8 UNITED STATES DISTRICT COURT
9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION 11
12 STEPHEN HADLEY, et al., Case No. 16-CV-04955-LHK
13 Plaintiffs, ORDER GRANTING ADMINISTRATIVE MOTION TO 14 v. SEAL
15 KELLOGG SALES COMPANY, Re: Dkt. No. 312 16 Defendant. 17 18 On August 26, 2019, Defendant Kellogg Sales Company (“Kellogg”) filed an 19 administrative motion to file under seal portions of an exhibit submitted in connection with 20 Kellogg’s Motion to Decertify the Class, Kellogg’s Motion for Summary Judgment, and Kellogg’s 21 three Daubert motions. ECF No. 268-2; see ECF No. 302. Having reviewed Kellogg’s 22 submissions and the applicable sealing law, the Court GRANTS the instant administrative motion 23 to file under seal. 24 “Historically, courts have recognized a ‘general right to inspect and copy public records 25 and documents, including judicial records and documents.’” Kamakana v. City & Cnty. of 26 Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc’ns, Inc., 435 27 U.S. 589, 597 & n.7 (1978)). As the Ninth Circuit has explained, this is a “common law right,” 1 United States v. Doe, 870 F.3d 991, 996 (9th Cir. 2017), reflecting the American judicial system’s 2 longstanding commitment to “the open courtroom,” Oliner v. Kontrabecki, 745 F.3d 1024, 1025 3 (9th Cir. 2014). The public policy favoring public access to judicial proceedings applies equally 4 to court records because “court records often provide important, sometimes the only, bases or 5 explanations for a court’s decision.” Id. Accordingly, when considering a sealing request, “a 6 strong presumption in favor of access is the starting point.” Id. (internal quotation marks omitted). 7 To be precise, the strong presumption of access to judicial records applies fully to filings 8 that are “more than tangentially related to the underlying cause of action.” Ctr. for Auto Safety v. 9 Chrysler Grp., 809 F.3d 1092, 1099 (9th Cir. 2016). That presumption can only be overcome by a 10 showing of “compelling reasons” that “outweigh the general history of access and the public 11 policies favoring disclosure.” Kamakana, 447 F.3d at 1178 (internal quotation marks omitted). 12 The party seeking to seal a judicial record bears the burden of “articulat[ing] compelling reasons 13 supported by specific factual findings.” Id. (internal quotation marks omitted). Compelling 14 reasons justifying the sealing of court records generally exist “when such ‘court files might have 15 become a vehicle for improper purposes,’ such as the use of records to gratify private spite, 16 promote public scandal, circulate libelous statements, or release trade secrets.” Id. at 1179 17 (quoting Nixon, 435 U.S. at 598). By contrast, “[t]he mere fact that the production of records may 18 lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will not, without 19 more, compel the court to seal its records.” Id. at 1178–79. 20 However, the Ninth Circuit has “carved out an exception” to the presumption of access for 21 materials filed in connection with motions that are not “more than tangentially related to the 22 underlying cause of action.” Ctr. for Auto Safety, 809 F.3d at 1099. Because “the public has less 23 of a need for access” to documents that are “unrelated, or only tangentially related, to the 24 underlying cause of action,” parties moving to seal such documents need only meet the lower 25 “good cause” standard of Rule 26(c) of the Federal Rules of Civil Procedure. Kamakana, 447 26 F.3d at 1179. Still, the “good cause” standard requires a “particularized showing” that “specific 27 prejudice or harm will result” if the information is disclosed. Phillips ex rel. Estates of Byrd v. 1 Gen. Motors Corp., 307 F.3d 1206, 1210–11 (9th Cir. 2002) (citation omitted); see Fed. R. Civ. P. 2 26(c). “Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning” 3 will not suffice. