Arnold v. State Farm Fire and Casualty Company

Filing 98

Order GRANTING Plf's 86 Unopposed MOTION to Seal as modified by Docs. 94 & 95 & this Order as set out. Plf's 95 Brief is construed as a motion to re-file Exhibits B & V to Plf's motion for class certification & is GRANTED as set out. Dft's 94 Memorandum is construed as a motion to seal & is GRANTED to the extent as set out. The Clerk is DIRECTED to unseal Exhibits X, Y, AA & EE & the 88 Memorandum in Support of Plf's Motion for Class Certification, Appointment of Class Representatives & Appointment of Class Counsel as set out Signed by District Judge Terry F. Moorer on 8/29/19. (tot)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
NORTHERN DIVISION
ANNIE ARNOLD, individually and
on behalf of others similarly situated,
Plaintiff,
v.
STATE FARM FIRE AND CASUALTY
COMPANY,
Defendant.

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Case No. 2:17-cv-00148-TFM-C

ORDER
Pending before the Court is Plaintiff’s Motion for Leave to File Under Seal Portions of
Memorandum in Support of Plaintiff’s Motion for Class Certification, Appointment of Class
Representatives, and Appointment of Class Counsel (Doc. 86); Plaintiff’s Brief Filed Pursuant to
the Court’s May 2, 2019 Order (Doc. 95); and Defendant’s Memorandum In Response to
Plaintiff’s Motion to Seal (Doc. 94) . For the reasons set out below, Plaintiff’s motion to seal is
GRANTED as modified by Docs. 94 and 95 and this Order; Plaintiff’s brief is construed as a
motion to re-file Exhibits B and V to Plaintiff’s motion for class certification and is GRANTED;
Defendant’s memorandum is construed as a motion to seal and is GRANTED to the extent set out
below.
I. BACKGROUND
On April 22, 2019, Plaintiff Annie Arnold (“Arnold” or “Plaintiff”) filed a Motion for Class
Certification, Appointment of Class Representatives, and Appointment of Class Counsel and an
accompanying Memorandum in Support of Plaintiff’s Motion for Class Certification, Appointment
of Class Representatives, and Appointment of Class Counsel. Docs. 87, 88. In tandem with that,
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Arnold filed a Motion for Leave to File Under Seal Portions of Memorandum in Support of
Plaintiff’s Motion for Class Certification, Appointment of Class Representatives, and Appointment
of Class Counsel. Doc. 86. The motion for class certification and accompanying memorandum
were filed under seal pending the Court’s ruling on her motion to seal.
In her original motion to seal, which was unopposed, Plaintiff sought to file under seal any
exhibits filed in support of her motion for class certification that were designated by the defendant,
State Farm Fire and Casualty Company (“State Farm” or “Defendant”), as “Confidential” or would
reveal information designated as confidential under the terms of a Consent Order adopted and
incorporated into the Scheduling Order on October 13, 2017.1 Docs. 50 and 51. Arnold did not
specify which documents she wished sealed, but she filed under seal the following exhibits: B, H,
T, V, X, Y, Z, AA, BB, CC, and EE. She also filed her memorandum in support of the motion for
class certification under seal and sought leave to redact the relevant portions of the memorandum
accordingly.2
However, the consent order merely guards against disclosure of confidential information
exchanged by the parties during discovery; information produced in discovery is not subject to the
common-law right of access. See Chicago Tribune Co. v. Bridgestone/Firestone, Inc., 263 F.3d
1304, 1311-12 (11th Cir. 2001); Romero v. Drummond Co., Inc., 480 F.3d 1234, 1245 (11th Cir.
2007). The consent order does not transfer to the parties the Court’s responsibility for protecting

1

The Court notes that movants are required to identify the documents they wish sealed under the
local rules. See S.D. Ala. GenLR 5.2(b). Plaintiff’s motion also did not state the duration for
which the seal was requested or why alternatives to sealing are inadequate, as required by the local
rules. See id.
2

