VENNEMAN v. BMW FINANCIAL SERVICES NA, LLC

Filing 133

OPINION AND ORDER on Defendants' Motion to Seal, that the Defendants shall supplement the motion record by filing redacted copies of the relevant confidential materials within 14 days of the date of this Order. For administrative purposes, the instant motion to seal will be held in abeyance, etc. Signed by Magistrate Judge Steven C. Mannion on 6/26/13. (gmd, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
NOT FOR PUBLICATION
W. DANA VENNEMAN, et al.,

Civil Action No.

Plaintiff,

2:09-CV-5672-ES-SCM

v.

OPINION AND ORDER ON
DEFENDANTS’ MOTION TO SEAL

BMW FINANCIAL SERVICES NA,
LLC, et al.,

[D.E. 129]

Defendants.
I.

INTRODUCTION
Pending before this Court is Defendant BMW Financial

Services NA, LLC’s (“BMW Financial”) renewed motion to seal
[Docket Entry (“D.E.”) 129] certain materials submitted with
Plaintiffs’ motion for partial summary judgment [D.E. 60] and
accompanying reply [D.E. 68].

The Court has considered the

parties’ submissions and oral argument pursuant to Federal Rule
of Civil Procedure 78(b), and for the reasons set forth below
the Court will administratively terminate the motion and order
Defendants to supplement their filing.

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BACKGROUND1

I.

This action concerns capitalized cost reduction payments in
the context of automobile leases and whether such “payments
constitute rent paid in advance for the purposes of the
Servicemembers Civil Relief Act, 50 U.S.C. App. § 501 et seq.
(the “Act”).” (D.E. 1).

Plaintiffs are military service members

who were mobilized for deployment.

They contend that

capitalized cost reduction payments constitute rent paid in
advance under the Act and are subject to pro-rata reimbursement
under the terms of the Act.

Defendant BMW Financial disputes

plaintiffs’ claims and moved for summary judgment, arguing that
the Act does not require reimbursement of capitalized cost
reduction payments.

(D.E. 59).

That motion is pending before

the Honorable Esther Salas, U.S.D.J.

II.

RELEVANT PROCEDURAL HISTORY

On February 17, 2012, BMW Financial filed a motion to seal
certain documents. (D.E. 72).
the return date.

The Court set March 19, 2012 as

Plaintiffs filed their opposition to the

motion on March 5, 2012. (D.E. 75).

Defendants’ reply brief was

filed on March 12, 2012. (D.E. 77).

1

At this stage of the proceedings we are required to accept the
facts alleged in the Amended Complaint as true.
2

The exhibits sought to be sealed by BMW financial were as
follows: BMW Financial’s Lease Program Worksheet (Exhibit B),
BMW Group Funding Notification for Venneman (Exhibit E), Lease
transaction documents for six (6) leases (Exhibits G through L),
a Center Agreement (Exhibit M), BMW Financial’s Group Accounting
Guidelines (Exhibit P), Reporting and Controlling guidelines
(Exhibit Q), and a 05/06 Financing Handbook (Exhibit R), a Pro
Rata CCR Chart for Service Members (Reply Exhibit A), and
Reporting and Controlling Guidelines for 2008 (Reply Exhibit F).
On September 25, 2012, Magistrate Judge Waldor issued an order
granting the motion in part and denying it in part. (D.E. 121).
Prior to the Court’s September 25, 2012, Order, BMW
Financial withdrew its Motion to Seal as to Exhibit B, and the
parties agreed to a limited production as to Exhibits P, Q, and
R.

(See D.E. 121, Sept. 25, 2012, Letter Order).

Judge Waldor

found that Exhibits E and G through L attached to Plaintiffs’
motion for summary judgment would likely “subject BMW Financial
to a competitive disadvantage,” and that the “public interest in
having this information disclosed is clearly outweighed by the
inevitable negotiating disadvantages that would result from the
release of the fee and reserve rates.”

Id.

Accordingly, Judge

Waldor ordered that Exhibits E and G through L be redacted in
accordance with the Court’s Order and submitted to the Court
with Plaintiff’s supplemental filing.
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Id.

Similarly, Judge

Waldor found that Exhibit A, the Pro Rata CCR Chart, should be
redacted with regard to personal identifying information.

Id.

With regard to Exhibit M, the BMW Center Agreement, Judge
Waldor denied the motion to seal without prejudice.

The Court

agreed with Defendants that the agreement contained certain
sensitive information that warrants sealing, but found that BMW
Financial “must narrow its request to include only those
portions of the Exhibit M, which, if open to the public, would
[affect] the parties’ legitimate business interests and must set
forth with particularity the reason open access to said
documents would harm the parties.”

