DRK Photo v. McGraw-Hill Companies Incorporated et al

Filing 121

ORDER denying as moot 84 Motion for Protective Order FURTHER ORDERED granting 92 Motion to Seal. The documents lodged at 82 shall remain under seal. FURTHER ORDERED granting 110 Motion to Seal. The exhibit lodged at 106 and 108 sha ll remain under seal. FURTHER ORDERED denying 105 Motion for Leave to File Supplemental Evidence FURTHER ORDERED granting 107 Motion to submit the exhibits to its Reply on Motion for Partial Summary Judgment under seal. Signed by Senior Judge Paul G Rosenblatt on 6/10/14.(MAP)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 DRK Photo, Plaintiff, 10 11 v. 12 The McGraw-Hill Companies, Inc., et al., 13 Defendants. 14 ) ) ) ) ) ) ) ) ) ) ) CV 12-8093-PCT-PGR ORDER 15 Before the Court are several discovery-related motions: Defendants’ Motion for 16 Protective Order Regarding Rule 30(b)(6) Deposition (Doc. 84); Defendants’ Motions to Seal 17 Certain Confidential Documents (Docs. 92, 110); Plaintiff’s Motion for Leave to File 18 Supplemental Evidence in Support of Reply on Motion for Partial Summary Judgment (Doc. 19 105); and Plaintiff’s Notice of Lodging, which asks the Court seal the exhibits lodged with 20 the motion for leave to file (Doc. 107). The Court rules on the motions as follows. 21 BACKGROUND 22 Plaintiff DRK Photo (hereinafter “DRK”) is a stock photography agency. It alleges 23 that Defendant McGraw-Hill (“McGraw”), a textbook publisher, infringed DRK’s copyright 24 by exceeding the scope of license restrictions pertaining to certain photographs or failing to 25 obtain permission to use the photographs. 26 On November 26, 2013, the Court granted the parties’ joint motion to extend the 27 deadline for discovery to February 28, 2014, and the deadline for the filing of dispositive 28 motions to May 23, 2014. (Doc. 74.) 1 On February 21, 2014, DRK filed a motion for partial summary judgment (Doc. 79), 2 which the Court has denied in a separate order. Along with the motion DRK included a 3 notice of lodging of sealed documents. (Doc. 83.) The sealed documents, lodged at Doc. 82, 4 are Exhibits A and B to DRK’s motion for partial summary judgment and Exhibits 2–9 to the 5 Declaration of attorney Amanda Bruss. The documents contain print quantity figures and 6 information about the countries to which the publications at issue have been distributed. 7 McGraw contends that information pertaining to “precise print run and distribution 8 quantities, pricing information, and print run dates” is therefore confidential and should 9 remain sealed. (Doc. 92 at 4.) 10 On February 24, 2014, McGraw filed its motion for a protective order. (Doc. 84.) On 11 March 23, 2014, McGraw filed its motion for partial summary judgment (Doc. 97), which 12 the Court has granted. 13 On April 8, 2014, DRK filed a motion for leave to file exhibits in support of its reply 14 on its motion for partial summary judgment. (Doc. 105.) The exhibits are lodged at Docs. 106 15 and 108 as Exhibits 1 and 2. DRK agreed that they remain sealed for the purpose of its 16 motion to for leave to file the exhibits. (Doc. 107.) McGraw moves to seal Ex. 2 as 17 containing confidential material. (Doc. 110.) DISCUSSION 18 19 1. Protective order 20 McGraw moved, pursuant to Rule 26(c) of the Federal Rules of Civil Procedure, for 21 protective order regarding the deposition noticed by DRK in its second amended notice of 22 Rule 30(b)(6) deposition. (Doc. 84.) McGraw argued that the topics noticed by DRK have 23 been covered in prior testimony in this case and in parallel litigation brought by DRK’s 24 counsel, so additional testimony would be cumulative and unduly burdensome. (Doc. 84 at 25 7–11.) DRK opposed the motion. (Doc. 89.) The motion will be denied as moot. The 26 discovery deadline has passed and the parties have filed, and the Court has ruled on, motions 27 for summary judgment. 