Schmuckley et al v. Rite Aid Corporation

Filing 198

ORDER signed by District Judge Kimberly J. Mueller on 4/29/2019 GRANTING 194 Notice of Request to Seal Document(s). (Washington, S)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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UNITED STATES OF AMERICA, and the
STATE OF CALIFORNIA, et al., ex rel
LOYD F. SCHMUCKLEY, JR.,

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Plaintiffs,

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No. 2:12-cv-1699-KJM-EFB

ORDER

v.

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RITE AID CORPORATION,

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Defendant.

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Before the court is defendant Rite Aid Corporation’s unopposed request to redact

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and seal material contained within its expert report, which Rite Aid seeks to attach as an exhibit

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to the Declaration of Michael Q. Eagan, Jr. in support of Rite Aid’s Motion to Exclude Plaintiff’s

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Proposed Sampling Methodology (“Motion to Exclude”). See Notice of Req. to Seal (“Notice”),

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ECF No. 194. For the foregoing reasons, the court GRANTS the request to seal.

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I.

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LEGAL STANDARD
“[T]he courts of this country recognize a general right to inspect and copy public

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records and documents, including judicial records and documents.” Nixon v. Warner

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Communications, 435 U.S. 589, 597 (1978) (footnotes omitted). Because “the right to inspect

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and copy judicial records is not absolute,” access in civil cases is properly denied for clearly
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justifiable reasons: to protect against “gratif[ication of] private spite or promot[ion of] public

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scandal,” or to preclude court dockets from becoming “reservoirs of libelous statements,” or

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“sources of business information that might harm a litigant’s competitive standing.” Id. at 598

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(citations omitted). As the Ninth Circuit instructs, a “strong presumption in favor of access” to

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the record governs in a court of law unless the case or a part of it qualifies for one of the relatively

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few exceptions “traditionally kept secret,” with secrecy allowed for good reasons. Foltz v. State

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Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003) (citation omitted). “Those who

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seek to maintain the secrecy of documents attached to dispositive motions must meet the high

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threshold of showing that ‘compelling reasons’ support secrecy.” Kamakana v. City and County

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of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citing Foltz, 331 F.3d at 1136). The

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compelling-reasons standard applies even if the contents of the dispositive motion or its

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attachments have previously been filed under seal or are covered by a generalized protective

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order, including a discovery phase protective order. See Foltz, 331 F.3d at 1136 (citation

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omitted).

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“The Ninth Circuit has determined that the public’s interest in non-dispositive

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motions is relatively lower than its interest in trial or a dispositive motion. Accordingly, a party

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seeking to seal a document attached to a non-dispositive motion need only demonstrate ‘good

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cause’ to justify sealing.” Williams v. U.S. Bank Nat. Ass’n, 290 F.R.D. 600, 604 (E.D. Cal.

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2013) (quoting Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010) (applying “good

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cause” standard to all non-dispositive motions because such motions “are often unrelated, or only

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tangentially related, to the underlying cause of action”) (internal quotation marks and citation

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omitted). “For good cause to exist, the party seeking protection bears the burden of showing

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specific prejudice or harm will result” if the sealing request is denied. Phillips ex rel. Estates of

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Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210–11 (9th Cir. 2002) (citation omitted). “Broad

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allegations of harm, unsubstantiated by specific examples or articulated reasoning” are

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insufficient. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (citation

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omitted).

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The Eastern District of California has adopted rules to clarify procedures for

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parties’ compliance with the law reviewed above. Local Rule 141 provides that documents may

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be sealed only by a written order of the court after a particularized request to seal has been made.

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L.R. 141(a). A mere request to seal is not enough under the local rules. Local Rule 141(b)

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expressly requires that “[t]he ‘Request to Seal Documents’ shall set forth the statutory or other

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authority for sealing, the requested duration, the identity, by name or category, of persons to be

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permitted access to the document, and all relevant information.” Local Rule 140(a)(vi) provides

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for redaction, by “counsel and the Court . . . . when federal law requires redaction.” L.R.

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140(a)(vi) (emphasis in original). Moreover, redaction is appropriate to protect “proprietary or

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trade secret information.” L.R. 140(b). The court’s own Standing Order emphasizes the

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requirement that parties comply with the law and the rules in making any sealing request, which

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they should do lightly and only rarely if at all. ECF No. 6-1 at ¶ 10.

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II.

