AGS, LLC et al v. Galaxy Gaming, Inc., No. 2:2014cv02018 - Document 80 (D. Nev. 2015)

Court Description: ORDER denying 19 Motion to Seal. Defendant shall file an amended answer, without the information at issue, no later than April 10, 2015; granting 47 Motion to Seal; granting 54 Motion to Seal; granting 23 Motion to Seal. Signed by Magistrate Judge Carl W. Hoffman on 4/2/2015. (Copies have been distributed pursuant to the NEF - DKJ)
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AGS, LLC et al v. Galaxy Gaming, Inc. Doc. 80 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 DISTRICT OF NEVADA 10 11 12 13 14 AGS, LLC, et al., ) ) Plaintiffs, ) vs. ) ) GALAXY GAMING, INC., ) ) Defendant. ) ____________________________________) Case No. 2:14-cv-02018-JAD-CWH ORDER 15 Before this Court are Defendant and Counterclaimant Galaxy Gaming Inc’s (“Defendant”) 16 motions to seal (docs. # 14, # 19, #23, # 47,# 54), Plaintiffs and Counterclaimants AGS, LLC and Red 17 Card Gaming Inc.’s (“Plaintiffs”) responses (docs. # 39, # 40, # 66, # 67), and Defendant’s replies 18 (docs. # 52, # 72, # 73). 19 BACKGROUND 20 This action arises from a dispute over the terms of the non-competition and asset purchase 21 agreements that were entered into by Defendant and Plaintiff Red Card Gaming Inc. (“Red Card”). 22 Plaintiff AGS, LLC is involved in this action, as it has been assigned Red Card’s rights and obligations 23 under both the non-competition and asset purchase agreements. 24 25 DISCUSSION 1. Legal Standard 26 The Ninth Circuit has comprehensively examined the common law right of public access to 27 judicial files and records. See Kamakana v. City and County of Honolulu, 447 F.3d 1172 (9th Cir. 28 2006). In Kamakana, the court recognized that different interests are at stake in preserving the secrecy Dockets.Justia.com 1 of materials produced during discovery, and materials produced or presented in relation to dispositive 2 motions. Id. at 1180-81. According to the court, two standards apply to account for these interests 3 when evaluating requests to seal such materials. 4 A party seeking to seal “private materials unearthed during discovery,” or to maintain the 5 sealing of such materials when attached to non-dispositive motions, need only demonstrate “good 6 cause” to justify sealing. Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010). “For good 7 cause to exist, the party seeking protection bears the burden of showing specific prejudice or harm will 8 result if no protective order is granted.” Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 9 1206, 1210-11 (9th Cir. 2002). In essence, “the public can gain access to litigation documents and 10 information produced during discovery unless the party opposing disclosure shows ‘good cause’ why 11 a protective order is necessary.” Id. at 1210. Thus, the “burden is on the party requesting a protective 12 order to demonstrate that: (1) the material in question is a trade secret or other confidential 13 information within the scope of Rule 26(c); and (2) disclosure would cause an identifiable, significant 14 harm.” Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003) (citation 15 omitted). “If a court finds particularized harm will result from disclosure of information to the public, 16 then it balances the public and private interests to decide whether a protective order is necessary.” Id. 17 at 1211 (citing Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995)). 18 By contrast, a party seeking to seal a judicial record attached to a dispositive motion, or 19 material that is presented at trial must articulate “compelling reasons” in favor of sealing. Kamakana, 20 447 F.3d at 1178. Indeed, the “mere fact that the production of records may lead to a litigant’s 21 embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court 22 to seal its records.” Id. (citation omitted). To justify sealing such documents, therefore, a party must 23 present articulable facts identifying the interests favoring continued secrecy and show that these 24 specific interests overcome the presumption of public access by outweighing the public’s interest in 25 understanding the judicial process. Id. at 1181. Generally, requests for sealing are justified in cases 26 in which the production of records would gratify private spite, encourage public scandal, circulate 27 libelous statements, or release trade secrets. Id. at 1179. 