Blackhawk Network Incorporated v. SL Card Company Incorporated ( 2021 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Blackhawk Network Incorporated, No. CV-21-00813-PHX-MTL 10 Plaintiff, ORDER 11 v. 12 SL Card Company Incorporated, et al., 13 Defendants. 14 15 Before the Court is Plaintiff’s Motion for Leave to File First Amended Complaint 16 Under Seal (the “Motion”) (Doc. 13). The Motion is fully briefed. (Docs. 34, 35.) For the 17 following reasons, the Court will grant the Motion in part. 18 I. 19 In the Motion, Plaintiff seeks leave to file its First Amended Complaint (“FAC”) 20 and Exhibit A thereto under seal. (Doc. 13 at 2.) Plaintiff’s request is mainly premised on 21 a confidentiality provision included in a Product Distribution Agreement (“PDA”), 22 attached to the FAC as Exhibit A. (Id.) Plaintiff argues that good cause supports its request 23 because revealing the information would expose Plaintiff “to potential liability for breach 24 of contract.” (Id.) Defendants oppose the Motion. (Doc. 34.) They contend that “[t]here is 25 no compelling need to shield the contents of the PDA from public view, as the PDA 26 pertains to a product that was discontinued and a relationship that ended over two years 27 ago.” (Id. at 2.) Thus, in Defendants’ view, there is “no risk that [Plaintiff] will be sued for 28 breach if the FAC and PDA are not sealed.” (Id.) Having considered Defendants’ response, 1 Plaintiff now contends that, subject to two exceptions, “sealing is no longer necessary.” 2 (Doc. 35 at 2.) Plaintiff continues to seek leave to file a customer list contained in an exhibit 3 attached to the PDA and confidential pricing information provided in certain paragraphs of 4 the FAC under seal. (Id.) 5 II. 6 The public has a right to inspect and copy public judicial records and documents. 7 Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 567 (1978). Although that right is not 8 absolute, there is a “strong presumption in favor of access to court records.” Ctr. for Auto 9 Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1096 (9th Cir. 2016), cert. denied sub nom. 10 FCA U.S. LLC v. Ctr. for Auto Safety, 137 S. Ct. 38 (2016) (quoting Foltz v. State Farm 11 Mut. Aut. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). As the party seeking to seal a 12 judicial record, Plaintiff bears the burden of overcoming that presumption by either 13 showing “compelling reasons” if the record is a dispositive pleading or “good cause” if the 14 record is a nondispositive pleading. See Kamakana v. City & Cnty. of Honolulu, 447 F.3d 15 1172, 1179–80 (9th Cir. 2006); see also Ctr. for Auto Safety, 809 F.3d at 1096–97. Motions 16 to seal a complaint must meet the compelling reasons standard, not the good cause standard 17 as Plaintiff suggests. See Ctr. for Auto Safety, 809 F.3d at 1096–97 (explaining the “good 18 cause” exception applies to “materials attached to a discovery motion unrelated to the 19 merits”); see also In re NVIDIA Corp. Derivative Litig., No. C06-06110, 2008 WL 20 1859067, at *3 (N.D. Cal. Apr. 23, 2008) (“Under the Ninth Circuit’s jurisprudence in 21 Kamakana, a request to seal all or part of a complaint must clearly meet the ‘compelling 22 reasons’ standard and not the ‘good cause’ standard.”). 23 III. 24 Plaintiff seeks to leave to file a list of customers, attached to the PDA, under seal. 25 Plaintiff considers the customer list to be a trade secret because Plaintiff does not share the 26 list publicly. (Doc. 35 at 2.) Thus, Plaintiff contends that the release of the list would cause 27 competitive harm. (Id.) The Court agrees with Plaintiff. “[C]ustomer lists may constitute 28 trade secrets if competitors could not readily ascertain customer names from public or other 1 proper sources and if reasonable efforts are made to maintain the secrecy of the lists.” See 2 B2B CFO Partners, LLC v. Kaufman, No. CV09-2158, 2011 WL 6297930, at *3 (D. Ariz. 3 Dec. 16, 2011). Plaintiff’s interest in keeping the customer list confidential outweighs the 4 public’s interest in accessing a miniscule part of the record. Thus, the Court finds that 5 Plaintiff has demonstrated compelling reasons for sealing the customer list. 6 Plaintiff also seeks leave to file two paragraphs of the FAC under seal because they 7 contain “proprietary and confidential” information concerning how Plaintiff “prices its 8 services to its customers.” (Doc. 35 at 3.) Plaintiff asserts that the release of this information 9 would cause competitive harm because the information “reveals details about how 10 [Plaintiff] prices its products and margins and/or profits realized between wholesale and 11 retail pricing.” (Id.) If made public, Plaintiff argues that competitors could “directly target 12 [Plaintiff’s] partners and [] structure their pricing in a manner that could directly harm and 13 undermine [Plaintiff’s] sales approach.” (Id.) The Court finds that public disclosure of this 14 confidential pricing information would cause Plaintiff competitive harm such that Plaintiff 15 has demonstrated compelling reasons for sealing the information. See, e.g., Baker v. 16 SeaWorld Ent., Inc., No. 14CV2129, 2017 WL 5029612, at *5 (S.D. Cal. Nov. 3, 2017) 17 (finding compelling reasons to maintain under seal “pricing and marketing strategies” 18 because disclosure “could lead to an improper use by competitors”). 19 IV. 20 Accordingly, 21 IT IS ORDERED that Plaintiff’s Motion (Doc. 13) is granted in part and denied 22 in part. The Motion is granted insofar as Plaintiff is permitted to file the customer list in 23 Exhibit A to the FAC and paragraphs 6 and 69 of the FAC under seal. The Motion is denied 24 in all other respects. 25 IT IS FURTHER ORDERED that by no later than July 7, 2021, Plaintiff shall file 26 a copy of the FAC that redacts only (1) the customer list attached to Exhibit A of the FAC, 27 and (2) paragraphs 6 and 69 of the FAC. 28 IT IS FURTHER ORDERED that the Clerk of the Court shall file the unredacted || version of Plaintiff's FAC (lodged at Doc. 14) and unredacted version of Plaintiff's Notice 2|| of Filing First Amended Complaint (lodged at Doc. 20) under seal. 3 IT IS FURTHER ORDERED that the Clerk of the Court shall file Defendant’s Opposition to Plaintiff's Motion for Leave to File First Amended Complaint Under Seal 5 || Codged at Doc. 33) on the public docket. 6 IT IS FINALLY ORDERED reaffirming Defendants’ deadline to respond to the □□ FAC. Defendants shall answer or otherwise respond to the FAC by no later than July 9, 8] 2021. 9 Dated this Ist day of July, 2021. 10 Wichad T. gibuade Michael T. Liburdi 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4-