ATI INDUSTRIAL AUTOMATION, INC. v. APPLIED ROBOTICS, INC.

Filing 46

MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 5/11/2011, that ATI's Motion for Impoundment (Docket Entry 41 ) is denied without prejudice to the parties filing a Joint Renewed Motion for Impoundment that addresses t he matters discussed in this Memorandum Opinion and Order for each document identified in the motion as requiring sealing. Further, that, if the parties fail to file such a Renewed Motion for Impoundment by June 1, 2011, ATI shall publicly file unredacted copies of the documents identified in its Motion for Impoundment (Docket Entry 41 ).(Daniel, J)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
ATI INDUSTRIAL AUTOMATION, INC.,
Plaintiff,
v.
APPLIED ROBOTICS, INC.,
Defendant.

)
)
)
)
)
)
)
)
)

1:09CV471

MEMORANDUM OPINION AND ORDER
This

matter

comes

before

the

Court

on

the

Motion

for

Impoundment (Docket Entry 41) filed by Plaintiff ATI Industrial
Automation, Inc. (“ATI”).

For the reasons that follow, the Court

will deny said motion without prejudice to the filing of a Renewed
Motion for Impoundment.
I.

BACKGROUND
ATI’s Amended Complaint seeks to enforce patents concerning a

device that serves as “a mechanical interface between an industrial
robot arm and a variety of tools, or end effectors, that may be
attached to the robot arm to perform various tasks.” (Docket Entry
20, ¶ 7.)

On February 17, 2010, Defendant Applied Robotics, Inc.

(“ARI”) filed its “Defendant’s Motion to Dismiss, or Alternatively,
to Transfer” (Docket Entry 24), and in support of its motion, it
filed a “Declaration of Clifford Annis” (Docket Entry 26), and
“Declaration of Steve Listing” (Docket Entry 27).

On March 15,

2010, ATI filed its Response (Docket Entry 29), and fourteen days
later, ARI filed its Reply (Docket Entry 30).
ARI seeks dismissal of this action for lack of personal
jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2)

and/or improper venue pursuant to Federal Rule of Civil Procedure
12(b)(3); alternatively, ARI requests a transfer of this action to
the Northern District of New York under 28 U.S.C. § 1406(a).
(Docket Entry 24 at 1.)

ATI requests that, should the Court find

personal jurisdiction lacking on the current record, the Court
nonetheless refrain from dismissing the case or transferring it to
the Northern District of New York (as ARI proposes); instead, ATI
asks the Court to “transfer this case to the District of South
Carolina

or,

in

the

alternative,

to

permit

ATI

to

conduct

jurisdictional discovery.” (Docket Entry 29 at 4.)
On December 29, 2010, the Court issued a Memorandum Opinion
and Order which granted ATI’s request for jurisdictional discovery
and deferred further action on ARI’s motion to dismiss.
Entry 35 at 15.)

(Docket

On February 15, 2011, the Court approved a

Consent Protective Order to which both parties stipulated. (Docket
Entry 37.) On March 18, 2011, ATI filed its Motion for Impoundment
(Docket Entry 41), a document titled “Notice of Filing Under Seal”
(Docket Entry 38), an Affidavit of Karen S. Boardman (Docket Entry
39), and a “Supplemental Memorandum Opposing Defendant’s Motion to
Dismiss” (Docket Entry 40).
II.

DISCUSSION
In the Motion for Impoundment, ATI moves “to seal documents

provided to [ATI] by [ARI] under the terms of the protective order.
. . . Although [ATI] requested [ARI] lower its designations, [ARI]
refused.”

(Docket Entry 41 at 1.)

-2-

A.

Standard for Sealing Documents

Federal Rule of Civil Procedure 26(c) states in relevant part
that:
The court may, for good cause, issue an order to protect
a party or person from annoyance, embarrassment,
oppression, or undue burden or expense, including one or
more of the following:
. . . .
(G) requiring that a trade secret or other confidential
research, development, or commercial information not be
revealed or be revealed only in a specific way; and
(H) requiring that the parties simultaneously file
specified documents or information in sealed envelopes,
to be opened as the court directs.
Fed. R. Civ. P. 26(c) (emphasis added).
The United States Court of Appeals for the Fourth Circuit has
recognized

that

“there

may

be

instances

in

which

discovery

materials should be kept under seal even after they are made part
of a dispostiive motion.”

