Ever.Ag, LLC v. Milk Moovement, Inc. ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 DAIRY, LLC, a Delaware Limited No. 2:21-cv-02233 WBS AC Liability Company, 13 Plaintiff, 14 ORDER RE: REQUESTS TO SEAL v. 15 MILK MOOVEMENT, INC., a foreign 16 Corporation, and MILK MOOVEMENT, LLC, a Delaware Limited 17 Liability Company, 18 Defendants. 19 20 ----oo0oo---- 21 Dairy, LLC initiated this action against Milk 22 Moovement, Inc. and Milk Moovement, LLC alleging trade secret 23 misappropriation under federal and California law, and 24 intentional interference with contractual relations. (First Am. 25 Compl. (Docket No. 48).) On February 14, 2023, the court denied 26 various requests to seal without prejudice. (Docket No. 237.) 27 Before the court are (1) Dairy’s renewed request to seal portions 28 of the parties’ briefing related to Milk Moovement’s motion for 1 leave to amend counterclaims (Dairy Req. to Seal (Docket No. 2 248)), and (2) Milk Moovement’s request to seal certain materials 3 filed in connection with its now filed Second Amended 4 Counterclaims (Milk Moovement Req. to Seal (Docket No. 250)).1 5 A party seeking to seal a judicial record bears the 6 burden of overcoming a strong presumption in favor of public 7 access. Kamakana v. City & County of Honolulu, 447 F.3d 1172, 8 1178 (9th Cir. 2006). The party must “articulate compelling 9 reasons supported by specific factual findings that outweigh the 10 general history of access and the public policies favoring 11 disclosure, such as the public interest in understanding the 12 judicial process.” Id. at 1178-79 (citation omitted); see also 13 Ctr for Auto Safety v. Chrysler Group, LLC, 809 F.3d 1092, 1098- 14 99 (9th Cir. 2016) (explaining that the compelling reasons 15 standard should apply to all motions which are correlated to the 16 underlying cause of action). In ruling on a motion to seal, the 17 court must balance the competing interests of the public and the 18 party seeking to keep records secret. See Kamakana, 477 F.3d at 19 1179. 20 The Ninth Circuit has recognized that an example of a 21 compelling reason for sealing records includes “sources of 22 business information that might harm a litigant’s competitive 23 standing.” Ctr. For Auto Safety, 809 F.3d at 1097 (quoting Nixon 24 v. Warner Commc’ns, Inc., 435 U.S. 539, 598 (1978)); see also 25 Smith v. United States, 2022 WL 3578568, *1 (E.D. Cal. Aug. 19, 26 27 1 On February 23, 2023, the court granted Milk Moovement’s motion for leave to amend counterclaims. (Docket No. 28 244.) 1 2022) (explaining that business information may include “pricing, 2 profit, and customer usage information kept confidential by a 3 company that could be used to the company’s competitive 4 disadvantage”). 5 I. Dairy’s Renewed Request to Seal 6 Dairy identifies three categories of information it 7 seeks to protect: (1) discussion of its “at-issue trade secrets”; 8 (2) terms of business arrangements in confidential contracts with 9 United Dairymen of Arizona (“United Dairymen”), California 10 Dairies, Inc. (“California Dairies”), and Borden Dairy; and (3) 11 internal analyses and strategies. (See Dairy Req. to Seal.) 12 To protect its alleged trade secrets, Dairy seeks to 13 seal portions of the declaration of Duane Banderbob, Dairy’s 14 Chief Operating Officer, which is attached as exhibit N to the 15 Patchen declaration.2 (Patchen Decl., Ex. N (Docket No. 224-15).) 16 (See Dairy Req. to Seal at 3-4.) Specifically, Dairy seeks to 17 seal the portions of the declaration which “discuss the details 18 and functionality of Dairy’s producer payroll application, its 19 pooling methodology, and a confidential report . . . that reveals 20 the logic of Dairy’s pooling methodology.” (Id. at 4.) The 21 request to seal appears to sufficiently show that sealing is 22 necessary to protect Dairy’s alleged trade secrets. Accordingly, 23 Dairy’s request to seal the identified portions of exhibit N will 24 be granted. 