Zee Apparel, Inc. v. RealReal, Inc.

Filing 55

ORDER by Chief Magistrate Judge Joseph C. Spero granting in part and denying in part 45 and 46 Administrative Motions to File Under Seal. The parties shall file documents as described herein no later than December 15, 2016. (jcslc2S, COURT STAFF) (Filed on 12/8/2016)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ZEE APPAREL, INC., Case No. 16-cv-00755-HSG (JCS) Plaintiff, 8 v. 9 10 REALREAL, INC., Defendant. ORDER REGARDING ADMINISTRATIVE MOTIONS TO FILE UNDER SEAL Re: Dkt. Nos. 45, 46 United States District Court Northern District of California 11 12 I. INTRODUCTION Plaintiff Zee Apparel, Inc. and Defendant The RealReal, Inc. (“TRR”) each move to file 13 14 documents under seal pursuant to Civil Local Rule 79-5(e) based on the opposing party’s 15 designation of such documents as confidential. Each party timely responded to its opponent’s 16 motion with a declaration in support of sealing. See Civ. L.R. 79-5(e)(1). 17 The sealing motions relate to discovery disputes that have been referred to the undersigned 18 magistrate judge for disposition. The presiding district judge has also referred the sealing motions 19 to the undersigned. See dkt. 48. For the reasons discussed below, each party’s administrative 20 motion to file documents under seal is GRANTED in part and DENIED in part. The parties are 21 ORDERED to file documents described below in the public record no later than December 15, 22 2016. See Civ. L.R. 79-5(f). 23 II. 24 LEGAL STANDARD Courts have long recognized a strong presumption of public access to court records. 25 Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citing, e.g., Nixon v. 26 warner Commc’ns, Inc., 435 U.S. 589, 597−98 & n.7 (1978)). A party seeking to overcome that 27 presumption generally must demonstrate “compelling reasons” to file documents under seal rather 28 than in the public record. Id. at 1178−79 (citing Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1 1122, 1135 (9th Cir. 2003)). The Ninth Circuit recognizes an exception to that standard, requiring 2 a lower showing of “good cause” for sealing discovery documents produced pursuant to a 3 protective order and attached to non-dispositive motions. Id. at 1179−80. The Court’s analysis 4 below applies the “good cause” standard to the present motions. Requests to file under seal must be narrowly tailored. See Civ. L.R. 79-5(b); see also In re 5 6 Hewlett-Packard Co. S’holder Derivative Litig., No. 3:12-cv-06003-CRB, ECF Doc. No. 411 7 (N.D. Cal. July 28, 2015). 8 III. ANALYSIS As a starting point, the Court is not inclined to seal documents simply to spare the parties 10 embarrassment for their own commercial conduct. Both parties’ declarations include conclusory 11 United States District Court Northern District of California 9 assertions that certain material—primarily deposition testimony regarding the parties’ involvement 12 with goods that may have been counterfeit—would damage the parties’ “reputation and goodwill.” 13 See DuFrane Decl. (dkt. 50) ¶¶ 6, 8(c); Erez Decl. (dkt. 51) ¶¶ 4(A), 4(C), 5, 6(B)−(C). The Court 14 rejects such assertions as grounds for filing documents under seal. The parties’ remaining 15 contentions are discussed below. TRR’s Motion to File Under Seal 16 A. 17 The Court first addresses TRR’s motion to file documents under seal, which relates to the 18 joint discovery letter at docket entry 44 and is based on Zee Apparel’s designations of 19 confidentiality. See Def.’s Mot. to File Under Seal (dkt. 45). Zee Apparel timely filed a 20 declaration by its president Sean Erez in support of sealing much of the material at issue. 21 Accordingly, although this motion is brought by TRR, the analysis below discusses Zee Apparel’s 22 arguments for sealing. 23 Zee Apparel seeks to seal large portions of the excerpts of Erez’s deposition that TRR 24 submitted in support of its discovery letter. Erez Decl. ¶ 4 (citing Rauscher Decl. (dkt. 45-2) Ex. 1 25 (dkt. 45-3, under seal)). As noted above, the Court rejects Zee Apparel’s argument that Erez’s 26 deposition testimony regarding Zee Apparel, some of its customers, and certain brand owners 27 questioning the authenticity of certain goods that Zee Apparel purchased and sold warrants sealing 28 based on potential reputational harm to Zee Apparel. See id. ¶¶ 4(A), (C). 