Lucas et al v. Breg, Inc. et al

Filing 95

ORDER granting in part and denying in part 53 Motion to File Documents Under Seal; granting 61 Motion to File Documents Under Seal; granting 72 Motion to File Documents Under Seal. Signed by Judge Cynthia Bashant on 9/28/2016. (kcm)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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STACY LUCAS, an individual,
TAREK ALBABA, an individual,
RIGOBERTO VINDIOLA, an
individual, DAVID GAMMA, an
individual, SARAH FISHER, an
individual, on behalf of themselves
and all other similarly situated
consumers,

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Case No. 15-cv-00258-BAS-NLS
ORDER:
(1) GRANTING IN PART AND
DENYING IN PART
PLAINTIFFS’ MOTION TO
SEAL;

Plaintiffs,

(2) GRANTING PLAINTIFFS’
SUPPLEMENTAL MOTION TO
SEAL; AND

v.
BREG, INC., a California
corporation; GARY LOSSE, an
individual; MARK HOWARD, an
individual; and DOES 1 through 50,
inclusive,

(3) GRANTING DEFENDANT
BREG INC.’S MOTION TO SEAL
[ECF Nos. 53, 61, 72]

Defendants.

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Presently before the Court are Plaintiffs’ motions to file under seal certain

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exhibits in support of their motion for class certification, and Defendant Breg, Inc.’s

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motion to file under seal an expert report in support of Breg’s opposition to Plaintiffs’

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motion for class certification. For the following reasons, the Court GRANTS IN

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PART and DENIES IN PART Plaintiffs’ motion to seal (ECF No. 53), GRANTS

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Plaintiffs’ supplemental motion to seal (ECF No. 61), and GRANTS Breg’s motion
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to seal (ECF No. 72).

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I.

LEGAL STANDARD

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“It is clear that the courts of this country recognize a general right to inspect

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and copy public records and documents, including judicial records and documents.”

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Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 597 (1978). Thus, in assessing a

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motion to seal, the starting point is “a strong presumption in favor of access to court

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records.” Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir.

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2003). “The presumption of access is ‘based on the need for federal courts, although

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independent—indeed, particularly because they are independent—to have a measure

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of accountability and for the public to have confidence in the administration of

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justice.” Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1096 (9th Cir.

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2016) (quoting United States v. Amodeo, 71 F.3d 1044, 1048 (2d Cir. 1995)).

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A party seeking to seal a judicial record bears the burden of overcoming the

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strong presumption of access. Foltz, 331 F.3d at 1135. The showing required to meet

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this burden depends upon whether the documents to be sealed relate to a motion that

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is “more than tangentially related to the merits of [the] case.” Ctr. for Auto Safety,

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809 F.3d at 1101. When the underlying motion is more than tangentially related to

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the merits, the “compelling reasons” standard applies. Id. at 1096–98. When the

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underlying motion does not surpass the tangential relevance threshold, the “good

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cause” standard applies. Id.

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Here, the motions to file under seal relate to Plaintiffs’ motion for class

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certification. A class certification motion “generally involves considerations that are

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enmeshed in the factual and legal issues comprising plaintiff’s cause of action.” Wal–

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Mart Stores, Inc. v. Dukes, 564 U.S. 338, 352 (2011) (quoting Gen. Tel. Co. of Sw.

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v. Falcon, 457 U.S. 147, 160 (1982)) (internal quotation marks omitted). In deciding

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whether to certify a class, district courts engage in a “rigorous analysis” that

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frequently “will entail some overlap with the merits of the plaintiff’s underlying

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claim.” Dukes, 564 U.S. at 351. Thus, the Court finds that Plaintiffs’ motion for class
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certification is more than tangentially related to the merits of the case, and that the

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compelling reasons standard applies.

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In general, sealing court records under the compelling reasons test will be

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justified when such records could be used to “gratify private spite or promote public

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scandal,” to circulate “libelous” statements, or “as sources of business information

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that might harm a litigant’s competitive standing.” Nixon, 435 U.S. at 598 (citations

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omitted). As to this last category, courts have been willing to seal court filings

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containing confidential business material, “such as marketing strategies, product

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development plans, licensing agreements, and profit, cost, and margin data,” where

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the parties have been able to point to concrete factual information to justify sealing.