25 To protect the terms of its business arrangements with 26 27 2 Dairy seeks to seal exhibit N at 71:19-23 fn.2, 72:3- 13, 73:24-26, 74:1-12, 74:21-22, 78:1, and 79:1-13. (Req. to 28 Seal at 2.) 1 United Dairymen, California Dairies, and Borden Dairy, Dairy also 2 seeks to seal seven documents in their entirety: (1) exhibit A to 3 the Patchen declaration: the “Software Assignment and Grant-Back 4 License Agreement” (the “Software Assignment Agreement”) (Patchen 5 Decl., Ex. A (Docket No. 224-2)); (2) exhibit B to the Patchen 6 Declaration: the “Nondisclosure Agreement” (Patchen Decl., Ex. B 7 (Docket No. 224-3)); (3) exhibit 10 to the Hagey Declaration: a 8 letter sent from Dairy’s CFO to United Dairymen’s CEO (the “UDA 9 Letter”) (Hagey Decl., Ex. 10 (Docket No.204-12)); (4) exhibit 11 10 to the Hagey Declaration: an order form which contains 11 descriptions of Dairy software solutions and confidential 12 contract terms such as term length and monthly pricing (Hagey 13 Decl., Ex. 11 (Docket No. 204-13)); (5) exhibit 13 to the Hagey 14 Declaration: a user agreement between Dairy and CDI which governs 15 Dairy’s commercial relationship with CDI (Hagey Decl., Ex. 13 16 (Docket No. 204-15)); (6) exhibit 14 to the Hagey Declaration: a 17 user agreement (Hagey Decl., Ex. 14 (Docket No. 204-16)); and (7) 18 exhibit 15 to the Hagey Declaration: a service level agreement 19 (Hagey Decl., Ex. 15 (Docket No. 204-17).) (See Dairy Req. to 20 Seal at 5-6.) 21 Dairy argues that, because these documents reflect 22 Dairy’s “business strategies, negotiating positions, and agreed- 23 to commercial terms,” Dairy argues that they could “harm Dairy’s 24 position vis-à-vis competitors and counterparties in future 25 similar negotiations.” (Id.) 26 The request to seal exhibit 11 appears to sufficiently 27 show that sealing is necessary to protect Dairy’s business 28 information. Accordingly, Dairy’s request to seal exhibit 11 1 will be granted. By contrast, with the exceptions of the 2 purchase price and license fee in the Software Assignment 3 Agreement (see Ex. A at 2) and the term length in the 4 Nondisclosure Agreement (see Ex. B at 3), the other documents 5 appear to be standard, almost “boilerplate” contracts which would 6 not disclose any protected information and thus Dairy’s concerns 7 do not outweigh the history of access and public policies 8 favoring disclosure to the public. Therefore, the court must 9 deny Dairy’s request to seal the entirety of the Software 10 Assignment Agreement, Nondisclosure Agreement, UDA Letter, and 11 exhibits 13, 14, and 15 without prejudice. The court will 12 consider a more tailored request that seeks to seal only the 13 protected information within these documents, rather than the 14 entirety of the documents. 15 To protect its internal analyses and strategies, Dairy 16 also seeks to seal: (1) the entirety of an email from Dairy 17 investor, Banneker Partners, to Dairy’s CEO, Scott Sexton, which 18 discusses Milk Moovement as a then new entrant to the market (the 19 “Banneker Email”) (Hagey Decl., Ex. 1 at 65-66); (2) an internal 20 email in which a Dairy employee provides notes from a call with 21 CDI and makes recommendations to the Dairy team (Mot. for Leave 22 at 46:16-19 and 46:21-22); and (3) an internal email in which a 23 Dairy employee provides notes from a call with California Dairies 24 and recommended next-steps and strategies (Mot. for Leave at 25 46:25-27 and 47:1-10). (See Dairy Req. to Seal at 6-8.) The 26 request to seal these portions of Milk Moovement’s motion appears 27 to sufficiently show that sealing is necessary to protect Dairy’s 28 business information. Accordingly, Dairy’s request to seal 1 Exhibit 2 and the two emails will be granted. 