6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JEREMY L. KEATING ET AL., CASE NO. 3:15-cv-00057-L-AGS
12 Plaintiffs, ORDER DENYING 13 v. PLAINTIFFS’/COUNTER- DEFENDANTS’ MOTION TO SEAL 14 JOHN A. JASTREMSKI ET AL., (Doc. no. 438) 15 Defendants. 16
17 AND RELATED CROSS-ACTIONS.
19 Pending before the Court in this action alleging misappropriation of trade secrets 20 is an unopposed motion filed by Plaintiffs and Counter-Defendants Jeremy Keating, 21 Richard P. Gigliotti, and Alexander J. Mele (collectively, the “Keating Group”) to seal 22 portions of the Special Master’s report and recommendation. (Docs. no. 428, 440 23 (“Recommendation”).) For the reasons which follow, the motion is denied. 24 The Court appointed Hon. Ronald S. Prager (Ret.) as the Special Master 25 pursuant to Rule 53 of the Federal Rules of Civil Procedure (docs. no. 316, 323) to 26 prepare a report and recommendation on two motions for sanctions and related fee 27 applications. The subject of the Recommendation is the motion for terminating 28 1 Initially, Counter-Defendant Securities America, Inc. ("SAI") objected to the 2 filing of the Recommendation and requested sealing because the Recommendation 3 disclosed monetary terms of the settlement between SAI and Counterclaimant The 4 Retirement Group, LLC ("TRG"), reached during the pendency of the Special Master 5 proceedings (doc. no. 434). The Court construed the objection as a motion to seal the 6 Recommendation to the extent it disclosed monetary terms of the settlement with 7 respect to SAI as well as with respect to the Keating Group, who filed the instant 8 motion. (See doc. no. 437.) The Recommendation was sealed, and a redacted version 9 was filed for public view. (See docs. no. 437, 440.) Accordingly, to the extent the 10 Keating Group requests sealing the financial terms of the settlement, their motion is 11 denied without prejudice as moot. 12 The Keating Group further argues that the discussion of their conduct in the 13 Recommendation deprives them of the benefit of the settlement, which was reached 14 without admitting fault and included a confidentiality agreement. Specifically, they 15 maintain that the disclosure of their conduct prejudices their business reputation, and 16 contend sealing is warranted by Federal Rule of Civil Procedure 26(c) and Federal 17 Rule of Evidence 408. 18 Rule 408 precludes admissibility of settlement information to prove a claim or 19 impeach a witness but allows its admission for other purposes. Fed. R. Evid. 408. To 20 the extent the settlement is referenced in the Recommendation, as currently redacted 21 for public view, it is neither used to prove a claim nor impeach a witness, and the 22 discussion of the Keating Group’s conduct does not disclose any information related to 23 the settlement, such as its terms or the preceding negotiations. Instead, the 24 Recommendation references the settlement to explain that the Keating Group and SAI 25 are no longer parties to the case. Accordingly, Rule 408 precludes neither the 26 reference to the settlement nor the discussion of the Keating Group’s conduct, and 27 does not support sealing any part of the Recommendation. 28 1 Next, the Keating Group relies on a confidentiality agreement executed with the 2 settlement as a reason to seal the references to their conduct. Even if their private 3 confidentiality agreement stood on the same footing as a protective order, it would not 4 be sufficient to warrant sealing. That a document is designated confidential pursuant 5 to a stipulation is of little weight when it comes to sealing court filings. See San Jose 6 Mercury News, Inc. v. U.S. Dist. Ct.(Saldivar), 187 F.3d 1096, 1103 (9th Cir. 1999); 7 Beckman Indus. v. Int'l Ins. Co., 966 F.2d 470, 475-76 (9th Cir. 1992); Confederated 8 Tribes of Siletz Indians of Or. v. Weyerhaeuser Co., 340 F. Supp. 2d 1118, 1121 (D. 9 Or. 2003). 10 Finally, the Keating Group members maintain that referencing their conduct 11 reflects negatively on their business reputation, and that this establishes good cause for 12 sealing under Federal Rule of Civil Procedure 26(c). Sealing court records implicates 13 the "general right to inspect and copy public records and documents, including judicial 14 records and documents." Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 & n.7 15 (1978). The lack of opposition to the pending motion therefore does not automatically 16 resolve it. See Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1128, 1130 & passim 17 (9th Cir. 2003). 18 Aside from “grand jury transcripts and warrant materials in the midst of a pre- 19 indictment investigation,” a strong presumption applies in favor of public access to 20 judicial records. Kamakana v. City and County of Honolulu, 447 F.3d 1172, 1178 (9th 21 Cir. 2006). “A party seeking to seal a judicial record then bears the burden of 22 overcoming this strong presumption by meeting the ‘compelling reasons’ standard.” 