AGS, LLC et al v. Galaxy Gaming, Inc.
Filing
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ORDER denying 19 Motion to Seal. Defendant shall file an amended answer, without the information at issue, no later than April 10, 2015; granting 47 Motion to Seal; granting 54 Motion to Seal; granting 23 Motion to Seal. Signed by Magistrate Judge Carl W. Hoffman on 4/2/2015. (Copies have been distributed pursuant to the NEF - DKJ)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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AGS, LLC, et al.,
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Plaintiffs,
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vs.
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GALAXY GAMING, INC.,
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Defendant.
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____________________________________)
Case No. 2:14-cv-02018-JAD-CWH
ORDER
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Before this Court are Defendant and Counterclaimant Galaxy Gaming Inc’s (“Defendant”)
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motions to seal (docs. # 14, # 19, #23, # 47,# 54), Plaintiffs and Counterclaimants AGS, LLC and Red
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Card Gaming Inc.’s (“Plaintiffs”) responses (docs. # 39, # 40, # 66, # 67), and Defendant’s replies
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(docs. # 52, # 72, # 73).
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BACKGROUND
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This action arises from a dispute over the terms of the non-competition and asset purchase
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agreements that were entered into by Defendant and Plaintiff Red Card Gaming Inc. (“Red Card”).
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Plaintiff AGS, LLC is involved in this action, as it has been assigned Red Card’s rights and obligations
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under both the non-competition and asset purchase agreements.
DISCUSSION
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1.
Legal Standard
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The Ninth Circuit has comprehensively examined the common law right of public access to
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judicial files and records. See Kamakana v. City and County of Honolulu, 447 F.3d 1172 (9th Cir.
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2006). In Kamakana, the court recognized that different interests are at stake in preserving the secrecy
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of materials produced during discovery, and materials produced or presented in relation to dispositive
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motions. Id. at 1180-81. According to the court, two standards apply to account for these interests
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when evaluating requests to seal such materials.
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A party seeking to seal “private materials unearthed during discovery,” or to maintain the
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sealing of such materials when attached to non-dispositive motions, need only demonstrate “good
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cause” to justify sealing. Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010). “For good
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cause to exist, the party seeking protection bears the burden of showing specific prejudice or harm will
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result if no protective order is granted.” Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d
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1206, 1210-11 (9th Cir. 2002). In essence, “the public can gain access to litigation documents and
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information produced during discovery unless the party opposing disclosure shows ‘good cause’ why
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a protective order is necessary.” Id. at 1210. Thus, the “burden is on the party requesting a protective
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order to demonstrate that: (1) the material in question is a trade secret or other confidential
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information within the scope of Rule 26(c); and (2) disclosure would cause an identifiable, significant
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harm.” Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003) (citation
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omitted). “If a court finds particularized harm will result from disclosure of information to the public,
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then it balances the public and private interests to decide whether a protective order is necessary.” Id.
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at 1211 (citing Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995)).
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By contrast, a party seeking to seal a judicial record attached to a dispositive motion, or
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material that is presented at trial must articulate “compelling reasons” in favor of sealing. Kamakana,
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447 F.3d at 1178. Indeed, the “mere fact that the production of records may lead to a litigant’s
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embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court
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to seal its records.” Id. (citation omitted). To justify sealing such documents, therefore, a party must
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present articulable facts identifying the interests favoring continued secrecy and show that these
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specific interests overcome the presumption of public access by outweighing the public’s interest in
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understanding the judicial process. Id. at 1181. Generally, requests for sealing are justified in cases
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in which the production of records would gratify private spite, encourage public scandal, circulate
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libelous statements, or release trade secrets. Id. at 1179.
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//
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Analysis
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a.
