EpicentRx, Inc. v. Carter

Filing 102

ORDER on Motions to Strike Or Seal [Docket Numbers 7 27 34 41 62 67 74 ]. Signed by Judge Larry Alan Burns on 3/30/2021. (anh) (Additional attachment(s) added on 3/31/2021: # 1 Stricken Document, # 2 Exhibit A, # 3 Exhibit B) (sxa).

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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EPICENTRX, INC.

Case No.: 20cv1058-TWR (LL)
Plaintiff,

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v.

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COREY A. CARTER

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Defendant.

ORDER ON MOTIONS TO
STRIKE OR SEAL
[DOCKET NUMBERS 7, 27, 34,
41, 62, 67, and 74.]

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Plaintiff EpicentRx, Inc. filed its complaint, raising ten claims. The claims

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arise from Defendant Dr. Corey Carter’s employment with EpicentRx, and his

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alleged misappropriation of its trade secrets. After filing its complaint, EpicentRx

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brought a motion for a temporary restraining order. The Court denied the

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restraining order but treated the motion as seeking a preliminary injunction. Carter

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also filed a motion to strike a portion of the complaint.

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The parties then filed a series of motions and related documents that can

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fairly be described as excessive. In particular EpicentRx’s motion to disqualify

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opposing counsel has been briefed in piecemeal fashion, with multiple related ex

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parte motions related to it. The Court eventually ordered the parties to stop filing

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briefing on most issues, until it could decide a motion for disqualification of counsel.
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(Docket no. 48.) The Court permitted the parties to continue briefing pending

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motions, however, and the parties filed even more motions. Eventually the Court

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suspended briefing on the pending motions altogether. (Docket no. 76.)

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This case was selected for transfer to the newly-appointed District Judge

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Todd Robinson. The undersigned judge transferred the case to Judge Robinson,

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but retained jurisdiction over motions pending as of October 14, 2020.

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motions, most of which are related, are as follows:

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1. Carter’s Motion to Strike (Docket no. 7);

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The

2. EpicentRx’s Motion for Preliminary Injunction (Docket no. 16);

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3. EpicentRx’s Ex Parte Motion for Leave to File a Reply Brief in Support of
the Motion for Preliminary Injunction (Docket no. 25);
4. EpicentRx’s Ex Parte Motion to Seal a Previously-filed Document (Docket
no. 27);
5. EpicentRx’s Ex Parte Motion to Strike EpicentRx’s Own Objection (Docket
no. 34);

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6. EpicentRx’s Motion to Disqualify Defendant’s Counsel (Docket no. 40);

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7. EpicentRx’s Ex Parte Motion to File Documents Under Seal (Docket no.

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41);

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8. EpicentRx’s Motion to Dismiss Carter’s Counterclaim (Docket no. 44); and

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9. EpicentRx’s Motion for Leave to Supplement the Motion to Disqualify

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Counsel (Docket no. 55).

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Following transfer, several other motions relating to the pending motions were also

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filed. These are:

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EpicentRx’s Ex Parte Motion to Seal a Previously Filed Document

(Docket no. 62);
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EpicentRx’s Ex Parte Motion for Leave to File Excess Pages in its

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Reply to Carter’s Opposition to the Motion to Disqualify Counsel (Docket

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no. 65);
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EpicentRx’s Amended Ex Parte Motion for Leave to File Excess Pages

(Docket no. 66);
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EpicentRx’s Ex Parte Motion for Leave to File Documents Under Seal

(Docket no. 67);
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EpicentRx’s Amended Ex Parte Motion to Seal a Previously Filed

Document (Docket no. 74); and
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EpicentRx’s Ex Parte Motion for Rulings on the Previously-Filed

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Motions, and to Lift the Suspension on Briefing (Docket no. 82).

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Other motions were also pending before transfer, but the Court has ruled on them.

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Other pending motions are all new matters assigned to Judge Robinson. The listed

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motions are the only ones which remain pending and over which the undersigned

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Judge has retained jurisdiction.

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In view of the number of motions and the volume of briefing on those

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motions, this Order necessarily addresses the issues summarily, rather than

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discussing them at length. The Court has, however, considered the parties’

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arguments and the relevant legal standards.

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This order addresses only motions to strike and motions to seal. Three other

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substantial motions (Docket nos. 16, 40, and 44) remain to be ruled on, along with

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procedural motions relating to them. These will be addressed in separate orders.

