Gloria Basaraba v. Robert Greenberg et al
Filing
13
MINUTES (IN CHAMBERS): Order DENYING Plaintiff's application to file Complaint under seal by Judge Philip S. Gutierrez: For the reasons set forth above, Plaintiff's application to file the Complaint under seal is DENIED. The Clerk is direct ed to RETURN the Complaint to Plaintiff. Plaintiff is directed to file an operative complaint within 10 days of this Order. If Plaintiff does not file such a complaint, this case will be administratively closed.denying 1 Application to Seal (bp)
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 13-5061 PSG (SHx)
Title
Gloria Basaraba v. Robert Greenberg, et al.
Present:
Date
August 26, 2013
The Honorable Philip S. Gutierrez, United States District Judge
Wendy K. Hernandez
Deputy Clerk
Not Present
Court Reporter
Attorneys Present for Plaintiff(s):
n/a
Tape No.
Attorneys Present for Defendant(s):
Not Present
Not Present
Proceedings: (In Chambers) Order DENYING Plaintiff’s application to file
Complaint under seal
Before the Court is Plaintiff Gloria Basaraba’s application to file her Verified Shareholder
Derivative Complaint (“Complaint”) under seal. See Dkt. # 1. The Court finds this matter
appropriate for decision without oral argument. See Fed. R. Civ. P. 78(b); L.R. 7-15. After
considering Plaintiff’s unopposed submission, the Court DENIES Plaintiff’s application.
I.
Introduction
Plaintiff Gloria Basaraba (“Plaintiff”) brings this shareholder derivative action against
Defendants Robert Greenberg, Michael Greenberg, Jeffrey Greenberg, David Weinberg, Jennifer
Weiderman,1 Richard Siskind, Geyer Kosinski, Morton Erlich, Richard A. Rappaport, and
Thomas Walsh (collectively, the “Individual Defendants”), and nominal defendant Skechers
U.S.A., Inc. (“Skechers”), claiming that the Individual Defendants breached their fiduciary
duties to Skechers’ shareholders by, among other things, marketing Skechers’ “Shape-ups” line
of rocker-bottom shoes under the false pretense that “Shape-ups” would improve their wearers’
physical fitness. Compl. ¶¶ 1-17. Plaintiff asserts causes of action for: (1) breach of fiduciary
duty; (2) gross mismanagement; (3) waste of corporate assets; and (4) unjust enrichment. Id. ¶¶
203-229.
On July 15, 2013, Plaintiff submitted an application to file her entire Complaint under
seal, pursuant to Federal Rule of Civil Procedure 5.2(d) and Local Rule 79-5.1. See Dkt. # 1.
1
Plaintiff has dismissed Jennifer Weiderman as a Defendant. See Dkt. # 10.
CV-90 (06/04)
CIVIL MINUTES - GENERAL
Page 1 of 4
O
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 13-5061 PSG (SHx)
Title
Date
August 26, 2013
Gloria Basaraba v. Robert Greenberg, et al.
Plaintiff states that her application “is being made to comply with the parties’ Confidentiality
Agreement,” Application 2:5-2:6, which counsel for Plaintiff and counsel for Skechers executed
after Plaintiff demanded access to certain Skechers books, records, and company documents,
including “certain of [Skechers’] Board of Director minutes, Audit Committee Minutes, Board
materials, and promotional materials related to Skechers’ ‘Footware Toning’ products.” Id. 3:23:10. The Confidentiality Agreement (the “Agreement”) designates all information produced by
Skechers to Plaintiff in response to Plaintiff’s demand as “Confidential Information,” with
exceptions for information already generally available to the public and information available to
the Plaintiff from certain other sources. Id., Ex. A at ¶¶ 1, 17. The Agreement further provides
that:
Any document containing Confidential Information filed by the [Plaintiff] or on her
behalf in a court proceeding shall be filed under seal subject to a confidentiality order
consistent with the terms of this Agreement restricting access to such document and
the information therein to the court in which such action is filed and court personnel.
In the event that the [Plaintiff] or [Plaintiff’s] Counsel files any document containing
Confidential Information under seal, but the court requires a public version of the
document to be made available, [Skechers] shall, within the time required by the
applicable Court rules or order of the Court, file a redacted version of any such
document, omitting only that information which the Company believes in good faith
should remain confidential.
Id., Ex. A. at ¶ 10.
Neither Skechers nor the Individual Defendants have objected to Plaintiff’s application.
II.
