Digital Assurance Certification, LLC v. Pendolino

Filing 11

ORDER denying without prejudice 6 Motion to Seal Exhibit "B" to Charles Pratt Declaration. Signed by Magistrate Judge Thomas B. Smith on 1/23/2017. (Smith, Thomas)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
DIGITAL ASSURANCE CERTIFICATION,
LLC,
Plaintiff,
v.

Case No: 6:17-cv-72-Orl-31TBS

ALEX PENDOLINO, JR.,
Defendant.
ORDER
Pending before the Court is Plaintiff’s Motion to Seal Exhibit “B” to Declaration of
Charles Pratt (Doc. 6). This case was recently filed and Defendant Alex Pendolino, Jr.
(“Pendolino”), who may or may not have been served, has yet to appear.
Plaintiff Digital Assurance Certification, LLC (“DAC”) employed Pendolino as a
broker-dealer liaison (Doc. 1, ¶ 3). While working for DAC, Pendolino signed a
confidentiality agreement in which he acknowledged that he would be receiving
confidential, trade secret information (Id., ¶ 14). He promised to maintain the confidentiality
of that information during and after the conclusion of his employment (Id.). Pendolino left
DAC on October 10, 2016 and now works for a competitor (Id., ¶¶ 21, 27). Since leaving
DAC, Pendolino has moved at least one of its clients to his new employer (Id., ¶ 27).
DAC engaged computer expert Charles Pratt (“Pratt”) to forensically examine the
computer Pendolino used when he worked for the company (Id., ¶ 29; Doc. 6 at 3). Pratt
has determined that on October 5, 2016, Pendolino attached a USB drive to his work
computer and accessed every file in DAC’s shared-network drive (Doc. 6 at 2). Until he is
able to examine the USB drive that was used, Pratt is unable to conclude definitively that

Pendolino transferred the information in the shared-network drive to that USB drive (Doc. 6
at 3). But, DAC avers that Pendolino had no legitimate business purpose for accessing all
of the files (Doc. 1, ¶ 30). DAC brings this multi-count lawsuit against Pendolino for
misappropriation of its trade secrets (Doc. 1).
Relying on the Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836 et seq., DAC
has filed an ex parte application for the seizure of documents, computers and computer
storage devices it believes unlawfully contain its trade secrets (Doc. 3). The application is
supported by Pratt’s declaration (Doc. 5). Exhibit “B” to that declaration is a document
listing every folder on DAC’s internal network that Pendolino allegedly accessed (Doc. 6 at
2). The list includes the names of DAC’s former, current, and potential customers (Id. at 5).
DAC alleges that in the hands of its competitors, this information “would be extremely
detrimental to DAC’s business interests.” (Id.). Consequently, DAC seeks leave of Court to
file Exhibit “B” under seal or, alternatively, to redact the confidential information contained
in Exhibit “B” (Id. at 6).
In this district, motions to seal must satisfy the following requirements: “Unless filing
under seal is authorized by statute, rule, or order, a party seeking to file under seal any
paper or other matter in any civil case shall file and serve a motion, the title of which
includes the words ‘Motion to Seal’ and which includes (i) an identification and description
of each item proposed for sealing; (ii) the reason that filing each item is necessary; (iii) the
reason that sealing each item is necessary; (iv) the reason that a means other than sealing
is unavailable or unsatisfactory to preserve the interest advanced by the movant in support
of the seal; (v) a statement of the proposed duration of the seal; and (vi) a memorandum of
legal authority supporting the seal.” M.D. FLA. Rule 1.09(a). The motion complies with the
local rule.

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District courts may enter orders that “a trade secret or other confidential research
development, or commercial information not be revealed or be revealed only in a
designated way.” FED. R. CIV. P. 26(c)(1)(G). However, before sealing information the Court
must consider the public’s qualified common-law right of access to judicial proceedings.
See generally Chicago Tribune Co. v. Bridgestone/Firestone, Inc., 263 F.3d 1304 (11th Cir.
2001). This “common law right of access may be overcome by a showing of good cause,
which requires ‘balancing the asserted right of access against the other party’s interest in
keeping the information confidential.’” Romero v. Drummond Co., Inc., 480 F.3d 1234,
1245 (11th Cir. 2007) (quoting Chicago Tribune, 263 F.3d at 1313). In balancing these
interests “courts consider, among other factors, whether allowing access would impair
court functions or harm legitimate privacy interests, the degree of and likelihood of injury if
made public, the reliability of the information, whether there will be an opportunity to
respond to the information, whether the information concerns public officials or public
concerns, and the availability of a less onerous alternative to sealing the documents.”
Romero, 480 F.3d at 1246. Good cause is established by showing that disclosure will
cause “a clearly defined and serious injury.” Pansy v. Borough of Stroudsburg, 23 F.3d
772, 786 (3d Cir. 1994); see also Kamakana v. City and Cty. of Honolulu, 447 F.3d 1172,
1178, 1182 n.7 (9th Cir. 2006) (party seeking to seal dispositive motion papers “must
‘articulate[] compelling reasons supported by specific factual findings.’” (quoting Foltz v.
State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003) (alterations in
original)).
DAC seeks to protect the confidentiality of its customer list. Under Florida law,
customer lists are generally considered trade secrets provided: (1) the list was acquired or
compiled through the industry of the owner of the list and is not just a compilation of

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information commonly available to the public; and (2) the owner shows that it has taken
reasonable efforts to maintain the secrecy of the information. E. Colonial Refuse Serv., Inc.
v. Velocci, 416 So. 2d 1276, 1278 (Fla. 5th DCA 1982); Sethscot Collection, Inc. v. Drbul,
669 So. 2d 1076, 1078 (Fla. 3d DCA 1996); Merrill Lynch, Pierce, Fenner & Smith, Inc. v.
Lovekamp, No. 4:01CV318SPM, 2001 WL 810749, at *3 (N.D. Fla. July 16, 2001).
DAC represents that it “takes significant steps to protect its customer lists from
disclosure, including password protecting its computer systems and requiring that
employees generate new complex passwords every ninety (90) days, restricting remote
access to DAC’s servers absent extraordinary circumstances, and requiring employees to
sign confidentiality agreements providing for the non-disclosure of customer lists.” (Doc. 6
at 5). But, DAC has not explained the method by which the list was created or otherwise
shown that the information is not readily available from a public source. Consequently,
DAC has not met its burden to show that the information is a trade secret. Because DAC
has not shown that Exhibit “B” contains trade secret information, it has not demonstrated a
legitimate privacy interest that requires the protection afforded by an order to seal.
Therefore, the motion to seal is DENIED without prejudice.
DONE and ORDERED in Orlando, Florida on January 23, 2017.

Copies furnished to Counsel of Record

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