First American Specialty Insurance Company v. Ford Motor Company et al

Filing 36

ORDER RE SEALING MOTION by Hon. William Alsup denying #33 Administrative Motion to File Under Seal.(whalc1, COURT STAFF) (Filed on 6/8/2017)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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No. C 16-05951 WHA

FIRST AMERICAN SPECIALTY
INSURANCE COMPANY,

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Plaintiff,
For the Northern District of California

United States District Court

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ORDER RE SEALING MOTION
v.

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FORD MOTOR COMPANY, et al.,
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Defendants.
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INTRODUCTION
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Defendant Ford Motor Company moves to seal the amount it agreed to pay to plaintiff
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First American Specialty Insurance Company in connection with the forthcoming good-faith19
settlement motion. Defendants Carmax Auto Superstores California, LLC, and Carmax Auto
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Superstores West Coast, Inc. oppose Ford’s motion.
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STATEMENT
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First American provided insurance for Anthony Santos’s home in Fremont, California,
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and acts as subrogee in this action. First American alleges that insured purchased a 2002 Ford
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F-150 from Carmax, which had a defective speed control deactivation switch (“SCDS”). The
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SCDS was the subject of a recall because it was known to fail without warning and combust,
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but defendants failed to inform insured of the recall. The defective SCDS caught fire while on
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insured’s property and caused damage to his home (Compl. ¶¶ 8–13).
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First American sued Ford and Carmax, and Ford reached a settlement with First
American on April 28, 2017 (Dkt. No. 32). Ford moves to seal the settlement amount in its

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forthcoming motion for a determination of good-faith settlement on the grounds that the

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settlement agreement includes a contractual obligation to maintain the settlement’s

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confidentiality, and disclosing the settlement amount will cause Ford prejudice in pending and

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future lawsuits. Carmax opposes Ford’s motion. For the reasons set forth herein, Ford’s

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request is DENIED.

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ANALYSIS
To determine whether the “compelling reason” or the “good cause” standard applies to

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this sealing motion, the Court must first determine whether a motion for good-faith settlement is

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dispositive or non-dispositive. See Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172,
1178–80 (9th Cir. 2006). Our court of appeals has not provided guidance on this issue and only

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For the Northern District of California

United States District Court

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two decisions in this district have directly addressed it. In Prosurance Group., Inc. v. Liberty

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Mutual Group, Inc., No. 10-CV-02600-LHK, 2011 WL 704456, at *1 (N.D. Cal. Feb. 18, 2011)

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(Judge Lucy Koh), Judge Koh held that “a motion to determine good faith settlement is only

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tangentially related to the merits of the underlying cause of action” and should therefore be

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subject to the good-cause standard for sealing. Since that ruling, one other court in this district

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has considered a sealing motion in connection with a determination of good faith settlement,

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and likewise applied the good cause standard. Wendell v. Johnson & Johnson, No. C 09-4124

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CW, 2014 WL 12644224, at *2 (N.D. Cal. June 10, 2014) (Chief Judge Claudia Wilken). The

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Court agrees with Judge Koh’s reasoning, and will therefore consider whether Ford has made a

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particularized showing of good cause as to why this motion should be granted.

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A party must make a “particularized showing” of good cause with respect to any

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individual document in order to justify sealing the document. Kamakana, 447 F.3d at 1180.

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

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not sufficient. Beckman Indus., Inc. v. Int'l Ins. Co., 966 F.2d 470, 476 (9th Cir.1992) (internal

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quotation marks and citation omitted). Moreover, Ford must establish that “the document, or

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portions thereof [are] privileged or protectable as a trade secret or otherwise entitled to

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protection under the law.” Civil L.R. 79–5(b).

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In support of its motion, Ford submits an attorney declaration stating that disclosing the

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settlement amount will prejudice Ford because “similar claims and lawsuits involving Ford

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vehicles are still active and additional claims and lawsuits can be brought” (Gaus Decl. ¶ 6). It

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further observes that the settlement agreement was entered into subject to a confidentiality

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clause and was marked confidential pursuant to the parties’ protective order (¶¶ 3–4), and that

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making the amount of the settlement public would contravene the public policy of adhering to

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contractual obligations and promoting settlement (Mot. at 2–3). Ford does not identify any

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relevant legal authority supporting its arguments, instead mistakenly citing only California state

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law in its motion.
Ford’s reasoning is unpersuasive. The parties’ private agreement to keep the settlement

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For the Northern District of California

United States District Court

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confidential is insufficient reason to seal the Court’s records. Moreover, Ford’s argument “that

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the production of records may lead to . . . exposure to further litigation will not, without more,

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compel the court to seal . . . .” Kamakana, 447 F.3d at 1179. The public has a strong interest

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in understanding how this Court applies California's good faith settlement law — the

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application of which would be constrained if the Court cannot publicize its analysis of the

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settlement.

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Finally, as Carmax points out, it is entitled to learn the amount that Ford has agreed to

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pay in order to decide whether to oppose Ford’s motion to determine good faith settlement.

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Ford has not explained how the non-settling defendant will know the amount of the settlement if

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it is sealed. To afford Carmax an opportunity to challenge the good faith settlement, Carmax

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must know what it is up against.

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CONCLUSION
For the foregoing reasons, Ford’s administrative motion to seal its settlement amount is

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DENIED. Ford shall re-file its settlement agreement consistent with this order and Civil Local

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Rule 79-5 by JUNE 15.

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IT IS SO ORDERED.

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Dated: June 8, 2017.

WILLIAM ALSUP
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UNITED STATES DISTRICT
JUDGE

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For the Northern District of California

United States District Court

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