Plaintiff stated in the motion that she wished to file portions of the memorandum under seal.
However, under this Court’s Local Rules, “[p]ortions of a document cannot be filed or placed
under seal – only the entire document may be sealed.” General L.R. 5.2(a). Thus, the Court
construed her request as one to redact the relevant portions of her brief.
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the public’s right to access judicial records of substantive proceedings. See, e.g., Romero, 480
F.3d at 1247. Accordingly, the parties were directed to confer regarding the exhibits Plaintiff
sought to seal and to file briefs (1) indicating which materials each party wishes to be sealed and/or
redacted from the motion for class certification and accompanying memorandum; (2) asserting an
argument for sealing each, addressing the relevant factors; and (3) indicating whether each request
is unopposed. See Doc. 91. Deadlines for responding to the motion for class certification were
stayed and the relevant documents have been maintained under seal pending a ruling on the matter.
Accordingly, the parties indicate they have conferred, and each has submitted the requested brief
indicating which documents they seek to file under seal. Docs. 94, 95.
II. STANDARD OF REVIEW
“The operations of courts and the judicial conduct of judges are matters of utmost public
concern.” Landmark Commc’ns, Inc. v. Virginia, 435 U.S. 829, 839, 98 S. Ct. 1535, 1541, 56 L.
Ed. 2d 1 (1978). “[T]he common-law right of access to judicial proceedings, an essential
component of our system of justice, is instrumental in securing the integrity of the process.”
Romero, 480 F.3d at 1245 (quoting Chicago Tribune Co., 263 F.3d at 1311). “What happens in
the halls of government is presumptively public business. Judges deliberate in private, but issue
public decisions after public arguments based on public records.” Union Oil Co. of Ca. v. Leavell,
220 F.3d 562, 568 (7th Cir. 2000). The common-law right of access favors access to judicial
records and includes “the right to inspect and copy public records and documents.” Chicago
Tribune, 263 F.3d at 1311. However, the right is not absolute. Id. It does not apply to discovery,
and where it does apply, it may be overcome by a showing of good cause. Romero, 480 F.3d at
1245.

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The good cause standard “requires the district court to balance the party’s interest in
obtaining access against the other party’s interest in keeping the information confidential.”
Chicago Tribune, 263 F.3d at 1313. When considering that balancing test, the Romero Court
stated as follows:
In balancing the public interest in accessing court documents against a party’s
interest in keeping the information confidential, courts consider, among other
factors, whether allowing access would impair court functions or harm legitimate
privacy interests, the degree of and likelihood of injury if made public, the
reliability of the information, whether there will be an opportunity to respond to the
information, whether the information concerns public officials or public concerns,
and the availability of a less onerous alternative to sealing the documents.
Romero, 480 F.3d at 1246. “Discovery material filed in connection with pretrial motions that
require judicial resolution of the merits is subject to the common-law right.” Chicago Tribune
Co., 263 F.3d at 1312. The Court should inform its decision whether to seal a judicial record by a
“‘sensitive appreciation of the circumstances that led to ... [the] production [of the particular
document in question].’” Chicago Tribune Co., 263 F.3d at 1311 (quoting Nixon v. Warner
Comm., Inc., 435 U.S. 589, 598, 602-02, 98 S. Ct. 1306, 1312, 1314-15, 55 L. Ed. 2d 570 (1978)).
“[T]he judge is the primary representative of the public interest in the judicial process and
is duty-bound therefore to review any request to seal the record (or part of it). He may not rubber
stamp a stipulation to seal the record.” Citizens First Nat’l Bank of Princeton v. Cincinnati Ins.
Co., 178 F.3d 943, 945 (7th Cir. 1999) (citations omitted). Thus, because the Court is obligated
to protect the public’s right to access judicial records, it is not bound by the parties’ stipulation to
seal the documentary record. See, e.g., Romero, 480 F.3d at 1247 (“[T]hat both parties want to
seal court documents ‘is immaterial’ to the public right of access.”) (quoting Brown v. Advantage
Eng’g, Inc., 960 F.2d 1013, 1016 (11th Cir. 1992)).