Id.

Accordingly, Judge

Waldor directed BMW Financial to make a supplemental filing to
the motion to seal indicating the portions of Exhibit M which it
deems to be protected.

Id.

Judge Waldor also considered Defendants’ motion to seal
Exhibit F, BMW Financial’s Reporting and Controlling Guidelines,
attached to the reply.

Defendants argued that Exhibit F

contained BMW Financial’s accounting methodology, and that such
information is normally kept private from its competitors.

The

Court found that BMW Financial’s request to seal Exhibit F was
not sufficiently narrow, and accordingly denied the motion as to
Exhibit F without prejudice.

Id.

On November 26, 2012, BMW Financial filed its renewed
motion to seal Exhibits M and F.

(D.E. 129).
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With its renewed

filing BMW Financial included a declaration of Patrick Clark,
the General Manager of New Business with BMW Group Financial
Services.

(D.E. 129-3).

In the Declaration Mr. Clark indicates

that Exhibits M and F include Defendants’ “confidential,
proprietary, and sensitive business information.” (Id. at *2,
¶3).

With regard to Exhibit M, the Center Agreement, Mr. Clark

declared that the agreement was negotiated and agreed upon by
BMW Financial and an individual dealership, and contains
material terms that differ from dealership to dealership. (Id.
at *2, ¶¶4-6).

As such, Mr. Clark declared that public

disclosure of the Center Agreement in its entirety would place
BMW Financial at a competitive disadvantage when negotiating
future agreements with individual dealerships.
6).

(Id. at *2, ¶

Specifically, Mr. Clark declared that Paragraphs 2 (Sale

and Purchase of Contracts, Processing of Promissory Notes), 3
(Supplemental Contracts), 7 (Center Representations and
Warranties to Each Contract), and 8 (Center Liability), contain
sensitive contractual provisions “which differ from dealership
to dealership,” and therefore those provisions should be
“redacted prior to any public production or dissemination.”
(Id. at *2-3, ¶¶ 7-11).
The Declaration also referenced Exhibit F, BMW Group’s
Reporting and Controlling Guidelines.

(Id. at *3, ¶ 12).

Mr.

Clark declared that the Reporting and Controlling Guidelines
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contain an “explanation of how BMW Group accounts for and
reports Leasing Depreciation Expenses,” and that the accounting
and reporting methodology described therein “is not available to
the public and may not be used by BMW FS’s competitors.”
at *4, ¶¶ 13-14).

(Id.

Mr. Clark further declared that the

accounting and reporting methodology is “not generally accepted
in the industry and each of BMW FS’s competitors may have a
different method of accounting and reporting for Leasing
Depreciation Expense,” and therefore the public disclosure of
this accounting and methodology would “place BMW Group at a
competitive disadvantage[.]”

Id. at *4, ¶¶15-16.

Further, Mr.

Clark declared that the production of Exhibit F would “disclose
confidential reporting and accounting procedures for
subsidiaries and affiliates who are not parties [to this
action],” and accordingly requested that the first full
paragraph after the heading “Account 5400 Leasing Depreciation
Expense” be redacted in its entirety.

Id. at *4, ¶17-18.

III. DISCUSSION
The Third Circuit recognizes a “common law public right of
access to judicial proceedings and records.”
Corp., 260 F.3d 183, 192 (3d Cir. 2001).

In re Cendant

There is a

“presumptive right of public access to pretrial motions of a
non-discovery nature, whether preliminary or dispositive, and
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the material filed in connection therewith.”

Leucadia, Inc. v.

Applied Extrusion Techs., Inc., 998 F.2d 157, 164 (3d Cir.
1993).

The presentation of materials to the Court creates a

presumption that such materials, regardless of a discovery
designation by the parties, are part of the public record and
subject to public access.

See Comment to L. Civ. R. 5.3(c)(2);

Bank of America Nat’l Trust and Savs. Ass’n v. Hotel Rittenhouse
Assoc., 800 F.2d 339, 346 (3d Cir. 1988).

Local Civil Rule

5.3(a)(4) codifies this presumption and provides that “[s]ubject
to this rule and to statute or other law, all materials and
judicial proceedings are matters of public record and shall not
be sealed.”

Id.

However, the right of public access is not absolute.
Leucadia, 998 F.2d at 165.

“Every court has supervisory power

over its own records and files, and access has been denied where
court files might have become a vehicle for improper purposes.”
Littlejohn, 851 F.2d at 678 (quoting Nixon v. Warner Commc’ns,
Inc., 435 U.S. 589, 598 (1978)).

