Tevra Brands LLC v. Bayer HealthCare LLC ( 2020 )

1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 TEVRA BRANDS LLC, Case No. 19-cv-04312-BLF 8 Plaintiff, ORDER RE PLAINTIFF'S 9 v. ADMINISTRATIVE MOTIONS TO SEAL FIRST AMENDED COMPLAINT 10 BAYER HEALTHCARE LLC, et al., AND PLAINTIFF'S REPLY IN SUPPORT OF MOTION FOR LEAVE 11 Defendants. TO FILE FIRST AMENDED COMPLAINT 12 [Re: ECF 78, 87] 13 14 Before the Court are Plaintiff Tevra Brands LLC’s administrative motions to file under 15 seal portions of (1) the First Amended Complaint (“FAC”) and the red-lined version of the FAC, 16 ECF 78, see also ECF 82; and (2) Plaintiff’s Reply in Support of Its Motion for Leave to File the 17 FAC, ECF 87. Having reviewed the parties’ submissions and applicable sealing law, the Court 18 GRANTS IN PART and DENIES IN PART the administrative motions. 19 I. LEGAL STANDARD 20 “Historically, courts have recognized a ‘general right to inspect and copy public records 21 and documents, including judicial records and documents.’” Kamakana v. City & Cnty. of 22 Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc’ns, Inc., 435 23 U.S. 589, 597 & n.7 (1978)). As the Ninth Circuit has explained, this right exists to “ensur[e] the 24 public’s understanding of the judicial process and of significant public events,” Kamakana, 447 25 F.3d at 1179 (internal quotation marks omitted), as “court records often provide important, 26 sometimes the only, bases or explanations for a court’s decision,” Oliner v. Kontrabecki, 745 F.3d 27 1024, 1025 (9th Cir. 2014). Accordingly, court records are generally subject to “a strong 1 In order to justify sealing such records, a litigant must show “compelling reasons” that “outweigh 2 the general history of access and the public policies favoring disclosure.” Id. 3 Although a lesser showing of “good cause” suffices to seal documents not “more than 4 tangentially related to the underlying cause of action,” Ctr. for Auto Safety, 809 F.3d at 1099, this 5 Court has previously determined that a complaint—which forms the very basis for a suit—does 6 not fall within that narrow “exception,” id. See Space Data Corp. v. Alphabet Inc., No. 16-CV- 7 03260-BLF, 2019 WL 1024964, at *2 (N.D. Cal. Mar. 4, 2019); accord Ojmar US, LLC v. Sec. 8 People, Inc., No. 16-CV-04948-HSG, 2016 WL 6091543, at *2 (N.D. Cal. Oct. 19, 2016). As for 9 Plaintiff’s Reply, all of the passages the parties seek to seal are direct quotes or paraphrases from 10 the proposed FAC, and so are sealable to the same extent as the FAC itself. Thus, in order to 11 justify sealing the documents at issue, the parties must meet “the high threshold of showing that 12 ‘compelling reasons’ support secrecy.” Kamakana, 447 F.3d at 1180. 13 Compelling reasons justifying the sealing of court records generally exist “when such 14 ‘court files might . . . become a vehicle for improper purposes,’” Kamakana, 447 F.3d at 1179 15 (quoting Nixon, 435 U.S. at 598), such as: “to gratify private spite, promote public scandal, 16 circulate libelous statements,” id.; “to release trade secrets,” id.; or “as sources of business 17 information that might harm a litigant’s competitive standing,” Ctr. for Auto Safety, 809 F.3d at 18 1097 (quoting Nixon, 435 U.S. at 598). On the other hand, “[t]he mere fact that the production of 19 records may lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will 20 not, without more, compel the court to seal its records.” Kamakana, 447 F.3d at 1178–79. The 21 party seeking to seal a judicial record bears the burden of “articulat[ing] compelling reasons 22 supported by specific factual findings.” Id. at 1182 (internal quotation marks omitted). The court 23 must then “conscientiously balance the competing interests of the public and the party who seeks 24 to keep certain judicial records secret.” Ctr. for Auto Safety, 809 F.3d at 1097 (internal quotation 25 marks and alterations omitted). 