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (citation 4 omitted). 5 The threshold question before the Court is what test to apply to Plaintiff’s motion—“the 6 presumptive ‘compelling reasons’ standard or the ‘good cause’ exception.” Ctr. for Auto Safety, 7 809 F.3d at 1097. The Ninth Circuit has held that the compelling reasons standard applies to 8 summary judgment motions, as well as Daubert motions “filed in connection with pending 9 summary judgment motions.” In re Midland Nat. Life Ins. Co. Annuity Sales Practices Litig., 686 10 F.3d 1115, 1120 (9th Cir. 2012). Moreover, as the Court explained in its August 12, 2019 sealing 11 order, the compelling reasons standard typically applies to a motion for class certification. ECF 12 No. 306 at 4. That is because “[a] class certification motion ‘generally involves considerations 13 that are enmeshed in the factual and legal issues comprising plaintiff’s cause of action,’ which 14 require a districts court to engage in a ‘rigorous analysis’ that ‘entail[s] some overlap with the 15 merits of the plaintiff’s underlying claims.’” McCurley v. Royal Seas Cruises, Inc., No. 17-CV- 16 00986-BAS-AGS, 2018 WL 3629945, at *2 (S.D. Cal. July 31, 2018) (quoting Wal-Mart Stores, 17 Inc. v. Dukes, 564 U.S. 338, 351, 352 (2011)). The Court therefore applies the compelling reasons 18 standard to the instant administrative motion to seal. 19 Plaintiff asserts that the exhibit at issue contains “proprietary” “information about how 20 Kellogg’s competitors have responded to proposed changes in nutrition labeling” that disclosure 21 of such information would cause Kellogg significant competitive harm. ECF No. 312. Applying 22 the compelling reasons standard, the Court finds that Kellogg has justified sealing this document. 23 The U.S. Supreme Court and the Ninth Circuit have both made clear that compelling 24 reasons exist to seal court records when the records “might be used . . . ‘as sources of business 25 information that might harm a litigant’s competitive standing.’” Ctr. for Auto Safety, 809 F.3d at 26 1097 (quoting Nixon, 435 U.S. at 598). Such business information includes, but is not limited to, 27 “trade secrets.” Kamakana, 447 F.3d at 1179. The Ninth Circuit has adopted the Restatement’s 1 definition of “trade secret,” Clark v. Bunker, 453 F.2d 1006, 1009 (9th Cir. 1972), which is “any 2 formula, pattern, device or compilation of information which is used in one’s business, and which 3 gives him an opportunity to obtain an advantage over competitors who do not know or use it,” 4 Restatement (First) of Torts § 757, cmt. b. For instance, “pricing terms, royalty rates, and 5 guaranteed minimum payment terms” of patent licensing agreements have been deemed sealable 6 trade secrets. In re Elec. Arts, Inc., 298 F. App’x 568, 569 (9th Cir. 2008). 7 Relevant here, the Federal Circuit has concluded that under Ninth Circuit law, “market 8 research reports” are appropriately sealable under the compelling reasons standard where those 9 reports “contain information that . . . competitors could not obtain anywhere else.” Apple Inc. v. 10 Samsung Elecs.