28 -2- 1 2 3 2. Motions to seal Defendants seek to seal confidential print, financial, and sales documents (Doc. 92) and confidential business process management and related communications (Doc. 110). 4 There is a strong presumption in favor of public access to court documents. Kamakana 5 v. City and County of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006). A party seeking to seal 6 a judicial record attached to a dispositive motion “bears the burden of overcoming this strong 7 presumption by meeting the ‘compelling reasons’ standard.” Id. This means “the party must 8 articulate compelling reasons supported by specific factual findings that outweigh the general 9 history of access and the public policies favoring disclosure.” Id. at 1178–79 (internal 10 quotations omitted). These compelling reasons must be shown even if the dispositive motion, 11 or its attachments, were previously filed under seal or protective order. Id. at 1179. The party 12 moving to seal bears the burden of proof for each particular document it wishes to seal. Foltz 13 v. State Farm Mutual Auto. Ins., 331 F.3d 1122, 1130 (9th Cir. 2003). 14 Compelling reasons to seal typically exist when such court files might become “a 15 vehicle for improper purposes, such as the use of records to gratify private spite, promote 16 public scandal, circulate libelous statements, or release trade secrets.” Kamakana, 447 F.3d 17 at 1179 (citing Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978)). A “trade secret 18 may consist of any formula, pattern, device or compilation of information which is used in 19 one’s business, and which gives him an opportunity to obtain an advantage over competitors 20 who do not know or use it.” In re Electronic Arts, Inc., 298 Fed.Appx. 568, 569 (9th Cir. 21 2008) (quoting Restatement of Torts § 757, cmt. b). Courts have found that a compelling 22 reason to seal exists to prevent information from being used “as sources of business 23 information that might harm a litigant’s competitive standing.” (Id.) (quoting Nixon, 435 U.S. 24 at 598); see TriQuint Semiconductor, Inc. v. Avago Technologies Ltd., No. CV-09-1531- 25 PHX-JAT, 2011 WL 6182346, at *2 (D.Ariz. December 13, 2011). 26 The documents lodged with DRK’s motion for partial summary judgment contain 27 specific print run and distribution data for dozens of McGraw products. Courts have 28 -3- 1 recognized the confidential nature of this type of information, finding that its disclosure 2 could reveal a publisher’s confidential trade secrets, which then could be used by competitors 3 to ascertain the publisher’s sales and marketing strategies to gain competitive advantage. 4 See, e.g., Bean v. Pearson Educ., Inc., No.CV-11-8030-PCT-PGR, 2013 WL 2455930, at *3- 5 4 (D.Ariz. June 5, 2013); Bean v. John Wiley & Sons, Inc., No. CV 11-08028-PCT-FJM, 6 2012 WL 1078662, at *5-6 (D. Ariz. Mar. 30, 2012); Muench Photography, Inc. v. Pearson 7 Educ., Inc., No. 12-cv-01927-WHO, 2013 WL 4475900, at *3–6 (N.D. Cal. Aug. 15, 2013); 8 Grant Heilman Photography, Inc. v. Pearson Educ., Inc., No. 11-cv-4649, 2012 WL 9 1956787, at *5 (E.D. Pa. May 31, 2012) 10 In addition, McGraw has provided specific facts establishing the harm it would suffer 11 from the disclosure of its print run and distribution data. Kevin Bretzinger, a senior director 12 at McGraw-Hill School Education Holdings (“MHE”), states in his declaration that “MHE 13 maintains the confidentiality of this information both to preserve this advantage and to 14 prevent its competitors from benefitting from knowledge of MHE’s sales and marketing 15 strategies” and that “actual sales and distribution data concerning each of these titles is highly 16 sensitive, not publicly revealed and guarded MHE commercial trade secret 17 information.”