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III. PLAINTIFF’S BRIEF - Exhibits B and V (Doc. 89-2; Docs. 89-22/90-7)3
In her brief, Arnold indicates that she does not seek, herself, to file any documents under
seal. Doc. 95. She stated that she sought to do so in her previous motion primarily to adhere to
the constrains of the consent order adopted by the Court (Docs. 50, 51, 53) regarding items
designated by State Farm as “Confidential.” Doc. 95. Thus, Arnold makes no argument in her
brief for placing State Farm’s “Confidential” documents under seal.
Arnold also indicates, however, that she wishes to refile Exhibits B and V in order to limit
the scope of the documents to only the portions relevant to the motion for class certification. She
explains that she filed the exhibits—transcripts of her deposition and the deposition of proposed
class representative Tina Daniel—in their entirety with her motion for class certification, intending
to file them under seal because they contain references to confidential medical and financial
information. Arnold indicates that the parties have conferred and have agreed to narrow the scope
of materials they wish to be placed under seal. Consequently, rather than move to seal Exhibits B
and V, Arnold seeks to re-file them without the extraneous personal information. State Farm raises
no objection. The Court construes the request as a motion to re-file Exhibits B and V, which the
Court grants.
IV. DEFENDANT’S BRIEF
A.

Exhibit X (Docs. 89-24/90-8)
In its brief, State Farm concedes that Exhibit X was filed under seal in error, and the parties

do not request the document be maintained under seal.

Accordingly, the Court orders the

document unsealed.

3

It appears that Plaintiff has not included Exhibit B among the sealed exhibits filed in Doc. 90;
however, the absence is irrelevant in light of this Order.
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B.

Exhibits T and Z (Docs. 89-20/90-6; Docs. 89-26/90-10)
State Farm also concedes that various documents designated as confidential during

discovery do not meet the standard for filing under seal. Doc. 94. State Farm indicates that Arnold
filed Exhibits T and Z—both deposition transcripts designated as confidential under the terms of
the consent order—in their entirety in conjunction with her motion for class certification, but the
parties have agreed that the portions relevant to the motion need not be filed under seal.
Consequently, State Farm indicates that (1) Arnold has agreed to re-file Exhibits T and Z to include
only the agreed-upon portions relevant to the motion and (2) State Farm does not seek to file the
agreed-upon portions under seal. State Farm correctly notes that, under the Court’s local rules,
parties are instructed to file in conjunction with their motions “only the relevant portions” of
discovery material “germane to any motion or response.” S.D. Ala. CivLR 5(a) (“If discovery
materials are germane to any motion or response, only the relevant portions of the material shall
be filed with the motion or response.”). Accordingly, the Court construes this as a joint motion to
re-file Exhibits T and Z and grants the motion. The currently filed documents will remain under
seal.
C.

Exhibit BB (Docs. 89-28/90-12)
State Farm indicates that Exhibit BB is an email communication between itself and a third-

party vendor, and the vendor had designated it as “Confidential” in response to Plaintiff’s
subpoena. State Farm indicates that the vendor has withdrawn its objection to filing the document
in the public record; consequently, State Farm moves only to redact the exhibit to obscure the
email addresses of the sender and recipient, arguing that they are irrelevant business contact
information. The Court agrees and grants the request.

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D.

Exhibit CC (Docs. 89-29/90-13)
State Farm notes that Exhibit CC comprises 27 pages of internal State Farm email

communications, many of which are irrelevant to Plaintiff’s pending motion for class certification.
State Farm indicates that Plaintiff has agreed to modify the exhibit to include only the necessary
pages, which State Farm does not seek to seal. Defendant requests that the Court permit the exhibit
to be re-filed pursuant to the parties’ agreement and permit the parties to redact the names and
email addresses of the senders and recipients of the emails. State Farm argues that the contact
information is not germane to any issues raised in Plaintiff’s motion for class certification; the
redaction would protect irrelevant business contact information for the individuals; and the
substance of the emails would remain available in the public record. Accordingly, the Court grants
the request to re-file Exhibit CC with the requested modification and redaction.
E.

