McCracken et al v. Verisma Systems, Inc. et al

Filing 110

DECISION AND ORDER granting 70 Motion to Seal Document ; granting 86 Motion to Seal Document ; granting 89 Motion to Seal Document consistent with this Decision and Order. Signed by Hon. Michael A. Telesca on 9/26/17. (JMC)-CLERK TO FOLLOW UP-

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

ANN McCRACKEN, JOAN FARRELL,
SARAH STILSON, KEVIN McCLOSKEY,
CHRISTOPHER TRAPATSOS, and
KIMBERLY BAILEY, as individuals
and as representatives of the
classes,

DECISION AND ORDER
No. 6:14-cv-06248(MAT)

Plaintiffs,
-vsVERISMA SYSTEMS, INC., STRONG
MEMORIAL HOSPITAL, HIGHLAND
HOSPITAL, and UNIVERSITY OF
ROCHESTER,
Defendants.

I.

Introduction
Presently

before

the

Court

are

three

motions

to

seal

(Dkt ##70, 86 and 89) filed by defendant Verisma Systems, Inc.
(“Verisma”), pertaining to pleadings filed in connection with
Plaintiffs’ Motion for Class Certification and Verisma’s Motion for
Summary Judgment. Following the Court’s receipt of correspondence
from Plaintiffs suggesting that they had received information from
Verisma that one of these motions to seal (Dkt #89) had been
withdrawn, the Court requested clarification from Verisma on the
status of all three motions.
In response, Verisma sent a letter to the Court (Dkt #109),
explaining that it is not withdrawing its motions but rather is
limiting the scope of the first motion (Dkt #70).

Verisma also

requested in the letter that the second and third motions (Dkt ##86

& 89) be granted as submitted. Plaintiffs have not opposed or
otherwise responded to Verisma’s letter.
II.

The Stipulated Protective Orders
The parties have entered several stipulated protective orders

during the course of this litigation. In particular, the stipulated
protective order entered on December 11, 2015 (Dkt #56) (“the
12/11/15 SPO”) provides that any party or nonparty may designate
documents or information as “confidential” after review by an
attorney who has, in good faith, determined that the documents or
information contain (1) information protected from disclosure by
statute; (2) sensitive personal information; (3) trade secrets;
(4) confidential

research,

development,

project

or commercial

information; (5) non-public financial, or otherwise sensitive,
information; or (6) information which the party is concerned may
contain information identified in the foregoing items (1) through
(5), and there is an expedited need to produce the documents; in
such case, the documents can be evaluated, after their initial
production, regarding their confidential nature. (See 12/11/15 SPO,
¶ 3 (Dkt # 56)).
When seeking to file any confidential materials that are
subject to protection under the 12/11/15 SPO, the party “shall take
appropriate action to insure that the documents/information receive
proper protection from public disclosure by: (1) filing a redacted
copy of the document that omits the [c]onfidential information;
(2)

where

appropriate

(e.g.,

in
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relation

to

discovery

and

evidentiary motions), submitting the unredacted documents solely
for in camera review; or (3) where the preceding measures are not
practicable, seeking permission to file
the document under seal.” (Id., ¶ 5). The 12/11/15 SPO acknowledges
the parties’ understanding that documents may be filed under seal
only upon proper motion and with the Court’s permission. (Id.; see
also id., ¶ 14 (“Nothing in this Order shall be deemed to permit
court documents or any document in the Court file to be placed
under seal absent further Order.”).
The 12/11/15 SPO further provides that all of its provisions
restricting the use of documents and information designated as
confidential “shall continue to be binding after the conclusion of
the litigation unless otherwise agreed.” (Id., ¶ 10(a)).
III. Discussion
A.

