DNA Genotek Inc. v. Spectrum Solutions L.L.C., No. 3:2021cv00516 - Document 168 (S.D. Cal. 2022)
Court Description: ORDER granting 149 Motion to File Documents Under Seal; denying 151 Motion to File Documents Under Seal; denying 165 Motion to File Documents Under Seal. Signed by Magistrate Judge David D. Leshner on 11/3/2022. (alns)
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DNA Genotek Inc. v. Spectrum Solutions L.L.C. Doc. 168 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 DNA GENOTEK INC., a Canadian Corporation, Plaintiff, 13 14 15 16 v. Case No.: 21-cv-516-RSH-DDL ORDER ON MOTIONS TO SEAL [Dkt. Nos. 149, 151, 165] SPECTRUM SOLUTIONS L.L.C., a Utah Limited Liability Company, Defendant. 17 18 AND RELATED COUNTERCLAIM. 19 20 Before the Court are three pending motions to seal (the “Motions to Seal”). 21 Dkt. Nos. 149, 151 and 165. Having considered the parties’ arguments and the 22 applicable law, and for the reasons explained below, the Court GRANTS IN PART 23 and DENIES IN PART Defendant Spectrum Solutions LLC’s Motion for Leave to 24 File Under Seal Documents in Support of Spectrum’s Motion to Compel DNA 25 Genotek to Produce Documents [Dkt. No. 149], DENIES Plaintiff DNA Genotek 26 Inc.’s Motion for Leave to File Documents Under Seal [Dkt. No. 151] and DENIES 27 Spectrum’s Motion for Leave to File Under Seal Joint Submission Supplementing 28 Motions to Seal [Dkt. No. 165]. 1 21-cv-516-RSH-DDL Dockets.Justia.com 1 I. 2 BACKGROUND 3 On September 30, 2022, Defendant moved to compel further responses to 4 its request for “documents that [Plaintiff] provided to third parties in furtherance of 5 a potential acquisition of [Plaintiff] or its parent.” See Dkt. Nos. 148, 150 at 5. In 6 connection with that motion, 1 the parties each moved to seal certain of their 7 supporting exhibits and portions of any briefing that cited to, or revealed the 8 contents of, those exhibits. See Dkt. Nos. 149, 151. The assertedly sealable 9 information largely related to the potential acquisition referenced above, although 10 Defendant also sought to seal certain other non-public data regarding the revenue 11 Defendant generates from the allegedly infringing products (the “Revenue 12 Information”). See Dkt. No. 149 at 3. 13 On October 17, 2022, the Court tentatively denied the Motions to Seal due 14 to “the parties’ failure to make a particularized showing that the information is 15 protectable under Ninth Circuit law.” See Dkt. No. 157. The Court held a hearing 16 on Defendant’s motion to compel on October 21, 2022. Dkt. No. 159. During that 17 hearing, the Court requested supplemental briefing on the Motions to Seal, 18 specifically directing the parties to address the concrete, particularized harm that 19 would result from disclosure of the allegedly sealable information. See Dkt. No. 20 160. 21 Submission”), which was itself accompanied by a further request to seal. See Dkt. 22 Nos. 164, 165. 23 /// 24 /// The parties timely filed the supplemental briefing (the “Supplemental 25 26 27 28 1 The Court has since denied the motion to compel, finding that the information sought was relevant, but was responsive to other document requests for which Plaintiff had already produced or would produce responsive, non-privileged documents. See Dkt. No. 162. 2 21-cv-516-RSH-DDL 1 II. 2 LEGAL STANDARDS 3 The public enjoys “a general right to inspect and copy public records and 4 documents, including judicial records and documents.” Nixon v. Warner 5 Commc’ns, Inc., 435 U.S. 589, 597 (1978). This longstanding principle “is ‘based 6 on the need for federal courts, although independent—indeed, particularly 7 because they are independent—to have a measure of accountability and for the 8 public to have confidence in the administration of justice.’” Ctr. for Auto Safety v. 9 Chrysler Grp., LLC, 809 F.3d 1092, 1096 (9th Cir. 2016). Thus, when evaluating a 10 request to seal judicial records, courts in this Circuit start with “a ‘strong 11 presumption in favor of access’” to those records. Kamakana v. City & Cty. of 12 Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citation omitted). 13 The party requesting sealing bears the burden of overcoming this strong 14 presumption. Id. The showing required depends upon whether the underlying 15 motion is closely related to the merits of the case – in which case the party must 16 demonstrate “compelling reasons” to seal – or is only “tangentially related” to them, 17 which requires a less demanding showing of good cause. See Ctr. for Auto Safety, 18 809 F.3d at 1097. Most courts apply the “good cause” standard to discovery 19 motions. Although less demanding than the “compelling reasons” standard, “good 20 cause” nevertheless requires a “particularized showing that specific prejudice or 21 harm will result” if the information is disclosed. 