Arnaudov et al v. California Delta Mechanical, Inc et al
Filing
141
ORDER RE: SETTLEMENT AGREEMENT Re: Dkt. Nos. 132 140 . Signed by Judge Nathanael Cousins on 4/7/2015. (lmh, COURT STAFF) (Filed on 4/7/2015)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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MARTIN ARNAUDOV, et al.,
Plaintiffs,
United States District Court
Northern District of California
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Case No.13-cv-02306-NC
ORDER RE: SETTLEMENT
AGREEMENT
v.
CALIFORNIA DELTA MECHANICAL,
INC., et al.,
Re: Dkt. Nos. 132, 140
Defendants.
Before the Court is Delta’s and plaintiffs’ motion for approval of settlement of
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claims under the Fair Labor Standards Act and the California Private Attorneys General
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Act. As part of the supplemental memorandum in support of this motion, the parties also
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filed a motion to seal certain terms of the settlement agreement. Dkt. No. 140. As to this
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latter motion, the issue is whether the parties have shown compelling reasons to overcome
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the presumption of public access and to warrant redacting portions of the settlement
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agreement. Because Delta and plaintiffs have failed to articulate any compelling reason
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why parts of the settlement agreement should be redacted, the Court DENIES the parties’
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motion to seal without prejudice.
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Furthermore, because the parties failed to follow the local rules governing
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administrative motions to seal and did not file an unredacted version of the settlement
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agreement for the Court’s review, the Court DENIES Delta’s and plaintiffs’ motion for
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approval of settlements of FLSA and PAGA claims without prejudice.
Case No.: 13-cv-02306-NC
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I.
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LEGAL STANDARD
There is a presumption of public access to judicial records and documents. Nixon v.
Warner Commc’ns, Inc., 435 U.S. 589, 597 (1978). Therefore, a party must demonstrate
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“compelling reasons” to seal judicial records attached to a dispositive motion. Kamakana
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v. City & Cnty. of Honolulu, 447 F.3d 1172, 1179 (9th Cir. 2006). A party seeking to file a
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motion to seal in connection with a non-dispositive motion, however, must show “good
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cause” under Federal Rule of Civil Procedure 26(c). In re Midland Nat’l Life Ins. Co.
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Annuity Sales Practices Litig., 686 F.3d 1115, 1119 (9th Cir. 2012); Pintos v. Pac.
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Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010) (“In light of the weaker public interest
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in nondispositive materials, we apply the ‘good cause’ standard when parties wish to keep
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United States District Court
Northern District of California
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them under seal.”).
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In any case, “the party seeking protection bears the burden of showing specific
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prejudice or harm will result,” Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307
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F.3d 1206, 1210-11 (9th Cir. 2002), and must make a “particularized showing . . . with
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respect to any individual document,” San Jose Mercury News, Inc. v. U.S. Dist. Court, N.
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Dist. (San Jose), 187 F.3d 1096, 1103 (9th Cir. 1999). “Broad allegations of harm,
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unsubstantiated by specific examples or articulated reasoning” are insufficient. Beckman
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Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992).
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Furthermore, “[a] sealing order may issue only upon a request that establishes that
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the document, or portions thereof, are privileged, protectable as a trade secret or otherwise
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entitled to protection under the law.” Civ. L.R. 79-5(b). Requests to file under seal must
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be “narrowly tailored,” id., and must be accompanied by “[a] declaration establishing that
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the document sought to be filed under seal, or portions thereof, are sealable.” Civ. L.R.
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79-5(d)(1)(A). “Reference to a stipulation . . . that allows a party to designate certain
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documents as confidential is not sufficient to establish that a document, or portions thereof,
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are sealable.” Id.
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Case No.:13-cv-02306-NC
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II.
DISCUSSION
A.
Failure to Attach Sealed, Unredacted Version
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Under Civil Local Rule 79-5(d)(1)(D), an unredacted version of the document
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sought to be filed under seal must be filed electronically under seal as an attachment to the
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administrative motion to seal. Civ. L.R. 79-5(d)(1)(D). Indeed, the “[i]nstructions for e-
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filing documents under seal can be found on the ECF website.” Id. In addition, the
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“unredacted version must indicate, by highlighting or other clear method, the portions of
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the document that have been omitted from the redacted version . . . .” Id. Moreover,
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parties that seek to file documents under seal must attach a proposed order that “lists in
table format each document or portion thereof that is sought to be sealed.” Civ. L.R. 79-
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United States District Court
Northern District of California
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5(d)(1)(B) (emphasis added).