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EpicentRx’s Motion to Strike Its Own Filing (Docket no. 34)

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EpicentRx filed an objection to a document filed by Carter. (Docket no. 32.)

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That same day it filed a notice of withdrawal, followed by an ex parte motion to

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strike its own objection. (Docket no. 34.) It has since filed a redacted objection.

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The unopposed motion to strike is GRANTED, and the Clerk is directed to remove

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the withdrawn objection (Docket no. 32) from the docket.

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Carter’s Motion to Strike (Docket no. 7)

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Carter asks the Court to strike paragraph 30 and Exhibit A of the Complaint,

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as irrelevant, impertinent, and scandalous under Fed. R. Civ. P. 12(f). The Court’s
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exercise of its authority to strike material from a complaint is discretionary. See

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Nurse v. United States, 226 F.3d 996, 1000 (9th Cir. 2000). The function of a

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motion to strike is to avoid the expenditure of time and money involved in litigating

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spurious issues; it is not the proper vehicle to seek resolution of substantial

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disputed factual or legal issues. Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d

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970, 973 (9th Cir. 2010).

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Paragraph 30 alleges that Carter was a Physician Officer and oncologist in

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the Navy from 1999 through 2018, but that he “ignominiously left the military under

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a cloud of suspicion and accusations” pertaining to misuse of drugs,

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unprofessional conduct, and conflicts of interest. The complaint alleges that the

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allegations “are entirely consistent with Dr. Carter’s performance at EpicentRx” and

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that they would not have hired him had they known this. Exhibit A is a copy of a

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document that Carter submitted in his defense. Carter argues that the accusations

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were unfounded and arose out of an acrimonious divorce. Whether the allegations

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are true is not properly decided in a motion to strike.

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The allegations are at least somewhat related to EpicentRx’s claims of

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Carter’s malfeasance. While they do not form part of EpicentRx’s claim, they

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render it somewhat more plausible. If, as EpicentRx alleges, the claims — or at

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least some of them — were well-founded, it is somewhat more plausible that he

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might have engaged in the wrongful conduct they accuse him of. The Court is not

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deciding whether he did, of course, but merely whether EpicentRx is allowed to

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make such an allegation.

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While the accusations are negative, they do not in the Court’s judgment arise

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to the level of being scandalous. Paragraph 30 is fairly general, and not overly

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provocative. Most of the specifics are found in Exhibit A, which gives Carter’s

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response to the accusations. Taken together, the allegations and exhibit show that

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Carter denied and attempted to rebut the accusations, but that EpicentRx believes

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that at least some of them are true. While a number of the accusations have little
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to do with this case, some of them — if true — would shed light on Carter’s

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professionalism and possible motive. For example, some of the accusations

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involve alleged conflicts of interest, in the form of dealings with outside companies

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(including EpicentRx). Carter’s response also says that the investigation would

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make it difficult for him to find post-service employment, which tends to support

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EpicentRx’s contention that the accusations are germane to his employment.

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The Court concludes that the challenged portions of the Complaint do not fall

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within the rationale of Fed. R. Civ. P. 12(f). Accordingly, the motion to strike is

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DENIED.

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Motions to Seal

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Legal Standards for Sealing

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Two different standards govern whether documents may be filed under seal,

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depending on whether the motion they are filed in support of is dispositive or non-

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dispositive. Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir.

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2006)). The analysis starts with the “strong presumption” favoring public access to

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

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Cir. 2003). In general, a party seeking to seal a judicial record bears the burden of

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overcoming this presumption by meeting the “compelling reasons” standard.

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Kamakana, 447 F.3d at 1178. This standard is met where the Court finds

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compelling reasons and articulates the factual basis for its rulings. Id. at 1179.

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Assuming that hurdle is surmounted, the Court then balances the public’s interest

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against the party’s private interest. Id. Even if documents are confidential or subject

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to a privilege, sealing is not automatic; compelling reasons must still be shown.

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Estate of Nunez by and through Nunez v. Cnty. of San Diego, 386 F. Supp. 3d

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1334, 1337 (S.D. Cal., 2019). See also Kamakana, 447 F.3d at 1179 (holding that

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“compelling reasons” must still be shown even if documents are subject to a

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protective order, or were previously sealed).

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The Ninth Circuit recognizes an exception to this general rule for materials

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attached to motions unrelated to the merits of the case. See Phillips ex rel. Estates

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of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1213–14 (9th Cir. 2002); Foltz, 331

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F.3d at 1135. In such an instance, the “good cause” standard applies. Id. This

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standard is based on Fed. R. Civ. P. 26(c)’s provision authorizing courts to fashion

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appropriate protective orders. Phillips, 307 F.3d at 1213.

