Northeast Series of Lockton Companies, LLC v. Bachrach

Filing 69

MEMORANDUM Opinion and Order. Signed by the Honorable Arlander Keys on 8/2/2013. (ac, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
NORTHEAST SERIES OF LOCKTON
COMPANIES, LLC.,

)
)
)
Plaintiff/Counterdefendant, )
)
vs.
)
DAVID BACHRACH
)
)
Defendant/Counterplaintiff,)

No. 12 CV 1695

Judge Guzman
)
Magistrate Judge Arlander Keys

)

MEMORANDUM OPINION AND ORDER
Currently before the Court is Defendant’s, David
Bachrach’s, motion for a ruling on the confidentiality of two
documents and on whether the motion for summary judgment should
or should not be filed under seal.

Pursuant to the Agreed

Confidentiality Order and Local Rule 26.2, Mr. Bachrach urges the
Court to find that Plaintiff’s Operating Agreement and First
Amended and Restated Operating Agreement are not confidential and
that he be permitted to file his motion for summary judgment
publicly and not under seal.

For the reasons set forth below,

the Court grants Defendant’s motion.
BACKGROUND
Plaintiff, Northeast Series of Lockton Companies, LLC,
offers a variety of commercial insurance services through its
Producer Members who have professional experience and expertise

in the insurance industry.

Defendant, David A. Bachrach, is a

former Producer Member of Plaintiff. The Plaintiff's Members are
compensated by commission payments based on the revenue they
generate and the plaintiff's profitability.
11.)

(Compl., Dkt # 1, ¶

Because Members may generate income on an irregular basis,

the Plaintiff allows them to take regular draw payments and
recover certain expenses incurred in the course of their sales
efforts. (Id. ¶ 12.)

However, every Member is contractually

bound to repay any of these draw payments and advanced business
expenses that exceed the actual commissions earned by the Member.
(Id. ¶¶ 12, 20.)

Plaintiff alleges that, despite this obligation

pursuant to the Member Agreement, the Operating Agreement and the
Amended Operating Agreement, Mr. Bachrach failed to repay his
negative capital account balance of $336,726.75 when his
membership was terminated on December 15, 2011. (Id. ¶¶ 20–21,
26.)
Plaintiff has sued Mr. Bachrach to recoup draws it paid him,
and argues that its Operating Agreement is the “express
agreement” permitting it to recoup said draws. (Id. ¶ 20.)
Plaintiff has designated its Operating Agreement and its First
Amended and Restated Operating Agreement (collectively as the
“Operating Agreements”) as “ATTORNEYS’ EYES ONLY – PLUS
BACHRACH/SERIES” under the Agreed Confidentiality Order (Doc.
#34-1.)

Mr. Bachrach has filed a counterclaim, disputes the
2

confidentiality designation by Plaintiff, and now requests the
Court to declare the Operating Agreements are not confidential
and asks that he be permitted to file his motion for summary
judgment publicly and not under seal.
LEGAL STANDARD
The burden of establishing confidentiality is to establish
“good cause” for it, and the burden lies on the party who
designated the documents as “confidential”.

See. e.g., EEOC v.

Univ. of Notre Dame Du Lac, 715 F.2d 331 at 340 (7th Cir. 1983).
The Seventh Circuit has held that good cause to file a document,
or portion thereof, under seal requires the party seeking
protection to “analyze in detail, document by document, the
propriety of secrecy, providing reasons and legal citations.”
Baxter Int’l v. Abbott Labs, 297 F.3d 544 at 548 (7th Cir. 2002).
Moreover, the burden is a continual one, as a party must
“continue to show good cause for confidentiality when
challenged.” In re Bank One Sec. Litig., 222 F.R.D. 582 at 586
(N.D. Ill. 2004)(citing Union Oil Co. of Cal. v. Leavell, 220
F.3d 562 at 568 (7th Cir. 2000)).

