Mendoza v. Electrolux Home Products, Inc. ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ERIKA MENDOZA, et al., an individual, No. 1:20-cv-01133-DAD-BAM on behalf of herself and all others similarly 12 situated, 13 Plaintiffs, ORDER GRANTING DEFENDANT’S REQUEST TO SEAL 14 v. (Doc. No. 223) 15 ELECTROLUX HOME PRODUCTS, INC. et al., 16 Defendants. 17 18 19 This matter is before the court on a request to file an exhibit under seal pursuant to Local 20 Rule 141 brought by defendant Midea Microwave and Electrical Appliances Manufacturing Co. 21 Ltd. (“Midea China”). (Doc. No. 223.) Defendant Midea China requests the court’s permission 22 to file under seal two documents attached as Exhibit 5 to a declaration in support of motions to 23 dismiss filed by defendants Midea America Corporation (“Midea America”) and Midea China. 24 (Doc. Nos. 199; 201; 223 at 2; 220 at 5.) In addition to defendant Midea China’s notice of 25 request to seal, which is publicly filed on the court’s docket, Midea China has also separately 26 provided the court with the exhibit defendant Midea China seeks to file under seal. (See Doc. 27 Nos. 223; 220-3.) Pursuant to Local Rule 141, on January 29, 2021, plaintiffs Erika Mendoza and 28 James Hunt (“plaintiffs”) submitted to the court an opposition to defendant Midea China’s request 1 (“Opp’n”). Having reviewed the exhibit that Midea China seeks to file under seal as well as 2 plaintiffs’ opposition to Midea China’s request to seal, the court will grant Midea China’s 3 request.1 4 LEGAL STANDARD 5 All documents filed with the court are presumptively public. San Jose Mercury News, 6 Inc. v. U.S. Dist. Court, 187 F.3d 1096, 1103 (9th Cir. 1999) (“It is well-established that the fruits 7 of pretrial discovery are, in the absence of a court order to the contrary, presumptively public.”). 8 “Historically, courts have recognized a ‘general right to inspect and copy public records and 9 documents, including judicial records and documents.’” Kamakana v. City & County of 10 Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc’ns, Inc., 435 11 U.S. 589, 597 & n.7 (1978)). 12 Two standards generally govern requests to seal documents. Pintos v. Pac. Creditors 13 Ass’n, 605 F.3d 665, 677 (9th Cir. 2010). The standards used are based on the type of motion to 14 which the documents to be sealed are attached: 15 [J]udicial records attached to dispositive motions [are treated] differently from records attached to non-dispositive motions. Those 16 who seek to maintain the secrecy of documents attached to dispositive motions must meet the high threshold of showing that 17 “compelling reasons” support secrecy. A “good cause” showing under Rule 26(c) will suffice to keep sealed records attached to non- 18 dispositive motions. 19 Kamakana, 447 F.3d at 1180 (citations omitted). The reason for the two different standards is 20 that “[n]ondispositive motions are often unrelated, or only tangentially related, to the underlying 21 1 Defendants Midea China and Midea America have each filed separate motions to dismiss in 22 this action. (Doc. Nos. 199, 201.) In its reply brief in support of its pending motion to dismiss, 23 defendant Midea America states that “[p]laintiffs’ consolidated Opposition repeatedly conflates Midea America and Midea China as the ‘Midea Defendants’ . . . . Because Midea America and 24 Midea China are separate and distinct entities, Midea America files this separate Reply Brief to address issues unique to Midea America and to disentangle what Plaintiffs have conflated.” 25 (Doc. No. 220 at 2.) However, defendant Midea China filed the pending request to file under seal, despite the fact that the request pertains to a declaration attached only to defendant Midea 26 America’s reply brief in support of Midea America’s pending motion to dismiss. (Doc. Nos. 223; 27 220-2 at 6–7.) The declaration itself is titled “Supplemental Declaration of Gerard P. Dietrich in Support of Midea China’s and Midea America’s Motions to Dismiss.” (Doc. No. 220-2 at 1 28 (emphasis added).) 1 cause of action, and, as a result, the public’s interest in accessing dispositive materials does not 2 apply with equal force to non-dispositive materials.” Pintos, 605 F.3d at 678 (quotations 3 omitted). 4 Under the “compelling reasons” standard applicable to dispositive motions: 5 [T]he court must conscientiously balance the competing interests of the public and the party who seeks to keep certain judicial records 6 secret. After considering these interests, if the court decides to seal certain judicial records, it must base its decision on a compelling 7 reason and articulate the factual basis for its ruling, without relying on hypothesis or conjecture. 