2 See Phillips ex rel. Estates of Byrd 22 v. Gen Motors Corp., 307 F.3d 1206, 1210-11 (9th Cir. 2002). “Broad allegations 23 of harm, unsubstantiated by specific examples of articulated reasoning,” do not 24 25 26 27 28 2 The undersigned’s Chambers Rules require the designating party to join the motion to seal because that party will often be in the best (if not the only) position to make the required “particularized” showing of a concrete, non-speculative harm that will from disclosure. See Chambers Rules for the Honorable David D. Leshner (“Chambers Rules”), § III.G. 3 21-cv-516-RSH-DDL 1 satisfy the good cause standard. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 2 470, 476 (9th Cir. 1992). 3 III. 4 DISCUSSION 5 The parties request sealing, in whole or in part, of a total of six exhibits, 3 6 certain other business information, and any part of their briefing on the motion to 7 compel or the Supplemental Submission that reveal their allegedly confidential 8 information. The parties’ requests are as follows: 9 Document to Be Sealed 10 Exhibit or Docket Number(s) 11 Documents for Which Redactions Are Requested 12 13 14 15 16 17 18 19 20 21 22 Defendant’s Third Set of Requests for Production to Plaintiff Def. Ex. 1 Plaintiff’s Responses to Defendant’s Third Set of Requests for Production Def. Ex. 2 Meet and confer correspondence between counsel, dated 7/26/22-9/13/22 Def. Ex. 6 References to the above exhibits in Defendant’s Motion to Compel (the “Motion”), Plaintiff’s Opposition (the “Opposition”) and the Declaration of Brian M. Kramer in Support of the Opposition (“Kramer Decl.” and, collectively, the “Moving Papers”) Dkt. Nos. 150, 152, and 152-1, passim Pl. Ex. 2 Pl. Ex. 3 Pl. Ex. 4 23 24 25 26 27 28 3 The parties’ filings are complicated by their filing of duplicate copies of the supporting exhibits, which needlessly proliferated the parties’ sealing requests. Compare Defendant’s Exhibit (“Def. Ex.”) 1 with Plaintiff’s Exhibit (“Pl. Ex.”) 2; Def. Ex. 2 with Pl. Ex. 3; Def. Ex. 3 with Pl. Ex. 5; Def. Ex. 4 with Pl. Ex. 8; Def. Ex. 6 with Pl. Ex. 4. For future motions, the parties are instructed not to file duplicative exhibits. 4 21-cv-516-RSH-DDL 1 Revenue Information Dkt. No. 150 at page 8, line 17 Supplemental Submission Dkt. No. 164 at 2 2 3 4 Documents Requested to Be Sealed in Their Entirety 5 Plaintiff’s Responses to Defendant’s First Set of Requests for Production Def. Ex. 4 8 Plaintiff’s Responses to Defendant’s First Set of Interrogatories Def. Ex. 5 9 Mutual Confidentiality Agreement (“MCA”) Pl. Ex. 7 6 7 Pl. Ex. 8 4 10 11 The parties advance three main arguments in support of their various 12 requests for sealing. First, as to Defendant’s Exhibits 1, 2, 4, 5, and 6; Plaintiff’s 13 Exhibits 2, 3 and 4; the Revenue Information; the Moving Papers; and the 14 Supplemental Submission, the parties assert that the documents contain 15 confidential business information that would be detrimental to their respective 16 business interests if disclosed. Second, as to all documents for which they request 17 sealing, the parties state these were designated as “Confidential” or “Highly 18 Confidential” by one or more parties under the operative Protective Order. See 19 Dkt. No. 34-1. Third, as to Plaintiff’s Exhibit 7, Plaintiff states that the parties to 20 this contract agreed to keep it confidential, irrespective of its designation under the 21 Protective Order.5 The Court addresses each of these arguments in turn. 22 23 24 25 26 27 28 4 Plaintiff filed an excerpt of this document publicly and without redactions. See Pl. Ex. 8. The parties acknowledge the magistrate judge previously assigned to the case denied a request to seal that excerpt. See Dkt. No. 119; Dkt. No. 149 at 3. 