Jones et al v. PGA Tour, Inc., No. 5:2022cv04486 - Document 279 (N.D. Cal. 2023)
Court Description: ORDER GRANTING IN PART AND DENYING IN PART 237 MOTION TO SEAL DOCUMENTS SUBMITTED WITH MOTION TO AMEND COUNTERCLAIM. Signed by Judge Beth Labson Freeman on 2/21/2023. (blflc3, COURT STAFF) (Filed on 2/21/2023)
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Jones et al v. PGA Tour, Inc. Doc. 279 Case 5:22-cv-04486-BLF Document 279 Filed 02/21/23 Page 1 of 9 1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 MATT JONES, et al., Plaintiffs, 8 9 v. 10 PGA TOUR, INC., Defendant. 11 United States District Court Northern District of California Case No. 22-cv-04486-BLF ORDER GRANTING IN PART AND DENYING IN PART MOTION TO SEAL DOCUMENTS SUBMITTED WITH MOTION TO AMEND COUNTERCLAIM [Re: ECF No. 237] 12 13 Before the Court is Defendant and Counter-Claimant PGA Tour, Inc.’s (“the TOUR”) 14 15 Administrative Motion to Consider Whether Another Party’s Material Should Be Sealed. ECF 16 No. 237. Plaintiff and Counter-Defendant LIV Golf, Inc. (“LIV”) submitted a Statement in 17 Support of Sealing. ECF No. 260. LIV asks that the Court seal (1) portions of the TOUR’s 18 amended counterclaim; (2) portions of a redlined version of the TOUR’s amended counter claim; 19 (3) portions of the TOUR’s memorandum in support of its motion for leave to amend its 20 counterclaim; and (4) an exhibit the TOUR submitted in support of its motion. For the reasons below, the Court GRANTS IN PART and DENIES IN PART the motion 21 22 to seal. 23 I. 24 LEGAL STANDARD “Historically, courts have recognized a ‘general right to inspect and copy public records 25 and documents, including judicial records and documents.’” Kamakana v. City & Cty. Of 26 Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc’ns, Inc., 435 27 U.S. 589, 597 & n.7 (1978)). Accordingly, when considering a sealing request, “a ‘strong 28 presumption in favor of access’ is the starting point.” Id. (quoting Foltz v. State Farm Mut. Auto. Dockets.Justia.com Case 5:22-cv-04486-BLF Document 279 Filed 02/21/23 Page 2 of 9 1 Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). Parties seeking to seal judicial records relating to 2 motions that are “more than tangentially related to the underlying cause of action” bear the burden 3 of overcoming the presumption with “compelling reasons” that outweigh the general history of 4 access and the public policies favoring disclosure. Ctr. for Auto Safety v. Chrysler Grp., 809 F.3d 5 1092, 1099 (9th Cir. 2016); Kamakana, 447 F.3d at 1178-79. Courts have applied different standards when considering whether the grant a motion to United States District Court Northern District of California 6 7 seal materials submitted with a motion to amend the pleadings. Some courts have held that a party 8 seeking to seal such materials need only demonstrate “good cause” to support their sealing 9 request. See, e.g., Edwards Lifesciences Corp. v. Meril Life Scis. Pvt. Ltd., No. 19-CV-06593- 10 HSG, 2021 WL 1312748, at *5 (N.D. Cal. Apr. 8, 2021) (“The documents at issue in the pending 11 motions to seal relate to Plaintiffs’ nondispositive motion for leave to file a second amended 12 complaint so the Court will apply the lower good cause standard.”). Other Courts have applied the 13 “compelling reasons” standard. See E. W. Bank v. Shanker, No. 20-CV-07364-WHO, 2021 WL 14 3471177, at *4 (N.D. Cal. Aug. 6, 2021) (“[Plaintiff’s] motion for leave to amend its FAC is a 15 nondispositive motion that is ‘more than tangentially related to the merits’ of this case, and 16 therefore the ‘compelling reasons’ standard applies.” (quoting Ctr. for Auto Safety, 809 F.3d at 17 1101)). 18 The Court agrees with the latter approach and analyzes the request to seal under the 19 “compelling reasons” standard. The Ninth Circuit has explained that the “focus” of the inquiry 20 regarding which standard applies to a motion to seal is not whether a motion is dispositive or 21 nondispositive, but rather “whether the motion at issue is more than tangentially related to the 22 underlying cause of action.” Ctr. For Auto Safety, 809 F.3d at 1099. The Court finds that a 23 motion to amend the pleadings is more than tangentially related to the underlying cause of action 24 given that the pleadings are the foundation of the lawsuit. C.f. Restoration Hardware, Inc. v. 25 Sichuan Wei Li Tian Xia Network Tech. Co., No. 22-CV-03054-JSC, 2023 WL 1769189, at *4 26 (N.D. Cal. Feb. 3, 2023) (complaint is “foundation of the lawsuit”). 