8 9 Id. at 1178–79 (internal quotation marks, omissions, and citations omitted). The party seeking to 10 seal a judicial record bears the burden of meeting the “compelling reasons” standard. Id. at 1178; 11 Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003). 12 “In general, ‘compelling reasons’ sufficient to . . . justify sealing court records exist when 13 such ‘court files might . . . become a vehicle for improper purposes,’ such as the use of records to 14 gratify private spite, promote public scandal, circulate libelous statements, or release trade 15 secrets.” Kamakana, 447 F.3d at 1179 (quoting Nixon, 435 U.S. at 598). “The mere fact that the 16 production of records may lead to a litigant’s embarrassment, incrimination, or exposure to 17 further litigation will not, without more, compel the court to seal its records.” Id. “The 18 ‘compelling reasons’ standard is invoked even if the dispositive motion, or its attachments, were 19 previously filed under seal or protective order.” Id. at 1178–79. 20 ANALYSIS 21 Because defendant Midea China requests sealing in connection with a motion to dismiss, 22 the “compelling reasons” standard plainly applies. Even under that higher standard, however, the 23 court finds that the exhibit in question should remain sealed. 24 This putative products liability class action pertains to allegedly defective handles on 25 certain microwaves that were designed, manufactured, marketed, tested, distributed, and/or sold 26 by the various defendants in this action. (Doc. No. 194 at ¶ 1.) On November 30, 2020, 27 defendants Midea China and Midea America each filed motions to dismiss plaintiffs’ first 28 amended complaint. (Doc. Nos. 199, 201.) Defendant Midea China now requests an order 1 authorizing it to file under seal Exhibit 5 to the supplemental declaration of Gerhard P. Dietrich in 2 support of Midea China and Midea America’s motions to dismiss plaintiffs’ first amended 3 complaint. (Doc. No. 223 at 2.) The exhibit consists of two agreements between defendant 4 Midea China and third-party Underwriters Laboratories, Inc. (“UL”) pertaining to the testing and 5 use of the UL mark on certain products (the “UL Agreements”). (Id. at 3.) According to 6 defendants Midea China and Midea America, plaintiffs received access to these documents when 7 UL produced 2,700 pages of documents in a PDF titled “Agreements with Midea” in response to 8 a subpoena in a related case, Rice v. Electrolux Prods., Inc., No. 4:15-cv-00371 (M.D. Pa.). 9 (Doc. Nos. 223 at 3; 220-2 at 2.) The parties do not dispute that the documents were marked 10 confidential by UL when the documents were initially produced, or that “[b]y agreement, the 11 parties are allowed to use the documents produced in Rice in related litigation, including this 12 case.” (Doc. No 223 at 3; see also Opp’n at 3.) 13 Plaintiffs placed the UL Agreements at issue in their first amended complaint in this 14 action, in which they quote the following paragraph (“Paragraph 11.0”), which appears in both 15 UL Agreements: 16 This Agreement shall be governed by the laws of the State of Illinois, USA without reference to its choice of law principles. Any action 17 related to the Agreement shall be filed in the federal or state court having jurisdiction in Cook County, Illinois, USA. The parties 18 consent of the exercise of personal jurisdiction of that court and shall bear any costs, legal fees and expenses incurred in transferring 19 actions filed elsewhere. 20 (Doc. No. 194 at ¶ 66.) In its pending motion to dismiss, defendant Midea China asserts that the 21 quoted choice of forum provision is irrelevant to this action and does not establish that personal 22 jurisdiction exists over Midea China in the state of California, particularly because “the 23 agreement does not mention California.” (Doc. No. 199 at 7.) In addition, Midea China quotes 24 the following paragraph from the UL Agreements (“Paragraph 10.0”) in its reply in support of its 25 motion to dismiss, which Midea China cites in support of its assertion that “the language in the 26 UL Agreements cannot benefit Plaintiffs”: 27 ///// 28 ///// 1 No Third Party Beneficiaries. No provisions of this Agreement shall in any way inure to the benefit of any third party, including the public 2 at large. The parties intend that no third party shall have any rights or cause of action under this Agreement. 