5 As noted, the parties were required by the undersigned’s Chambers Rules to join each other’s respective motions to seal to the extent the motion concerned information the joining party designated confidential. Chambers Rules, § III.G. Instead, the parties joined one another’s motions to seal in toto and largely parroted the other side’s reasoning for sealing. See generally Dkt. Nos. 155, 156. For simplicity, the Court has focused its discussion on the arguments advanced by each party in its respective motion to seal; to the extent the same basis for sealing 5 21-cv-516-RSH-DDL 1 A. Confidential Business Information 2 Defendant asserts that “there is good cause” to seal “portions of 3 [Defendant’s] Exhibits 1, 2 and 6 . . . and portions of [Defendant’s Motion] quoting 4 or referring to those exhibits” because they each contain confidential business 5 information whose disclosure could be potentially harmful to Spectrum. See Dkt. 6 No. 149 at 3. Defendant’s sealing motion is supported by its counsel’s declaration, 7 in which he avers identically as to each of these documents that it “contains 8 confidential, non-public information about the parties in this action, the public 9 disclosure of which would be detrimental to at least Spectrum’s business.” See 10 Declaration of Brandon G. Smith (“Smith Decl.”), Dkt. No. 149-1, at ¶¶ 3-5. 11 Defendant states that the Revenue Information is also “non-public” and 12 “confidential” and that its disclosure would likewise be “detrimental to Spectrum’s 13 business.” Dkt. No. 149 at 3; see also Smith Decl. at ¶ 8. 14 Plaintiff moves to seal Plaintiff’s Exhibits 2, 3, and 4, on the basis that these 15 documents were designated confidential under the Protective Order. Dkt. No. 151 16 at 2-3. The Court addresses this argument more fully below, but notes that Plaintiff 17 apparently reasons that anything so designated is necessarily also protectable 18 business information because the Protective Order was entered in recognition that 19 “the unrestricted disclosure of [the parties’] information could be potentially 20 prejudicial to the [parties’] business or operations.” See id. at 2 (citing Dkt. No. 34- 21 1 at ¶ 5.a). Further, in support of Plaintiff’s motion to seal, its counsel declares that 22 Exhibits 2, 3 and 4 reference “non-public information relating to both parties, the 23 disclosure of which could be prejudicial to the parties’ businesses.” See 24 Declaration of Drew A. Hillier (“Hillier Decl.”), Dkt. No. 151-1, at ¶¶ 2-4. Plaintiff 25 also seeks to seal paragraph 10 of the Kramer Declaration because it “contains 26 27 28 was advanced by the other party in its joinder, the same reasoning applies. 6 21-cv-516-RSH-DDL 1 confidential information that would be potentially harmful” to Plaintiff’s business if 2 publicly disclosed. Dkt. No. 151 at 3. 3 As the parties acknowledged during the October 21, 2022, hearing, Plaintiff’s 4 parent company announced in January 2022 that it was “seeking . . . strategic 5 alternatives” and that “anyone in the business would read that press release and 6 say, Okay, they’re looking into merger and acquisition discussions of some sort.” 7 See Dkt. No. 163 at 6. In the Supplemental Submission, however, the parties state 8 that while the fact of a potential merger was publicly known, the discussions 9 surrounding a possible merger were not public and that revelation of any of the 10 details of the transaction or negotiations could damage the parties to those 11 discussions by putting them at a competitive disadvantage. Dkt. No. 166 at 2. 12 They reiterate that the parties to those discussions agreed among themselves that 13 their negotiations should remain confidential and point out that other courts have 14 sealed similar “non-public information about ‘potential acquisition of businesses 15 and technologies.’” Id. Defendant also repeats its request to seal the Revenue 16 Information, stating that the disclosure of this information could put Defendant “at 17 a competitive disadvantage” and that the Court granted a prior request to seal its 18 financial data, including revenue data. See id. at 3 (citing Dkt. No. 91). Finally, 19 the parties argue that Defendant’s discovery requests to Plaintiff, and Plaintiff’s 20 responses thereto, are sealable because “a sophisticated viewer” could piece them 21 together “to gain competitive insight into commercially sensitive business 22 information” regarding one or both parties. Id. 23 The Court finds Defendant has done just enough to establish good cause to 24 seal the Revenue Information. The Court appreciates that Spectrum is not publicly 25 traded, but that alone is not a reason to seal all non-public information about the 26 company. Nevertheless, the Court finds that details about Defendant’s revenue 27 could be used inappropriately by a competitor, that the request for redaction of this 28 information is narrowly tailored, and that the Revenue Information was not central 7 21-cv-516-RSH-DDL 1 to the resolution of Defendant’s motion to compel. See BBK Tobacco & Foods LLP 2 v. Central Coast Agric. Inc., No. CV-19-05216-PHX-MTL, 2021 WL 5578864, at *2 3 (D. Ariz. Nov. 29, 2021) (granting narrow request to seal “revenue and sales 4 figures [and] marketing expenditures”). Furthermore, the Court is mindful that the 5 magistrate judge previously assigned to the case found Defendant’s financial data, 6 including its revenue, sealable, and finds no reason to depart from that ruling. See 7 Dkt. No. 91. Accordingly, the Court GRANTS the request to seal the Revenue 8 Information. 