If a party claims that injury

will result from public disclosure of certain information, it
must provide support for such a statement. Baxter Int’l, 297 F.3d
at 548.
Lastly, “[t]here is a strong presumption toward public
disclosure of court files and documents.” In re Bank One Sec.
3

Litig., 222 F.R.D. 582 at 585 (N.D. Ill. 2004) (Denlow, MJ),
citing Globe Newspaper Co. v. Superior Court, 457 U.S. 596 at 603
(1982). See also, United States v. Ladd, 218 F.3d 701 at 704 (7th
Cir. 2000) (the public presumptively has a right of access to the
records of judicial proceedings). “Those documents, usually a
small subset of all discovery, that influence or underpin the
judicial decision are open to public inspection unless they meet
the definition of trade secrets or other
categories of bona fide long-term confidentiality.” Baxter Int'l
Inc. v. Abbott Labs., 297 F.3d 544 at 545 (7th Cir. 2002), citing
Grove Fresh Distributors, Inc. v. Everfresh Juice Co., 24 F.3d
893 (7th Cir. 1994), and In re Continental Illinois
Securities Litigation, 732 F.2d 1302 (7th Cir. 1984).
DISCUSSION
Mr. Bachrach argues that Plaintiff has failed to meet its
burden of establishing “good cause” for the secrecy of both the
Operating Agreements and the filing of his impending motion for
summary judgment.

Plaintiff contends that the Operating

Agreements are legally confidential and proprietary documents,
which should be filed under seal, and that Mr. Bachrach conceded,
waived, and/or is estopped from making the arguments he now
asserts because he signed the Member Agreement to maintain
confidentiality.

The Court finds Plaintiff’s arguments

unavailing and agrees with Defendant that Plaintiff has failed to
4

meet its burden of establishing “good cause” and has not overcome
the strong presumption towards public disclosure.
Mr. Bachrach intends to file a motion for summary judgment
and seeks to include the Operating Agreements as exhibits to his
motion.

After a complete review of all documents submitted, the

Court finds no reason to deem the Operating Agreements
confidential, as it does not contain anything that the law
considers worthy of confidential protection, such as “a trade
secret or other confidential research, development, or commercial
information.”

Federal Rule of Civil Procedure 26(c)(1)(G). See

also, Citizens First Nat'l Bank v. Cincinnati Ins. Co., 178 F.3d
943 (7th Cir. 1999).

The Court does not find the Operating

Agreement to contain nor disclose the cost of any of the products
Plaintiff sells; information about Plaintiff’s profits made on
sales; information regarding Plaintiff’s profit margin;
Plaintiff’s marketing plan; Plaintiff’s customers; nor any
employee’s hours worked, gross pay, rate of pay, tax deductions,
etc. – nothing is revealed that is a trade secret or harmful
commercial information.
The Operating Agreements do contain and disclose information
concerning the way in which Plaintiff and its parent were
organized and various categories of pay, albeit without any
specific breakdown.

Defendant argues that some of this

information is already publicly available, and can be found on
5

Plaintiff’s website, including information such as the purpose of
the company, the names of various offices and titles, financial
package information such as savings/retirement, time off,
learning development, work-life, performance management, and
health and welfare.

Either way, the Court does not find that

this information constitutes “good cause” that should outweigh
the strong presumption of public disclosure.
Plaintiff additionally argues that confidentiality is
warranted due to the pay-structures that are explained within the
Operating Agreement.

However, Plaintiff fails to point to any

hard numbers on which a competitor could base any sort of
calculation and gain a competitive advantage.

Moreover,

employees have the right to discuss and disclose their pay.
Therefore, the vaguely worded pay-structures do not warrant
confidentiality.

Lastly, Plaintiff’s argument that Mr. Bachrach

conceded, waived, and/or is estopped from making the arguments he
now asserts simply due to his signing of the Member Agreement
also does not outweigh the presumption towards disclosure of
court files and documents in the suit that Plaintiff brought.
Mr. Bachrach maintains that the publicly-available filing
will not cite to specific provisions of the Operating Agreement,
so as not to violate the parties’ Protective Order.

Instead, he

will provide the Operating Agreement, among other things, for in
camera inspection.

This precaution, coupled with Plaintiff’s
6

failure to meet its burden of proving “good cause” otherwise,
compels the Court to grant Defendant’s motion.
Accordingly, the Court grants Defendant’s motion [#51] and
finds that the Operating Agreements are not confidential and
directs Defendant to file his motion for summary judgment
publicly.

All matters relating to the referral of this action

having been resolved, the case is returned to the assigned judge.

Dated: August 2, 2013
E N T E R E D:

_____________________________
MAGISTRATE JUDGE ARLANDER KEYS
UNITED STATES DISTRICT COURT

7