Docket Number 70

Prior

to

filing

their

Motion

for

Class

Certification,

Plaintiffs disclosed to Verisma a list of proposed exhibits, which
included 135 documents subject to the 12/11/15 SPO (Dkt #56). In
response to

that

disclosure, Verisma

filed

a

Motion

to

Seal

(Dkt #70) and supporting attorney declaration (Declaration of
Christopher Belter, Esq. (“Belter Decl.”) (Dkt #70-1) with Exhibits
(“Exhs.”) 1-124 Filed Under Seal (Dkt #70-1); Exh. 125 (Dkt #70-4);
Exh. 126 (Dkt #70-5); Exh. 127 (Dkt #70-6); Exh. 128 (Dkt #70-7);
Exh. 129 (Dkt #70-8); Exh. 130 (Dkt #70-9); Exh. 131 (Dkt #70-10);
Exh. 132 (Dkt #70-11); Exh. 133 (Dkt #70-12); Exh. 134 (Dkt #70-3-

13); & Exh. 135 (Dkt #70-14)). Verisma sought to seal these
135

exhibits

on

the

grounds

that

they

contain

Verisma’s

confidential financial information regarding Verisma’s costs and
expenses, proprietary and confidential pricing information, and
proprietary

and

confidential

business

methods

and

processes.

Plaintiffs did not oppose this motion.
Verisma indicates that when Plaintiffs subsequently filed
their Motion for Class Certification, they only attached a subset
of 25 documents out of the 135 documents they had disclosed to
Verisma as covered by the 12/11/15 SPO. Accordingly, Verisma has
decided to limit the scope of Docket Number 70 to the 25 documents
Plaintiffs actually filed. (See Letter from Christopher Belter,
Esq. dated 8/17/17 (“Belter Letter”) (Dkt #109)). Attached to the
Belter Letter is a chart (“Exhibit A”) consolidating the charts
contained in Docket Number 70-1 at paragraphs 6, 7 and 9 (Dkt #701, pp. 3-8 of 9), and has highlighted various documents to indicate
that these are the documents actually submitted by Plaintiffs as
exhibits.
The Court agrees that the 25 documents submitted by Plaintiffs
are covered by the SPO. “Courts have limited public access to
sensitive business information by sealing portions of the record,
finding

that

safeguarding

trade

secrets

can

overcome

the

presumption of access.” Hesse v. SunGard Sys. Int’l, No. 12 CIV.
1990 CM JLC, 2013 WL 174403, at *2 (S.D.N.Y. Jan. 14, 2013)
(exhibits

that

“include

sensitive
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client

information

and

proprietary

business

information,

including

inter

alia,

the

company’s billing rates and project pricing, as well as details of
specific projects completed for several clients” should be sealed)
(citing Encyclopedia Brown Prods., Ltd. v. Home Box Office, 26 F.
Supp.2d 606, 612 (S.D.N.Y. 1998) (sealing portions of record,
noting that “[p]otential damage from release of trade secrets is a
legitimate basis for sealing documents and restricting public
access

during

trial”)).

The

Court

finds

that

Verisma

has

sufficiently shown a legitimate basis for sealing the documents at
issue in Docket Number 70. See, e.g., Encyclopedia Brown Prods.,
Ltd.,

26

F.

Supp.2d

at

612.

Accordingly,

the

Court

grants

Verisma’s Motion to Seal (Dkt #70) to the extent that the following
documents are ordered to be filed under seal pursuant to the terms
of the December 11, 2015 SPO (Dkt #56):

Submitted as
Belter
Declaration
Exhibit Number
(Dkt #)

1
(Dkt #70-2)1

Bates Number
Range

VERISMA111607

Submitted as Plaintiffs’ Exhibit
Number or Letter
(Dkt #)

Frisch Decl.,2 Exh. 22 (Dkt #73-22)

1

Dkt #70-1 encompasses Exhibits 1 – 124, all of which were
filed under seal.
2

Declaration of Eleanor E. Frisch (Dkt #73).
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Submitted as
Belter
Declaration
Exhibit Number
(Dkt #)

Bates Number
Range

Submitted as Plaintiffs’ Exhibit
Number or Letter
(Dkt #)

2 (Dkt #70-2)