Rushford v. The New Yorker Magazine,

Inc., 846 F.2d 249, 253 (4th Cir. 1988).

However, the authority

granted to a court under Rule 26(c) to require special handling of
information
public’s

gathered

right

of

during

access

to

discovery
judicial

is

constrained

records.

See

by

the

Level

3

Communications, LLC v. Limelight Networks, Inc., 611 F. Supp. 2d
572, 576 (E.D. Va. 2009) (“There is a highly-developed body of case
law

governing

the

handling

of

discovery

documents

and

other

materials filed with courts under seal in civil cases. For current
purposes, this case law can be divided analytically into two
categories.

One body of case law relates to the protected status

-3-

of

documents

produced

in

pre-trial

discovery

pursuant

to

a

stipulated, court-approved protective order under Rule 26(c) of the
Federal Rules of Civil Procedure.
governs

the

public

availability

The second body of case law
of

materials

that

have

been

submitted to courts in connection with civil pleadings or motions
(dispositive or otherwise) or entered by courts into evidence in
the course of hearings or trial, whatever the materials’ origins or
pre-trial confidentiality status might previously have been.”).
This constraint arises because “[t]he operations of the courts
and the judicial conduct of judges are matters of utmost public
concern,” Landmark Communications, Inc. v. Virginia, 435 U.S. 829,
839 (1978).

As a result, “the courts of this country recognize a

general right to inspect and copy . . . judicial records and
documents.”

Nixon v. Warner Communications, Inc., 435 U.S. 589,

597 (1978).1

“The right of public access to documents or materials

filed in a district court derives from two independent sources:
the common law and the First Amendment.”

Virginia Dept. of State

Police v. The Washington Post, 386 F.3d 567, 575 (4th Cir. 2004).
“While the common law presumption in favor of access attaches to
all ‘judicial records and documents,’ the First Amendment guarantee
of access has been extended only to particular judicial records and

1

The right of access to court records flows from the right of access to
in-court proceedings; it applies in both civil and criminal cases. See Rushford
v. The New Yorker Magazine, Inc., 846 F.2d 249, 253 & n.4 (4th Cir. 1988).

-4-

documents.”

Stone v. University of Md. Med. Sys. Corp., 855 F.2d

178, 180 (4th Cir. 1988) (internal citation omitted).2
Before considering whether a constitutional or only a common
law right of access exists, however, a court must assess whether
the materials at issue actually constitute “judicial documents and
records,” id. at 180.

In this regard, the Fourth Circuit (albeit

in an unpublished opinion) has joined other courts in “hold[ing]
that the mere filing of a document with a court does not render the
document judicial.”

In re Policy Mgt. Sys. Corp., 67 F.3d 296,

1995 WL 541623, at *4 (4th Cir. Sept. 13, 1995) (unpublished)
(citing United States v. Amodeo, 44 F.3d 141, 145 (2d Cir. 1995)).
Accordingly, in any given case, some court-filed “documents fall
within the common law presumption of access, while others are
subject to the greater right of access provided by the First
Amendment.

Still others may not qualify as ‘judicial records’ at

all.” United States v. Moussaoui, 65 Fed. Appx. 881, 889 (4th Cir.
2003) (citing Amodeo, 44 F.3d at 145-46).
In light of this legal framework, “[w]hen presented with a
request to seal judicial records or documents, a district court
must comply with certain substantive and procedural requirements.”
Virginia Dept. of State Police, 386 F.3d at 576.

Procedurally:

[The district court] must give the public notice of the
request to seal and a reasonable opportunity to challenge
the request; it must consider less drastic alternatives
to sealing; and if it decides to seal it must state the

2

Moreover, “[t]he common law does not afford as much substantive
protection to the interests of the press and the public as does the First
Amendment.” Rushford, 846 F.2d at 253.

-5-

reasons (and specific supporting findings) for its
decision and the reasons for rejecting alternatives to
sealing. Adherence to this procedure serves to ensure
that the decision to seal materials will not be made
lightly and that it will be subject to meaningful
appellate review.
Id.