27 28 Compelling reasons justifying the sealing of court records generally exist “when such ‘court files might . . . become a vehicle for improper purposes,’” Kamakana, 447 F.3d at 1179 2 United States District Court Northern District of California Case 5:22-cv-04486-BLF Document 279 Filed 02/21/23 Page 3 of 9 1 (quoting Nixon, 435 U.S. at 598), such as: “to gratify private spite, promote public scandal, 2 circulate libelous statements,” id.; “to release trade secrets,” id.; or “as sources of business 3 information that might harm a litigant’s competitive standing,” Ctr. for Auto Safety, 809 F.3d at 4 1097 (quoting Nixon, 435 U.S. at 598). On the other hand, “[t]he mere fact that the production of 5 records may lead to a litigant's embarrassment, incrimination, or exposure to further litigation will 6 not, without more, compel the court to seal its records.” Kamakana, 447 F.3d at 1178–79. The 7 party seeking to seal a judicial record bears the burden of “articulat[ing] compelling reasons 8 supported by specific factual findings.” Id. at 1182 (internal quotation marks omitted). The court 9 must then “conscientiously balance the competing interests of the public and the party who seeks 10 to keep certain judicial records secret.” Ctr. for Auto Safety, 809 F.3d at 1097 (internal quotation 11 marks and alterations omitted). 12 In addition, in this district, all parties requesting sealing must comply with Civil Local 13 Rule 79–5. That rule requires, among other things, the moving party to “establish . . . that the 14 document, or portions thereof, are privileged, protectable as a trade secret or otherwise entitled to 15 protection under the law.” Civ. L.R. 79–5(b). The request must also “be narrowly tailored to seek 16 sealing only of sealable material.” Civ. L.R. 79–5(b). Section (d) lays out the procedural 17 requirements for an administrative motion to seal, namely, a “declaration establishing that the 18 document sought to be filed under seal, or portions thereof, are sealable,” a proposed order that 19 “lists in table format each document or portion thereof that is sought to be sealed,” and an 20 “unredacted version of the document” that “indicate[s], by highlighting or other clear method, the 21 portions of the document that have been omitted from the redacted version.” Civ. L.R. 79–5(d). 22 23 24 25 II. DISCUSSION In its statement in support of the TOUR’s administrative motion to seal, LIV asks the Court to seal six categories of information. The Court analyzes each category below. First, LIV seeks to seal portions of the TOUR’s proposed amended counterclaim and its 26 motion to amend that reference the terms of certain indemnification agreements. LIV declares that 27 disclosure of this information would harm LIV by revealing the contours of potential litigation, 28 including the parties of the contemplated litigation and amounts offered for indemnification. 3 Case 5:22-cv-04486-BLF Document 279 Filed 02/21/23 Page 4 of 9 1 Loffhagen Decl. ¶ 7. LIV explains that counterparties in the litigation could seek to drive up 2 costs to exceed the confidential indemnification amounts disclosed in the materials sought to be 3 sealed to encourage certain parties to give up their claims. Id. The Court finds that LIV has 4 adequately shown compelling reasons to seal this information, as LIV has provided a detailed 5 explanation as to how the information may “become a vehicle for improper purposes.” 6 Kamakana, 447 F.3d at 1179. Accordingly, the Court GRANTS the motion to seal this 7 information. 