Reputation.com, Inc. v. Mullarkey

• Court: District Court, N.D. California
• Decided: September 30, 2022
• Docket: 4:21-cv-07340
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 REPUTATION.COM, INC., Case No. 21-cv-07340-HSG

8 Plaintiff, ORDER GRANTING MOTION TO SEAL 9 v. Re: Dkt. No. 3 10 MICHAEL MULLARKEY, 11 Defendant.

12 13 Pending before the Court is Plaintiff Reputation.com, Inc.’s administrative motion to file 14 under seal portions of the complaint and an attached exhibit. See Dkt. No. 3. For the reasons 15 detailed below, the Court GRANTS the motion. 16 I. LEGAL STANDARD 17 Courts generally apply a “compelling reasons” standard when considering motions to seal 18 documents. Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010) (quoting Kamakana 19 v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006)). “This standard derives from the 20 common law right ‘to inspect and copy public records and documents, including judicial records 21 and documents.’” Id. (quoting Kamakana, 447 F.3d at 1178). “[A] strong presumption in favor of 22 access is the starting point.” Kamakana, 447 F.3d at 1178 (quotations omitted). To overcome this 23 strong presumption, the party seeking to seal a judicial record attached to a dispositive motion 24 must “articulate compelling reasons supported by specific factual findings that outweigh the 25 general history of access and the public policies favoring disclosure, such as the public interest in 26 understanding the judicial process” and “significant public events.” Id. at 1178–79 (quotations 27 omitted). “In general, ‘compelling reasons’ sufficient to outweigh the public’s interest in 1 vehicle for improper purposes,’ such as the use of records to gratify private spite, promote public 2 scandal, circulate libelous statements, or release trade secrets.” Id. at 1179 (quoting Nixon v. 3 Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978)). “The mere fact that the production of records 4 may lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will not, 5 without more, compel the court to seal its records.” Id. 6 Civil Local Rule 79-5 supplements the “compelling reasons” standard. The party seeking 7 to file under seal must submit “a request that establishes that the document, or portions thereof, are 8 privileged, protectable as a trade secret or otherwise entitled to protection under the law . . . . The 9 request must be narrowly tailored to seek sealing only of sealable material . . . .” Civil L.R. 79- 10 5(b). Courts have found that “confidential business information” in the form of “license 11 agreements, financial terms, details of confidential licensing negotiations, and business strategies” 12 satisfies the “compelling reasons” standard. See In re Qualcomm Litig., No. 3:17-cv-0108-GPC- 13 MDD, 2017 WL 5176922, at *2 (S.D. Cal. Nov. 8, 2017) (observing that sealing such information 14 “prevent[ed] competitors from gaining insight into the parties’ business model and strategy”); 15 Finisar Corp. v. Nistica, Inc., No. 13-cv-03345-BLF (JSC), 2015 WL 3988132, at *5 (N.D. Cal. 16 June 30, 2015). 17 Records attached to nondispositive motions must meet the lower “good cause” standard of 18 Rule 26(c) of the Federal Rules of Civil Procedure, as such records “are often unrelated, or only 19 tangentially related, to the underlying cause of action.” Id. at 1179–80 (quotations omitted). This 20 requires a “particularized showing” that “specific prejudice or harm will result” if the information 21 is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210–11 (9th 22 Cir. 2002); see also Fed. R. Civ. P. 26(c). “Broad allegations of harm, unsubstantiated by specific 23 examples of articulated reasoning” will not suffice. Beckman Indus., Inc. v. Int’l Ins. Co., 966 24 F.2d 470, 476 (9th Cir. 1992) (quotation omitted). 25 II. DISCUSSION 26 Plaintiff seeks to seal a merger agreement and excerpts of the agreement that are quoted in 27 the complaint. See Dkt. No. 3. Because the complaint is the pleading on which this action is 1 based, the Court applies the “compelling reasons” standard. See, e.g., Space Data Corp. v. 2 Alphabet Inc., No. 16-CV-03260-BLF, 2018 WL 10454862, at *2 (N.D. Cal. Aug. 31, 2018) 3 (finding compelling reasons standard governed motion to seal portions of the complaint); In re 4 NVIDIA Corp. Derivative Litig., No. C 06-06110 SBA, 2008 WL 1859067, at *3 (N.D. Cal. Apr. 5 23, 2008) (“While a complaint is not, per se, the actual pleading by which a suit may be disposed 6 of, it is the root, the foundation, the basis by which a suit arises and must be disposed of.”). 7 The Court did not rely on any of the documents that are the subject of the administrative 8 motion to seal because the parties resolved this action without the Court’s intervention. The 9 parties stipulated to dismiss this case three months after it was filed. Compare Dkt. No. 1, with 10 Dkt. No. 19. Thus, these documents are unrelated to the public’s understanding of the judicial 11 proceedings in this case, and the public’s interest in disclosure of these documents is minimal. See 12 In re iPhone Application Litig., No. 11-MD-02250-LHK, 2013 WL 12335013, at *2 (N.D. Cal. 13 Nov. 25, 2013) (“The public’s interest in accessing these documents is even further diminished in 14 light of the fact that the Court will not have occasion to rule on Plaintiffs’ Motion for Class 15 Certification.”). Additionally, the documents contain confidential business and financial 16 information relating to the terms of the acquisition. If public, the terms of the agreement could be 17 used against Plaintiff in future negotiations by potential acquirees or other entities competing 18 against Plaintiff for such opportunities. See Dkt. No. 3-1 at ¶ 4. 19 Accordingly, because the documents divulge confidential business and financial 20 information unrelated to the public’s understanding of the judicial proceedings in this action, the 21 Court finds that there is compelling reason to file the documents under seal. See Economus v. City 22 & Cty. of San Francisco, No. 18-CV-01071-HSG, 2019 WL 1483804, at *9 (N.D. Cal. Apr. 3, 23 2019) (finding compelling reason to seal because the sealing request divulges sensitive 24 information no longer related to the case); In re iPhone, 2013 WL 12335013 (same); Doe 25 v. City of San Diego, No. 12-CV-689-MMA-DHB, 2014 WL 1921742, at *4 (S.D. Cal. May 14, 26 2014) (exhibit’s disclosure of personal information and irrelevance to the matter are compelling 27 reasons to seal the exhibit). 1 Il. CONCLUSION 2 The Court GRANTS the motion. Pursuant to Civil Local Rule 79-5(g)(1), documents filed 3 under seal as to which the administrative motions are granted will remain under seal. 4 IT IS SO ORDERED. 5 Dated: 9/30/2022 ° HAYWOOD S. GILLIAM, JR. 7 United States District Judge 8 9 10 11 12

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