Reputation.com, Inc. v. Mullarkey

Opinion

REPUTATION.COM, INC., Case No. 21-cv-07340-HSG

Plaintiff, ORDER GRANTING MOTION TO SEAL v. Re: Dkt. No. 3 Defendant.

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

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