3 4 (Doc. Nos. 223 at 4; 222 at 11.)2 5 In seeking to seal the documents at issue, defendant Midea China first argues that the UL 6 Agreements are “not relevant to the . . . issues raised in this action.” (Id. at 4 (emphasis in 7 original).) Apart from Paragraphs 10.0 and 11.0, which, as mentioned, are both included 8 unredacted in the briefing filed in connection with the pending motions to dismiss in this action, 9 Midea China contends that “[n]o other provisions in the UL Agreements are arguably relevant to 10 this litigation.” (Doc. No. 223 at 4.) Midea China thus seeks to file the UL Agreements under 11 seal “only to demonstrate [to the court] that the UL Agreements . . . . are plainly irrelevant as they 12 both relate to the testing and use of the UL mark and do not mention California.” (Doc. No. 223 13 at 4.) 14 In its request to seal, Midea China also argues that the UL Agreements contain 15 “competitively sensitive business information that may present a threat of competitive harm if 16 disclosed publicly,” such as non-public payment arrangements and negotiated contract terms. 17 (Doc. No. 223 at 3–4.) According to Midea China, “[d]isclosure of these specific terms might 18 harm [UL’s] competitive standing and have a chilling effect on its ability to negotiate more 19 favorable similar terms in future agreements with other parties.” (Id. at 4.) Moreover, Midea 20 China repeats that because the UL Agreements are not relevant to this litigation, and the only 21 paragraphs that could arguably be relevant here—Paragraphs 10.0 and 11.0—are available on the 22 court’s docket without redaction, “the public’s interest in being informed about this case will not 23 be injured by filing the UL Agreements under seal.” (Id. at 4–5.) 24 In opposition, plaintiffs argue that it is merely “conjecture” that trade secrets will be 25 divulged if the UL Agreements are not filed under seal. (Opp’n at 3.) Plaintiffs assert that the 26 pricing provision in the UL Agreements “does not provide specifics and is a generic form 27 2 Defendant Midea America has also included Paragraphs 10.0 and 11.0 of the UL Agreements in 28 its reply brief in support of its motion to dismiss. (Doc. No. 220-1 at 11.) 1 paragraph that also appears in the contracts between UL and Electrolux and Sharp Electronics 2 Corp.” (Id. at 3.) Accordingly, plaintiffs argue that the pricing provision is “not a negotiated 3 provision” and that Midea China’s arguments are “based purely” on hypothesis or conjecture. 4 (Id. at 3 (citing Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9th Cir. 1995) (“After taking all 5 relevant factors into consideration, the district court must base its decision on a compelling reason 6 and articulate the factual basis for its ruling, without relying on hypothesis or conjecture.”).) In 7 addition, plaintiffs contend that Midea China’s “true goal” in seeking to seal the UL Agreements 8 is “to prevent disclosure of their consent to be subject to personal jurisdiction in Illinois,” because 9 “[t]heir business model is to prevent adjudication for defective products they sell in the United 10 States by universally challenging personal jurisdiction and attempting to maintain their business 11 operations to avoid the courts in the United States.” (Opp’n at 4.) Finally, plaintiffs contend that 12 because none of the defendants in this action objected to the inclusion of Paragraph 11.0 in 13 plaintiffs’ amended complaint, “the relevant provision of these UL contracts already exists in the 14 public forum” and defendants Midea China and Midea America waived any assertion that the UL 15 Agreements should be sealed. (Id. at 5.) 16 The court finds that defendant Midea China has established a compelling reason to seal 17 Exhibit 5 of Mr. Dietrich’s supplemental declaration submitted in this action. The court is 18 unpersuaded by plaintiffs’ argument that a lack of specific prices being listed in the UL 19 Agreements necessarily means that the pricing provisions therein are merely “generic form 20 paragraph[s]” and are not negotiated provisions containing sensitive business information. 