USSC Holdings Corp. et al v. TK Products, LLC et al

Filing 86

ORDER granting 83 Plaintiffs' Motion to Seal Exhibits A and F attached to the First Amended Complaint. Signed by Magistrate Judge William G. Cobb on 7/11/2017. (Copies have been distributed pursuant to the NEF - HJ)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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USSC HOLDINGS CORP., a Nevada
corporation, MUSIC CITY FORE CO.,
a Nevada corporation, ROBERT J.
BUCKLEY, an individual,
STEVE PALADINO, an individual,

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Plaintiffs,
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v.
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TK PRODUCTS, LLC, an Oregon limited
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liability company, KURT O’ BAUER, an
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individual, TRENT C. FARRER,
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an individual,
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Defendants.
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_____________________________________)

3:16-cv-00398-RCJ-WGC
ORDER

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Before the court is Plaintiffs’ Motion to Seal. (ECF No. 83.) Plaintiffs seek an order sealing

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certain discrete portions of their First Amended Complaint and two exhibits (Exhibits A and F) attached

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thereto.

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“Historically, courts have recognized a general right to inspect and copy public records and

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documents, including judicial records and documents.” See Kamakana v. City and County of Honolulu,

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447 F.3d 1172, 1178 (9th Cir. 2006) (internal quotation marks and citation omitted). “‘Throughout our

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history, the open courtroom has been a fundamental feature of the American judicial system. Basic

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principles have emerged to guide judicial discretion respecting public access to judicial proceedings.

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These principles apply as well to the determination of whether to permit access to information contained

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in court documents because court records often provide important, sometimes the only, bases or

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explanations for a court’s decision.’” Oliner v. Kontrabecki, 745 F.3d 1024, 1025 (9th Cir. 2014)

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(quoting Brown & Williamson Tobacco Corp. v. F.T.C., 710 F.2d 1165, 1177 (6th Cir. 1983)).
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Documents that have been traditionally kept secret, including grand jury transcripts and warrant

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materials in a pre-indictment investigation, come within an exception to the general right of public

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access. See Kamakana, 447 F.3d at 1178. Otherwise, “a strong presumption in favor of access is the

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starting point.” Id. (internal quotation marks and citation omitted). “The presumption of access is ‘based

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on the need for federal courts, although independent—indeed, particularly because they are

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independent—to have a measure of accountability and for the public to have confidence in the

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administration of justice.’” Center for Auto Safety v. Chrysler Group, LLC, 809 F.3d 1092, 1096 (9th

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Cir. 2016), cert. denied, 137 S.Ct. 38 (Oct. 3, 2016) (quoting United States v. Amodeo (Amodeo II),

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71 F.3d 1044, 1048 (2nd Cir. 1995); Valley Broad Co. v. U.S. Dist. Court-D. Nev., 798 F.2d 1289, 1294

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(9th Cir. 1986)).

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There are two possible standards a party must address when it seeks to file a document under

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seal: the compelling reasons standard or the good cause standard. See Center for Auto Safety, 809 F.3d

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at 1096-97. Under the compelling reasons standard, “a court may seal records only when it finds ‘a

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compelling reason and articulate[s] the factual basis for its ruling, without relying on hypothesis or

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conjecture.” Id. (quoting Kamakana, 447 F.3d at 1179). “The court must then ‘conscientiously balance

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[ ] the competing interests of the public and the party who seeks to keep certain judicial records secret.”

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Id. “What constitutes a ‘compelling reason’ is ‘best left to the sound discretion of the trial court.’” Id.

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(quoting Nixon v. Warner Comm., Inc., 435 U.S. 589, 599 (1978)). “Examples include when a court

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record might be used to ‘gratify private spite or promote public scandal,’ to circulate ‘libelous’

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statements, or ‘as sources of business information that might harm a litigant’s competitive standing.’”

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Id. (quoting Nixon, 435 U.S. at 598-99).

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Center for Auto Safety described the good cause standard, on the other hand, as the exception to

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public access that had been applied to “sealed materials attached to a discovery motion unrelated to the

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merits of a case.” Id. (citing Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1213-

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14 (9th Cir. 2002)). “The ‘good cause language comes from Rule 26(c)(1), which governs the issuance

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of protective orders in the discovery process: ‘The court may, for good cause, issue an order to protect

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a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Id. (citing
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Fed. R. Civ. P. 26(c)).

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The Ninth Circuit has clarified that the key in determining which standard to apply in assessing

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a motion for leave to file a document under seal is whether the documents proposed for sealing

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accompany a motion that is “more than tangentially related to the merits of a case.” Center for Auto

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Safety, 809 F.3d at 1101 (9th Cir. 2016). If that is the case, the compelling reasons standard is applied.

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If not, the good cause standard is applied.

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Here, Plaintiffs seek to file under seal the discrete portions of their First Amended Complaint and

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Exhibits A and F attached thereto. They represent that the exhibits contain the operative agreement

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between the parties and other information which the parties have deemed confidential pursuant to a

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protective order. The motion for leave to amend does not go to the merits of the action itself, but to what

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claims the Plaintiffs will be asserting. Therefore, the “good cause” standard applies.

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The exhibits attach the agreements and references other confidential information subject to the

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protective order entered in this case. Rule 26 allows the court to protect “trade secret[s] or other

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confidential research, development or commercial information[.]” As such, the court finds that good

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cause exists to seal exhibits A and F. Therefore, Plaintiffs’ motion (ECF No. 83) is GRANTED.

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IT IS SO ORDERED.

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DATED: July 11, 2017.

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__________________________________________
WILLIAM G. COBB
UNITED STATES MAGISTRATE JUDGE

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