Hadley v. Kellogg Sales Company

Filing 331

Order by Judge Lucy H. Koh Granting 312 Administrative Motion to File Under Seal.(mdllcS, COURT STAFF) (Filed on 12/12/2019)

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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
Northern District of California

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STEPHEN HADLEY, et al.,
Plaintiffs,

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Case No. 16-CV-04955-LHK
ORDER GRANTING
ADMINISTRATIVE MOTION TO
SEAL

v.
KELLOGG SALES COMPANY,

Re: Dkt. No. 312

Defendant.

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On August 26, 2019, Defendant Kellogg Sales Company (“Kellogg”) filed an

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administrative motion to file under seal portions of an exhibit submitted in connection with

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Kellogg’s Motion to Decertify the Class, Kellogg’s Motion for Summary Judgment, and Kellogg’s

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three Daubert motions. ECF No. 268-2; see ECF No. 302. Having reviewed Kellogg’s

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submissions and the applicable sealing law, the Court GRANTS the instant administrative motion

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to file under seal.

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“Historically, courts have recognized a ‘general right to inspect and copy public records

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and documents, including judicial records and documents.’” Kamakana v. City & Cnty. of

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Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc’ns, Inc., 435

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U.S. 589, 597 & n.7 (1978)). As the Ninth Circuit has explained, this is a “common law right,”

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Case No. 16-CV-04955-LHK
ORDER GRANTING ADMINISTRATIVE MOTION TO SEAL

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United States v. Doe, 870 F.3d 991, 996 (9th Cir. 2017), reflecting the American judicial system’s

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longstanding commitment to “the open courtroom,” Oliner v. Kontrabecki, 745 F.3d 1024, 1025

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(9th Cir. 2014). The public policy favoring public access to judicial proceedings applies equally

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to court records because “court records often provide important, sometimes the only, bases or

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explanations for a court’s decision.” Id. Accordingly, when considering a sealing request, “a

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strong presumption in favor of access is the starting point.” Id. (internal quotation marks omitted).

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To be precise, the strong presumption of access to judicial records applies fully to filings

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that are “more than tangentially related to the underlying cause of action.” Ctr. for Auto Safety v.

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Chrysler Grp., 809 F.3d 1092, 1099 (9th Cir. 2016). That presumption can only be overcome by a
showing of “compelling reasons” that “outweigh the general history of access and the public

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United States District Court
Northern District of California

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policies favoring disclosure.” Kamakana, 447 F.3d at 1178 (internal quotation marks omitted).

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The party seeking to seal a judicial record bears the burden of “articulat[ing] compelling reasons

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supported by specific factual findings.” Id. (internal quotation marks omitted). Compelling

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reasons justifying the sealing of court records generally exist “when such ‘court files might have

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become a vehicle for improper purposes,’ such as the use of records to gratify private spite,

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promote public scandal, circulate libelous statements, or release trade secrets.” Id. at 1179

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(quoting Nixon, 435 U.S. at 598). By contrast, “[t]he mere fact that the production of records may

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lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will not, without

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more, compel the court to seal its records.” Id. at 1178–79.

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However, the Ninth Circuit has “carved out an exception” to the presumption of access for

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materials filed in connection with motions that are not “more than tangentially related to the

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underlying cause of action.” Ctr. for Auto Safety, 809 F.3d at 1099. Because “the public has less

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of a need for access” to documents that are “unrelated, or only tangentially related, to the

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underlying cause of action,” parties moving to seal such documents need only meet the lower

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“good cause” standard of Rule 26(c) of the Federal Rules of Civil Procedure. Kamakana, 447

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F.3d at 1179. Still, the “good cause” standard requires a “particularized showing” that “specific

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prejudice or harm will result” if the information is disclosed. Phillips ex rel. Estates of Byrd v.

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Case No. 16-CV-04955-LHK
ORDER GRANTING ADMINISTRATIVE MOTION TO SEAL

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Gen. Motors Corp., 307 F.3d 1206, 1210–11 (9th Cir. 2002) (citation omitted); see Fed. R. Civ. P.

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26(c). “Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning”

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will not suffice. 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 threshold question before the Court is what test to apply to Plaintiff’s motion—“the
presumptive ‘compelling reasons’ standard or the ‘good cause’ exception.” Ctr. for Auto Safety,

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809 F.3d at 1097. The Ninth Circuit has held that the compelling reasons standard applies to

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summary judgment motions, as well as Daubert motions “filed in connection with pending

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summary judgment motions.” In re Midland Nat. Life Ins. Co. Annuity Sales Practices Litig., 686

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F.3d 1115, 1120 (9th Cir. 2012). Moreover, as the Court explained in its August 12, 2019 sealing

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United States District Court
Northern District of California

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order, the compelling reasons standard typically applies to a motion for class certification. ECF

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No. 306 at 4. That is because “[a] class certification motion ‘generally involves considerations

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that are enmeshed in the factual and legal issues comprising plaintiff’s cause of action,’ which

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require a districts court to engage in a ‘rigorous analysis’ that ‘entail[s] some overlap with the

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merits of the plaintiff’s underlying claims.’” McCurley v. Royal Seas Cruises, Inc., No. 17-CV-

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00986-BAS-AGS, 2018 WL 3629945, at *2 (S.D. Cal. July 31, 2018) (quoting Wal-Mart Stores,

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Inc. v. Dukes, 564 U.S. 338, 351, 352 (2011)). The Court therefore applies the compelling reasons

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standard to the instant administrative motion to seal.