VERISMA118137

Frisch Decl., Exh. 25 (Dkt #73-25)

3 (Dkt #70-2)

VERISMA118131

Frisch Decl., Exh. 26 (Dkt #73-26)

4 (Dkt #70-2)

VERISMA118136

Frisch Decl., Exh. 27 (Dkt #73-27)

5 (Dkt #70-2)

VERISMA118133

Frisch Decl., Exh. 28 (Dkt #73-28)

6 (Dkt #70-2)

VERISMA118132

Frisch Decl., Exh. 29 (Dkt #73-29)

7 (Dkt #70-2)

VERISMA118135

Frisch Decl., Exh. 30 (Dkt #73-30)

8 (Dkt #70-2)

VERISMA111610

Frisch Decl., Exh. 31 (Dkt #73-31)

9 (Dkt #70-2)

VERISMA111411
– 111459

Krieger Decl.,3
Exh. B Dkt #75-3
Exh. C Dkt #75-4
Exh. D Dkt #75-5

10
(Dkt #70-2)

VERISMA111460
– 111503

Krieger Decl.,
Exh. D (Dkt ## 75-5
Exh. E& 75-6)

11
(Dkt #70-2)

VERISMA111504
– 111555

Krieger Decl.,
Exh. C
Exh. D (Dkt ##75-4 & 75-5)

12
(Dkt #70-2)

VERISMA111556 –
111605

Krieger Decl.,
Exh. C (Dkt #75-4)
Exh. D (Dkt #75-5)

13
(Dkt #70-2)

VERISMA111606 &
VERISMA118959

Krieger Decl.,
Exh. C (Dkt #75-4)
Exh. F1 (Dkt #75-7
Exh. F2 (Dkt #75-8)

125
(Dkt #70-3)

VERISMA008818

Frisch Decl., Exh. 11 (Dkt #73-11)

3

Declaration of William G. Krieger (Dkt #75).
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Submitted as
Belter
Declaration
Exhibit Number
(Dkt #)

Bates Number
Range

Submitted as Plaintiffs’ Exhibit
Number or Letter
(Dkt #)

126
(Dkt #70-4)

UR000960 – 000961

Frisch Decl., Exh. 12 (Dkt #73-12)

127
(Dkt #70-5)

UR000985 – 000987

Frisch Decl., Exh. 13 (Dkt #73-13)

128
(Dkt #70-6)

UR000973 – 000978

Frisch Decl., Exh. 14 (Dkt #73-14)

129
(Dkt #70-7)

UR000898 – 000901

Frisch Decl., Exh. 15 (Dkt #73-15)

130
(Dkt #70-8)

UR000002 –
UR000010

Frisch Decl., Exh. 17 (Dkt #73-17)

131
(Dkt #70-9)

VERISMA000010 –
000011

Frisch Decl., Exh. 18 (Dkt #73-18)

132
(Dkt #70-10)

VERISMA026451 –
026456

Frisch Decl., Exh. 19 (Dkt #73-19)

133
(Dkt #70-11)

UR000081 – 000094

Frisch Decl., Exh. 7 (Dkt #73-7)

134
(Dkt #70-12)

VERISMA008808 –
008817

Frisch Decl., Exh. 10 (Dkt #73-10)

135
(Dkt #70-13)

VERISMA034553 –
034567

Frisch Decl., Exh. 20 (Dkt #73-20)

B.

Docket Number 86
This motion to seal pertains to pleadings filed in support of

Verisma’s

Motion

for

Summary

Judgment,

specifically,

the

Declaration of Andrew McManus (“McManus Declaration”) (Dkt #84-9),
and the Declaration of Anne Eberhardt (“Eberhardt Declaration”)
(Dkt #84-11). Verisma submits that certain content in the Eberhardt
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Declaration and certain exhibits attached thereto, as well as the
exhibits to the McManus Declaration should be filed under seal.
1.

