; Doc. 159, ¶¶ 17-18, 20; Doc. 158, 3:3-5, 9:10-14; Doc. 155-5 at 21, 23; 8 Doc. 175, ¶ 794 and SSOF ¶ 14; Doc. 174, 13:12-14 and 17-19; Doc. 188-2 at 86:16-24, 9 89:1-13; Doc. 188-2 at 16-20; Doc. 188-4 at 141:3-18, 155:5-20; Doc. 198, 9:10-20; Doc. 10 192, 9:17-21. 11 ii. Confidential Wire and Banking Information 12 Plaintiffs and Defendants agree some financial account information on this 13 document should be redacted. Plaintiffs seek redaction of the non-party lender’s name, but 14 as discussed above, Plaintiffs have not identified any compelling reasons to do so. 15 However, the Court agrees the financial account information, with the exception of the last 16 four digits, should be redacted. Fed. R. Civ. P. 5.2(a)(4). Defendants’ proposed redactions 17 will thus be adopted; Plaintiffs’ proposed redactions (filed at Doc. 204-6) are overbroad, 18 and the only redacted information on the document should be the account numbers. The 19 following document will thus be filed under seal: Doc. 176-5. 20 C. On Demand Loan Documents 21 Plaintiffs seek to redact copies of the On Demand Loan Note between the nonparty 22 lender and Plaintiffs. Plaintiffs seek to redact the identity of the lender, the principal, 23 amount, and interest rate on the loan. Plaintiffs argue disclosure “would cause harm to 24 Plaintiffs’ business model,” because it would harm potential future lenders from relying on 25 the confidence of their loans to Plaintiffs, which would harm Plaintiffs’ ability to pursue
26 2 See Doc. 207 at 3, n.4 (identifying media stories about the present dispute). 3 In Doc. 168, p. 3, Plaintiffs withdraw their confidentiality designation for Doc. 144-20, 27 which contains some of the information they now seek to redact, including the identity of the non-party lender. 28 4 Plaintiffs identify ¶ 70, but since that paragraph is in the public record already and not relevant to this issue, the Court assumes they meant ¶ 79. 1 new projects in the future. Defendants argue Plaintiffs have failed to show compelling 2 reasons to redact this information, because they provided only conclusory allegations of 3 harm, which do not suffice. Paul Johnson Drywall Inc. v. Sterling Grp. LP, 2021 WL 4 5218014, at *2 (D. Ariz. Oct. 19, 2021) (citing Oliner v. Kontrabecki, 745 F.3d 1024, 1026- 5 27 (9th Cir. 2014)). 6 The Court agrees with Defendants; the speculative and conclusory allegations of 7 harm do not constitute compelling reasons to seal portions of this document. As discussed 8 above, the identity of the non-party lender is publicly available, and Plaintiffs have 9 disclosed that information in other parts of the record here. There are no compelling reasons 10 to seal this information. 11 The following documents will not be filed under seal and must be re-filed in the 12 public record: Doc. 186-5 at 29; Doc. 188-1; Doc. 188-2 at 20; Doc. 143, ¶ 26; Doc. 142, 13 3:18; Doc. 159, ¶ 20. 14 D. Organizational Chart Documents 15 Plaintiffs next seek to redact various iterations of an organizational chart showing 16 the proposed structure for the Taymouth Castle project. Plaintiffs seek to redact the 17 ownership of DLE and DLC, the identity of the non-party lender, as well as potential 18 ownership percentages of persons involved in the Castle purchase. Plaintiffs argue such 19 information in the public record would harm their future projects because potential 20 investors would not want to risk having their identities or amounts of investments 21 disclosed. Defendants argue Plaintiffs have failed to demonstrate compelling reasons to 22 seal because they have again alleged only conclusory and speculative harm. 23 As above, the identity of the non-party lender is publicly available and otherwise 24 available on the docket. Plaintiffs’ argument that putative future lenders would not want to 25 risk their information becoming public is a red herring. Presumably, sophisticated 26 businesspeople are aware of the risks of litigation and the accompanying requirements of 27 discovery when they undertake business; there are no facts or unique circumstances to 28 support Plaintiffs’ allegations of particular harm from disclosure here. Plaintiffs have failed 1 to show compelling interests that warrant permanently sealing these documents. 