Rudd Equipment Company, Inc. v. Volvo Construction Equipment North America, LLC
Filing
147
MEMORANDUM OPINION AND ORDER Signed by Magistrate Judge Colin H. Lindsay on 6/3/2021: DN 116 is GRANTED in part and DENIED in part. DN 109 is GRANTED. DN 110 shall remain provisionally under seal pending the filing of a redacted version. On or before 6/11/2021, Rudd shall file a redacted version of DN 110 consistent with this order. cc: Counsel (DLW)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:19-CV-00778-DJH-CHL
RUDD EQUIPMENT COMPANY, INC.,
Plaintiff,
v.
VOLVO CONSTRUCTION EQUIPMENT NORTH AMERICA, LLC,
Defendant.
MEMORANDUM OPINION AND ORDER
Before the Court is a motion for leave to file portions of the expert witness report by Lisa
C. Snow filed by Plaintiff Rudd Equipment Company, Inc. (“Rudd”). (DN 116.) Defendant Volvo
Construction Equipment North America, LLC (“Volvo”) filed a response in opposition (DN 122)
to which Defendant filed a reply (DN 127). Therefore, the motion is ripe for review.
I.
BACKGROUND
Rudd’s motion concerns a document relied upon in Volvo’s combined response to Rudd’s
motion for summary judgment and brief in support of its motion for summary judgment. (DN 116,
at PageID # 2659.) Specifically, Rudd seeks to redact from the record portions of the declaration
and rebuttal report of Volvo’s expert witness, Lisa C. Snow. (Id.) The rebuttal report contains
information from Rudd’s 2014-2019 financial statements, which Rudd disclosed to Volvo with a
“Highly Confidential” designation. (Id., at PageID # 2661.) Pursuant to the Parties’ mutual
confidentiality agreement governing their use of documents obtained in this action, Volvo filed
the rebuttal report with a request that it be kept provisionally under seal pending a motion by Rudd
to permanently seal. (DN 109; DN 110.)
Rudd highly values the confidentiality of the information contained in its financial
statements, as evidenced in its motion. (DN 116, at PageID # 2660-61.) Rudd says that it does
not publicly disclose its financial information and “exercises major efforts to maintain
confidentiality . . . .” (Id., at PageID # 2660.) This includes limiting access to a handful of its
upper-level employees, its lawyers, accountants, and auditors, and select business partners. (Id.)
It is Rudd’s belief that “no third party has ever reviewed the Financial Statements (or the
confidential information they contain) except where that third party accepted an agreement with
Rudd that required them to treat such as confidential (or privileged).” (Id., at PageID # 2661.)
Rudd proposes a set of redactions to the rebuttal report that would conceal information derived
from the financial statements. (See DN 116-2.)
II.
LEGAL STANDARD
Although the Sixth Circuit has long recognized a “strong presumption in favor of
openness” regarding court records, there are certain interests that overcome this “strong
presumption.” Rudd Equipment Co., Inc. v. John Deere Construction & Forestry Co., 834 F.3d
589, 593 (6th Cir. 2016) (citing Brown & Williamson Tobacco Corp. v. FTC, 710 F.2d 1165, 1179
(6th Cir. 1983)). These interests include “certain privacy rights of participants or third parties,
trade secrets, and national security.” Brown & Williamson Tobacco Corp., 710 F.2d at 1179. The
party seeking to seal the records bears a “heavy” burden; simply showing that public disclosure of
the information would, for instance, harm a company's reputation is insufficient. Id.; Shane Grp.
Inc. v. Blue Cross Blue Shield of Mich., 825 F.3d 299, 305 (6th Cir. 2016). Instead, the moving
party must show that it will suffer a “clearly defined and serious injury” if the judicial records are
not sealed. Shane Grp. Inc., 825 F.3d at 307. Examples of injuries sufficient to justify a sealing
of judicial records include those that could be used as “sources of business information that might
harm a litigant's competitive standing.” Nixon v. Warner Comm'ns, Inc., 435 U.S. 589, 598 (1978).