(internal citation omitted).

“As to the substance, the

district court first must determine the source of the right of
access with respect to each document, because only then can it
accurately weigh the competing interests at stake.”
citations and quotation marks omitted).

Id. (internal

See also Moussaoui, 65

Fed. Appx. at 889 (“We therefore must examine [materials submitted
under seal] document by document to determine, for each document,
the source of the right of access (if any such right exists).

As

to those documents subject to a right of access, we must then
conduct

the

appropriate

balancing

to

determine

whether

the

remainder of the document should remain sealed, in whole or in
part.” (internal citation omitted) (emphasis added)).
B.

Consent Protective Order

The Consent Protective Order establishes a procedure for
filing with the Court any information which either party has
designated “CONFIDENTIAL” or “HIGHLY CONFIDENTIAL.”
37 at 7.)

(Docket Entry

Paragraph four describes the scope of the material that

the parties may designate as warranting protection:
Any party may, in good faith, designate Discovery
Material as “CONFIDENTIAL” or “HIGHLY CONFIDENTIAL.”
Discovery Material designated as “CONFIDENTIAL” shall
contain proprietary information, whether personal or
business-related.
Certain
limited
types
of
“CONFIDENTIAL”
information
may
be
alternatively
designated, as defined and detailed below, as “HIGHLY
CONFIDENTIAL.”
The “HIGHLY CONFIDENTIAL” designation
-6-

shall be reserved for confidential information that
constitutes, reflects, concerns or relates to trade
secrets, know-how or proprietary data, research and
development, unpublished patent applications, product
designs and information not disclosed to the public,
business plans, and business, financial, sales or
commercial information, including customer names and
addresses, the disclosure of which is likely to cause
harm to competitive position of the party making the
confidential designations of Discovery Material.
(Id. at 2 (emphasis added).)
Paragraph twelve, which governs the filing of such material
provides:
12. Before filing any information that has been
designated “CONFIDENTIAL” or “HIGHLY CONFIDENTIAL” with
the Court, or any pleadings, motions or other papers that
disclose any such information, counsel shall confer with
counsel for the party that produced the information so
designated about how it should be filed. If the party
that produced the information so designated desires that
the materials be filed under seal, then the filing party
shall file the materials under seal with a motion for
impoundment which sets forth, with respect to each
document for which impoundment is sought, an explanation
as to why impoundment is required, with notice served
upon the producing party, and file a redacted copy of the
documents for which impoundment is sought. If the Court
allows the motion to impound, the information designated
as “HIGHLY CONFIDENTIAL” or “CONFIDENTIAL” and subject of
the order allowing impoundment shall be filed and placed
in sealed envelopes on which shall be affixed a copy of
the cover page of the document contained therein. . . .
Upon failure of the filing or [sic] lodging Party to
properly designate the information and file or lodge such
information in accordance with this Protective Order, a
Producing Party who in good faith believes that
designation and filing under seal is required may file a
motion pursuant to the local rules to do so within five
business days of learning of the defective filing or
lodging.
(Id. at 7 (emphasis added).)
Additionally the protective order, in paragraph twenty-two,
prohibits the application of designations to certain information:

-7-

22. The restrictions set forth in any of the preceding
paragraphs of this Order shall not apply to information
that:
(a) Was, is, or becomes public knowledge not in
violation of this Order; or
(b) Was lawfully possessed by the non-designating
party prior to the date of this Order.
(Id. at 12 (emphasis added).)
C.

Analysis

ATI identifies the information that is “being filed under
seal” as including: materials which are incorporated in the Notice
of Filing Under Seal (Docket Entry 38); the Affidavit of Karen S.
Boardman and certain exhibits to that affidavit (Docket Entry 39);
and the Supplemental Memorandum (Docket Entry 40).

(Docket Entry

41 at 1-4.)
With respect to the Notice of Filing Under Seal, ATI seeks to
preserve the secrecy of “Excerpts from the Rule 30(b)(6) Deposition
of Applied Robotics with Clifford Annis as its designee (and
associated exhibits).” (Id. at 1.) ATI states that ARI designated
the materials as “HIGHLY CONFIDENTIAL - ATTORNEYS’ EYES ONLY[,]”
because the material includes “testimony regarding past sales, a
contacts list, and general business information . . . .”