8 United States District Court Northern District of California 9 Second, LIV seeks to seal portions of the proposed amended counterclaim and the motion to amend that describe a Shareholder Agreement that sets out LIV’s relationship with its investors, 10 including investor rights under that agreement. LIV declares that disclosure of the information 11 would harm LIV by prejudicing LIV’s ability to obtain outside funding, explaining that is current 12 investment structure gives certain investors rights that may deter outside funders or change the 13 terms that those funders demand. Loffhagen Decl. ¶ 3. The Court finds that LIV has 14 demonstrated compelling reasons to seal this information as LIV has explained how the disclosure 15 of these confidential terms of its Shareholder Agreement would harm LIV’s competitive standing. 16 See Fed. Trade Comm’n v. Qualcomm Inc., No. 17-CV-00220-LHK, 2019 WL 95922, at *3 (N.D. 17 Cal. Jan. 3, 2019) (finding compelling reasons to seal “to the extent that the instant motion seeks 18 to seal information that, if published, may harm [a party’s] competitive standing and divulges 19 terms of confidential contracts”). Accordingly, the Court GRANTS the motion to seal this 20 information. 21 Third, LIV seeks to seal a portion of the proposed amended counterclaim that “describes 22 LIV’s relationship with its investors, including services certain investors provide for LIV.” 23 Loffhagen Decl., ¶ 4. LIV declares that disclosure of this information would harm LIV because 24 “[c]ompetitors may seek to influence LIV’s investors to change LIV’s business model or 25 functioning or to otherwise exploit this information” and “[b]usiness partners may . . . be deterred 26 from entering into agreements with LIV in anticipation of participation by or need for services 27 from LIV’s investors.” Id. The Court has reviewed the material LIV seeks to seal and finds that it 28 contains only a general description of services performed by one of LIVs investors. The Court 4 Case 5:22-cv-04486-BLF Document 279 Filed 02/21/23 Page 5 of 9 1 also finds that LIV has articulated only speculative harms that may arise from the disclosure of 2 these materials. The Court thus finds that LIV has failed to articulate compelling reasons for 3 sealing the materials and therefore DENIES the motion to seal these materials. See 4 IntegrityMessageBoards.com v. Facebook, Inc., No. 18-CV-05286-PJH, 2020 WL 6544411, at 5 *10 (N.D. Cal. Nov. 6, 2020) (explaining that “mere possibility [of misuse of information], 6 without more factual explanation substantiating its plausibility, is insufficient to hide the 7 information from the public record”). 8 United States District Court Northern District of California 9 Fourth, LIV seeks to seal portions of the proposed amended counterclaim and the motion to amend that it asserts “describe LIV’s internal decision-making.” Loffhagen Decl. ¶ 5. LIV 10 declares that disclosure of the material would harm it because competitors may exploit the 11 information to influence LIV’s investors, and potential business partners may be deterred if they 12 believe that LIV requires investor consent on certain matters. Id. The Court has reviewed the 13 material LIV seeks to seal and finds that it describes mostly in general terms decisions in which 14 His Excellency Yasir Al-Rumayyan (“HE”) was allegedly involved. HE’s alleged control over 15 LIV goes to the heart of the counterclaim thus rendering the public interest in access to the 16 information especially great. See Tevra Brands LLC v. Bayer HealthCare LLC, No. 19-CV- 17 04312-BLF, 2020 WL 1245352, at *2 (N.D. Cal. Mar. 16, 2020). In the face of this public interest 18 in disclosure, LIV offers only speculative assertions that disclosure of this information may cause 19 competitors to “seek[] to influence LIV’s investors” or may deter future business partners. These 20 proffered harms are too speculative to provide compelling reasons to seal the materials LIV 21 requests to seal. See IntegrityMessageBoards.com v. Facebook, Inc., 2020 WL 6544411, at *10. 22 The Court thus DENIES the request to seal these materials on this basis. 