Zymex Industries, Inc. v. Ziba Foods, LLC ( 2021 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 9 EASTERN DISTRICT OF CALIFORNIA 10 ZYMEX INDUSTRIES, INC., Case No. 1:20-cv-01086-NONE-SAB 11 Plaintiff, ORDER DENYING JOINT REQUESTS TO 12 SEAL AND TO RETAIN JURISDICTION v. WITHOUT PREJUDICE 13 ZIBA FOODS, LLC, (ECF Nos. 27, 28) 14 Defendant. TWENTY-ONE DAY DEADLINE 15 16 17 I. 18 INTRODUCTION 19 On October 19, 2021, the parties filed a joint notice of request to seal their confidential 20 settlement agreement pursuant to Local Rule 141(b). (ECF No. 27.) Concurrently with this 21 request, the parties filed a notice of dismissal pursuant to Federal Rule of Civil Procedure 41, in 22 which they stipulated that “the court shall retain jurisdiction to enforce the confidential 23 settlement agreement reached between the parties . . . a copy of which is submitted herewith 24 under seal.” (ECF No. 28.) For the reasons set forth below, the parties’ stipulated request to seal 25 and request for the Court to retain jurisdiction shall be denied without prejudice. 26 /// 27 /// /// 1 II. 2 BACKGROUND 3 On August 5, 2020, Plaintiff sued Defendant for damages and injunctive relief resulting 4 from alleged trademark infringement and unfair competition practices. (ECF No. 1.) On July 5 26, 2021, the parties filed a notice of settlement. (ECF No. 21.) The Court ordered the parties to 6 file dispositional documents within thirty days but twice extended the filing deadline. (ECF Nos. 7 22, 24, 26.) On October 19, 2021, the parties filed the instant request to seal the settlement 8 agreement and Rule 41 notice of dismissal including the parties’ request that the Court retain 9 jurisdiction to enforce the settlement agreement.1 (ECF Nos. 27, 28.) 10 III. 11 LEGAL STANDARD 12 There is a presumption in favor of public access to court records. See Phillips ex rel. 13 Estates of Byrd v. Gen. Motors Corp. (Phillips), 307 F.3d 1206, 1210 (9th Cir. 2002). However, 14 “access to judicial records is not absolute.” Kamakana v. City & Cnty. of Honolulu, 447 F.3d 15 1172, 1178 (9th Cir. 2006). Two standards govern whether documents should be sealed: a 16 “compelling reasons” standard, and a “good cause” standard. Id. at 1179; Pintos v. Pac. 17 Creditors Ass’n, 605 F.3d 665, 677–78 (9th Cir. 2010). The “good cause” and “compelling 18 reasons” standards should not be conflated; a “good cause” showing will not, without more, 19 satisfy the “compelling reasons” test. Kamakana, 447 F.3d at 1180. 20 Generally, the compelling reasons standard is applied. See Ctr. for Auto Safety v. 21 Chrysler Grp., LLC (Auto Safety), 809 F.3d 1092, 1096–97 (9th Cir. 2016), cert. denied sub 22 nom. FCA U.S. LLC v. Ctr. for Auto Safety, 137 S. Ct. 38 (2016). Under the compelling 23 reasons standard, the party seeking to have a document sealed must articulate compelling reasons 24 supported by specific factual findings; it must identify the interests that favor secrecy; and it 25 must show that these specific interests outweigh the general history of access and the public 26 27 1 In the parties’ request to seal documents, which was not filed with the Court but emailed by the parties pursuant to Local Rule 141(b), the parties more specifically request that the settlement agreement remain under seal for five 1 policies favoring disclosure, such as the public’s interest in understanding the judicial process. 2 Kamakana, 447 F.3d at 1179–81. The Ninth Circuit has indicated that “ ‘compelling reasons’ 3 sufficient to outweigh the public’s interest in disclosure and justify sealing court records exist 4 when such ‘court files might have become a vehicle for improper purposes,’ such as the use of 5 records to gratify private spite, promote public scandal, circulate libelous statements, or release 6 trade secrets.’ ” Id. at 1179 (citing Nixon v. Warner Commc’ns Inc., 435 U.S. 589, 597 & n.7 7 (1978)). “[S]ources of business information that might harm a litigant’s competitive strategy 8 may also give rise to a compelling reason to seal,” as may pricing, profit, and customer usage 9 information kept confidential by a company that could be used to the company’s competitive 10 disadvantage. See Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214, 1221–22, 1225 (Fed. Cir. 11 2013) (quoting Nixon, 435 U.S. at 597–98). On the other hand, “[t]he mere fact that the 12 production of records may lead to a litigant’s embarrassment, incrimination, or exposure to 13 further litigation will not, without more, compel the court to seal its records.” Kamakana, 447 14 F.3d at 1179 (citing Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1136 (9th Cir. 15 2003)). Nor is the fact that the parties have agreed to keep information confidential. See 16 generally, Foltz, 331 F.3d 1122. Indeed, “[s]imply mentioning a general category of privilege, 17 without any further elaboration or any specific linkage with the documents, does not satisfy the 18 burden.” Kamakana, 447 F.3d at 1184. Rather, a party must “articulate compelling reasons 19 supported by specific factual findings.” Id. at 1178 (citations omitted). 