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Cohen v. Trump, No. 13-cv-2519-GPC-WVG, 2016 WL 3036302, at *5 (S.D. Cal.

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May 27, 2016) (citing cases). However, “[t]he mere fact that the production of

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records may lead to a litigant’s embarrassment, incrimination, or exposure to further

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litigation will not, without more, compel the court to seal its records.” Kamakana v.

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City & County of Honolulu, 447 F.3d 1172, 1179 (9th Cir. 2006) (citation omitted).

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II.

DISCUSSION

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In their motion to seal (ECF No. 53), Plaintiffs seek to file under seal a total

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of nine exhibits, including Breg’s 510(k) premarket notifications, Breg’s U.S.

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wholesale price lists from various years, Breg’s Cold Therapy Training Manual,

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excerpts from Breg’s customer lists, a copy of a 2006 settlement involving Breg, and

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a Form 10-K annual report pulled from the SEC’s online EDGAR system. The Court

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finds that Plaintiffs satisfy the compelling reasons test as to only four of these records:

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Breg’s 510(k) premarket notifications, Breg’s Cold Therapy Training Manual, and

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the filing containing excerpts from Breg’s customer lists. These documents contain

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confidential business material that might harm Breg’s competitive standing.

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However, Plaintiffs have not satisfied the compelling reasons test as to the

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remaining five documents, for the following reasons. First, it is unclear how Breg’s

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U.S. wholesale price lists from the years 2003, 2005, and 2009 would harm Breg’s
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market position, and neither side articulates a factual basis for such a finding. Second,

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although the 2006 settlement agreement contains a confidentiality provision, that

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alone is insufficient to overcome the strong presumption in favor of public access.

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See, e.g., Select Portfolio Serv. v. Valentino, No. C 12–0334 SI, 2013 WL 1800039,

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at *3 (N.D. Cal. Apr. 29, 2013) (finding that the parties’ agreement among

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themselves to make a settlement agreement confidential was insufficient to shield the

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information from public access). Finally, Form 10-Ks are publicly accessible

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documents available through the SEC’s online EDGAR database—there is no basis

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for sealing such documents. Therefore, Plaintiffs’ motion to seal is GRANTED IN

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PART and DENIED IN PART.

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In their supplemental motion to seal (ECF No. 61), Plaintiffs seek to file under

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seal an exhibit containing excerpts of Breg sales data broken down by year and

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product type. This motion is GRANTED. The information in this exhibit is detailed

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enough to constitute the kind of sales data that could undermine Breg’s market

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position if made public.

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For its part, Defendant Breg seeks to file under seal the expert report of Dwight

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D. Steward, Ph.D., on the grounds that the report contains confidential Breg sales and

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marketing data that would lose its value if made public. (ECF No. 72.) The Court

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finds that Breg has met the compelling reasons standard. The public disclosure of this

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business information could result in improper use by Breg’s competitors seeking to

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undercut Breg’s market position. See, e.g., Algarin v. Maybelline, LLC, Civil No.

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12cv3000 AJB (DHB), 2014 WL 690410, *3–4 (Feb. 21, 2014) (finding the

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compelling reasons standard satisfied where public access to marketing and sales data

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“may result in improper use by competitors who may circumvent expending their

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own resources in obtaining the information”). Accordingly, Breg’s motion to seal is

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GRANTED.

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III.

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CONCLUSION & ORDER
For the foregoing reasons, the Court GRANTS IN PART and DENIES IN
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PART Plaintiffs’ motion to seal (ECF No. 53), GRANTS Plaintiffs’ supplemental

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motion to seal (ECF No. 61), and GRANTS Breg’s motion to seal (ECF No. 72).

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Accordingly, the Clerk of Court is instructed to file the following currently lodged

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documents under seal: ECF No. 54 (Exh. 3), ECF No. 54-1 (Exh. 4), ECF No. 54-2

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(Exh. 7), ECF No. 54-7 (Exh. 36), ECF No. 62, and ECF No. 73.

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IT IS SO ORDERED.

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DATED: September 28, 2016

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