Legal Standard
There is a strong presumption in favor of public access to court records, grounded in the
common law right “to inspect and copy public records and documents, including judicial records
and documents.” Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 597 (1978); see Foltz v. State
Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003) (citing Hagestad v. Tragesser, 49
F.3d 1430, 1434 (9th Cir. 1995)); San Jose Mercury News, Inc. v. United States District Court,
187 F.3d 1096, 1102 (9th Cir. 1999).
To overcome this presumption, “[a] party seeking to seal a judicial record . . . must
articulate compelling reasons supported by specific factual findings that outweigh the general
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 13-5061 PSG (SHx)
Title
Date
August 26, 2013
Gloria Basaraba v. Robert Greenberg, et al.
history of access and the public policies favoring disclosure, such as the public interest in
understanding the judicial process.” Kamakana v. City & County of Honolulu, 447 F.3d 1172,
1178-79 (9th Cir. 2006) (internal citations, quotations, and alterations omitted). Conclusory
statements that documents are confidential do not satisfy this standard. Id. at 1182; see Foltz,
331 F.3d at 1130-31 (explaining that even under the more lenient “good cause” standard
applicable to unfiled discovery materials, the movant “bears the burden . . . of showing that
specific prejudice or harm will result if no protective order is granted”).
The court hearing the application to seal must then “base its decision on a compelling
reason and articulate the factual basis for its ruling, without relying on hypothesis or conjecture.”
Hagestad, 49 F.3d at 1434 (citing Valley Broad. Co. v. United States District Court, 798 F.2d
1289, 1294 (9th Cir. 1995)); see also In re Midland Nat’l Life Ins. Co. Annuity Sales Practices
Litig., 686 F.3d 1115, 1119 (9th Cir. 2012) (per curiam) (citing Kamakana, 447 F.3d at 1179)
(“the district court must articulate a factual basis for each compelling reason to seal”).
Compelling reasons sufficient to overcome the presumption of access may exist where
court documents “‘might have become a vehicle for improper purposes,’ such as the use of
records to gratify private spite, promote public scandal, circulate libelous statements, or release
trade secrets.” Kamakana, 447 F.3d at 1179 (quoting Nixon, 435 U.S. at 598). In contrast,
“[t]he 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. (citing Foltz, 331 F.3d at 1136).
III.
Discussion
Plaintiff offers three reasons why the Complaint should be filed under seal, but fails to
meet her burden of articulating “compelling reasons supported by specific factual findings that
outweigh the general history of access and the public policies favoring disclosure.” See
Kamakana, 447 F.3d at 1178-79.
First, Plaintiff contends that the Complaint should be sealed because the Agreement
between Plaintiff and Skechers provides that any court filing containing information that
Skechers has designated as “Confidential Information” and provided to Plaintiff “shall be filed
under seal.” Application 2:5-2:7, 4:18-5:20; id., Ex. A at ¶ 10. However, the Agreement
indiscriminately designates a broad category of information produced by Skechers as
“Confidential Information.” Application, Ex. A at ¶ 1. It does not set forth any factual basis
establishing that the designated “Confidential Information” might “become a vehicle for
CV-90 (06/04)
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O
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
CV 13-5061 PSG (SHx)
Title
Date
August 26, 2013
Gloria Basaraba v. Robert Greenberg, et al.
improper purposes such as the use of records to gratify private spite, promote public scandal,
circulate libelous statements, or release trade secrets” unless filed under seal. See Kamakana,
447 F.3d at 1179.
Second, Plaintiff claims, without offering any supporting law, that “[t]he protection of
private and confidential business matters have consistently been recognized as appropriate
interests that justify [the] sealing of documents.” Application, 5:21-5:22. Although some
private and confidential business matters might warrant being filed under seal if they could
“become a vehicle for improper purposes,” see Kamakana, 447 F.3d at 1179, it does not follow
that all “private and confidential business matters” may be filed under seal. Given that the court
will not seal records merely because they “may lead to a litigant’s . . . incrimination, or exposure
to further litigation,” id. at 1178-79, it is clear that the court will not seal records simply because
they relate to “private and confidential business matters.” Further, Plaintiff has not made any
factual showing that the entire Complaint consists of “private and confidential business matters.”
Finally, Plaintiff vaguely alludes to the possibility that the Complaint would release trade
secrets if not filed under seal, without providing any factual support or explanation. Application
5:21-6:4. This type of conclusory assertion does not satisfy the “compelling reasons” standard.
See Kamakana, 447 F.3d at 1182.
Although Plaintiff’s application is not contested, the Court may not seal the Complaint, a
judicial record, without articulating compelling reasons, supported by specific factual findings,
that weigh in favor of restricting public access. See Hagestad, 49 F.3d at 1434; In re Midland
Nat’l Life Ins. Co. Annuity Sales Practices Litig., 656 F.3d at 1119. In light of Plaintiff’s failure
to articulate and support any compelling reasons that would justify filing the Complaint under
seal, the Court will not grant Plaintiff’s application.
IV.
Conclusion
For the reasons set forth above, Plaintiff’s application to file the Complaint under seal is
DENIED. The Clerk is directed to RETURN the Complaint to Plaintiff. Plaintiff is directed to
file an operative complaint within 10 days of this Order. If Plaintiff does not file such a
complaint, this case will be administratively closed.
IT IS SO ORDERED.
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