In rendering a decision, the Court must articulate why the interests supporting nondisclosure are
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compelling, why the interests supporting public access are not as compelling, and why the scope
of the seal is no broader than necessary. Shane Grp. Inc., 825 F.3d at 306.
III.
DISCUSSION
Rudd’s proposed redactions would cover a chart showing its net sales from 2014-2019,
numerical figures representing Rudd’s operating income from 2017-2019, a chart showing Rudd’s
operating income from 2014-2019, a numerical figure representing Rudd’s operating margin from
2014-2017, and the numerical figures on a table detailing Rudd’s financial statements from 20142019. (DN 116-2, at PageID # 2680-81, 2688, 2704.) In arguing that it has a protected privacy
interest in this information, Rudd cites to prior cases in this Court recognizing a privacy interest in
“sources of business information that might harm a litigant’s competitive standing.” (DN 116, at
PageID # 2663.) (quoting Marathon Petroleum, No. 3:15-CV-354-DJH, 2018 U.S. Dist. LEXIS
106176, at *5). Rudd notes that this privacy interest has justified sealing businesses’s historical
and current financial information. (Id.) Rudd say that if the similar information he seeks to redact
is made public, competitors could share the information with its customers to damage its
relationships and use the information to undercut Rudd in the market, and Rudd’s business partners
could use the information to disadvantage Rudd in negotiations. (Id., at PageID # 2662.) Rudd
further argues that the public has a relatively low interest in accessing businesses’s sensitive
financial data, and that the limited redactions “would not in any way impede the public from
viewing and understanding the claims, defenses, or factual issues at issue in this case.” (Id., at
PageID # 2664-65.) Finally, Rudd asserts that the proposed redactions are narrowly tailored
because they only cover “a small number of specific, discrete financial figures (including profit
margin numbers) that are set forth on just four pages of one case filing.” (Id.)
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In response, Volvo argues that Rudd overstates its privacy interest in the information it
seeks to redact because the information is far narrower than the underlying financial statements
that Rudd works to keep confidential. (DN 122, at PageID # 2797.) Additionally, Volvo argues
that the potential harm that Rudd claims cannot support Rudd’s privacy interest because it is
“hypothetical” and would never materialize because the information at issue “is so bare bones . . .
.” (Id., at PageID # 2799.) Volvo also argues that Rudd’s past efforts to keep int financial
information confidential do not establish a privacy interest because Rudd chose to file suit and put
his finances at issue. (Id., at PageID # 2798.)
In the alternative, Volvo argues that even if Rudd could establish a privacy interest in the
information at issue, it would be outweighed by the public interest in access. (Id., at PageID #
2799-2801.) Rudd notes that the public interest in accessing information relied upon in dispositive
motions is heightened and that here it relies on the rebuttal report “to oppose Rudd’s motion for
summary judgment seeking the extraordinary relief of permanent injunction and in support of
Volvo’s cross-motion for summary judgment.” (Id.) Additionally, Volvo says that the rebuttal
report is highly relevant to the underlying issues in the motions. (Id., at PageID # 2800.)
In reply, Rudd says that Volvo overstates the burden required to establish a privacy interest
in sensitive business information, arguing that it need only show that public disclosure has the
potential to cause it competitive harm. (DN 127, at PageID # 2846.) Rudd recognizes that the
potential harms it illustrated are hypothetical examples, but that “it is simply illogical for Volvo to
claim that a business would not face a serious threat to its competitive standing if all of its
competitors could suddenly view previously unavailable information about the business’s
overarching performance and profitability.” (Id., at PageID # 2848.)
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Rudd also disputes that its proposed redactions substantially interfere with the public right
of access to information relied upon for conclusions of law, noting that it does not seek to conceal
any arguments, opinions, or reasons—just specific numerical figures. (DN 127, at PageID # 2845.)
Rudd further notes that its proposed redactions do not cover Ms. Snow’s descriptions of how its
finances have changed over time, which allows the public to vet Volvo’s general assertions
about Rudd’s damages. (Id.)