Exhibit H4 (Docs. 89-8/90-1 to 90-5)
State Farm seeks to file Exhibit H under seal in its entirety, asserting that it is a trade secret

containing high-value information closely guarded by insurers that, if made public, would give
competitors a substantial and unfair advantage. Defendant indicates that the exhibit is a massive
spreadsheet containing detailed estimating and claim data concerning potential class members
compiled over an extended period of time. Specifically, it contains estimating data for more than
10,000 Alabama property insurance claims made over approximately eight years, including the
number of estimates generated, the date of each insured’s loss, the zip code for the property at
issue, the estimated replacement cost for the loss, and the depreciation reflected in each estimate
broken down into subcategories including, in relevant part, “labor depreciation,” the calculated

4

Due to the size of the exhibit, Exhibit H is listed on the docket as Exhibits H1-H5. For purposes
of this Order, Exhibits H1-H5 shall be referred to as “Exhibit H.”
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“actual cash value” (“ACV”), and the calculated “Net ACV” for each estimate. Doc. 94 at 12-13.
It also contains claim data detailing the dates and payment amounts of each structural damage
indemnity claim, draft remarks for the payments when available, “pay code” types for each claim
payment, deductibles, coverage limits, and the cause and general location of each loss, among
other information.
State Farm argues that the spreadsheet data is highly proprietary, competitively sensitive,
and confidential. State Farm avers that public disclosure of the information would cause it
substantial injury in the Alabama insurance market by giving competitors a window on State
Farm’s property insurance loss experience in Alabama, while State Farm would have no similar
insights on its competitors’ experience. State Farm argues that it has taken extensive steps to
safeguard the confidentiality of the data, including imposing express requirements on employees,
independent adjusters, and others to protect the data from public disclosure.
State Farm asserts that the electronic claim handling system in which its claim handling
and payment data is stored is highly proprietary, it was developed internally over several years at
great expense, and employee access to it is restricted based on need. Defendant notes that the data
compiled in the exhibit is even more restricted—that, indeed, claims personnel could not access
reports showing the aggregate data in Exhibit H in the normal course of their work. Defendant
asserts that similar data is regularly protected in litigation by, inter alia, court orders to seal. State
Farm asserts that the estimating data in Exhibit H is generated from adjusters’ individual loss
estimates using Xactimate software under a license agreement that requires the licensor to maintain
the data’s confidentiality; accessing the data through the software system requires security
credentials; and transmissions of the data are encrypted.
State Farm questions whether Plaintiff’s motion for class certification is the kind of

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substantive proceeding contemplated by the common law right of access and argues that, even
assuming it is, State Farm has shown that publicly filing Exhibit H would harm its legitimate
privacy interests and present a substantial risk of significant competitive harm. State Farm notes
that the data does not refer to public officials and asserts that there is no less onerous means of
protecting the data because it is not the kind of data that may simply be redacted. State Farm
argues that Plaintiff relies on the data at this point in the litigation merely to try to show that the
action qualifies for class treatment, and the Court is not being asked to make a merits-based
determination. State Farm further argues that no party’s ability to respond to the data in Exhibit
H will be hampered by a seal because its relevance to the class certification motion is the type of
data it contains, not the individualized data figures, and the public-facing portions of Plaintiff’s
memorandum in support of class certification provide a sufficient summary of the type of data the
exhibit contains.
State Farm attaches to its memorandum a sworn declaration by Tom Moss (“Moss”), a Fire
Claim Consultant who provides support and guidance to other State Farm employees on the use of
the computer estimating software. Doc. 94-1. In the declaration, Moss attests to the contents and
uses of Exhibit H and the electronic system used to create it, the steps State Farm takes to ensure
its confidentiality, its sensitive and proprietary nature—essentially, all the particulars of State
Farm’s argument in favor of a seal, with additional detail.
As an initial matter, State Farm makes no argument in support of its assertion that a motion
for class certification may not qualify as the kind of public-facing judicial determination subject
to a presumption of public access. Thus, to the extent the argument is made, it is also rejected.
Nevertheless, the Supreme Court has noted that the Courts may deny access to judicial records
where they may become a “sources of business information that might harm a litigant’s