Motion to Seal (doc. # 14)
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Defendant asks the Court to seal: (1) exhibits 20, 28, and 29 (doc. # 15-22, # 15-30, #15-31)
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of Defendant’s cross-motion for preliminary injunction because the exhibits contain information of
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Defendant’s total placements of high card flush games, placements at specific casinos, and pricing for
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the games at each casino, which purportedly could be used by competitors; (2) paragraph 95 of Robert
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B. Saucier’s (“Saucier”) declaration (doc. # 15-1 at 18) because it refers to this information;
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(3) portions of Defendant’s cross-motion for preliminary injunction referring to this information (doc.
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# 15 at 12-13); and (4) exhibit 1 of Michael J. Pertgen’s (“Pertgen”) declaration (doc. # 10-1)
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supporting Plaintiffs’ motion for preliminary injunction because the declaration contains information
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of Defendant’s non-public patent application currently being prosecuted before the U.S. Patent and
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Trademark Office. Defendant adds that this action is in its early stages, with no protective order
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having yet been entered. Defendant also notes that it already filed a redacted version of the
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documents in question, except for Pertgen’s declaration, which was filed by Plaintiffs.
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Plaintiffs, in response, do not object. However, Plaintiffs assert that they reserve the right to
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contest whether such information should remain sealed at a later time. In reply, Defendant responds
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to assertions made by Plaintiffs in their opposition to Defendant’s motion for preliminary injunction,
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doc. # 31.
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As an initial matter, this Court will not consider Defendant’s reply, as it responds to assertions
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made by Plaintiffs in doc. # 31, which is not properly before this Court. In light of Plaintiff’s non-
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opposition, moreover, this Court grants Defendant’s request. As such, this Court directs the Clerk of
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Court to seal Pertgen’s declaration (doc. # 10-1) on the record. This Court also directs Plaintiffs to file
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a redacted version of Pertgen’s declaration.
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b.
Emergency Motion to Seal (doc. # 19)
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Defendant asks the Court to seal portions of paragraph 23 of Defendant’s answer (doc. # 13
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at 20) because Defendant “inadvertently” specified the number of placements of high card flush games
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that occurred during the first two years of the asset purchase agreement. Defendant contends this
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information is confidential and a trade secret because it could be used by competitors to “better
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compete” with Defendant in placing table games at casinos.
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Plaintiffs do not oppose Defendant’s request but wonder whether: (1) such information
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constitutes a trade secret or is confidential; (2) the instant motion is, in fact, an emergency; and
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(3) Defendant is or would incur harm by disclosing the information.
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A motion to seal an answer is governed by a “compelling reasons” standard, which reflects the
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strong presumption in favor of access to court records in this circuit. See Hyosung (Am.), Inc. v.
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Hantle, Inc., No. 10-CV-2160 SBA NJV, 2011 WL 5520961, at *3 (N.D. Cal. Nov. 14, 2011). Here,
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the Court finds that Defendant’s “inadvertent” inclusion of a purportedly confidential trade secret fails
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to satisfy the “compelling reasons” standard set forth by the Ninth Circuit. As such, this Court denies
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Defendant’s request. Defendant shall file an amended answer, without the information at issue, no
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later than April 10, 2015.
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c.
Motion to Seal (doc. # 23)
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Defendant asks the Court to seal portions of its motion to compel arbitration (doc. # 24), along
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with exhibit A of the motion (doc. # 24-1), as the non-competition agreement entered into by
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Defendant and Red Card purportedly requires the information at issue, which relates to arbitration, be
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held in confidence.
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Plaintiffs, in response, dispute various aspects of the non-competition agreement cited by
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Defendant, but claim they do not oppose Defendant’s sealing request at this time. However, Plaintiffs
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reserve the right to contest whether such information should remain sealed in the future.
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In reply, Defendant contends that Plaintiffs’ “reservation of rights” is no reason to deny the
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instant motion and, because it has shown “good cause,” Defendant asks the Court to seal the
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documents at issue.