There is a legitimate privacy interest in “sources of business information that might harm
a litigant’s competitive standing.” Kentucky v. Marathon Petroleum Co. LP, No. 3:15-CV-354DJH, 2018 WL 3130945, at *5 (W.D. Ky. June 26, 2018) (quoting Nixon v. Warner
Communications, Inc., 435 U.S. 589, 598 (1978). It is hard to challenge Rudd’s sincerity in its
belief that harm will result if information from its financial statements became public; Rudd has
spent substantial time, effort, and money over the years to establish its prices, profit margin, and
sales, and that this confidential financial information is unknown to its competitors. (See DN 1161.) While at this time, Rudd can only speculate as to what would happen if the information fell
into a competitor’s lap, the hypothetical guesses it lists in its motion aren’t unreasonable. See
Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214, 1225–26 (Fed. Cir. 2013) (“We conclude that
Apple and Samsung have such an interest because they could suffer competitive harm if this
information is made public, and the district court erred by concluding otherwise. In particular, it
seems clear that if Apple’s and Samsung’s suppliers have access to their profit, cost, and margin
data, it could give the suppliers an advantage in contract negotiations, which they could use to
extract price increases for components. This would put Apple and Samsung at a competitive
disadvantage compared to their current position . . . . Thus, we conclude that Apple and Samsung
have a significant interest in preventing the release of their detailed financial information.”)
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(citations omitted). Therefore, the Court finds that Rudd has established a legitimate privacy
interest in the information it seeks to redact.
The next question is how Rudd’s interest measures up against the public interest in access.
The Sixth Circuit has said that “the greater the public interest in the litigation’s subject matter, the
greater the showing necessary to overcome the presumption of access.” Shane Grp., 825 F.3d at
305. “The inverse is true, too. The lesser the public interest in the litigation's subject matter, the
lesser the showing necessary to overcome the presumption of access.” Caudill Seed & Warehouse
Co., Inc. v. Jarrow Formulas, Inc., No. 3:13-CV-82-CRS-CHL, 2017 WL 3220470, at *5 (W.D.
Ky. July 28, 2017) Here, “the public’s interest in this litigation is less than it would be in a case
involving constitutional rights, among other things.” (Id.) Additionally, Rudd does not request
any redactions to Volvo’s underlying motion. On the other hand, transparency is most important
at this stage of litigation, when the merits of the case are being decided. Marathon Petroleum Co.
LP, at *6. A review of Volvo’s combined response to Rudd’s motion for summary judgment and
motion for summary judgment reveals that Volvo relies heavily on the rebuttal report to establish
that Rudd’s performance improved after 2017. However, none of the references to the rebuttal
report quote or state the specific numerical figures Rudd seeks to redact. Additionally, the figures
themselves are not at issue because “Rudd is not disputing the accuracy of Volvo’s assertions about
how the finances have changed.” (DN 127, at PageID # 2845.) Finally, redacting the
information at this stage would not preclude public access if it is introduced at trial.
With the foregoing in mind, the Court finds that the balance of interests tilts marginally in
favor of redacting the information, of course, subject to the requirement that the redactions are
narrowly tailored. In the thirty-three-page report, Rudd seeks only to redact portions of four pages.
All the proposed redactions are discreet numerical figures in which it has established a legitimate
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privacy interest, except in two cases. Rudd’s proposed redactions cover the entire chart showing
its net sales from 2014-2019 on page 7 and the entire chart showing Rudd’s operating income from
2014-2019 on page 8. (DN 116-2, at PageID # 2681-82.) The changes in these data points
over time are central to the underlying combined motion, but much harder to substantiate when the
individual numerical figures are redacted. Narrowly tailored redactions of there charts would
redact the numerical values on the vertical axes but leave unredacted the linear representations of
the changes over time. Accordingly, the Court will require to file a version of the rebuttal report
that does so.
IV.
ORDER
For the foregoing reasons,
IT IS HEREBY ORDERED as follows:
1. DN 116 is GRANTED in part and DENIED in part.
2. DN 109 is GRANTED. DN 110 shall remain provisionally under seal pending the filing
of a redacted version.
3. On or before June 11, 2021, Rudd shall file a redacted version of DN 110 consistent with
this order.
June 3, 2021
cc: Counsel of record
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