McManus Declaration Exhibits

Verisma asserts that the two exhibits attached to the McManus
Declaration

must

be

information

exempted

filed
from

under

seal

disclosure

because

pursuant

Information Portability and Accountability Act
No.

104–191,

110

Stat.1936,

45

C.F.R.

they
to

contain

the

Health

(“HIPAA”), Pub. L.

§

164.512

et

seq.

Specifically, Exhibit A to the McManus Declaration contains the
names of patients who had medical records requests fulfilled by
Verisma; and Exhibit B includes documents relating to medical
records requests made by Plaintiffs’ counsel on behalf of other
individuals whom Plaintiffs seek to include within the class
definition. At present, none of the individuals identified in
Exhibits A and B are parties to this litigation.
HIPAA and the accompanying regulations promulgated by the
United States Department of Health & Human Services (“HHS”) exempt
from disclosure “protected health information” “except as permitted
or required by” 45 C.F.R. Pt. 164, Subpt. E and 45 C.F.R. Pt. 160,
Subpt. C. See 45 C.F.R. § 164.502(a). The term “health information”
covers, among other things, “past, present, or future physical or
mental health or condition of an individual; the provision of
health care to an individual; or the past, present, or future
payment for

the

provision

of

health

care

to

an

individual.”

45 C.F.R. § 160.103. “Courts in this Circuit have repeatedly held
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that information protected by HIPAA is not subject to a First
Amendment or common-law right of access and thus have sealed docket
entries and redacted documents that contain such information.”
Offor v. Mercy Med. Ctr., 167 F. Supp.3d 414, 445 (E.D.N.Y. 2016)
(collecting cases), vacated in part on other grounds, 676 F. App’x
51 (2d Cir. 2017).
However, HHS’s “regulations also provide that health records
are

not

considered

‘protected

health

individually
information,’

identifiable,
if

certain

and

thus

information

not
is

redacted.” Nat’l Abortion Fed’n v. Ashcroft, No. 03 CIV. 8695(RCC),
2004 WL 555701, at *3 (S.D.N.Y. Mar. 19, 2004) (citing 45 C.F.R.
§

164.514(a)

(“Health

information

that

does

not

identify

an

individual and with respect to which there is no reasonable basis
to believe that information can be used to identify an individual
is not individually identifiable health information.”)). According
to the HHS regulations regarding HIPAA, the following identifiers
must

be

removed

to

render

medical

records

not

“individually

identifiable”: names; geographic subdivisions smaller than a state
(including addresses and full zip codes); all dates except years;
telephone

and

fax

numbers;

email

addresses;

social

security

numbers; medical record numbers; health plan beneficiary numbers;
account numbers;

license

numbers;

vehicle

identifiers;

device

identifiers; internet addresses; biometric identifiers such as
finger and voice prints; photographs of the individual’s full face;
and any other unique identifying number, characteristic, or code.
-9-

See 45 C.F.R. § 164.514(b)(2)(I). “Records without this data are
not considered to be individually identifiable, and therefore are
not protected health information.” Nat’l Abortion Fed’n, 2004 WL
555701, at *3 (citing

45 C.F.R. § 164.514(a)).

Verisma has established that Exhibits A and B to the McManus
Declaration contain “protected health information” under HIPAA.
Therefore, they are not subject to a First Amendment or common-law
right of access. Accordingly, they will be filed under seal.
2.

Eberhardt Declaration Content

Verisma asserts that the Eberhardt Declaration contains its
private

financial

information,

including

records

of

business

expenditures, as well as its internal pricing information. Verisma
contends that all of this sensitive financial information should be
sealed because, as a privately held corporation that does not
disclose its financial information, Verisma would be placed at a
competitive disadvantage by disclosure of its financial information
and pricing strategies.
As noted above, “[c]ourts have limited public access to
sensitive business information by sealing portions of the record,
finding

that

safeguarding

trade

secrets

can

overcome

the

presumption of access.” Hesse, 2013 WL 174403, at *2 (citing
Encyclopedia Brown Prods., Ltd., 26 F. Supp.2d at 612). Under the
present circumstances, the Court finds it appropriate to seal the
Eberhardt Declaration content identified by Verisma as sensitive
proprietary or financial information. The Court notes that Verisma
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has redacted only its confidential financial information from the
Eberhardt Declaration, thereby narrowly tailoring the amount of
information that will be protected from public access.
3.