20 The “good cause” standard is an exception that the Ninth Circuit “carved out . . . for 21 sealed materials attached to a discovery motion unrelated to the merits of a case” or documents 22 only tangentially related to the underlying cause of action. Auto Safety, 809 F.3d at 1097. 23 While it “presents a lower burden for the party wishing to seal documents than the ‘compelling 24 reasons’ standard,” Pintos, 605 F.3d at 678, the party seeking protection nevertheless bears the 25 burden of showing specific prejudice or harm will result, Phillips, 307 F.3d at 1210–11, and must 26 make a “particularized showing of good cause with respect to any individual document,” San 27 Jose Mercury News, Inc. v. U.S. Dist. Ct., 187 F.3d 1096, 1103 (9th Cir. 1999) (citations 1 “annoyance, embarrassment, oppression, or an undue burden” will suffice to seal non-dispositive 2 records. Fed. R. Civ. P. 26(c)(1); Kamakana, 447 F.3d at 1180. “Broad allegations of harm, 3 unsubstantiated by specific examples or articulated reasoning,” however, are insufficient. 4 Phillips, 307 F.3d at 1211 (quoting Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th 5 Cir. 1992)). 6 Additionally, Local Rule 141 provides that requests to seal shall set forth: (1) the 7 statutory or other authority for sealing; (2) the requested duration; (3) the identity, by name or 8 category, of persons to be permitted access to the documents; and (4) all other relevant 9 information. E.D. Cal. L.R. 141(b). Finally, any request to seal documents must be “narrowly 10 tailored” to remove from the public sphere only the material that warrants secrecy. See, e.g., 11 Ervine v. Warden, 241 F. Supp. 3d 917, 919 (E.D. Cal. 2016) (citing Press-Enterprise Co. v. 12 Superior Ct. of Cal., 464 U.S. 501 (1986)). To the extent any confidential information can be 13 easily redacted while leaving meaningful information available to the public, the Court must 14 order that redacted versions be filed rather than sealing entire documents. See Foltz, 331 F.3d at 15 1137; see also In re Roman Catholic Archbishop of Portland, 661 F.3d 417, 425 (9th Cir. 2011) 16 (“a court must still consider whether redacting portions of the discovery material will 17 nevertheless allow disclosure.”). “[I]f the court decides to seal certain judicial records, it must . . 18 . articulate the factual basis for its ruling, without relying on hypothesis or conjecture.’ ” 19 Kamakana, 447 F.3d at 1179 (quoting Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9th Cir. 20 1995)); see also Apple Inc. v. Psystar Corp., 658 F.3d 1150, 1162 (9th Cir. 2011), cert. denied, 21 132 S. Ct. 2374 (2012). 22 IV. 23 DISCUSSION 24 A. Request to Seal Settlement Agreement 25 In the notice of request to seal, the parties indicate they seek to seal the settlement 26 agreement because “it contains proprietary and confidential trade secret information of the 27 parties.” (ECF No. 27 at 1.) As an initial matter, the Court notes it is unpersuaded that the 1 argument or authority in support of this position. See, e.g., Philliben v. Uber Techs., Inc., No. 2 14-cv-05615-JST, 2016 WL 9185000, at *2 (N.D. Cal. Apr. 15, 2016) (compelling reasons 3 standard applied to parties’ motion for preliminary approval of settlement); Wells Fargo Bank, 4 N.A. v. Saticoy Bay LLC Series 3948 Applecrest, No. 2:17-cv-01360-APG-VCF, 2020 WL 5 2311560, at *2 (D. Nev. Apr. 23, 2020) (compelling reasons standard applied to motion to 6 enforce settlement agreement), rep. and recommendation adopted, 2020 WL 2308090 (D. Nev. 7 May 8, 2020), appeal dismissed sub nom. Wells Fargo Bank, N.A. v. Woodcrest Homeowners 8 Ass’n, No. 20-16129, 2021 WL 2374570 (9th Cir. Mar. 12, 2021). 9 Regardless, the Court finds the parties have not made a sufficient showing under either 10 the presumptive “compelling reasons” standard or the “good cause” exception. While the 11 request to seal asserts the settlement agreement “contains proprietary and confidential trade 12 secret information,” it does not make any “particularized showings” or provide any further 13 elaboration with respect to the settlement agreement. Kamakana, 447 F.3d at 1180, 1184; Foltz, 14 331 F.3d at 1135. Nor have the parties made a showing that some specific harm or prejudice will 15 result if the settlement agreement is not sealed. Beckman Indus., Inc., 966 F.2d at 476; Phillips, 16 307 F.3d at 1211. Similarly, the parties do not indicate which part of the settlement agreement 17 would reveal legitimate trade secrets. See Intermotive, Inc. v. Inpower, Inc., No. 2:05-cv-00844- 18 KJM-GGH, 2012 WL 5523280, at *1 (E.D. Cal. Nov. 14, 2012) (denying motion to seal 19 settlement agreement on this basis). Finally, the Court notes the duration of time requested by 20 the parties for the settlement agreement to remain sealed (five years) appears entirely arbitrary, 21 as no explanation or supporting legal authority is presented with respect to this request. Thus, 22 the Court finds the parties’ entire request “consists only of a conclusory invocation of a legal 23 ground and citation to a case.” Id.; Kamakana, 447 F.3d at 1184. 