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DISCUSSION
Defendant Rite Aid Corporation (Rite Aid) “seeks leave to file a minimally

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redacted version of the [Dr. Roy J.] Epstein report in the public file, while [lodging] the

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unredacted Epstein Report with the Court under seal” in order to protect the personal health

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information (PHI) of certain Medi-Cal beneficiaries. Notice at 2 (emphases in original). Rite Aid

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further seeks leave to redact “images of Rite Aid’s proprietary internal computer system” to

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protect proprietary information. Id. at 3. Rite Aid seeks to redact and seal the documents as

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attachments to its Motion to Exclude Plaintiffs’ Proposed Sampling Methodology, ECF No. 195,

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which, given the importance of the methodology to plaintiffs’ case, is properly considered a

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dispositive motion. See Open Text S.A. v. Box, Inc., No. 13-CV-04910-JD, 2014 WL 7368594, at

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*2 (N.D. Cal. Dec. 26, 2014) (Daubert motions considered dispositive because “aimed squarely

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at the other side’s damages methodology” and “exclusion of this testimony could cause a

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crippling blow to the sponsoring party’s ability to prove its case”); AFL Telecommunications LLC

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v. SurplusEQ.com Inc., 946 F. Supp. 2d 928, 946 (D. Ariz. 2013) (motion to exclude expert

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opinions considered dispositive motion for sealing purposes); but see Albee v. Cont'l Tire N. Am.,

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No. CIV. S-09-1145, 2010 WL 5418885, at *1 (E.D. Cal. Dec. 23, 2010) (motion to exclude
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plaintiff’s tire expert considered non-dispositive motion for sealing analysis). Thus, the

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compelling-reasons standard applies.

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A.

Personal Health Information (PHI)
Rite Aid correctly asserts that “PHI of Medi-Cal beneficiaries is prohibited from

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public disclosure under the Health Insurance Portability and Accountability Act of 1996

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(HIPPA).” Notice at 2 (emphasis in original); see 45 C.F.R. § 164.502.1 Thus, federal law

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requires redaction of the PHI of Medi-Cal beneficiaries in the Epstein Report, and therefore

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redaction is permitted under the local rules. See L.R. 140(a)(vi) (“Redact when federal law

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requires redaction” (emphasis in original)). Further, Rite Aid’s request complies with the

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requirements of Local Rule 141(b), and the redactions appear to be narrowly tailored to cover

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only the PHI. Therefore, Rite Aid has established a compelling reason for redacting the PHI in

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the Epstein report, and the request to redact the PHI information is GRANTED.

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B.

Proprietary Information
Additionally, Rite Aid seeks to redact “images of Rite Aid’s proprietary internal

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computer system.” Id. at 3. Redaction is appropriate where disclosure compromises “sources of

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business information that might harm a litigant’s competitive standing.” Nixon, 435 U.S. at 598

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(citations omitted). The images of the computer system contain business information related to

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Rite Aid’s “dispensing drugs and maintaining customer prescription records.” Notice at 3. From

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the court’s review of the unredacted version of the report, the screenshots Rite Aid wishes to

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redact do contain “detailed, non-public information” regarding Rite Aid’s “internal data systems,

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processes, and practices,” Lane v. Wells Fargo Bank, N.A., No. C 12-04026 WHA, 2013 WL

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2627487, at *1 (N.D. Cal. 2013), consisting primarily of the layout, organization, and content of

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Rite Aid’s “internal computer system for dispensing drugs and maintaining customer prescription

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records,” Notice at 3. In its Request to Seal, Rite Aid sufficiently explains the proprietary nature

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of the computer system and the potential competitive harm from public disclosure of the

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“A covered entity or business associate may not use or disclose protected health
information, except as permitted or required by this subpart or by subpart C of part 160 of this
subchapter. . . . .”
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screenshots, such that the court finds there are compelling reasons to redact the images. See

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Esquivel v. Bank of Am., N.A., No. 2:12-CV-02502-GEB, 2015 WL 4224712, at *4 (E.D. Cal.

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July 10, 2015) (compelling reasons existed to seal exhibit where public dissemination “may allow

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Defendants’ competitors to reap the benefit of the [content] without having to incur the costs

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associated with developing the[m]” (citation omitted)). Rite Aid’s request to redact the

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screenshots of its computer system is GRANTED.

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III.

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CONCLUSION
Rite Aid’s unopposed request to file the redacted Epstein Report on the docket and

file the unredacted report with the court under seal is GRANTED. Accordingly, the Clerk will

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file the unredacted version of the document under seal, and defendant shall file the redacted

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version on the docket within seven (7) days. See L.R. 141(e)(2)(i).

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IT IS SO ORDERED.
DATED: April 29, 2019.
UNITED STATES DISTRICT JUDGE

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