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Some of the documents for which sealing are requested are offered in

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connection with a motion for preliminary injunction, or a motion to strike the

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counterclaim. Because a motion for preliminary injunction is related to merits of the

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case, the higher “compelling reasons” standard applies. See generally Center for

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Auto Safety v. Chrysler Group, LLC, 809 F.3d 1092 (9th Cir. 2016) (holding that

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district court should apply “compelling reasons” standard before sealing

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documents offered in support of motion for preliminary injunction). Courts in this

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circuit apply the “compelling reasons” standard for motions to seal a complaint,

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because the complaint is the foundation of the lawsuit. See In re Google Inc. Gmail

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Litig., 2013 WL 5366963, at *3 (N.D. Cal., Sept. 25, 2013) (collecting cases). The

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rationale applies equally to counterclaims. In light of the underlying presumption in

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favor of access, the Court concludes that the “compelling reasons” test should

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apply to statements in the counterclaim.

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Other documents are offered in connection with EpicentRx’s motion to

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disqualify counsel. A motion to disqualify is generally treated as nondispositive,

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and the “good cause” standard is applied. See WhatsApp Inc. v. NSO Group

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Technologies Ltd., 2020 WL 7133773, slip op. at *9 (N.D. Cal., June 16, 2020)

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(treating motion to disqualify as “only tangentially related to the merits of the case”

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and applying the “good cause” standard); Hologram USA, Inc. v. Pulse Evolution

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Corp., 2015 WL 105793, at *1–2 (D. Nev., Jan 7, 2015) (applying “good cause”

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standard to motion to seal documents in support of motion to disqualify counsel).

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One point that the briefing occasionally loses sight of is the fact that sealing

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is not the same as striking or disregarding a document. While sealed documents

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are removed from public view, the Court still gives them due consideration when

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making its rulings.

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First Motion to Seal Previously-Filed Documents (Docket no. 27)

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EpicentRx asks the Court to seal information in Carter’s counterclaim, and

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documents attached to his opposition to the motion for preliminary injunction.

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(Docket no. 27.) The “compelling reasons” standard applies to these.

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EpicentRx argues that the information it seeks to have sealed was either

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privileged, or subject to confidentiality agreements. Privilege applies, it argues,

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because Carter was acting as an agent for EpicentRx at the time he participated

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in communications with EpicentRx’s counsel.

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The two paragraphs of Carter’s counterclaim do not appear to contain

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privileged material — or, if there is something privileged, there does not appear to

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be a compelling reason to seal it. Paragraph 25 merely says EpicentRx’s counsel

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told Carter that an emergency board meeting would be postponed because of

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calendar conflicts, even though the matters involved were serious. Paragraph 27

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alleges what Carter believes took place at a different board meeting where board

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members with their attorney’s assistance developed a strategy to terminate Carter.

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Carter, in his opposition, argues that he is alleging what he believes took place

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there, and the counterclaim itself makes clear he was not present.

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The documents offered in support of Carter’s opposition to the motion for

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preliminary injunction likewise do not appear to contain privileged material. Even

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assuming it is privileged, there does not appear to be a compelling reason to seal

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any of it. The first two documents are Carter’s declaration (Docket no. 23-2), which

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is similar to his counterclaim, and a series of emails from Carter to board members

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calling for a board meeting to address alleged misconduct (Docket no. 23-4).

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While Docket no. 23-11 includes communications between Carter and

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EpicentRx’s general counsel Sarah Hibberd, the two are discussing proposals for

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installing an alarm to restrict access to the company’s laboratory.

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Docket no. 23-14 is an email from Carter to Aronsky, with EpicentRx’s

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counsel cc’d. The email recounts Carter’s own position on whether Aronsky could

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properly cancel the board meeting, and accuses Aronsky of acting inappropriately

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to cover up his own wrongdoing. Even assuming that cc’ing counsel on the email

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creates a privilege, the content is essentially the same as other non-privileged

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materials. It is clear Carter’s position, even apart from this email, was that Aronsky

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had been committing malfeasance, that a board meeting should be held to address

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it, and that Aronsky should not have been permitted to cancel the board meeting.

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Docket no. 23-15 is an email from Carter to board members announcing his

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intent to hold the board meeting as originally scheduled. This email chain includes

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the previous email. (Docket no. 23-14.)