26 In addition, in this district, all parties requesting sealing must comply with Civil Local 27 Rule 79–5. That rule requires, inter alia, the moving party to “establish ... that the document, or 1 under the law.” Civ. L.R. 79–5(b). The request must also “be narrowly tailored to seek sealing 2 only of sealable material.” Civ. L.R. 79–5(b). Section (d) lays out the procedural requirements for 3 an administrative motion to seal, namely, a “declaration establishing that the document sought to 4 be filed under seal, or portions thereof, are sealable,” a proposed order that “lists in table format 5 each document or portion thereof that is sought to be sealed,” and an “unredacted version of the 6 document” that “indicate[s], by highlighting or other clear method, the portions of the document 7 that have been omitted from the redacted version.” Civ. L.R. 79–5(d). 8 II. DISCUSSION 9 The Court now turns to the merits of the sealing motion. Although Tevra Brands LLC 10 (“Tevra”) is the Submitting Party for both the FAC and Plaintiff’s Reply in Support of Its Motion 11 for Leave, the documents at issue contain material that Defendant Bayer HealthCare LLC 12 (“Bayer”) seeks to seal, as well as material that Tevra seeks to seal. Accordingly, Bayer has also 13 filed supporting declarations as required by Civil Local Rule 79–5(e). ECF 85, 90. 14 The parties seek to seal the relevant information on the ground that it is “highly 15 confidential and sensitive business information.” ECF 87-1 ¶ 1 (Tevra), ECF 78 at 2 (Tevra); see 16 also ECF 85 ¶ 3 (Bayer), ECF 90 ¶ 3 (Bayer). Tevra asserts that the information at issue relates to 17 “Tevra’s offers to retailers,” ECF 87-1 ¶ 3 and ECF 78 at 1, and comparisons of its pricings to 18 Bayer’s pricing, ECF 78 at 1. Similarly, Bayer says that redaction is required for “information 19 relating to Bayer’s agreements with retailers and Bayer’s internal financial and business 20 strategies.” ECF 85 ¶ 2, ECF 90 ¶ 2. 21 Price terms and other financial information certainly may be sealable. For instance, in In 22 re Electronic Arts, 298 Fed. Appx. 568, 569 (2008), the Ninth Circuit held that “pricing terms, 23 royalty rates, and guaranteed minimum payment terms” in a licensing agreement constituted 24 “business information that might harm a litigant’s competitive strategy” and, as such, should have 25 been sealed under the compelling reasons standard. The court further observed that such 26 information “falls within the definition of ‘trade secrets,’” which “may consist of any formula, 27 pattern, device or compilation of information which is used in one’s business, and which gives 1 (quoting Restatement of Torts § 757, cmt. b). And in Apple Inc. v. Samsung Electronics Co., 727 2 F.3d 1214, 1223 (2013), the Federal Circuit held that a trial court in this district had abused its 3 discretion in refusing to seal portions of documents “containing detailed product-specific financial 4 information, including costs, sales, profits, and profit margins.” 5 In this case, however, the Court is not persuaded that the parties have met their burden of 6 showing compelling reasons to seal the requested information. Where, as here, the material to be 7 sealed goes to the very heart of the suit, the public interest in access is especially great. Again, the 8 parties are requesting to seal portions of the FAC. As the operative pleading in the case, the FAC 9 is essential to the “public’s understanding” of the suit, Kamakana, 447 F.3d at 1179, perhaps more 10 so than any other filing on the docket. What is more, the particular allegations the parties seek to 11 seal are critical to establishing Tevra’s claims. They include, for instance, descriptions of the key 12 terms in Bayer’s contracts with its dealers. These contractual terms are the allegedly 13 anticompetitive practices Tevra challenges. Similarly, the large price difference between Tevra’s 14 products and Bayer’s products explains why Bayer allegedly resorts to its anticompetitive 15 practices. Without access to these allegations, the public cannot meaningfully comprehend the 16 subject matter of the suit, let alone its merits. 17 Such a great public interest in disclosure can be overcome only by equally compelling 18 reasons to seal. Yet, the parties have failed to articulate with any specificity how disclosure would 19 cause competitive harm to them. Their blanket claims that their “competitive standing[s] could be 20 significantly harmed” by disclosure are not only conclusory and vague, they also generalize across 21 all the information sought to be sealed. ECF 85 ¶ 3; see ECF 78 at 2; ECF 90 ¶ 3; ECF 87-1 ¶ 4. 