23 Fifth, LIV seeks to seal portions of the proposed amended counterclaim and the motion to 24 amend that it asserts “describe specific negotiations and offers to certain players, agents, sponsors, 25 and broadcasters, including specific terms of offers.” Loffhagen Decl. ¶ 6. LIV declares that 26 disclosure of the information would harm it because “[o]ther, players, agent[s], sponsors, and 27 broadcasters may demand the same or better terms.” Id. LIV further declares that disclosure of 28 the entities with whom LIV was negotiating would subject the entities to unwanted attention and 5 Case 5:22-cv-04486-BLF Document 279 Filed 02/21/23 Page 6 of 9 1 prejudice LIV’s ability to obtain future business. Id. The Court finds that disclosure of this 2 material would plausibly cause LIV competitive harm by hampering its ability to negotiate future 3 contracts and therefore warrants sealing under the “compelling reasons” standard. See Quidel 4 Corp. v. Siemens Med. Sols. USA, Inc., No. 16-CV-3059-BAS-AGS, 2020 WL 1062949, at *2 5 (S.D. Cal. Mar. 4, 2020) (finding compelling reasons to seal where party would suffer competitive 6 harm in future negotiations with third parties). Accordingly, the Court GRANTS the motion to 7 seal the material that LIV contends “describe specific negotiations and offers to certain players, 8 agents, sponsors, and broadcasters, including specific terms of offers.” Finally, LIV seeks to seal an exhibit and excerpts from the TOUR’s motion to amend that United States District Court Northern District of California 9 10 discusses the exhibit. See Loffhagen Decl. ¶ 8. According to LIV, these materials describe LIV’s 11 recruitment of players and reveal information about player offers and LIV’s recruiting strategy. 12 Id. LIV declares that disclosure of this information would harm LIV by revealing LIV’s 13 constraining its bargaining power in future negotiations enabling competitors to counter LIV’s 14 recruitment strategy. Id. The Court finds that these competitive harms provide compelling 15 reasons to seal the materials LIV requests to seal. See Exeltis USA Inc. v. First Databank, Inc., 16 No. 17-CV-04810-HSG, 2020 WL 2838812, at *1 (N.D. Cal. June 1, 2020) (“Courts have found 17 that ‘confidential business information’ in the form of ‘license agreements, financial terms, details 18 of confidential licensing negotiations, and business strategies’ satisfies the ‘compelling reasons’ 19 standard.”) Accordingly, the Court GRANTS the motion to seal these materials. 20 III. 21 ORDER For the foregoing reasons, the Court ORDERS redactions as outlined in the below chart. 22 The TOUR SHALL file with the redactions permitted below public redacted versions of the (1) 23 Proposed Counterclaim; (2) Proposed Counterclaim Redline; and (3) Memorandum of Law in 24 Support of PGA Tour, Inc.’s Motion for Leave to Amend Counterclaim to Add Counter-Defend 25 by no later than March 3, 2023. 26 27 28 ECF No. 237-1 Document Exhibit A Portion(s) Proposed to Be Sealed Highlighted 6 Ruling GRANTED as to ¶¶ 6, 44, as the Case 5:22-cv-04486-BLF Document 279 Filed 02/21/23 Page 7 of 9 (Proposed Counterclaim) 1 2 portions at ¶¶ 6, 25, 26, 29-35, 44, 64-65 3 4 5 GRANTED as to ¶ 25, as the paragraph contains confidential information about LIV’s Shareholder Agreement setting out its relationship with its investors, including investor rights, disclosure of which would prejudice LIV’s ability to obtain outside funding, pursue a franchise model in the future, and obtain future business. 6 7 8 9 GRANTED as to ¶¶ 31-35, as the paragraphs contain confidential information about specific negotiations and offers to certain players, agents, sponsors, and broadcasters, including specific terms of offers, the disclosure of which would cause competitive harm to LIV, including by constraining its ability to negotiate different terms, inviting speculation about why certain entities decided to do business (or not) with LIV, prejudicing LIV’s ability to obtain future business, and constraining LIV’s ability to pursue confidential negotiations. 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 paragraphs contain confidential information about the terms of certain indemnification agreements, disclosure of which would harm LIV by revealing the contours of potential litigation, including the parties of the contemplated litigation and amounts offered for indemnification, which could be exploited by other litigants. 