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Here, while Delta and plaintiffs electronically filed a redacted version of the
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settlement agreement,” Dkt. No. 140-2-2, their motion to seal does not include the
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unredacted version with highlights of the redacted portions. See Dkt. No. 5. In the
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proposed order for the sealing motion, Delta and plaintiffs also fail to list the portions of
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the document it wishes to seal in table format. Dkt. No. 137.
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This failure to comply with the local rules will not do.
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Accordingly, the Court orders Delta and plaintiffs to either publicly file an
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unredacted version of the settlement agreement or electronically file an administrative
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motion to seal portions of the settlement agreement. Any administrative motion to seal
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should be filed separately from its motion for settlement approval and must be in
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accordance with the local rules just outlined.
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B.
Compelling Reasons Standard
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A threshold issue related to the parties’ motion to approve the settlement is whether
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the motion itself qualifies as a dispositive or non-dispositive motion in the sealing context.
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When presented with a proposed settlement of FLSA claims, the Court “must determine
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whether the settlement is a fair and reasonable resolution of a bona fide dispute.” See
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Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982); Yue Zhou
Case No.:13-cv-02306-NC
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v. Wang’s Restaurant, No. 05-cv-0279 PVT, 2007 WL 2298046, at *1 (N.D. Cal. Aug. 8,
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2007). Similarly, a “settlement reached between the parties on a PAGA claim is subject to
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court review and approval.” Schiller v. David’s Bridal, Inc., 2012 WL 2117001, at *14
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(E.D. Cal. June 11, 2012) (citing Cal. Lab.Code § 2699(l)).
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While there is no specific Ninth Circuit guidance, most district courts considering a
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motion to seal in connection with a motion to approve settlement of FLSA claims have
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applied a presumption of public access. See Joo v. Kitchen Table, Inc., 763 F. Supp. 2d
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643, 646-48 (S.D.N.Y. 2011) (joining “the overwhelming consensus of district courts that
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have considered the issue to hold that an FLSA settlement cannot be sealed absent some
showing that overcomes the presumption of public access”); Kianpour v. Rest. Zone, Inc.,
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United States District Court
Northern District of California
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2011 WL 3880463, at *2 (D. Md. Aug. 30, 2011) (vast majority of recent cases addressing
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this issue apply the presumption of public access to FLSA settlements); Taylor v. AFS
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Technologies, Inc., 2010 WL 2079750, at *2-3 (D. Ariz. May 24, 2010) (applying
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compelling reasons standard to a motion to approve FLSA settlement and permitting the
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parties to elect between withdrawing FLSA settlement or making settlement agreement
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part of public record); see also M.P. ex rel. Provins v. Lowe’s Companies, Inc., 2012 WL
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1574801, at *1 (E.D. Cal. May 3, 2012) (holding that, because approval of minor’s
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settlement is dispositive, the compelling reasons standard applies to motion to seal, citing
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Taylor, 2010 WL 2079750, at *2).
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Here, because approval of the settlement agreement will be dispositive of both the
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FLSA and PAGA claims, the Court applies the compelling reasons standard. Examples of
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compelling reasons include “the use of court records for improper purposes,” such as “to
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gratify private spite, promote public scandal, circulate libelous statements, or release trade
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secrets.” Kamakana, 447 F.3d at 1179. “[S]ources of business information that might
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harm a litigant’s competitive standing” may also give rise to a compelling reason to seal.
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Nixon, 435 U.S. at 598.
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Delta and plaintiffs seek to seal provisions of the settlement agreement related to
two areas: (1) the total amount paid under the settlement that incorporates non-FLSA
Case No.:13-cv-02306-NC
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claims; and (2) the security provisions in the settlement agreement. Dkt. No. 140 at 3.
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Total Settlement Agreement Amount
Delta and plaintiffs argue that because the total settlement agreement amount
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incorporates state law claims that do not require court approval, Delta and plaintiffs need
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not disclose the final amount. Dkt. No. 140 at 4. Instead, Delta and plaintiffs claim they
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must only disclose settlement amounts related to their FLSA and PAGA claims.
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While the Court agrees that it need only review the settlement of the FLSA and
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PAGA claims, Delta and plaintiffs must still articulate compelling reasons, supported by
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specific factual findings, as to why the Court should seal other portions of the settlement
agreement it seeks to file. Instead, Delta’s and plaintiffs’ only arguments are that redacting
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United States District Court
Northern District of California
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the total settlement amount would protect the confidentiality interests of other Delta
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entities in other jurisdictions facing FLSA lawsuits, prevent prejudice, and encourage
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settlement in those other matters. Id. at 4.