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Docket no. 23-16 is an email from EpicentRx’s counsel Stephen Davis,

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saying there had been no attempt to cover up misconduct, and that Davis did not

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know until a few minutes before sending the email of certain facts suggesting

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malfeasance. Of all documents the motion addresses, this comes closest to being

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a privileged document. Nevertheless, it is unclear what compelling reasons would

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require its sealing, particularly because Carter’s allegations raise similar points.

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Docket nos. 23-17 and 23-18 are both long email chains discussing business

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matters. These are different in character from the other documents EpicentRx

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seeks to have sealed. Some sections of the emails include contract negotiations

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and discussions among attorneys about the drafting of agreements and similar

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legal matters. A good portion of these documents include what appear to be

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confidential details of how EpicentRx does business. While some of this

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information may have leaked out as soon as Carter filed it, it is part of a large filing

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and thus has probably not been noticed. The proprietary information, if known by
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competitors, could be used to EpicentRx’s detriment. The release of trade secrets

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is a compelling reason sufficient to outweigh the right of public access. Kamakana,

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447 F.3d at 1179. Because the privileged and proprietary information can be

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redacted, it is unnecessary to seal both documents in their entirety. See id. at 1183

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(noting that redactions are preferable to outright sealing). The Court therefore finds

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that the “compelling reasons” standard is met as to the proprietary or privileged

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portions of documents 23-17 and 23-17, and that redacted versions of these

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documents should replace the unredacted versions currently in the docket.

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Second Motion to Seal a Previously Filed Documents (Docket no. 62)

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These documents were filed in support of Carter’s opposition to EpicentRx’s

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motion to disqualify counsel. The “good cause” standard applies to this and the

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remaining motions to seal. EpicentRx seeks to seal certain deposition testimony

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by attorney Sarah Hibbard pertaining to communications between her and defense

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counsel at a time when defense counsel was retained to represent EpicentRx in a

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different matter. It also seeks to seal product development information that is

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subject to a separate confidentiality agreement.

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EpicentRx’s counsel objected during Hibbard’s testimony, though she was

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permitted to answer. The highlighted portions of her testimony appear to be

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privileged. The proprietary information also appears to have been designated as

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confidential, and is the type of material that could damage EpicentRx’s interests if

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made available to its competitors. Carter’s opposition appears to focus on whether

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the information is germane to the motion, though this issue does not seem to be

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contested. The question is not whether it is relevant or should be considered, but

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whether it should be sealed. The Court finds good cause to seal the designated

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information, and the motion is GRANTED.

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Third Motion to Seal a Previously Filed Documents (Docket no. 74)

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Although this is styled as an amended motion, it supplements the previous

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motion (Docket no. 62), rather than replacing it. EpicentRx seeks to redact from
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the record the amount of debt MultiVir owed EpicentRx, which is mentioned in

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Carter’s opposition to the motion to disqualify counsel. It argues that Carter in spite

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of being contractually obligated to keep this information confidential, included the

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information in his public filing. The motion shows that the information is

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confidential, and appears only tangentially related to the motion to disqualify.

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Additionally, the redactions are narrow.
For the same reasons as discussed previously, the Court finds good cause

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for sealing the information, and the motion is GRANTED.

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Motions to File Portions of Documents Under Seal

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Motion to Seal Portions of Motion to Disqualify (Docket no. 41)

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EpicentRx filed a redacted version of its motion to disqualify counsel (Docket

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no. 40), and seeks authorization for the redaction. The portions to be redacted

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concern the retainer agreement or are privileged communications, and are very

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limited in scope.
For the same reasons as discussed previously, the Court finds good cause

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for sealing the redacted portions, and the motion is GRANTED.

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Motion to File Exhibits Under Seal (Docket no. 67)

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EpicentRx filed this motion, seeking leave to file 21 different documents or

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parts of documents. Almost all are exhibits offered in support of the motion to

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disqualify counsel. One is a portion of EpicentRx’s reply to Carter’s opposition to

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the motion to disqualify. The motion also seeks to seal portions of the Stirn

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Declaration in support of the motion, and also one line of EpicentRx’s response to

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Carter’s objection and request to strike the Stirn Declaration.

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Several of the documents are covered by confidentiality agreements, and the

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remainder are all privileged communications among counsel. For the reasons

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discussed previously, the Court finds good cause to seal these materials, and the

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motion is GRANTED.

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IT IS SO ORDERED.
Dated: March 30, 2021

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Honorable Larry Alan Burns
United States District Judge

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