(Doc. 95, ¶ 3.) Bretzinger also states that “such disclosure would give MHE’s 18 competitors direct, accurate information as to MHE’s historical marketing and sales 19 strategies, and the resulting success (or failure) of those strategies,” which the competitors 20 could use “in developing their own products and strategic market decisions.” (Id., ¶ 5; see 21 Doc. 94, ¶¶ 5–9.) McGraw has also provided evidence that, contrary to DRK’s assertions, 22 the information at issue is not publicly available and that it takes steps to maintain the 23 confidentiality of its print run and distribution information, internally and with third parties. 24 (Doc. 94, ¶ 10, 12, 16; Doc. 95, ¶ 10, 12, 16.) 25 The Court concludes that McGraw has demonstrated compelling reasons to rebut the 26 presumption of public access. See Bean v. John Wiley & Sons, 2012 WL 1078662 at *6 27 (finding “compelling reasons” to seal print run and sales data that had been kept confidential 28 -4- 1 and could be used by the publisher’s competitors to its detriment). 2 McGraw also moved to seal DRK’s proposed Exhibit 2, lodged at Doc. 108. (Doc. 3 110.) The material in Exhibit 2 includes information concerning “MHE’s draft process 4 management presentations, internal communications and audits of MHE’s past and ongoing 5 business practices, including policies and procedures governing the acquisition and tracking 6 of third party content acquisition . . . as well as materials concerning MHE’s strategic 7 approach to its internal organizational and data management structure. (Doc. 110 at 4; see 8 Doc. 111, ¶ 4–7.) The Court finds that public disclosure of the information would cause 9 significant competitive harm and therefore McGraw has shown a compelling reason to seal 10 the exhibit. 11 2. Motion to file supplemental evidence in support of reply 12 DRK seeks leave to file exhibits to its reply in support of its motion for partial 13 summary judgment. (Doc. 105.) The motion will be denied. “District courts in Arizona have 14 uniformly held that the Local Rules of Civil Procedure do not permit a party moving for 15 summary judgment to file a supplemental statement of facts or attached exhibits with its 16 reply.” Parker v. Arizona, No. CV 08–656–TUC–AWT, 2013 WL 3286414, at *8 (D.Ariz. 17 June 28, 2013) (citations omitted); see TSI Inc. v. Azbil BioVigilant Inc., No. CV-12-83- 18 PHX-DGC, 2014 WL 880408, at *1 (D.Ariz., March 6, 2014) (“A party moving for summary 19 judgment may not introduce new facts or exhibits in its reply.”); B2B CFO Partners, LLC 20 v. Kaufman, 856 F.Supp.2d 1084, 1086–87 (D.Ariz. 2012) (“The Local Rules do not 21 contemplate attaching additional exhibits to replies in support of summary judgment or filing 22 a separate response to the non-moving party’s statement of facts.”). 23 CONCLUSION 24 For the reasons set forth above, 25 IT IS HEREBY ORDERED denying as moot Defendant McGraw’s Motion for 26 27 Protective Order (Doc. 84). IT IS FURTHER ORDERED granting McGraw’s Motion to Seal (Doc. 92). The 28 -5- 1 documents lodges at Docs. 82-3, 82-4, 82-5, 82-6, 82-7, 82-1 and 82-2 shall remain under 2 seal. 3 4 5 6 7 8 9 IT IS FURTHER ORDERED granting McGraw’s Motion to Seal (Doc. 110). The exhibit lodged at Docs. 106 and 108 shall remain under seal. IT IS FURTHER ORDERED denying Plaintiff DRK’s Motion for Leave to File Supplemental Evidence (Doc. 105). IT IS FURTHER ORDERED granting DRK’s request to submit the exhibits to its Reply on Motion for Partial Summary Judgment under seal (Doc. 107). DATED this 10th day of June, 2014. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6-

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