237-2 Exhibit B (Proposed Counterclaim Redline) Highlighted portions at ¶¶ 6, 25, 26, 29-35, 44 64-65 21 22 23 DENIED as to ¶¶ 26, 29-30, 64-65 as LIV has not provided compelling reasons to seal in the information. GRANTED as to ¶¶ 6, 44, as the paragraphs contain confidential information about the terms of certain indemnification agreements, disclosure of which would harm LIV by revealing the contours of potential litigation, including the parties of the contemplated litigation and amounts offered for indemnification, which could be exploited by other litigants. GRANTED as to ¶ 25, as the paragraph contains confidential information about LIV’s Shareholder Agreement setting out its relationship with its investors, including investor rights, disclosure of which would prejudice LIV’s ability to obtain outside funding, pursue a franchise model in the future, and obtain future business. 24 25 26 27 GRANTED as to ¶¶ 31-35, as the paragraphs contain confidential information 28 7 Case 5:22-cv-04486-BLF Document 279 Filed 02/21/23 Page 8 of 9 about specific negotiations and offers to certain players, agents, sponsors, and broadcasters, including specific terms of offers, the disclosure of which would cause competitive harm to LIV, including by constraining its ability to negotiate different terms, inviting speculation about why certain entities decided to do business (or not) with LIV, prejudicing LIV’s ability to obtain future business, and constraining LIV’s ability to pursue confidential negotiations. 1 2 3 4 5 6 7 8 237-3 Exhibit C Entire Exhibit 237-4 Memorandum of Law in Support of PGA Tour, Inc.’s Motion for Leave to Amend Counterclaim to Add CounterDefend Highlighted portions at lines 3:26-27, 5:14-16, 5:18-20, 5:23-24, 6:1, 6:3-12, 7:2327 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 DENIED as to ¶¶ 26, 29-30, 64-65 as LIV has not provided compelling reasons to seal in the information. GRANTED, as the exhibit contains confidential information about LIV’s recruitment of players, including the identities of the players, the number of offers, the structure of the offers, and the terms of the offers, including specific amounts, disclosure of which would harm LIV by constraining its ability to offer different terms, revealing its ability and willingness to pay, and allowing LIV’s recruitment strategy to be exploited by competitors. GRANTED as to 3:26-27, as the excerpts contain confidential information about the terms of certain indemnification agreements, disclosure of which would harm LIV by revealing the contours of potential litigation, including the parties of the contemplated litigation and amounts offered for indemnification, which could be exploited by other litigants. GRANTED as to 5:14-16 and 5:18-20, as the excerpts contain confidential information about LIV’s Shareholder Agreement setting out its relationship with its investors, including investor rights, disclosure of which would prejudice LIV’s ability to obtain outside funding, pursue a franchise model in the future, and obtain future business. 20 21 22 23 24 GRANTED as to 5:23-24, 6:1, 6:3-9 and 7:23-27, as the excerpts contain confidential information about specific negotiations and offers to certain players, agents, sponsors, and broadcasters, including specific terms of offers, disclosure which would cause competitive harm to LIV, including by constraining its ability to negotiate different terms. 25 26 27 28 8 Case 5:22-cv-04486-BLF Document 279 Filed 02/21/23 Page 9 of 9 1 GRANTED as to 6:10-12, as the excerpts contain confidential information about LIV’s recruitment of players, including the identities of the players, the number of offers, the structure of the offers, and the terms of the offers, including specific amounts, disclosure of which would harm LIV by constraining its ability to offer different terms, revealing its ability and willingness to pay, and allowing LIV’s recruitment strategy to be exploited by competitors. 2 3 4 5 6 7 8 9 Dated: February 21, 2023 10 United States District Court Northern District of California 11 12 ______________________________________ BETH LABSON FREEMAN United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9
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