28 // 2 1 2. Analysis 2 a. Motion to Seal (doc. # 14) 3 Defendant asks the Court to seal: (1) exhibits 20, 28, and 29 (doc. # 15-22, # 15-30, #15-31) 4 of Defendant’s cross-motion for preliminary injunction because the exhibits contain information of 5 Defendant’s total placements of high card flush games, placements at specific casinos, and pricing for 6 the games at each casino, which purportedly could be used by competitors; (2) paragraph 95 of Robert 7 B. Saucier’s (“Saucier”) declaration (doc. # 15-1 at 18) because it refers to this information; 8 (3) portions of Defendant’s cross-motion for preliminary injunction referring to this information (doc. 9 # 15 at 12-13); and (4) exhibit 1 of Michael J. Pertgen’s (“Pertgen”) declaration (doc. # 10-1) 10 supporting Plaintiffs’ motion for preliminary injunction because the declaration contains information 11 of Defendant’s non-public patent application currently being prosecuted before the U.S. Patent and 12 Trademark Office. Defendant adds that this action is in its early stages, with no protective order 13 having yet been entered. Defendant also notes that it already filed a redacted version of the 14 documents in question, except for Pertgen’s declaration, which was filed by Plaintiffs. 15 Plaintiffs, in response, do not object. However, Plaintiffs assert that they reserve the right to 16 contest whether such information should remain sealed at a later time. In reply, Defendant responds 17 to assertions made by Plaintiffs in their opposition to Defendant’s motion for preliminary injunction, 18 doc. # 31. 19 As an initial matter, this Court will not consider Defendant’s reply, as it responds to assertions 20 made by Plaintiffs in doc. # 31, which is not properly before this Court. In light of Plaintiff’s non- 21 opposition, moreover, this Court grants Defendant’s request. As such, this Court directs the Clerk of 22 Court to seal Pertgen’s declaration (doc. # 10-1) on the record. This Court also directs Plaintiffs to file 23 a redacted version of Pertgen’s declaration. 24 b. 25 Defendant asks the Court to seal portions of paragraph 23 of Defendant’s answer (doc. # 13 26 at 20) because Defendant “inadvertently” specified the number of placements of high card flush games 27 that occurred during the first two years of the asset purchase agreement. Defendant contends this 28 information is confidential and a trade secret because it could be used by competitors to “better Emergency Motion to Seal (doc. # 19) 3 1 compete” with Defendant in placing table games at casinos. 2 Plaintiffs do not oppose Defendant’s request but wonder whether: (1) such information 3 constitutes a trade secret or is confidential; (2) the instant motion is, in fact, an emergency; and 4 (3) Defendant is or would incur harm by disclosing the information. 5 A motion to seal an answer is governed by a “compelling reasons” standard, which reflects the 6 strong presumption in favor of access to court records in this circuit. See Hyosung (Am.), Inc. v. 7 Hantle, Inc., No. 10-CV-2160 SBA NJV, 2011 WL 5520961, at *3 (N.D. Cal. Nov. 14, 2011). Here, 8 the Court finds that Defendant’s “inadvertent” inclusion of a purportedly confidential trade secret fails 9 to satisfy the “compelling reasons” standard set forth by the Ninth Circuit. As such, this Court denies 10 Defendant’s request. Defendant shall file an amended answer, without the information at issue, no 11 later than April 10, 2015. 12 c. 13 Defendant asks the Court to seal portions of its motion to compel arbitration (doc. # 24), along 14 with exhibit A of the motion (doc. # 24-1), as the non-competition agreement entered into by 15 Defendant and Red Card purportedly requires the information at issue, which relates to arbitration, be 16 held in confidence. Motion to Seal (doc. # 23) 17 Plaintiffs, in response, dispute various aspects of the non-competition agreement cited by 18 Defendant, but claim they do not oppose Defendant’s sealing request at this time. However, Plaintiffs 19 reserve the right to contest whether such information should remain sealed in the future. 20 In reply, Defendant contends that Plaintiffs’ “reservation of rights” is no reason to deny the 21 instant motion and, because it has shown “good cause,” Defendant asks the Court to seal the 22 documents at issue. 