23 Id. (citation omitted). "Despite this strong preference for public access," an exception 24 was carved out "for sealed materials attached to a discovery motion unrelated to the 25 merits of a case. Under this exception, a party need only satisfy the less exacting 'good 26 cause' standard" articulated in Rule 26(c)(1).” Center for Auto Safety v. Chrysler Grp. 27 LLC, 809 F.3d 1092, 1097 (9th Cir. 2016) (citations omitted). 28 1 The Keating Group assumes that the less exacting good cause standard applies 2 to its motion. The good cause standard is an exception, rather than the rule in the area 3 of court-filed documents. Kamakana, 447 F.3d at 1179. The applicable standard 4 “turn[s] on whether the motion is more than tangentially related to the merits of a 5 case.” Center for Auto Safety, 809 F.3d at 1101. As is apparent on the face of the 6 Recommendation, the motion for terminating sanctions is more than tangentially 7 related to the merits of this case. Furthermore, underlying the strong presumption in 8 favor of public access to judicial records is the public interest in understanding the 9 judicial process. See id. at 1096. The dispositive nature of the motion for terminating 10 sanctions therefore also counsels against applying the good cause standard. 11 To meet the compelling reasons standard, the requesting party 12 must articulate compelling reasons supported by specific factual findings 13 that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process. 14 In turn, the court must conscientiously balance the competing interests of 15 the public and the party who seeks to keep certain judicial records secret.
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6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JEREMY L. KEATING ET AL., CASE NO. 3:15-cv-00057-L-AGS
12 Plaintiffs, ORDER DENYING 13 v. PLAINTIFFS’/COUNTER- DEFENDANTS’ MOTION TO SEAL 14 JOHN A. JASTREMSKI ET AL., (Doc. no. 438) 15 Defendants. 16
17 AND RELATED CROSS-ACTIONS.
19 Pending before the Court in this action alleging misappropriation of trade secrets 20 is an unopposed motion filed by Plaintiffs and Counter-Defendants Jeremy Keating, 21 Richard P. Gigliotti, and Alexander J. Mele (collectively, the “Keating Group”) to seal 22 portions of the Special Master’s report and recommendation. (Docs. no. 428, 440 23 (“Recommendation”).) For the reasons which follow, the motion is denied. 24 The Court appointed Hon. Ronald S. Prager (Ret.) as the Special Master 25 pursuant to Rule 53 of the Federal Rules of Civil Procedure (docs. no. 316, 323) to 26 prepare a report and recommendation on two motions for sanctions and related fee 27 applications. The subject of the Recommendation is the motion for terminating 28 1 Initially, Counter-Defendant Securities America, Inc. ("SAI") objected to the 2 filing of the Recommendation and requested sealing because the Recommendation 3 disclosed monetary terms of the settlement between SAI and Counterclaimant The 4 Retirement Group, LLC ("TRG"), reached during the pendency of the Special Master 5 proceedings (doc. no. 434). The Court construed the objection as a motion to seal the 6 Recommendation to the extent it disclosed monetary terms of the settlement with 7 respect to SAI as well as with respect to the Keating Group, who filed the instant 8 motion. (See doc. no. 437.) The Recommendation was sealed, and a redacted version 9 was filed for public view. (See docs. no. 437, 440.) Accordingly, to the extent the 10 Keating Group requests sealing the financial terms of the settlement, their motion is 11 denied without prejudice as moot. 12 The Keating Group further argues that the discussion of their conduct in the 13 Recommendation deprives them of the benefit of the settlement, which was reached 14 without admitting fault and included a confidentiality agreement. Specifically, they 15 maintain that the disclosure of their conduct prejudices their business reputation, and 16 contend sealing is warranted by Federal Rule of Civil Procedure 26(c) and Federal 17 Rule of Evidence 408. 18 Rule 408 precludes admissibility of settlement information to prove a claim or 19 impeach a witness but allows its admission for other purposes. Fed. R. Evid. 408. To 20 the extent the settlement is referenced in the Recommendation, as currently redacted 21 for public view, it is neither used to prove a claim nor impeach a witness, and the 22 discussion of the Keating Group’s conduct does not disclose any information related to 23 the settlement, such as its terms or the preceding negotiations. Instead, the 24 Recommendation references the settlement to explain that the Keating Group and SAI 25 are no longer parties to the case. Accordingly, Rule 408 precludes neither the 26 reference to the settlement nor the discussion of the Keating Group’s conduct, and 27 does not support sealing any part of the Recommendation. 