2 The following documents will not be filed under seal and must be re-filed in the 3 public record: Doc. 186-1; Doc. 186-5 at 30-31; Doc. 186-6 at 69-70; Doc. 188-8. 4 E. Financial Documents 5 Plaintiffs seek to seal two documents in their entirety because of confidential 6 financial information. 7 First, Plaintiffs seek to seal Exhibit F, KH7 to Plaintiffs’ Response to BIC’s MSJ 8 (Doc. 186-2 at 10-11). The only reason they articulate is that this document “contains 9 financial information regarding the amounts wired to Jirehouse to facilitate the purchase of 10 the Taymouth Castle.” It is hard to understand how Plaintiffs believe they can demonstrate 11 a compelling reason to seal from this statement alone. Indeed, as Defendants argue in 12 response, the entire case is about the amounts wired to Jirehouse to facilitate the Castle 13 purchase. Plaintiffs have failed to articulate compelling reasons to seal this document. It 14 shall be re-filed in the public record. 15 Second, Plaintiffs seek to seal a document that contains the terms of a loan from 16 DLC to EAML, in the record twice as Exhibits Q, MM33 and R, SG45 to Plaintiffs’ 17 Response to BIC’s MSJ (Doc. 186-5 at 32-40; Doc. 186-6 at 60-68). Again, Plaintiffs only 18 assertion as to why sealing is appropriate is bare and insufficient: the document “contains 19 the terms of a loan to one of Jirehouse’s related entities, [EAML].” That is a fact about the 20 document; it does not suffice to demonstrate any compelling reasons to seal it. This 21 document shall be re-filed in the public record. 22 F. Jirehouse Insurance Letter 23 Lastly, Plaintiffs argue a letter to Jirehouse from its insurers’ attorneys relating to 24 claims arising out of the Taymouth Castle Transaction should be sealed in its entirety. 25 (Doc. 186-6 at 80-111). Plaintiffs argue the document “contains extensive information 26 related to the transaction that is directly relevant to Plaintiffs’ unresolved civil claim in 27 overseas litigation,” and that public disclosure here could result in a breach of their 28 confidentiality obligations abroad. This is not enough. Plaintiffs provided no authority to 1 || support their assertion that this Court must protect their interests abroad, nor have they || asserted facts that would allow this Court to assess their claims of harm from disclosure. || Additionally, it is already in the public record. (Doc. 181-16 at 11-42). Plaintiffs have failed 4|| to meet their burden to demonstrate compelling reasons to seal. This document must be re- 5 || filed in the public record. 6 Ill. New Filings 7 Because the previously filed summary judgment motions, responses, replies, and 8 || supporting papers were redacted or lodged under seal, the parties will be required to refile all those documents on the public docket consistent with the terms of this Order. To avoid || further confusion, however, each party will only be required to file a “Notice of Filing” 11 || accompanied by that party’s unredacted motions, responses, replies, and supporting papers. || Plaintiffs will then be required to file a renewed motion to seal, lodging only those 13 || documents identified as properly subject to seal. 14 Accordingly, 15 IT IS ORDERED Plaintiffs’ Consolidated and Amended Motion to Seal (Doc. 204) is GRANTED IN PART and DENIED IN PART. 17 IT IS FURTHER ORDERED the parties shall re-file their summary judgment 18 || motions and supporting papers on the public record with only the above-ordered redactions || by March 7, 2023. 20 IT IS FURTHER ORDERED no later than March 7, 2023, Plaintiffs shall file a || renewed motion to seal, lodging only the documents previously lodged under seal at the || following docket entries: Doc. 144-5; Doc. 155-4 at 14-18; Doc. 186-4 at 9-13; Doc. 188- 231} 7 at 10-14; Doc. 176-5. 24 Dated this 2nd day of March, 2023. fo ~~ = 25 — 26 Senior United States District Judge 28
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