23 The Court will not consider Plaintiffs’ assertions regarding the non-competition agreement, as 24 they are not properly before this Court. In light of Plaintiffs’ non-opposition, moreover, this Court 25 grants Defendant’s request. Because Defendant has already filed a redacted version of the documents 26 at issue, the Court will not require anything further at this time. 27 // 28 // 4 1 d. Motion to Seal (doc. # 47) 2 Defendant asks the Court to seal portions of its reply (doc. # 48) to Plaintiffs’ opposition to 3 Defendant’s motion to compel arbitration, along with exhibits A and B of Defendant’s reply (docs. 4 # 48-1, # 48-2), as the non-competition agreement entered into by Defendant and Red Card purportedly 5 requires that the information at issue, which relates to arbitration, be held in confidence. 6 Plaintiffs, in response, again dispute various aspects of the non-competition agreement cited 7 by Defendant, but claim they do not oppose sealing the information at this time and reserve the right 8 to contest whether such information should remain sealed in the future. 9 In reply, Defendant contends that Plaintiffs “do not actually oppose” the instant motion, and 10 it has shown “good cause” to seal the documents at issue. Thus, Defendant asks the Court to grant its 11 request. 12 The Court reiterates its refusal to consider Plaintiffs’ assertions regarding the non-competition 13 agreement, as they are not properly before this Court. In any event, because Plaintiffs do not oppose 14 the instant motion, this Court grants Defendant’s request. This Court notes that Defendant has already 15 filed a redacted version of the documents at issue. As such, the Court will not require anything further 16 at this time. 17 e. 18 Defendant asks the Court to seal: (1) portions of its reply (doc. # 55) in support of its cross- 19 motion for preliminary injunction because the non-competition agreement entered into by Defendant 20 and Red Card purportedly requires that the information at issue, which relates to arbitration, be held 21 in confidence; (2) exhibit 1 (doc. # 55-3) of Ryan J. Cudnick’s (“Cudnick”) declaration because it is 22 a copy of the August 28, 2014 asset purchase agreement between Defendant and Red Card and, hence, 23 “confidential”; and (3) exhibit 1 (doc. # 57-1) of Gary A. Vecchiarelli’s (“Vecchiarelli”) declaration, 24 which contains pricing and placement information that purportedly constitutes a “trade secret.” Motion to Seal (doc. # 54) 25 Plaintiffs, in response, yet again dispute various aspects of the non-competition agreement, but 26 claim they do not oppose Defendant’s request at this time and reserve the right to contest whether such 27 information should remain sealed in the future. 28 In reply, Defendant points out that Plaintiffs filed an untimely response to the instant motion. 5 1 Nevertheless, per Defendant, Plaintiffs do not oppose the sealing request, and Defendant has 2 purportedly shown “compelling reasons” to support that request. 3 The Court, yet again, reiterates its refusal to consider Plaintiffs’ assertions regarding the non- 4 competition agreement, as they are not properly before this Court. Because Plaintiffs do not oppose 5 the instant motion, and Defendant already filed a redacted version of the documents at issue, the Court 6 grants Defendant’s request. 7 CONCLUSION AND ORDER 8 Accordingly, IT IS HEREBY ORDERED that Defendant’s Motion to Seal (doc. # 14) is 9 granted. The Court directs the Clerk of Court to seal Pertgen’s declaration (doc. # 10-1) on the 10 record. The Court also directs Plaintiffs to file a redacted version of Pertgen’s declaration. 11 IT IS FURTHER ORDERED that Defendant’s Emergency Motion to Seal (doc. # 19) is 12 denied. Defendant shall file an amended answer, without the information at issue, no later than April 13 10, 2015. 14 IT IS FURTHER ORDERED that Defendant’s Motion to Seal (doc. # 23) is granted. 15 IT IS FURTHER ORDERED that Defendant’s Motion to Seal (doc. # 47) is granted. 16 IT IS FURTHER ORDERED that Defendant’s Motion to Seal (doc. # 54) is granted. 17 DATED: April 2, 2015 18 19 20 ______________________________________ C.W. Hoffman, Jr. United States Magistrate Judge 21 22 23 24 25 26 27 28 6