Fundingsland v. OMH Healthedge Holdings Inc. et al

Filing 61

ORDER: (1) Granting Motion to File Documents Under Seal (ECF No. 48 ) and (2) denying Motion to File Documents Under Sea; (ECF No. 51 ). Signed by Judge Cynthia Bashant on 3/27/2018. (jjg) (sjt).

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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JOHN FUNDINGSLAND,

Case No. 15-cv-01053-BAS-WVG

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Plaintiff,

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(1) GRANTING MOTION TO
FILE DOCUMENTS UNDER
SEAL (ECF No. 48)

v.

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OMH HEALTHEDGE HOLDINGS,
INC.,

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AND

Defendant.

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ORDER:

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(2) DENYING MOTION TO FILE
DOCUMENTS UNDER SEAL
(ECF No. 51)

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Presently before the Court are two motions by the parties to file documents

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under seal. (ECF Nos. 48, 51.) The motions were filed with Defendant OMH

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Healthedge Holdings, Inc.’s (“OMH”) motion for summary judgment (ECF No. 47)

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and Plaintiff John Fundingsland’s opposition to the motion for summary judgment

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(ECF No. 52). Both motions to seal are unopposed.

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I.

LEGAL STANDARD

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“[T]he courts of this country recognize a general right to inspect and copy

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public records and documents, including judicial records and documents.” Nixon v.
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Warner Commc’ns, Inc., 435 U.S. 589, 597 (1978). “Unless a particular court record

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is one ‘traditionally kept secret,’ a ‘strong presumption in favor of access’ is the

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starting point.” Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir.

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2006) (citing 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, 809

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F.3d at 1102. When the underlying motion is more than tangentially related to the

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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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“In general, ‘compelling reasons’ sufficient to outweigh the public’s interest

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in disclosure and justify sealing court records exists when such ‘court files might

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

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

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secrets.” Kamakana, 447 F.3d at 1179 (quoting Nixon, 435 U.S. at 598). 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

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court to seal its records.” Id. (citing Foltz, 331 F.3d at 1136). The decision to seal

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documents is “one best left to the sound discretion of the trial court” upon

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consideration of “the relevant facts and circumstances of the particular case.” Nixon,

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435 U.S. at 599.
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Federal Rule of Civil Procedure 26(c), generally, provides the “good cause”

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standard for the purposes of sealing documents. See Kamakana, 447 F.3d at 1179.

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The test applied is whether “‘good cause’ exists to protect th[e] information from

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being disclosed to the public by balancing the needs for discovery against the need

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for confidentiality.” Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010)

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(quoting Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1213

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(9th Cir. 2002)). Under Rule 26(c), only “a particularized showing of ‘good cause’ .

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. . is sufficient to preserve the secrecy of sealed discovery documents[.]” In re

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Midland Nat. Life Ins. Co. Annuity Sales Practices Litig., 686 F.3d 1115, 1119 (9th

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Cir. 2012) (emphasis added); see also Kamakana, 447 F.3d at 1180 (requiring a

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“particularized showing” of good cause). “Broad allegations of harm,

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unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule

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26(c) test.” Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992).

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Moreover, a blanket protective order is not itself sufficient to show “good cause,” let

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alone compelling reasons, for sealing particular documents. See Foltz, 331 F.3d at

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1133; Beckman Indus., 966 F.2d at 476; San Jose Mercury News, Inc. v. U.S. District

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Court, N. Dist., 187 F.3d 1096, 1103 (9th Cir. 1999).

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II.

ANALYSIS
OMH’s Motion to Seal

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a.

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In its motion to seal, OMH seeks leave to file under seal portions of and entire

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exhibits to Charles Pugh’s Declaration. Specifically, OMH seeks to seal pages 4-6

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and 10-11 of Exhibit 12 (OMH’s Written Consent in Lieu of a Special Meeting of

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the Board of Directors); Exhibit 13 in its entirety (OMH’s Series B Convertible

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Preferred Stock Purchase Agreement); and Section 7 and Exhibits A-D for Exhibit

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16 (Expert Report of Richard A. Weintraub). Plaintiff does not oppose.

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All of the documents (or portions of documents) that OMH seeks leave to seal

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relate to sensitive, non-public non-party financial information. OMH is a private
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company and thus, OMH argues that its financial information contains sensitive and

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proprietary information relating to payments to non-parties investors, non-party

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salary and bonus information, and non-party ownership information. (ECF No 48 at

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3.) OMH further argues that this information is private, and the non-parties have an

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expectation that this sensitive—sometimes personal—information would not

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become private. (Id.) Though sealing full pages in Exhibit 12 seems broad, the Court

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finds these pages contains information warranting sealing, and the majority of this

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exhibit remains public. Thus, OMH’s reasoning appears to be consistent with the

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Court’s assessment of the relevant exhibits.

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Having reviewed OMH’s requests, the Court finds that FRI provides

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compelling reasons to seal seal pages 4-6 and 10-11 of Exhibit 12, Exhibit 13, and

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Section 7 and Exhibits A-D for Exhibit 16. See Kamakana, 447 F.3d at 1179.

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Therefore, the Court GRANTS OMH’s motion to file documents under seal. (ECF

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No. 48.)

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Plaintiff’s Motion to Seal

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b.

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In his motion to seal, Plaintiff seeks leave to file under seal his opposition brief

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to OMH’s motion for summary judgment and two exhibits. (ECF No. 51.)

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Specifically, Plaintiff seeks to seal his entire opposition brief (ECF No. 52), as well

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as Exhibits 1 (an email) and 2 (financial spreadsheet).

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Plaintiff states that he seeks to seal these documents only because these

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documents reference the documents in OMH’s motion to seal. (ECF No. 51 at 1.)

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This explanation alone is insufficient to demonstrate that sealing the requested

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information is appropriate under the compelling reasons standard. See Kamakana,

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447 F.3d at 1179. However, the Court recognizes that OMH has the burden to show

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why Plaintiff’s opposition brief and relevant exhibits should be filed under seal

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because OMH is the party seeking to prevent the disclosure of this information.

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Therefore, OMH must provide compelling reasons to the Court for sealing Plaintiff’s
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opposition brief and Exhibits 1-2. The Court anticipates that compelling reasons do

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not exist for sealing all of these documents in their entirety, and that rather applying

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redactions would be more appropriate.

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III.

CONCLUSION

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In light of the foregoing, the Court:

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(1)

GRANTS OMH’s request to file documents under seal in ECF No. 48.

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The Clerk of the Court is directed to file the following exhibits under

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seal: ECF Nos. 49, 49-1, and 49-2; and

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(2)

DENIES Plaintiff’s request to file documents under seal in ECF No. 51.

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The Clerk of the Court is not directed to file any documents under seal

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at this time.

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If OMH wishes to file a renewed motion to seal for the denied requests relating

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to its information in Plaintiff’s opposition brief and exhibits, it may do so no later

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than April 13, 2018 after the issuance of this order. Otherwise, Plaintiff is instructed

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to file the unredacted versions of the aforementioned documents as directed by the

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Court in this Order on the public docket no later than April 16, 2018 after the

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issuance of this order. When filing the documents on the public docket, the parties

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must strictly adhere to the relevant Federal Rules of Civil Procedure, this district’s

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Civil Local Rules, this Court’s Standing Order for Civil Cases, and this district’s

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Electronic Case Filing Administrative Policies & Procedures Manual. Non-

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compliance with this order or any relevant rules may result in sanctions pursuant to

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Civil Local Rule 83.1.

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IT IS SO ORDERED.

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DATED: March 27, 2018

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