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8 UNITED STATES DISTRICT COURT
9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION 11
12 STEPHEN HADLEY, et al., Case No. 16-CV-04955-LHK
13 Plaintiffs, ORDER GRANTING ADMINISTRATIVE MOTION TO 14 v. SEAL
15 KELLOGG SALES COMPANY, Re: Dkt. No. 312 16 Defendant. 17 18 On August 26, 2019, Defendant Kellogg Sales Company (“Kellogg”) filed an 19 administrative motion to file under seal portions of an exhibit submitted in connection with 20 Kellogg’s Motion to Decertify the Class, Kellogg’s Motion for Summary Judgment, and Kellogg’s 21 three Daubert motions. ECF No. 268-2; see ECF No. 302. Having reviewed Kellogg’s 22 submissions and the applicable sealing law, the Court GRANTS the instant administrative motion 23 to file under seal. 24 “Historically, courts have recognized a ‘general right to inspect and copy public records 25 and documents, including judicial records and documents.’” Kamakana v. City & Cnty. of 26 Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc’ns, Inc., 435 27 U.S. 589, 597 & n.7 (1978)). As the Ninth Circuit has explained, this is a “common law right,” 1 United States v. Doe, 870 F.3d 991, 996 (9th Cir. 2017), reflecting the American judicial system’s 2 longstanding commitment to “the open courtroom,” Oliner v. Kontrabecki, 745 F.3d 1024, 1025 3 (9th Cir. 2014). The public policy favoring public access to judicial proceedings applies equally 4 to court records because “court records often provide important, sometimes the only, bases or 5 explanations for a court’s decision.” Id. Accordingly, when considering a sealing request, “a 6 strong presumption in favor of access is the starting point.” Id. (internal quotation marks omitted). 7 To be precise, the strong presumption of access to judicial records applies fully to filings 8 that are “more than tangentially related to the underlying cause of action.” Ctr. for Auto Safety v. 9 Chrysler Grp., 809 F.3d 1092, 1099 (9th Cir. 2016). That presumption can only be overcome by a 10 showing of “compelling reasons” that “outweigh the general history of access and the public 11 policies favoring disclosure.” Kamakana, 447 F.3d at 1178 (internal quotation marks omitted). 12 The party seeking to seal a judicial record bears the burden of “articulat[ing] compelling reasons 13 supported by specific factual findings.” Id. (internal quotation marks omitted). Compelling 14 reasons justifying the sealing of court records generally exist “when such ‘court files might have 15 become a vehicle for improper purposes,’ such as the use of records to gratify private spite, 16 promote public scandal, circulate libelous statements, or release trade secrets.” Id. at 1179 17 (quoting Nixon, 435 U.S. at 598). By contrast, “[t]he mere fact that the production of records may 18 lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will not, without 19 more, compel the court to seal its records.” Id. at 1178–79. 20 However, the Ninth Circuit has “carved out an exception” to the presumption of access for 21 materials filed in connection with motions that are not “more than tangentially related to the 22 underlying cause of action.” Ctr. for Auto Safety, 809 F.3d at 1099. Because “the public has less 23 of a need for access” to documents that are “unrelated, or only tangentially related, to the 24 underlying cause of action,” parties moving to seal such documents need only meet the lower 25 “good cause” standard of Rule 26(c) of the Federal Rules of Civil Procedure. Kamakana, 447 26 F.3d at 1179. Still, the “good cause” standard requires a “particularized showing” that “specific 27 prejudice or harm will result” if the information is disclosed. Phillips ex rel. Estates of Byrd v. 1 Gen. Motors Corp., 307 F.3d 1206, 1210–11 (9th Cir. 2002) (citation omitted); see Fed. R. Civ. P. 2 26(c). “Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning” 3 will not suffice. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (citation 4 omitted). 