9 The Court finds, however, that the parties have failed to establish good cause 10 to seal the remainder of their “non-public” and “confidential” business information. 11 The parties’ rote assertions that the disclosure of this information “could be 12 prejudicial,” “potentially harmful,” or “detrimental” to the parties’ commercial 13 interests (see Dkt. Nos. 149 at 3; 151 at 3) are exactly the type of unsubstantiated 14 allegations of nonspecific harm that courts in this Circuit have repeatedly found do 15 not satisfy the good cause standard. See Anderson v. Marsh, 312 F.R.D. 584, 594 16 (E.D. Cal. 2015) (citation omitted); see also Apple Inc. v. Samsung Elecs. Co., No. 17 11–CV–01846 LHK (PSG), 2013 WL 412864, at *2 (N.D. Cal. Feb. 1, 2013) 18 (denying motion to seal where party “recite[d] boilerplate terms that this information 19 is proprietary and confidential,” but “[did] not provide a particularized showing of 20 how this information would be detrimental if disclosed”); In re BofI Holding, Inc. 21 Sec. Litig., No. 15-cv-2324-GPC-KSC, 2021 WL 5579222, at *4 (S.D. Cal. Nov. 22 30, 2021) (finding a party’s “generic reference to ‘highly sensitive information’” was 23 not sufficient to show good cause for sealing). 24 The parties’ Supplemental Submission does not remedy this deficiency, as 25 its vague, conjectural statements do not establish a specific, non-speculative harm 26 that would result from disclosure of the information. See Vasquez v. O’Reilly Auto 27 Enter., LLC, No. 1:21-cv-01099-DAD-SAB, 2022 WL 1645145, at *4 (E.D. Cal. May 28 24, 2022) (finding party’s request for sealing “conclusory” and insufficient to satisfy 8 21-cv-516-RSH-DDL 1 the good cause standard where party did not “elaborate[e]” on statements that 2 documents contained information about “business processes and management 3 decisions”). For example, the parties generically describe a competitor’s 4 unspecified competitive advantage that might be gained from disclosure of their 5 business information and posit that a “sophisticated viewer” might “gain 6 competitive insight” into the parties’ businesses from a review of the parties’ 7 discovery. Dkt. No. 166 at 2-3. But how? What insight? And what use would the 8 hypothetical third party make of the information and the insights gained thereby? 9 The Court is left to speculate. 10 The cases relied upon by the parties do not assist them, because the 11 question for the Court is not whether similar information has been sealed before, 12 but whether the parties have made the necessary showing that it is sealable in this 13 instance. Further, based on the Court’s independent review of the materials, it 14 does not appear that the documents reveal trade secrets, technological 15 specifications, calculations, or the mechanics of the proposed transaction, 16 distinguishing the instant case from those relied upon by the parties. See, e.g., 17 Connor v. Quora, Inc., No. 18-cv-07597-BLF, 2020 WL 11590589, at *2 (N.D. Cal. 18 Sept. 22, 2020) (sealing documents that contained “technical details”); Workplace 19 Tech. Research, Inc. v. Project Mgmt. Inst., Inc., No. 18cv1927 JM (MSB), 2021 20 WL 6066119, at *2 (S.D. Cal. Aug. 10, 2021) (sealing documents that could be 21 used as a blueprint for negotiations) (citations omitted); In re Hewlett-Packard Co. 22 Sh’holder Derivative Litig., No. 12–CV–6003, 2015 WL 8570883, at *5 (N.D. Cal. 23 Nov. 18, 2015) (granting motion to seal corporate governance documents that 24 provided “an outline of [the Company’s] procedures”) (citations omitted). 25 “[C]ourts will seal records containing detailed confidential business 26 information” only “where the parties articulate a concrete, non-speculative harm” 27 that would result from disclosure. Grano v. Sodexo Mgmt., Inc., No. 18-cv-1818- 28 RSH-BLM, 2022 WL 3371621, at *2 (S.D. Cal. Aug. 16, 2022). On the record 9 21-cv-516-RSH-DDL 1 before it, the Court finds the parties have not done so. Therefore, the Court 2 DENIES the parties’ requests to seal nonpublic business information. 