City of Birmingham Relief and Retirement System v. Hastings et al

Filing 20

ORDER GRANTING 3 PLAINTIFF'S ADMINISTRATIVE MOTION TO FILE UNDER SEAL, AS MODIFIED BY 12 NOMINAL DEFENDANT NETFLIX'S NARROWED REDACTIONS. Signed by Judge Beth Labson Freeman on 4/17/2018. (blflc2S, COURT STAFF) (Filed on 4/17/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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CITY OF BIRMINGHAM RELIEF AND
RETIREMENT SYSTEM,
Plaintiff,

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v.
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REED HASTINGS, et al.,

United States District Court
Northern District of California

Defendants.
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Case No. 18-cv-02107-BLF
ORDER GRANTING PLAINTIFF’S
ADMINISTRATIVE MOTION TO FILE
UNDER SEAL, AS MODIFIED BY
NOMINAL DEFENDANT NETFLIX’S
NARROWED REDACTIONS
[Re: ECF 3, 12]

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Plaintiff City of Birmingham Relief and Retirement System (“Plaintiff”) has filed a

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redacted Verified Shareholder Derivative Complaint (“Complaint”) against Defendants along with

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an administrative motion to seal portions of the Complaint because it references content

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designated by Nominal Defendant Netflix, Inc. (“Netflix”) as confidential pursuant to a

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Confidentiality Agreement. See ECF 3. Plaintiff explains that it takes no position as to whether

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the information referenced in the Complaint is confidential, and Netflix’s designation is Plaintiff’s

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only basis for the requested redactions. Id. Netflix has properly filed supporting declarations as

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the designating party, conceding that some of the redactions are unnecessary but arguing that

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compelling reasons exist to seal certain internal non-public financial information. See ECF 12.

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For the reasons that follow, Plaintiff’s administrative motion to file under seal at ECF 3 is

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GRANTED as modified by Netflix’s narrowed redactions.

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I.

LEGAL STANDARD

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There is a “strong presumption in favor of access” to judicial records. Kamakana v. City &

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Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Foltz v. State Farm Mut. Auto.

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Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). A party seeking to seal judicial records bears the

burden of overcoming this presumption by articulating “compelling reasons supported by specific

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factual findings that outweigh the general history of access and the public policies favoring

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disclosure.” Id. at 1178-79. Compelling reasons for sealing court files generally exist when such

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“‘court files might have become a vehicle for improper purposes,’ such as the use of records to

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gratify private spite, promote public scandal, circulate libelous statements, or release trade

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secrets.” Id. (quoting Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978)). However,

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“[t]he mere fact that the production of records may lead to a litigant’s embarrassment,

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incrimination, or exposure to further litigation will not, without more, compel the court to seal its

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records.” Kamakana, 447 F.3d at 1179. Ultimately, “[w]hat constitutes a ‘compelling reason’ is

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‘best left to the sound discretion of the trial court.’” Ctr. for Auto Safety v. Chrslyer Grp., LLC,

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United States District Court
Northern District of California

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809 F.3d 1092, 1097 (9th Cir. 2016).

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“Despite this strong preference for public access, [the Ninth Circuit has] carved out an

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exception,” id. at 1097, for judicial records attached to motions that are “tangentially related to the

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merits of a case,” id. at 1101. Parties moving to seal such records need only make a

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“particularized showing” under the “good cause” standard of Federal Rule of Civil Procedure

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26(c). Kamakana, 447 F.3d at 1180 (quoting Foltz, 331 F.3d at 1138).

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In this District, parties seeking to seal judicial records must also follow Civil Local Rule

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79-5, which requires, inter alia, that a sealing request be “narrowly tailored to seek sealing only of

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sealable material.” Civil L.R. 79-5(b). Pursuant to Civil Local Rule 79-5(d)(1)(A), “[r]eference to

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a stipulation or protective order that allows a party to designate certain documents as confidential

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is not sufficient to establish that a document, or portions thereof, are sealable.” Rather, if the sole

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basis of a party’s request to seal is that the document at issue was previously designated as

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confidential or subject to a protective order, then the procedures detailed in Civil L.R. 79-5(e)

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apply. Civ. L. R. 79-5(d)(1)(A). Those procedures require that within 4 days of the filing of the

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motion to seal, the designating party must file a declaration establishing that all of the designated

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material is sealable. Civ. L. R. 79-5(e)(1). In other words, where the submitting party seeks to

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file under seal a document designated confidential by another party, the burden of articulating

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compelling reasons for sealing is placed on the party designating that material as confidential. Id.
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II.

DISCUSSION

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The parties have complied with Civil Local Rules 7-11 and 79-5(d) and (e). Netflix, as the

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designating party, timely filed declarations in support of Plaintiff’s administrative motion to seal

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portions of the Complaint pursuant to the Confidentiality Agreement. See Declaration of Rodney

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G. Strickland (“Strickland Decl.”), ECF 12. According to the Strickland Declaration, Netflix

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reviewed Plaintiff’s proposed redactions and determined that the majority of them are

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unnecessary. Id. ¶ 3. However, Netflix asserts that a compelling reason exists to seal certain

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limited information in the Complaint consisting of internal non-public financial information. Id.

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Netflix attaches a proposed public version of the Complaint as Exhibit A to the Strickland

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United States District Court
Northern District of California

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Declaration. See ECF 12-1.
Because the motion to seal relates to the filing of the Complaint, which is the operative

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pleading and more than tangentially related to the merits of the case, the instant motion is resolved

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under the compelling reasons standard. The Court has reviewed Netflix’s proposed redactions and

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the declarations of Rodney G. Strickland and Mark Yurechko in support thereof. See Strickland

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Decl., see also Declaration of Mark Yurechko (“Yurechko Decl.”), ECF 12-2. The Court also

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notes that Plaintiff has not opposed Netflix’s narrowed redactions and takes no position as to

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whether the designated material is confidential. See ECF 3.

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According to the Yurechko declaration, although most of the information originally

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redacted by Plaintiff can be made public, certain information should remain sealed because it

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contains Netflix’s non-public projected financial results and actual financial data shared with

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Netflix’s board of directors each quarter. Yurechko Decl. ¶¶ 3-4. Yurechko, Netflix’s Vice

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President of Financial Planning & Analysis, declares that this financial information is confidential

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and commercially sensitive because it would provide Netflix’s competitors with an unfair

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advantage if disclosed. Id. ¶ 4. Netflix’s proposed redactions also substantially narrow the

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original redactions proposed by Plaintiff pursuant to the Confidentiality Agreement. ECF 12-1.

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The Court finds that Netflix has articulated compelling reasons to seal the requested

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portions of the Complaint. The information that Netflix requests to seal includes confidential,

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non-public financial information, the disclosure of which would cause competitive and business
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harm to Netflix. The proposed redactions are also narrowly tailored to exclude only sealable

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material as required by Civil L.R. 79-5(b). See ECF 12-1. Accordingly, Plaintiff’s Administrative

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Motion to Seal is GRANTED with respect to the following portions of the Complaint:

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14-15, 22-24

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9, 13-14, 20, 26

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11, 17

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2, 8, 15, 17, 21, 27

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United States District Court
Northern District of California

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1-2, 5, 13, 18-19, 25

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1, 8, 22

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Plaintiff is hereby ORDERED to file Netflix’s version of the Complaint (ECF 12-1) with

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the narrow redactions approved by this Order in the docket in this case on or before April 20,

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2018.

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IT IS SO ORDERED.

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Dated: April 17, 2018
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BETH LABSON FREEMAN
United States District Judge

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