In the Third Circuit, a party

moving to seal court records bears the burden of showing that
the parties’ interest in secrecy outweighs the public right of
access.

See Faulman v. Security Mutual Financial Life Ins. Co.,

2006 WL 15410559 at *1 (D.N.J. June 2, 2006).

In doing so, the

moving party must describe a specific injury that public
disclosure will inflict.

In re Cendant Corp., 260 F.3d 183, 194
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(3d Cir. 2001) (holding that “the party seeking the closure of a
hearing or the sealing of part of the judicial record bears the
burden of showing that the material is the kind of information
that courts will protect and that disclosure will work a clearly
defined and serious injury to the party seeking closure.”)
(citations and internal quotations omitted); see also Zurich
America Ins. Co. v. Rite Aid Corp., 345 F.Supp.2d 497, 503 (E.D.
Pa. 2004).
The burden that parties moving to seal court documents must
bear is embodied in this District’s Local Rules.

Specifically,

Local Civil Rule 5.3(c)(2) requires the party moving to seal an
otherwise publicly available document to show:
(a) the nature of the materials or
proceedings at issue;
(b) the legitimate private or public
interests which warrant the relief sought;
(c) the clearly defined and serious injury
that would result if the relief sought is
not granted; and
(d) why a less restrictive alternative to
the relief sought is not available.
In addition, Local Civil Rule 5.2(c)(3) establishes certain
procedural requirements for the filing of motions to seal.2

When

a protective order is in place, the parties may file “[a]ny
2

Parties are often unaware of the procedure they must follow
when filing a motion to seal. See generally Mary Pat Gallagher,
Federal Court in N.J. Cracks Down on Wrongly Filed Sealing
Motions, 186 N.J.L.J. 879 (“Lawyers are improperly filing
motions to seal ...”); see also Bracco Diagnostics, Inc. v.
Amersham Health, Inc., 2007 WL 2085350 at *3 (not reported in
F.Supp.2d)(D.N.J. 2007)
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materials deemed confidential by a party or parties ... under
the designation “confidential materials”... [under seal] until
such time as the motion is decided.”

Id.

This section “is

intended to allow confidential materials to be filed and remain
under seal until a motion to seal or otherwise restrict public
access is ruled on.”
5.3(c)(3).

See Explanatory Note to Local Civil Rule

In cases where a protective order has not been

entered, parties should follow the provisions of L.Civ.R.
5.3(c)(6), which allows for the entry of a temporary sealing
order until a formal motion, filed pursuant to Local Civil Rule
7.1, can be adjudicated by the court.

Parties should be aware

that if the motion to seal is denied this material would then be
available to public access.

Bank of America Nat'l Trust and

Savings Ass'n v. Hotel Rittenhouse Assoc., 800 F.2d 339 (3d
Cir.1988).
Here, BMW Financial has provided a declaration describing
the materials it seeks to seal and the reasons why it seeks such
relief.

However, the Court notes that those materials have not

been filed designated as confidential under seal,3 or even filed
in redacted form.

To the contrary, there is no electronic

record of these materials whatsoever.

While the Court

understands that the materials that are the subject of this
3

When uploading a .pdf file onto CM/ECF, parties are able to
click a checkbox marked “Seal” in order to prevent public access
to that document. See L.Civ.R. 5.3(c).
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motion have previously been submitted to this Court for in
camera review, the Court also recognizes the clear importance of
adhering to the Local Rules and respecting the public right of
access.

Following the proper procedure regarding motions to

seal set forth in the Local Rules is important, as doing so
provides the Court with “an electronic record of each document
in its original form in perpetuity.”

Bracco Diagnostics, Inc.

v. Amersham Health, Inc., 2007 WL 2085350 at *3.

At present,

the absence of the subject documents effectively restricts
public access irrespective of the Court’s decision.

See id.

Accordingly, the Court will direct BMW Financial to file the
exhibits it seeks to seal in accordance with L.Civ.R. 5.3(c),
and will defer adjudicating this matter until a complete
electronic record is established.
IV.

CONCLUSION

For the foregoing reasons, and good cause shown,
IT IS on this 26th day of June, 2013,
ORDERED that Defendants shall supplement the motion record
by filing redacted copies of the relevant confidential materials
within fourteen (14) days of the date of this Order; and it is
further

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ORDERED that, for administrative purposes, the instant
motion to seal will be held in abeyance pending the Court’s
determination upon Defendants’ filing described above.

6/26/2013 7:17:08 PM

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