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competitive standing.” Nixon, 435 U.S. at 598; 98 S. Ct. at 1312. Here, State Farm asserts that
Exhibit H contains valuable trade secrets that could be used for just such purpose. To demonstrate
that Exhibit H constitutes a trade secret, State Farm must show that the spreadsheet has substantial
value; derives its value from the effort of its creation and lack of dissemination; would be valuable
to State Farm’s competitors; and has consistently been treated as a closely guarded secret. Chicago
Tribune Co., 263 F.3d at 1313.
State Farm demonstrates by the assertions above—which Moss attests to under penalty of
perjury—that Exhibit H and the database from which it was produced are substantially valuable to
State Farm and to its competitors; that the value derives from the creation of both the database and
the spreadsheet, and from their confidential nature; that State Farm has, indeed, kept access to the
database closely guarded; and that public access to the spreadsheet could harm State Farm’s
Alabama business by giving competitors a comprehensive look into its internal claim processes.
Thus, the Court finds that State Farm has demonstrated that the contents of Exhibit H, as a whole,
constitute a trade secret.
Additionally, State Farm has established good cause for filing Exhibit H under seal. The
sheer volume of internal information collected in the spreadsheet over a period of years, and the
lengths to which State Farm has gone to limit access to and dissemination of that information, even
among its own employees, supports the sensitive nature of the data and its potential value to
competitors. Moreover, there appears to be no opposition to a seal. 5 Based on State Farm’s
arguments and supporting evidence, the Court finds that State Farm has shown good cause, and
preventing public access to the spreadsheet as a whole is warranted under the Romero factors.

5

State Farm does not explicitly state whether Arnold opposes the request to seal. However, given
Arnold’s prior motion to seal, the parties’ subsequent conference, and the ensuing briefs, none of
the requests before the Court appear to be contentious.
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Specifically, the Court finds that there is a substantial likelihood of injury to State Farm if the
spreadsheet were publicly available, no public officials or business of public agencies are directly
implicated in the data, and, although the lawsuit itself is a presumptively public concern, access to
the spreadsheet is unnecessary for an understanding of the issues involved. State Farm has an
interest in keeping the spreadsheet private that outweighs public interest in the collected data
contained in it. Thus, the Court grants the motion to seal.
The Court notes, however, that State Farm’s arguments pertain to access to the spreadsheet
in its totality. State Farm does not object to Plaintiff’s lengthy description of State Farm’s
Xactimate estimating software and the ways in which State Farm has used the software in
Plaintiff’s memorandum supporting the motion for class certification. See, e.g., Doc. 88 at 11-15,
27-30. State Farm also raises no objection to Plaintiff’s citation to a small amount of specific data
in the spreadsheet in the memorandum’s factual background regarding the claim history of the
three proposed additional class representatives. See id. at 10-11. Moreover, State Farm does not
request any redactions to Plaintiff’s memorandum. Thus, the specific information from and
concerning the spreadsheet contained in the memorandum is exempted from the seal for purposes
of class certification, and Plaintiff’s memorandum shall be unsealed.
V. CONCLUSION
As detailed above, the Court ORDERS as follows:
(1) Plaintiff’s motion to seal (Doc. 86) is GRANTED as modified by Docs. 94 and 95 and this
Order.
(2) Plaintiff’s motion to re-file amended Exhibits B and V (Doc. 95) is GRANTED.
(3) Defendant’s motion to seal (Doc. 94) is GRANTED as follows:
a. The parties’ joint motion to re-file amended Exhibits T and Z is GRANTED.

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b. Defendant’s motion to redact email addresses from Exhibit BB is GRANTED. The
parties are DIRECTED to re-file an amended exhibit with the appropriate
redactions.
c. Defendant’s motion to re-file an amended Exhibit CC and to redact the names and
email addresses of senders and recipients is GRANTED.
d. Defendant’s motion to permit Exhibit H to be filed under seal is GRANTED, with
the exceptions noted above. The Clerk of Court is DIRECTED to maintain Exhibit
H under seal pending further Order of this Court. If further adjudication beyond
the class certification motion currently pending in this case requires citation to or
other use of the data in the spreadsheet, the parties are DIRECTED to confer and
notify the Court as to any additional exemptions.
(4) The Clerk of Court is DIRECTED to unseal Exhibits X, Y, AA, and EE (Docs. 89-24/908; Docs. 89-25/90-9; Docs. 89-27/90-11; and Docs. 89-31/90-14), and the Memorandum
in Support of Plaintiff’s Motion for Class Certification, Appointment of Class
Representatives, and Appointment of Class Counsel (Doc. 88). All other documents
currently under seal shall remain under seal pending further Order of this Court.
DONE and ORDERED this 29th day of August 2019.
/s/ Terry F. Moorer
TERRY F. MOORER
UNITED STATES DISTRICT JUDGE

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