2 II. Milk Moovement’s Request to Seal 3 Milk Moovement seeks to seal certain materials filed in 4 support of its Second Amended Counterclaims which were designated 5 as “CONFIDENTIAL” or “HIGHLY CONFIDENTIAL -- ATTORNEYS' EYES 6 ONLY” under the stipulated protective order (Docket Nos. 54 61). 7 (See Milk Moovement Req. to Seal at 1.) As Milk Moovement 8 acknowledges, a confidentiality agreement between the parties 9 does not per se constitute a compelling reason to seal documents 10 outweighing the interests of public disclosure and access. There 11 needs to be an independent basis for sealing or redacting a 12 document beyond the fact that material is within the purview of a 13 stipulated protective order. 14 While Milk Moovement does not provide an independent 15 basis, many of the materials it seeks to seal are the same as 16 those which Dairy seeks to seal. Specifically, Milk Moovement 17 seeks to seal portions of its Second Amended Counterclaims as 18 well as the attached exhibits: exhibit 1 (the UDA Letter) and 19 exhibit 2 (the Banneker Email). (Milk Moovement Req. to Seal at 20 1.) For the same reasons discussed above, the request to seal 21 the Banneker Email and portions of the Second Amended 22 Counterclaims which reference Dairy’s business information and 23 internal emails will be granted. The request to seal the UDA 24 Letter and all other portions of the Second Amended Counterclaims 25 for which there is no independent basis for sealing will be 26 denied without prejudice.3 27 3 This includes the request to seal the Second Amended 28 Counterclaims at 30:20-23, 32:11, 33:16-19, 33:21-22, 33:25-27, 1 IT IS THEREFORE ORDERED that the requests to seal 2 (Docket Nos. 248, 250) be, and the same hereby are, GRANTED in 3 part and DENIED in part. Milk Moovement’s motion for leave to 4 amend counterclaims at 43:20-24, 46:16-19, 46:21-22, 46:25-27, 5 and 47:1-10 (Docket No. 204-1); exhibit 1 of the Hagey 6 Declaration at 65-66 (Docket No. 204-3); the entirety of exhibit 7 11 of the Hagey Declaration (Docket No. 204-13); exhibit N of the 8 Patchen Declaration at 71:19-23 fn.2, 72:3-13, 73:24-26, 74:1-12, 9 74:21-22, 78:1, and 79:1-13 (Docket No. 224-15); and the Second 10 Amended Counterclaims at 30:20-23, 32:11, 33:16-19, 33:21-22, 11 33:25-27, 34:1-9, 34:21-22, and exhibit 2 (Docket No. 249) are 12 ordered SEALED. 13 The requests to seal exhibits A and B of the Patchen 14 Declaration (Docket Nos. 224-2, 224-3); exhibits 10, 13, 14, and 15 15 of the Hagey Declaration (Docket Nos. 204-12, 204-15, 204-16, 16 204-17); Milk Moovement’s motion for leave to amend counterclaims 17 at 6:19-23, 9:27, 11:11-13, 16:25-27, 17:1-3, and 18:24 (Docket 18 No. 204-1); exhibit 1 to the Hagey Declaration at 29:18-24, 19 45:11, 47:22-23, 48:21-28, 49:1-3, and 61-63 (Docket No. 204-3); 20 Dairy’s opposition to the motion for leave at 9:22-24, 22:10-11, 21 24:8-9, 36:2-4, and 36:6-17 (Docket No. 224); Milk Moovement’s 22 reply at 8:18-19 (Docket No. 233); and the Second Amended 23 Counterclaims at 16:18-26, 27:5-22, 28:6-8, 28:21-23, 32:9-10, 24 32:12-26, 33:1-15, 33:20, 33:23-24, 34:12-18, 35:21-27, 36:1-2, 25 36:7-16, and exhibit 2 (Docket No. 249) be, and the same hereby 26 are, DENIED WITHOUT PREJUDICE. 27 28 34:1-9, and 34:21-22. nnn nen nee EI IE II IEEE EE IIE OIE IIE DE 1] Dated: March 9, 2023 eh hha A hh bee WILLIAM B. SHUBB 2 UNITED STATES DISTRICT JUDGE 3 4 5 6 , g 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28