3 B. Designation Under a Stipulated Protective Order 4 As noted above, Plaintiff asserts that there is good cause to seal Plaintiff’s 5 Exhibits 2, 3, 4 and 7, and references thereto because the parties have designated 6 “Confidential” or “Highly Confidential” pursuant to the operative Protective Order. 7 Dkt. No. 151 at 2-3 (citing Dkt. No. 34-1); Hillier Decl., at ¶¶ 2-5. For the reasons 8 stated above, the Court does not find that the parties have established a concrete, 9 non-speculative harm from the disclosure of this information. To the extent Plaintiff 10 (or Defendant) advances the parties’ designation of the documents and information 11 pursuant to the Protective Order as an independent basis for sealing, the Court 12 rejects it. 13 As an initial matter, that position is not supported by a plain reading of the 14 Protective Order, which expressly states that designated documents will not be 15 filed under seal “without a separate prior order” of the Court based on “a request 16 that establishes that the document, or portions thereof, is privileged or otherwise 17 subject to protection under the law.” Dkt. No. 34-1 at ¶ 28. 18 Furthermore, it is well established in this Circuit that the designation of 19 documents as confidential pursuant to a blanket protective order is not a basis for 20 sealing, because they “are entered to facilitate the exchange of discovery 21 documents” and do not make any “findings that a particular document is 22 confidential or that a document’s disclosure would cause harm.” Small v. Univ. 23 Med. Ctr. of S. Nevada, No. 13–cv–00298–APG–PAL, 2015 WL 1281549, at *3 24 (D. Nev. Mar. 20, 2015); see also Beckman, 966 F.2d at 476 (noting that blanket 25 protective orders are “by nature overinclusive” and do not require a “’good cause’ 26 showing under [Rule] 26”). As the Ninth Circuit has explained, “confidential 27 categorization of discovery documents under the [blanket] protective order was not 28 a guarantee of confidentiality, especially in the event of a court filing” because the 10 21-cv-516-RSH-DDL 1 Court is required to “mak[e] an individualized determination” as to the sealing of 2 “specific documents.” Kamakana, 447 F.3d at 1183. Accordingly, Plaintiff’s request to seal documents on the basis that the 3 4 documents were designated “Confidential” by one or more parties is DENIED. 5 C. Agreement to Keep Information Confidential 6 The parties also urge sealing of the MCA, because “the parties agreed to the 7 confidentiality of the agreement when it was executed.” Dkt. No. 151 at 3; see also 8 Dkt. No. 166 at 2. However, “the fact that parties contract or agree to treat certain 9 information . . . as confidential is an insufficient basis in and of itself for a court to 10 seal a judicial record and override the public’s interest in understanding the judicial 11 process.” Grano, 2022 WL 3371621, at *2 (collecting cases); see also Anderson, 12 312 F.R.D. at 594 (finding that “the parties’ agreement that documents shall be 13 filed under seal” does not satisfy the good cause standard). A contrary ruling would 14 render the public’s right of access meaningless. The Court therefore DENIES the 15 parties’ request to seal the MCA on this basis. 16 IV. 17 CONCLUSION 18 For the reasons stated above, the Court ORDERS as follows: 19 1. Defendant Spectrum Solutions LLC’s Motion for Leave to File Under Seal 20 Documents in Support of Spectrum’s Motion to Compel DNA Genotek to 21 Produce Documents [Dkt. No. 149], is GRANTED as to the information at 22 Dkt. No. 150 at page 8, line 17 and DENIED in all other respects. 23 2. Plaintiff DNA Genotek Inc.’s Motion for Leave to File Documents Under Seal [Dkt. No. 151] is DENIED. 24 25 3. Defendant Spectrum Solutions LLC’s Motion for Leave to File Under Seal 26 Joint Submission Supplementing Motions to Seal [Dkt. No. 165] is 27 DENIED. 28 /// 11 21-cv-516-RSH-DDL 1 4. The parties shall file the following documents on the public docket in 2 unredacted form within 10 days of this Order: Dkt. No. 150 (redaction of 3 page 8, line 17 permitted); Dkt. No. 150-1; Dkt. No. 150-2; Dkt. No. 150- 4 3; Dkt. No. 150-4; Dkt. No. 150-5; Dkt. No. 152; Dkt. No. 152-1; and Dkt. 5 No. 166. 6 IT IS SO ORDERED. 7 Dated: November 3, 2022 8 9 10 Hon. David D. Leshner United States Magistrate Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 21-cv-516-RSH-DDL
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