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Plaintiff asserts that the exhibit at issue contains “proprietary” “information about how

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Kellogg’s competitors have responded to proposed changes in nutrition labeling” that disclosure

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of such information would cause Kellogg significant competitive harm. ECF No. 312. Applying

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the compelling reasons standard, the Court finds that Kellogg has justified sealing this document.

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The U.S. Supreme Court and the Ninth Circuit have both made clear that compelling

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reasons exist to seal court records when the records “might be used . . . ‘as sources of business

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information that might harm a litigant’s competitive standing.’” Ctr. for Auto Safety, 809 F.3d at

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1097 (quoting Nixon, 435 U.S. at 598). Such business information includes, but is not limited to,

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“trade secrets.” Kamakana, 447 F.3d at 1179. The Ninth Circuit has adopted the Restatement’s

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Case No. 16-CV-04955-LHK
ORDER GRANTING ADMINISTRATIVE MOTION TO SEAL

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definition of “trade secret,” Clark v. Bunker, 453 F.2d 1006, 1009 (9th Cir. 1972), which is “any

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formula, pattern, device or compilation of information which is used in one’s business, and which

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gives him an opportunity to obtain an advantage over competitors who do not know or use it,”

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Restatement (First) of Torts § 757, cmt. b. For instance, “pricing terms, royalty rates, and

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guaranteed minimum payment terms” of patent licensing agreements have been deemed sealable

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trade secrets. In re Elec. Arts, Inc., 298 F. App’x 568, 569 (9th Cir. 2008).

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Relevant here, the Federal Circuit has concluded that under Ninth Circuit law, “market

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research reports” are appropriately sealable under the compelling reasons standard where those

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reports “contain information that . . . competitors could not obtain anywhere else.” Apple Inc. v.
Samsung Elecs. Co., 727 F.3d 1214, 1226, 1228 (Fed. Cir. 2013). As the Federal Circuit

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United States District Court
Northern District of California

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explained, giving competitors access to reports that a litigant has spent time and energy

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conducting would give would provide competitors “with an enormous benefit—to [the litigant’s]

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detriment.” Id. Similarly, courts in this district have sealed internal reports that contain

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“discussions of business strategy and competitive analyses.” Krieger v. Atheros Commc’ns, Inc.,

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No. 11-CV-00640-LHK, 2011 WL 2550831, at *1 (N.D. Cal. June 25, 2011) (sealing a

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presentation that contained “discussions of business strategy and competitive analyses”); see also

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Synchronoss Techs., Inc. v. Dropbox Inc., No. 16-CV-00119-HSG, 2018 WL 6002319, at *1

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(N.D. Cal. Nov. 15, 2018) (approving the sealing of information that “prevent[s] competitors from

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gaining insight into the parties’ business model and strategy”).

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Here, the Court agrees that the exhibit reveals “information about Kellogg’s business

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strategies and plans for future products.” Id. Kellogg has represented that it conducted the

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relevant research and analysis internally, and that it keeps the exhibit at issue confidential. ECF

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No. 312. Moreover, having reviewed the exhibit, the Court is satisfied that Kellogg has narrowly

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tailored its request to include only information that would plausibly cause competitive harm.

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Thus, the Court rules on the instant motions as follows:
Document
KELLOGG-036087 (ECF No.
268-2)

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Page 9
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Case No. 16-CV-04955-LHK
ORDER GRANTING ADMINISTRATIVE MOTION TO SEAL

Ruling
GRANTED.

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Document
KELLOGG-036087 (ECF No.
268-2)
KELLOGG-036087 (ECF No.
268-2)
KELLOGG-036087 (ECF No.
268-2)
KELLOGG-036087 (ECF No.
268-2)
KELLOGG-036087 (ECF No.
268-2)

Page/Line
Page 10

Ruling
GRANTED.

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GRANTED.

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GRANTED.

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GRANTED.

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GRANTED.

IT IS SO ORDERED.

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United States District Court
Northern District of California

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Dated: December 12, 2019
______________________________________
LUCY H. KOH
United States District Judge

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Case No. 16-CV-04955-LHK
ORDER GRANTING ADMINISTRATIVE MOTION TO SEAL