21 (Opp’n at 3.) A compelling reason to file a document under seal exists “where public disclosure 22 of proprietary business information could harm [the business’s] competitive standing and/or result 23 in the improper use of the information by others who might circumvent investing their own time 24 and resources.” Western Air Charter, Inc. v. Sojitz Corp., No. 2:18-cv-07361-JGB-MAA, 2019 25 WL 4509304, at *4 (C.D. Cal. May 2, 2019). Here, the UL Agreements contain nonpublic 26 contract terms that were the final product of negotiations between Midea China and UL. 27 Similarly, plaintiffs’ unsupported allegation that the same pricing provisions appear in 28 agreements between UL and other companies—agreements to which plaintiffs have access due to 1 related litigation, but to which the public and UL’s business competitors do not—does not 2 diminish the fact that the publication of these documents could provide a negotiating advantage to 3 UL’s business partners or competitors. (See Opp’n at 3); see also Western Air Charter, 2019 WL 4 4509304, at *5 (granting an application to file nonpublic business agreements under seal because 5 “their public dissemination would give [defendant’s] future business partners the upper-hand in 6 negotiations of similar deals”); Interstate Fire and Cas. Co. v. New Hampshire Ins. Co., No. 2:12- 7 cv-01237-DGC, 2013 WL 11693771, at *1 (D. Ariz. Apr. 22, 2013) (granting a motion to seal a 8 settlement agreement produced by non-parties in underlying litigation where the non-parties 9 expressed that the settlement terms were confidential); Monster Energy Co. v. Vital 10 Pharmaceuticals, Inc., No. 5:18-cv-01882-JGB-SHK, 2019 WL 3099711, at *2 (C.D. Cal. June 11 17, 2019) (“Courts also routinely find that non-public financial, pricing, and strategy information 12 could harm litigants’ competitive standing and grant motions to seal such information.”). 13 Moreover, Midea China does not oppose the presence of Paragraph 11.0 of the UL 14 Agreements —the Illinois forum selection clause—on the public docket in this action, and indeed 15 has set forth the full text of both Paragraphs 10.0 and 11.0 in its reply brief in support of its 16 motion to dismiss. (Doc. No. 222 at 11.) Thus, plaintiffs’ argument that Midea China’s true 17 motivation in filing the pending motion is to “prevent disclosure of [its] consent to be subject to 18 personal jurisdiction in Illinois” is unavailing. Midea China has made no efforts to file under seal 19 the only paragraph of the UL Agreements that bears on personal jurisdiction in Illinois. (See 20 Opp’n at 4.) 21 Lastly, the court has read the UL Agreements in their entirety and agrees with defendant 22 Midea China that, apart from Paragraphs 10.0 and 11.0, the contents of the UL Agreements are 23 irrelevant to this action. Notably, plaintiffs appear to concede that the remainder of the UL 24 Agreements are irrelevant here, referring to Paragraph 11.0 as “the relevant contractual 25 provision” from the UL Agreements and stating that this provision “already exists in the public 26 ///// 27 ///// 28 ///// 1 | forum.”? Because the only terms of the UL Agreements that are relevant to this action are already 2 | available on the public docket, the court finds that in this instance, the competitive business 3 | interests of UL outweigh the public’s interest in accessing the entirety of the UL Agreements. 4 | See Tri-Quint Semiconductor, Inc. v. Avago Tech. Ltd., No. 2:09-cv-01531-JAT, 2011 WL 5 | 4947343, at *3 (D. Ariz. Oct. 18, 2011) (granting a request to seal personnel records pertaining to 6 | non-parties where non-parties’ confidentiality interests “outweigh[] the public’s right of access”). 7 CONCLUSION 8 After reviewing the papers submitted by the parties, the court grants defendant Midea 9 | China’s request to seal. (Doc. No. 223.) Defendant Midea China shall provide an electronic copy 10 | of the documents to be sealed to the Clerk of the Court by email at 11 | ApprovedSealed@caed.uscourts.gov, at which time the Clerk of the Court will file the documents 12 | under seal. See Local Rule 141(e)(2)G). 13 | IT IS SO ORDERED. □ Dated: _ April 26, 2022 fe or 15 UNITED STATES DISTRICT JUDGE 16 17 18 19 20 21 22 23 | ? This assertion by plaintiffs ostensibly contradicts a different argument made by plaintiffs: that the UL Agreements are relevant to this products liability action because the results of the product 24 | testing Midea China performed pursuant to the UL Agreements were incorrectly reported to UL for five years. (Opp’n at 4-5.) However, plaintiffs fail to demonstrate how any of the specific 25 terms contained in the UL Agreements (apart from Paragraph 11.0) are relevant here. Instead, 26 | Plaintiffs’ argument in this regard merely suggests that the existence of a contractual relationship between Midea China and UL is relevant to this action, but not the specific terms underlying that 27 | contractual relationship. As noted above, plaintiffs appear to acknowledge this distinction by, only one sentence after describing the importance of the contracts, stating that “the relevant 28 | contractual provision from the UL contracts is quoted in the Amended Complaint.” (Id. at 5.)