Oracle America, Inc. v. Innovative Technology Distributors, LLC

Filing 143

Order by Hon. Lucy H. Koh denying 122 Administrative Motion to File Under Seal Portions of First Amended Complaint.(lhklc3, COURT STAFF) (Filed on 5/8/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
For the Northern District of California

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ORACLE AMERICA, INC.,
Plaintiff,

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v.
INNOVATIVE TECHNOLOGY
DISTRIBUTORS, INC.,
Defendant.

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Case No.: 11-CV-01043-LHK
Related Case No: 11-CV-02135-LHK
ORDER DENYING MOTION TO FILE
UNDER SEAL PORTIONS OF FIRST
AMENDED COMPLAINT
(re: dkt. #122)

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On February 24, 2012, Oracle filed a motion for leave to file under seal certain portions of

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Oracle’s Amended Complaint (“FAC”). See ECF No. 122. In support of its motion to seal, Oracle

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filed the Declaration of Margaret Branick-Abilla. ECF No. 123. On March 2, 2012, Defendant

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filed a response, ECF No. 124, along with the Declaration of Vincent James Spinella, ECF No.

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124-1, in support of Plaintiff’s second motion to seal in accordance with Civil Local Rule 79-5(d).

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Under the Civil Local Rules, to be sealable, a document must be “privileged or protectable

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as a trade secret or otherwise entitled to protection under the law.” Civ. L.R. 79-5. There is

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generally a strong presumption in favor of public access to court records. Foltz v. State Farm Mut.

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Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003). That presumption may be overcome, and

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court records may be sealed, only upon a showing of “compelling reasons.” 1 Kamakana v. City

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The Ninth Circuit applies a lower “good cause” standard to sealed discovery documents attached
to non-dispositive motions. Kamakana, 447 F.3d at 1179. The rationale for this lower standard is
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Case No.: 11-cv-01043-LHK
Related Case No.: 11-cv-02135-LHK
ORDER DENYING ADMINISTRATIVE MOTION TO FILE UNDER SEAL

and Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006). That is, the party seeking to seal a

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judicial record “must ‘articulate[] compelling reasons supported by specific factual findings,’” and

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the Court must “‘conscientiously balance[] the competing interests’ of the public and the party who

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seeks to keep certain judicial records secret.” Id. at 1178-79 (quoting Foltz, 331 F.3d at 1135).

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The Ninth Circuit has explained that “compelling reasons” that justify sealing court records

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generally exist “when such ‘court files might have become a vehicle for improper purposes,’ such

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as the use of records to gratify private spite, promote public scandal, circulate libelous statements,

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or release trade secret.” Id. at 1179 (quoting Nixon, 435 U.S. at 598). Although a “good cause”

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showing will suffice to seal documents produced in discovery attached to non-dispositive motions,

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United States District Court
For the Northern District of California

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“[a] ‘good cause’ showing will not, without more, satisfy a ‘compelling reasons’ test.” Id. at 1180.

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“Unlike private materials unearthed during discovery, judicial records are public documents almost

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by definition, and the public is entitled to access by default. This fact sharply tips the balance in

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favor of production when a document, formerly sealed for good cause under Rule 26(c), becomes

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part of a judicial record.” Id.

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Oracle moves to file its FAC under seal on grounds that certain financial and other

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information contained within them has been designated as “Confidential” or “Attorneys’ Eyes

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Only” by ITD under the Protective Order. See ECF No. 122. Defendant ITD has submitted a

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declaration supporting Plaintiff’s request to seal, in compliance with Civil Local Rule 79-5(d). See

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Decl. of Vincent James Spinella, ECF No. 124-1 (“Spinella Decl.”). In the declaration, ITD

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explains that portions of paragraphs 28, 30, 37, 38, 39, 41, 43, 48, 51, and 57 of the FAC contain

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“highly sensitive information” concerning either: (1) the personal finances of James and Linda

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Spinella; (2) ITD’s and HDlogix’s ownership structure, internal operations and business strategies,

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revenue numbers, financial accounting methodologies, and customer relationships; or (3) the

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that “the public has less of a need for access to court records attached only to non-dispositive
motions because those documents are often unrelated, or only tangentially related, to the
underlying cause of action.” Id. In this case, the documents at issue are portions of Plaintiff’s
amended complaint. As such, unlike discovery documents attached to a non-dispositive motion,
these documents are directly relevant to the merits of Plaintiff’s claims. For this reason, the Court
applies the “compelling reasons” standard to Plaintiff’s motion to file under seal.
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Case No.: 11-cv-01043-LHK
Related Case No.: 11-cv-02135-LHK
ORDER DENYING ADMINISTRATIVE MOTION TO FILE UNDER SEAL

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amount of ITD’s debt and its lender relationships. See Spinella Decl. ¶¶ 3-12. ITD does not object

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to the remaining portions of Oracle’s FAC being publicly available. See ECF No. 124 at 3.

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Upon review of the passages of the FAC that ITD has designated confidential and wishes

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to file under seal, the Court is not persuaded that they contain any sealable information. For

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example, while paragraphs 28 and 30 refer to the Spinellas’ finances and ownership stakes, they do

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not disclose any specific, detailed information warranting protection from public view. Similarly,

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while paragraph 37 describes evidence of ITD’s and HDlogix’s revenues, it does not disclose

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specific financial information. While ITD may not want all of this information disclosed, “[t]he

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mere fact that the production of records may lead to a litigant’s embarrassment, incrimination, or

United States District Court
For the Northern District of California

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exposure to further litigation will not, without more, compel the court to seal its records.”

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Kamakana, 447 F.3d at 1179 (citing Foltz, 331 F.3d at 1136). The allegations contained in

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Oracle’s FAC are not unrelated or merely tangential to the underlying cause of action, but rather

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form the very foundation of Oracle’s new fraudulent conveyance claims against ITD. The public

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therefore has a strong interest in accessing the allegations in the FAC, and ITD has not shown

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compelling reasons why its private interest outweighs the public’s strong interest in accessing

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public records. The motion for leave to file portions of the FAC under seal is therefore DENIED.

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Absent a stipulation of the parties to amend the FAC to exclude the portions ITD wishes to remain

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confidential, Oracle shall file a non-redacted version of the FAC within 7 days of the date of this

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Order.

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IT IS SO ORDERED.

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Dated: May 8, 2012

_________________________________
LUCY H. KOH
United States District Judge

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Case No.: 11-cv-01043-LHK
Related Case No.: 11-cv-02135-LHK
ORDER DENYING ADMINISTRATIVE MOTION TO FILE UNDER SEAL