2 Erez also states that portions of his deposition testimony discussing “[t]he identity (or 1 2 information related thereto) of certain former suppliers of Zee Apparel” should remain under seal 3 because publication of that information “could provide an unfair advantage to Zee Apparel’s 4 competitors and prospective competitors.” Id. ¶ 4(B). The Court has reviewed the testimony at 5 issue, which includes the first names and trade names of two suppliers with whom Zee Apparel no 6 longer does business because of concerns regarding the authenticity of their products, discussion 7 of various methods by which Erez did or did not communicate with those suppliers, and the fact 8 that the suppliers are located overseas. The testimony does not include the suppliers’ contact 9 information (although the portions that Zee Apparel seeks to redact do include multiple instances of Erez explaining that he did not have the suppliers’ contact information available at the 11 United States District Court Northern District of California 10 deposition). The Court discerns no risk of unfair advantage to Zee Apparel’s competitors that 12 would result from disclosing that information. The Court therefore DENIES TRR’s motion to seal 13 excerpts of Erez’s deposition. 14 Zee Apparel also seeks to seal a letter it received from counsel for brand owner Chanel, 15 accusing Zee Apparel of selling counterfeit merchandise. Erez Decl. ¶ 5 (citing Rauscher Decl. 16 Ex. 2 (dkt. 45-4, under seal)). The only stated basis for sealing that document is that it “could 17 cause damage to Zee Apparel’s business reputation and goodwill.” Id. ¶ 5. The Court declines to 18 seal the letter on that basis, and DENIES TRR’s motion to seal this document. 19 Finally, Zee Apparel seeks to seal redacted portions of TRR’s discovery letter, on the 20 grounds that it includes information from the documents discussed above and that it discloses 21 confidential settlement communications by Zee Apparel. Id. ¶ 6 (citing Rauscher Decl. Ex. 3 (dkt. 22 45-5, under seal)). TRR’s motion to seal the discovery letter is GRANTED as to the redactions on 23 the first page, which relate to settlement communications, and DENIED as to the remainder of the 24 letter. 25 TRR is ORDERED to file in the public record a revised redacted version of the joint 26 discovery letter previously filed at docket entry 44 consistent with this Order, and unredacted 27 versions of the exhibits thereto, no later than December 15, 2016. 28 3 Zee Apparel’s Motion to File Under Seal 1 B. 2 Zee Apparel’s sealing motion regarding the joint discovery letter at docket entry 47 is 3 based on TRR’s confidentiality designations. See Pl.’s Mot. to File Under Seal (dkt. 46). TRR 4 timely filed a declaration by Dana DuFrane, its vice president of legal affairs, in support of 5 sealing. Accordingly, although this motion is brought by Zee Apparel, the analysis below 6 discusses TRR’s arguments for sealing. 7 First, TRR seeks to seal in full excerpts of the deposition transcript of Carine Karam, a TRR employee, submitted as Exhibit A to the joint discovery letter. According to DuFrane, 9 “[m]ost if not all of the excerpts that provide substantive information discuss confidential 10 information,” because “Karam describes internal authentication procedures at [TRR] and 11 United States District Court Northern District of California 8 discussions related to the personnel records of an employee at [TRR] which are protected under 12 the California constitution.” DuFrane Decl. ¶ 4 (citing Trauben Decl. (dkt. 46-1) Ex. 1 (dkt. 46-3, 13 under seal)). DuFrane asserts that disclosure of TRR’s authentication procedures could give 14 competitors an unfair advantage and assist counterfeiters in defeating authentication. Id. ¶ 8(a). 