24 Furthermore, the parties do not demonstrate that the request to seal is narrowly tailored, 25 nor do they address whether redaction, rather than sealing, is appropriate. Foltz, 331 F.3d at 26 1137; Roman Catholic Archbishop of Portland, 661 F.3d at 425. The fact that the parties agreed 27 amongst themselves to keep the settlement details private, without more, is no reason to shield 1 JLR, 2018 WL 1159251, at *8–9 (W.D. Wash. Feb. 16, 2018) (“The fact that the settlement 2 agreements are confidential is not a sufficient basis for sealing the agreements.”), rep. and 3 recommendation adopted, 2018 WL 1157997, at *8–9 (W.D. Wash. Mar. 1, 2018); see 4 also Bernstein v. Target Stores, Inc., No. 13-cv-01018 NC, 2013 WL 5807581, at *3 (N.D. Cal. 5 Oct. 28, 2013) (“The existence of a confidentiality provision [in a settlement agreement], without 6 more, does not constitute good cause, let alone a compelling reason, to seal.”). On this record, 7 there are insufficient grounds on which to grant the parties’ request. 8 Finally, the Court notes it is unclear why the parties chose to submit their settlement 9 agreement at this time, considering the fact that they were neither required to do so, nor does 10 there as of yet appear to be any dispute requiring enforcement of the terms of the settlement 11 agreement. 12 For all of these reasons, the Court shall deny the parties’ request without prejudice. 13 B. Request to Retain Jurisdiction to Enforce the Settlement Agreement 14 The Court notes the parties’ stipulated request that the Court retain jurisdiction over this 15 action to enforce the parties’ settlement agreement “which is submitted herewith under seal,” 16 appears predicated upon the Court’s ruling on the pending request to seal. (See ECF No. 28 at 17 2.) In light of the Court’s denial of the request to seal the settlement agreement without 18 prejudice, the Court concludes the parties’ stipulated request that it retain jurisdiction to enforce 19 the settlement agreement submitted under seal must also be denied at this time. 20 However, the Court additionally finds the request to retain jurisdiction is properly denied 21 on the merits due to several facial deficiencies. For example, the parties provide no legal 22 authority in support of their request. Moreover, the stipulation does not indicate how long the 23 parties intend that the Court retain jurisdiction (and the Court declines to retain jurisdiction over 24 the parties’ closed case indefinitely), nor do the parties provide any other information justifying 25 any such period of time for retaining jurisdiction as reasonable or appropriate. Without more, 26 the Court shall deny the parties’ request. However, the denial shall be without prejudice to the 27 parties submitting an amended request consistent with this order. 1 V. 2 CONCLUSION AND ORDER 3 Accordingly, IT IS HEREBY ORDERED that: 4 1. The parties’ joit request to seal the settlement agreement (ECF No. 27), is 5 DENIED without prejudice;7 6 2. The Clerk of the Court shall RETURN the documents submitted in connection 7 with the parties’ request to seal to the submitting party pursuant to Local Rule 8 141(e)(1); 9 3. The parties’ stipulated request that the Court retain jurisdiction to enforce the 10 settlement agreement (ECF No. 28) is DENIED without prejudice; and 11 4. If the parties wish to file a renewed request and/or stipulated request for the Court 12 to retain jurisdiction over their agreement or, alternatively, withdraw their filing, 13 they must do so within twenty-one (21) days of entry this order. Otherwise, the 14 Court will direct the Clerk of the Court to close this case and adjust the docket to 15 reflect the parties’ voluntary dismissal pursuant to Rule 41. 16 7 IT IS SO ORDERED. DAA Le 1g | Dated: _ October 20, 2021 _ ee 9 UNITED STATES MAGISTRATE JUDGE 20 21 22 23 24 25 26 2 The Court finds adjudication by a magistrate judge of this motion appropriate. See E.D. Cal. L.R. 302(c)(1) (“all 27 | stipulations and motions relating to protective orders and sealing documents submitted or filed for hearing before discovery cutoff.”); see_also, e.g., Ambriz_ v. CVS Pharmacy, Inc., No. 1:19-cv-01391-NONE-BAM, 2020 WL 28 | 4368364, at *1 (E.D. Cal. July 30, 2020) (denial by magistrate judge of joint request to seal).