28 1 Next, the Keating Group relies on a confidentiality agreement executed with the 2 settlement as a reason to seal the references to their conduct. Even if their private 3 confidentiality agreement stood on the same footing as a protective order, it would not 4 be sufficient to warrant sealing. That a document is designated confidential pursuant 5 to a stipulation is of little weight when it comes to sealing court filings. See San Jose 6 Mercury News, Inc. v. U.S. Dist. Ct.(Saldivar), 187 F.3d 1096, 1103 (9th Cir. 1999); 7 Beckman Indus. v. Int'l Ins. Co., 966 F.2d 470, 475-76 (9th Cir. 1992); Confederated 8 Tribes of Siletz Indians of Or. v. Weyerhaeuser Co., 340 F. Supp. 2d 1118, 1121 (D. 9 Or. 2003). 10 Finally, the Keating Group members maintain that referencing their conduct 11 reflects negatively on their business reputation, and that this establishes good cause for 12 sealing under Federal Rule of Civil Procedure 26(c). Sealing court records implicates 13 the "general right to inspect and copy public records and documents, including judicial 14 records and documents." Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 & n.7 15 (1978). The lack of opposition to the pending motion therefore does not automatically 16 resolve it. See Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1128, 1130 & passim 17 (9th Cir. 2003). 18 Aside from “grand jury transcripts and warrant materials in the midst of a pre- 19 indictment investigation,” a strong presumption applies in favor of public access to 20 judicial records. Kamakana v. City and County of Honolulu, 447 F.3d 1172, 1178 (9th 21 Cir. 2006). “A party seeking to seal a judicial record then bears the burden of 22 overcoming this strong presumption by meeting the ‘compelling reasons’ standard.” 23 Id. (citation omitted). "Despite this strong preference for public access," an exception 24 was carved out "for sealed materials attached to a discovery motion unrelated to the 25 merits of a case. Under this exception, a party need only satisfy the less exacting 'good 26 cause' standard" articulated in Rule 26(c)(1).” Center for Auto Safety v. Chrysler Grp. 27 LLC, 809 F.3d 1092, 1097 (9th Cir. 2016) (citations omitted). 28 1 The Keating Group assumes that the less exacting good cause standard applies 2 to its motion. The good cause standard is an exception, rather than the rule in the area 3 of court-filed documents. Kamakana, 447 F.3d at 1179. The applicable standard 4 “turn[s] on whether the motion is more than tangentially related to the merits of a 5 case.” Center for Auto Safety, 809 F.3d at 1101. As is apparent on the face of the 6 Recommendation, the motion for terminating sanctions is more than tangentially 7 related to the merits of this case. Furthermore, underlying the strong presumption in 8 favor of public access to judicial records is the public interest in understanding the 9 judicial process. See id. at 1096. The dispositive nature of the motion for terminating 10 sanctions therefore also counsels against applying the good cause standard. 11 To meet the compelling reasons standard, the requesting party 12 must articulate compelling reasons supported by specific factual findings 13 that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process. 14 In turn, the court must conscientiously balance the competing interests of 15 the public and the party who seeks to keep certain judicial records secret. After considering these interests, if the court decides to seal certain judicial 16 records, it must base its decision on a compelling reason and articulate the 17 factual basis for its ruling, without relying on hypothesis or conjecture.
18 In general, “compelling reasons” sufficient to outweigh the public's interest 19 in disclosure and justify sealing court records exist when such court files might have become a vehicle for improper purposes, such as the use of 20 records to gratify private spite, promote public scandal, circulate libelous 21 statements, or release trade secrets. The mere fact that the production of records may lead to a litigant's embarrassment, incrimination, or exposure 22 to further litigation will not, without more, compel the court to seal its 23 records.
25 Kamakana, 447 F.3d at 1178-79 (internal quotation marks, brackets and citations 26 omitted). The Keating Group’s argument that the discussion of their involvement 27 prejudices their business reputation is insufficient to meet the compelling reasons 28 standard. 1 For the foregoing reasons, the motion to seal filed by the Keating Group is 2 || denied. 3 IT IS SO ORDERED. 4 5 || Dated: April 9, 2020
7 H . James Lorenz g United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28