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The Court will not consider Plaintiffs’ assertions regarding the non-competition agreement, as
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they are not properly before this Court. In light of Plaintiffs’ non-opposition, moreover, this Court
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grants Defendant’s request. Because Defendant has already filed a redacted version of the documents
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at issue, the Court will not require anything further at this time.
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d.
Motion to Seal (doc. # 47)
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Defendant asks the Court to seal portions of its reply (doc. # 48) to Plaintiffs’ opposition to
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Defendant’s motion to compel arbitration, along with exhibits A and B of Defendant’s reply (docs.
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# 48-1, # 48-2), as the non-competition agreement entered into by Defendant and Red Card purportedly
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requires that the information at issue, which relates to arbitration, be held in confidence.
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Plaintiffs, in response, again dispute various aspects of the non-competition agreement cited
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by Defendant, but claim they do not oppose sealing the information at this time and reserve the right
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to contest whether such information should remain sealed in the future.
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In reply, Defendant contends that Plaintiffs “do not actually oppose” the instant motion, and
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it has shown “good cause” to seal the documents at issue. Thus, Defendant asks the Court to grant its
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request.
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The Court reiterates its refusal to consider Plaintiffs’ assertions regarding the non-competition
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agreement, as they are not properly before this Court. In any event, because Plaintiffs do not oppose
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the instant motion, this Court grants Defendant’s request. This Court notes that Defendant has already
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filed a redacted version of the documents at issue. As such, the Court will not require anything further
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at this time.
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e.
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Defendant asks the Court to seal: (1) portions of its reply (doc. # 55) in support of its cross-
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motion for preliminary injunction because the non-competition agreement entered into by Defendant
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and Red Card purportedly requires that the information at issue, which relates to arbitration, be held
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in confidence; (2) exhibit 1 (doc. # 55-3) of Ryan J. Cudnick’s (“Cudnick”) declaration because it is
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a copy of the August 28, 2014 asset purchase agreement between Defendant and Red Card and, hence,
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“confidential”; and (3) exhibit 1 (doc. # 57-1) of Gary A. Vecchiarelli’s (“Vecchiarelli”) declaration,
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which contains pricing and placement information that purportedly constitutes a “trade secret.”
Motion to Seal (doc. # 54)
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Plaintiffs, in response, yet again dispute various aspects of the non-competition agreement, but
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claim they do not oppose Defendant’s request at this time and reserve the right to contest whether such
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information should remain sealed in the future.
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In reply, Defendant points out that Plaintiffs filed an untimely response to the instant motion.
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Nevertheless, per Defendant, Plaintiffs do not oppose the sealing request, and Defendant has
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purportedly shown “compelling reasons” to support that request.
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The Court, yet again, reiterates its refusal to consider Plaintiffs’ assertions regarding the non-
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competition agreement, as they are not properly before this Court. Because Plaintiffs do not oppose
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the instant motion, and Defendant already filed a redacted version of the documents at issue, the Court
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grants Defendant’s request.
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CONCLUSION AND ORDER
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Accordingly, IT IS HEREBY ORDERED that Defendant’s Motion to Seal (doc. # 14) is
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granted. The Court directs the Clerk of Court to seal Pertgen’s declaration (doc. # 10-1) on the
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record. The Court also directs Plaintiffs to file a redacted version of Pertgen’s declaration.
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IT IS FURTHER ORDERED that Defendant’s Emergency Motion to Seal (doc. # 19) is
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denied. Defendant shall file an amended answer, without the information at issue, no later than April
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10, 2015.
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IT IS FURTHER ORDERED that Defendant’s Motion to Seal (doc. # 23) is granted.
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IT IS FURTHER ORDERED that Defendant’s Motion to Seal (doc. # 47) is granted.
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IT IS FURTHER ORDERED that Defendant’s Motion to Seal (doc. # 54) is granted.
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DATED: April 2, 2015
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______________________________________
C.W. Hoffman, Jr.
United States Magistrate Judge
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