22 “[C]onclusory offerings do not rise to the level of ‘compelling reasons’ sufficiently specific to bar 23 the public access to the documents.” Kamakana, 447 F.3d at 1182 (requiring a specific 24 compelling reason for each redaction rather than “a general category of privilege”). 25 Of course, the public does not require access to all the minutia of Bayer’s agreements with 26 retailers or to product- or customer-specific price terms. These kinds of details are unnecessary to 27 the public’s understanding of the suit; they also pose a greater risk of competitive harm. But, 1 contractual terms (as opposed to merely ancillary ones), at a reasonably high level of generality. 2 The parties have not met the compelling reasons standard as to such allegations. 3 Accordingly, the Court will GRANT the motion to seal only as to product-specific or 4 customer-specific price terms. The motion to seal is otherwise DENIED; however, the Court will 5 allow the parties another opportunity to justify sealing before mandating disclosure. 6 III. ORDER 7 To summarize, the Court rules on the administrative motions to seal, ECF 78, 87, as 8 follows: 9 Document Location Designating Party Ruling 10 FAC, ECF 78-3 ¶ 3, at p. 1 Bayer, see ECF 85 GRANTED, as confidential lines 18-21 ¶ 2 price information of Bayer 11 FAC, ECF 78-3 ¶ 3, at p. 1 Tevra, see ECF GRANTED, as confidential lines 22-23 78-1 ¶ 2 price information of Tevra 12 FAC, ECF 78-3 ¶ 5, at p. 2 Bayer, see ECF 85 DENIED 13 lines 16-19 ¶ 2 FAC, ECF 78-3 ¶ 103, at p. 25 Tevra, see ECF DENIED 14 line 6 78-1 ¶ 2 FAC, ECF 78-3 ¶ 104, at p. 25 Tevra, see ECF DENIED 15 line 8 78-1 ¶ 2 FAC, ECF 78-3 ¶ 110, at p. 26 Bayer, see ECF 85 DENIED 16 lines 7-13 ¶ 2 17 FAC, ECF 78-3 ¶¶ 115-17, at p. Bayer, see ECF 85 DENIED 27 lines 15-27 ¶ 2 18 FAC, ECF 78-3 ¶¶ 118-122, at Bayer, see ECF 85 DENIED p. 28 lines 2-26 ¶ 2 19 FAC, ECF 78-3 ¶¶ 123-25, at p. Bayer, see ECF 85 DENIED 20 29 lines 7-9, ¶ 2 15-20 21 FAC, ECF 78-3 ¶ 126, at p. 29 Tevra, see ECF DENIED line 23 78-1 ¶ 2 22 FAC, ECF 78-3 ¶ 127, at p. 29- Bayer, see ECF 85 DENIED 30 ¶ 2 23 FAC, ECF 78-3 ¶ 128, at p. 30 Bayer, see ECF 85 DENIED 24 lines 5-11 ¶ 2 FAC, ECF 78-3 Table at ¶ 128, Bayer, see ECF 85 GRANTED, as confidential 25 at p. 30-31 ¶ 2 price information of Bayer FAC, ECF 78-3 ¶ 129, at p. 31 Bayer, see ECF 85 GRANTED, as confidential 26 lines 23-28 ¶ 2 price information of Bayer 27 FAC, ECF 78-3 ¶ 130, at p. 32 Bayer, see ECF 85 DENIED lines 3-11 ¶ 2 lines 1-2 ¶ 2 1 FAC, ECF 78-3 ¶ 131, at p. 33 Bayer, see ECF 85 DENIED 2 lines 19-20 ¶ 2 FAC, ECF 78-3 ¶¶ 139-140, at Bayer, see ECF 85 DENIED. Tevra’s 3 p. 34 lines 22, ¶ 2 projections are not the 26 proprietary information of 4 Bayer, which purports to be the designating party. 5 FAC, ECF 78-3 ¶ 155, at p. 36 Bayer, see ECF 85 DENIED 6 line 28 to p. 37 ¶ 2 lines 1-2 7 FAC, ECF 78-3 ¶¶ 158-160, at Bayer, see ECF 85 DENIED p. 37 lines 12, ¶ 2 8 16-17, 19-21 9 FAC, ECF 78-3 ¶¶ 164-65, at p. Bayer, see ECF 85 DENIED 38 lines 13-16, ¶ 2 10 20-25 FAC, ECF 78-3 ¶ 170, at p. 39 Bayer, see ECF 85 DENIED 11 line 24 ¶ 2 FAC, ECF 78-3 ¶ 212, at p. 47 Bayer, see ECF 85 DENIED 12 lines 18-19 ¶ 2 13 FAC, ECF 78-3 ¶ 233, at p. 51 Bayer, see ECF 85 DENIED lines 8-10 ¶ 2 14 FAC, ECF 78-3 ¶ 239, at p. 52 Bayer, see ECF 85 DENIED line 14 ¶ 2 15 Red-lined FAC, Same portions Both parties See ruling as to FAC 16 ECF 78-5 identified as to the FAC 17 Plaintiff’s Reply, p. 7 line 24 Bayer, see ECF 90 DENIED ECF 87-4 ¶ 2 18 Plaintiff’s Reply, p. 8 line 3 Tevra, see ECF DENIED ECF 87-4 87-1 ¶ 3 19 Plaintiff’s Reply, p. 8 lines 13-15 Bayer, see ECF 90 DENIED 20 ECF 87-4 ¶ 2 Plaintiff’s Reply, p. 9 lines 27-28 Bayer, see ECF 90 DENIED 21 ECF 87-4 ¶ 2 Plaintiff’s Reply, p. 10 lines 1-2 Bayer, see ECF 90 DENIED 22 ECF 87-4 ¶ 2 23 Plaintiff’s Reply, p. 11 lines 18- Bayer, see ECF 90 DENIED ECF 87-4 23 ¶ 2 24 Again, the above-listed denials are all WITHOUT PREJUDICE. Any renewed 25 administrative motion to seal the material discussed in this order must be filed by March 27, 26 2020. 27 IT IS SO ORDERED. 1 || Dated: March 16, 2020 han en 2 / eh l fly MAM BETH LABSON FREEMAN 3 United States District Judge 4 5 6 7 8 9 10 11 a 12 © 15 16 18 19 20 21 22 23 24 25 26 27 28