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The parties in Luo v. Zynga Inc., 2013 WL 5814763, at *3 (N.D. Cal. 2013) made
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similar arguments. There, the parties argued that a settlement agreement concerning FLSA
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claims should remain under seal because making it public could discourage settlement by
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exposing the employer to potential additional litigation. Id. This Court in Luo found such
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arguments unpersuasive and ruled that the settlement agreement should be unsealed. Id. at
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*4. Like in Luo, the Court here finds arguments by Delta and plaintiffs similarly
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unpersuasive.
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In short, Delta and plaintiffs fail to point to any particularized harm that would
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result from disclosure. Their conclusory assertions do not constitute good cause, “let alone
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a compelling reason,” to seal. Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122,
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1136 (9th Cir. 2003).
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Delta and plaintiffs also failed to satisfy Civil Local Rule 79-5(b), which permits
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sealing orders only where parties have “establishe[d] that the document or portions thereof
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is privileged or protectable as a trade secret or otherwise entitled to protection under the
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law.” Civ. L.R. 79-5(b). Without more, the Court must deny Delta’s and plaintiffs’
Case No.:13-cv-02306-NC
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motion to seal the portion of the settlement agreement identifying the total settlement
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amount. See Luo, 2013 WL 5814763, at *3 (“Because the parties here have failed to
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articulate any facts—for example that the settlement agreement contains trade secrets or
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competitively sensitive information—that would justify sealing their settlement agreement,
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the Court finds that the settlement agreement should be unsealed.”).
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2.
Security Provisions
Delta and plaintiffs also seek to redact the “Security Provisions” of the settlement
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agreement. According to the parties, the provisions “provide additional security to the
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Plaintiffs in order to ensure that the payments called for in the settlement agreement will
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be made.” Id. at 5. Delta and plaintiffs contend that “inclusion of these provisions in the
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United States District Court
Northern District of California
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public record will perhaps needlessly prejudice efforts towards resolving FLSA claims
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pending in other jurisdictions and reveal settlement strategies that would normally never be
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subject to public scrutiny.” Id. at 5 (emphasis added). They further add that redaction
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would not “impact the ability to assess the reasonableness of the settlement in any manner
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or hinder the public policy underlying the presumption of public access to FLSA
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settlement agreements.” Id.
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These arguments are not persuasive. Much like the request to seal the total
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settlement amount, Delta and plaintiffs fail to articulate compelling reasons, supported by
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specific factual findings. In fact, rather than making a particularized showing of harm,
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Delta and plaintiff speculate that disclosing the security provisions “will perhaps”
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prejudice other Delta entities seeking to settle FLSA claims in other jurisdictions.
And just as with the earlier request, Delta and plaintiffs’ request to redact the
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security provisions fail to meet Civil Local Rule 79-5(b). Without showing why these
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portions of the document are “privileged or protectable as a trade secret or otherwise
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entitled to protection under the law,” the Court denies Delta’s and plaintiffs’ motion to seal
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the portion of the settlement agreement involving the security provisions. See Luo, 2013
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WL 5814763, at *3.
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//
Case No.:13-cv-02306-NC
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III. CONCLUSION
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Delta’s and plaintiffs’ administrative motion to file under seal portions of its
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settlement agreement is DENIED without prejudice. The parties must either file an
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unredacted version of the settlement agreement, or resubmit an amended administrative
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motion to seal in accordance with this order within 14 days. This motion to seal must
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establish why the portions Delta and plaintiffs seek to redact meet the compelling reasons
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standard and satisfy Local Rule 79-5. The sealing motion must also be separate from its
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motion for approval of settlement of FLSA and PAGA claims.
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Because the Court has not received an unredacted version of the settlement
agreement that includes all of the agreements’ terms and conditions as required under
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United States District Court
Northern District of California
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Local Rule 79-5, the Court DENIES the parties’ motion for approval of its settlement
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claims without prejudice. Along with its separate motion to seal, the parties must file an
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amended motion for approval of its settlement claims within 14 days.
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Delta and plaintiffs’ also request that the Court appoint a magistrate judge to make a
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confidential and “binding determination of reasonable attorney’s fees and costs under the
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settlement agreement.” Dkt. Nos. 132 at 11, 137 at 2. The Court will not be reaching this
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request yet.
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IT IS SO ORDERED.
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Dated: April 7, 2015
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_____________________________________
NATHANAEL M. COUSINS
United States Magistrate Judge
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Case No.:13-cv-02306-NC
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