15 The Court has reviewed the transcript excerpts at issue and finds no basis for sealing. With 16 respect to authentication procedures, Karam merely describes communications with another 17 individual regarding whether certain items were “sent . . . to authentication.” She does not discuss 18 specific procedures that TRR uses to authenticate items, and the Court discerns no risk that 19 disclosing these excerpts would provide an unfair advantage to competitors or counterfeiters. As 20 for personnel records, Karam refused to answer all questions on that subject, based on the 21 instruction of TRR’s attorney. The Court is not persuaded that disclosure of Zee Apparel’s 22 counsel’s questions would infringe any privacy right under the California constitution. Zee 23 Apparel’s motion to seal excerpts of Karam’s deposition transcript is therefore DENIED. 24 Next, TRR proposes to redact certain portions of the transcript of TRR employee Graham 25 Wetzbarger’s deposition on the basis that it too “describes internal authentication procedures.” 26 DuFrane Decl. ¶ 5 (citing Trauben Decl. Ex. 2 (dkt. 46-4, under seal)). The Court finds TRR’s 27 concerns to be well founded as to these excerpts, which discuss in significantly greater detail than 28 Karam’s deposition the procedures that TRR uses when dealing with potential counterfeit goods, 4 1 and also finds TRR’s redactions, see DuFrane Decl. Ex. 2 (dkt. 50-1), to be narrowly tailored to 2 material that should remain under seal. Zee Apparel’s sealing motion is GRANTED as to those 3 portions of this exhibit. TRR also proposes to redact portions of its responses to Zee Apparel’s discovery requests. 4 5 DuFrane Decl. ¶ 6. According to TRR, those responses “discuss [TRR’s] processing of certain 6 goods consigned by Zee Apparel” and “could cause damages to [TRR’s] reputation and goodwill.” 7 Id. ¶¶ 6, 8(c). DuFrane refers the Court to a redacted portion of the joint discovery letter, which 8 clarifies that TRR is concerned about reputational damage from the fact that it sold goods obtained 9 from Zee Apparel to its customers. Id. ¶ 6 (citing Trauben Decl. Ex. 5 (dkt. 50-7, under seal) at 2). In addition to the Court’s views discussed above regarding the parties’ reputational concerns, the 11 United States District Court Northern District of California 10 public interest weighs strongly against sealing documents indicating that unsuspecting customers 12 might have received counterfeit goods. Zee Apparel’s motion to seal this exhibit is DENIED. Finally, TRR contends that portions of the joint discovery letter discussing the material 13 14 addressed above should be redacted. Most of the redactions relate to either Zee Apparel’s 15 questioning of Karam or TRR’s sale of goods obtained from Zee Apparel to customers. See 16 Trauben Decl. Ex. 5 (dkt. 46-7, under seal) at 2−3, 5. As discussed below, those subjects do not 17 warrant sealing. One redaction states the number of times TRR returned questionable items to 18 consignors in 2015. Id. at 4. DuFrane’s declaration does not adequately explain how disclosure of 19 that statistic would harm TRR. Zee Apparel’s motion to seal portions of the joint discovery letter 20 is therefore DENIED. Zee Apparel is ORDERED to file in the public record an unredacted version of the joint 21 22 discovery letter previously filed at docket entry 47, and unredacted versions of exhibits A and D 23 thereto, no later than December 15, 2016.1 24 IV. CONCLUSION For the reasons discussed above, each party’s administrative motion to file under seal is 25 26 27 28 1 Because TRR has already filed a redacted version of Wetzbarger’s deposition transcript, and the Court finds those redactions to be appropriate, Zee Apparel need not file a revised version of that exhibit. 5 1 GRANTED in part and DENIED in part. The parties are ORDERED to file materials in the public 2 record as described above no later than December 15, 2016. 3 4 5 6 IT IS SO ORDERED. Dated: December 8, 2016 ______________________________________ JOSEPH C. SPERO Chief Magistrate Judge 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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