Eberhardt Declaration Exhibits

According to Verisma, the following exhibits to the Eberhardt
Declaration should be filed under seal:
• Exhibit 3, which contains Verisma’s indirect cost
schedules for the years 2012 to 2015;
• Exhibits 4, 5, 6, 7, which contain excerpts from
Verisma’s internal financial records for 2012, 2013,
2014, and 2015, respectively; and
• Exhibit 8, which contains records produced by the
University of Rochester pursuant to a confidentiality
agreement and which discloses University of Rochester
employee compensation information.
(Declaration of Christopher Belter, Esq. (Dkt #86), ¶ 10). Verisma
argues

that

information
financial

the

foregoing

exempt
and

from

documents

disclosure

proprietary

compensation-related

contain
the

information;

information

for

personal

certain
and

University

health

confidential
confidential
of

Rochester

employees. The Court finds that the identified documents contain
information exempt from disclosure under HIPAA, which must be filed
under

seal.

With

regard

to

the

confidential

financial

and

proprietary information in the exhibits identified above, the Court
concludes that Verisma’s “privacy interests . . . outweigh the
presumption of public access, and that it is appropriate for these
materials to [be filed] under seal.” GoSMiLE, Inc. v. Dr. Jonathan
Levine, D.M.D. P.C., 769 F. Supp.2d 630, 649–50 (S.D.N.Y. 2011)
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(granting motion to seal exhibits that “contain highly proprietary
material concerning the defendants’ marketing strategies, product
development, costs and budgeting”). Finally, with regard to the
University of Rochester employee compensation information, the
Court concludes that the privacy interests of the employees, who
are not parties to this action, outweigh the presumption of public
access to court documents. These materials will be filed under
seal.
C.

Docket Number 89

This motion seal addresses Plaintiff’s Response in Opposition
to Verisma’s Motion for Summary Judgment. In connection with their
Response, Plaintiffs have publicly filed a redacted version of
their

expert’s

reply

declaration

(William

G.

Krieger

Reply

Declaration (“Krieger Reply”) (Dkt #88-3). Plaintiffs also provided
the Court with an unredacted version of the Krieger Reply. Verisma
seeks to have the unredacted version of the Krieger Reply filed
under seal. Verisma asserts that the redactions to the Krieger
Reply are limited to avoid public disclosure of Verisma’s private
financial data, including the costs it incurs in providing its
services. As Verisma argues, New York courts have recognized that
this type of financial information is appropriately subject to a
sealing order. See, e.g., Godson v. Eltman, Eltman & Cooper, P.C.,
285 F.R.D. 255, 262 (W.D.N.Y. 2012) (granting defendants’ motion to
seal “because [they] seek to file potentially sensitive financial
information”)

(citing

Nanjing

Textiles

-12-

IMP/EXP

Corp.

v.

NCC

Sportswear Corp., No. 06 CIV. 52(JGK)(KNF), 2006 WL 2381847, at *2
(S.D.N.Y. Aug. 14, 2006) (finding that plaintiff’s counsel should
be sanctioned for attaching NCC’s Financial Statement to publicly
filed motion papers; granting NCC’s request that the Financial
Statement be filed under seal). Accordingly, the Court grants
Verisma’s request to have the unredacted version of the William G.
Krieger Reply Declaration (Dkt #88-3) filed under seal.
IV. Conclusion
For the foregoing reasons, and to the extent discussed above,
Verisma’s Motions to Seal (Dkt ##70, 86, & 89) are granted.
SO ORDERED.
S/Michael A. Telesca
HON. MICHAEL A. TELESCA
United States District Judge
Dated:

September 26, 2017
Rochester, New York.

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