5 The threshold question before the Court is what test to apply to Plaintiff’s motion—“the 6 presumptive ‘compelling reasons’ standard or the ‘good cause’ exception.” Ctr. for Auto Safety, 7 809 F.3d at 1097. The Ninth Circuit has held that the compelling reasons standard applies to 8 summary judgment motions, as well as Daubert motions “filed in connection with pending 9 summary judgment motions.” In re Midland Nat. Life Ins. Co. Annuity Sales Practices Litig., 686 10 F.3d 1115, 1120 (9th Cir. 2012). Moreover, as the Court explained in its August 12, 2019 sealing 11 order, the compelling reasons standard typically applies to a motion for class certification. ECF 12 No. 306 at 4. That is because “[a] class certification motion ‘generally involves considerations 13 that are enmeshed in the factual and legal issues comprising plaintiff’s cause of action,’ which 14 require a districts court to engage in a ‘rigorous analysis’ that ‘entail[s] some overlap with the 15 merits of the plaintiff’s underlying claims.’” McCurley v. Royal Seas Cruises, Inc., No. 17-CV- 16 00986-BAS-AGS, 2018 WL 3629945, at *2 (S.D. Cal. July 31, 2018) (quoting Wal-Mart Stores, 17 Inc. v. Dukes, 564 U.S. 338, 351, 352 (2011)). The Court therefore applies the compelling reasons 18 standard to the instant administrative motion to seal. 19 Plaintiff asserts that the exhibit at issue contains “proprietary” “information about how 20 Kellogg’s competitors have responded to proposed changes in nutrition labeling” that disclosure 21 of such information would cause Kellogg significant competitive harm. ECF No. 312. Applying 22 the compelling reasons standard, the Court finds that Kellogg has justified sealing this document. 23 The U.S. Supreme Court and the Ninth Circuit have both made clear that compelling 24 reasons exist to seal court records when the records “might be used . . . ‘as sources of business 25 information that might harm a litigant’s competitive standing.’” Ctr. for Auto Safety, 809 F.3d at 26 1097 (quoting Nixon, 435 U.S. at 598). Such business information includes, but is not limited to, 27 “trade secrets.” Kamakana, 447 F.3d at 1179. The Ninth Circuit has adopted the Restatement’s 1 definition of “trade secret,” Clark v. Bunker, 453 F.2d 1006, 1009 (9th Cir. 1972), which is “any 2 formula, pattern, device or compilation of information which is used in one’s business, and which 3 gives him an opportunity to obtain an advantage over competitors who do not know or use it,” 4 Restatement (First) of Torts § 757, cmt. b. For instance, “pricing terms, royalty rates, and 5 guaranteed minimum payment terms” of patent licensing agreements have been deemed sealable 6 trade secrets. In re Elec. Arts, Inc., 298 F. App’x 568, 569 (9th Cir. 2008). 7 Relevant here, the Federal Circuit has concluded that under Ninth Circuit law, “market 8 research reports” are appropriately sealable under the compelling reasons standard where those 9 reports “contain information that . . . competitors could not obtain anywhere else.” Apple Inc. v. 10 Samsung Elecs. Co., 727 F.3d 1214, 1226, 1228 (Fed. Cir. 2013). As the Federal Circuit 11 explained, giving competitors access to reports that a litigant has spent time and energy 12 conducting would give would provide competitors “with an enormous benefit—to [the litigant’s] 13 detriment.” Id. Similarly, courts in this district have sealed internal reports that contain 14 “discussions of business strategy and competitive analyses.” Krieger v. Atheros Commc’ns, Inc., 15 No. 11-CV-00640-LHK, 2011 WL 2550831, at *1 (N.D. Cal. June 25, 2011) (sealing a 16 presentation that contained “discussions of business strategy and competitive analyses”); see also 17 Synchronoss Techs., Inc. v. Dropbox Inc., No. 16-CV-00119-HSG, 2018 WL 6002319, at *1 18 (N.D. Cal. Nov. 15, 2018) (approving the sealing of information that “prevent[s] competitors from 19 gaining insight into the parties’ business model and strategy”). 20 Here, the Court agrees that the exhibit reveals “information about Kellogg’s business 21 strategies and plans for future products.” Id. Kellogg has represented that it conducted the 22 relevant research and analysis internally, and that it keeps the exhibit at issue confidential. ECF 23 No. 312. Moreover, having reviewed the exhibit, the Court is satisfied that Kellogg has narrowly 24 tailored its request to include only information that would plausibly cause competitive harm. 25 Thus, the Court rules on the instant motions as follows: 26 Document Page/Line Ruling KELLOGG-036087 (ECF No. Page 9 GRANTED. 27 268-2) KELLOGG-036087 (ECF No. Page 10 GRANTED. 2 268-2) KELLOGG-036087 (ECF No. Page 14 GRANTED. 3 268-2) 4 KELLOGG-036087 (ECF No. Page 19 GRANTED. 268-2) 5 KELLOGG-036087 (ECF No. Page 20 GRANTED. 268-2) 6 || | KELLOGG-036087 (ECF No. Page 21 GRANTED. 4 268-2) 8 IT IS SO ORDERED.
9 10 Dated: December 12, 2019 HL K f 11 LUCY H. KOH 12 United States District Judge
© 15 16 & = 17
Z 18 19 20 21 22 23 24 25 26 27 28 Case No. 16-CV-04955-LHK