(Id.)

ATI describes the reason for sealing certain exhibits associated
with the Annis deposition as follows:
(1) “Exhibits 4, 5, 28, 29, 34, & 38-40 consist[] of email
communications

between

Defendant’s

entities[;]”

-8-

agent

and

North

Carolina

(2)

“Exhibit

7

consist[s]

of

Defendant’s

responses

to

Plaintiff’s discovery requests[;]”
(3) “Exhibit 11 consist[s] of Defendant’s contacts list for
North Carolina[;]”
(4) “Exhibit 14 consist[s] of a list of Defendant’s trips into
North Carolina[;]”
(5) “Exhibit 15 consist[s] of a list of Defendant’s North
Carolina vendors[;]”
(6) “Exhibits 19 and 22 consist[] of press releases about the
accused products[;]”
(7) “Exhibits 20 and 23 consist[] of analytics performed on
press releases about the accused products[;]”
(8) “Exhibits 21 and 24 consist[] of listings of each news
source publishing Defendant’s press releases[;]”
(9) “Exhibit 25 consist[s] of a Google Analytics report for
Defendant’s website[;]”
(10) “Exhibit 26 consist[s] of email communications between
Defendant

and

a

potential

client

regarding

locations

where

Defendant’s products are used[;]” and
(11) “Exhibit 33 consist[s] of an email planning a technical
support trip to North Carolina.”
Additionally,

ATI

(Id. at 2-3.)

requests

that

the

Court

seal

certain

portions of Ms. Boardman’s affidavit and exhibits A, E-V, and X.
(Id. at 3-4.)
“HIGHLY

ATI states that ARI labeled these materials as

CONFIDENTIAL

-

ATTORNEYS’

EYES

ONLY[,]”

because

the

affidavit and exhibits include “financial information, customer
-9-

lists,

customer

communications,

information . . . .”

(Id.)

and

general

business

In particular, ATI explains the basis

for sealing each exhibit as follows:
(1)

“Exhibit

A

consist[s]

of

a

spreadsheet

disclosing

Defendant’s confidential information[;]”
(2)

“Exhibits

E-N,

U-V,

&

X

are

communications

between

Defendant and Defendant’s customers[;]”
(3) “Exhibit O is an attachment to a communication requesting
a repair from Defendant[;]”
(4) “Exhibit P is a spreadsheet disclosing returns and repairs
performed for Defendant’s North Carolina clients[;]”
(5) “Exhibit Q lists payments from Defendant to North Carolina
entities[;]”
(6) “Exhibits R-S are an [sic] email discussing Defendant’s
travel arrangements to North Carolina and an attachment listing
contact information for several of Defendant’s clients[;]” and
(7) “Exhibit T is an expense report for one of Defendant’s
trips to North Carolina.”

(Id. at 3-4.)

ATI argues that the Supplemental Memorandum warrants sealing,
because it “discusses the information labeled HIGHLY CONFIDENTIAL ATTORNEY’S EYES ONLY by [ARI] and filed with the Annis Deposition
or the Boardman Affidavit.”

(Id. at 4.)

Initially, the Court observes that the Consent Protective
Order requires ATI to file the instant motion (see Docket Entry 37
at 7), because ATI seeks to file materials in support of its
opposition

to

ARI’s

motion

to
-10-

dismiss

and

ARI

has

placed

confidentiality designations on said materials.
1 at 1.)

(See Docket Entry

Moreover, ARI has not “lower[ed] it designations” prior

to ATI’s submission of the motion for impoundment.
41 at 1.)

(Docket Entry

Thus, while ATI is the movant, the Court recognizes that

ARI has selected the documents that the motion seeks to protect.
The Court finds that the instant motion for impoundment may
not be granted, because ATI has failed to comply with the Consent
Protective Order by filing under seal the materials that it seeks
to keep secret.

The Consent Protective Order requires that ATI

“file the materials under seal with a motion for impoundment[.]”
(Docket Entry 37 at 7.)

ATI has filed a redacted copy of its

Supplemental Memorandum (Docket Entry 40), and a redacted Affidavit
of Karen Boardman (without the exhibits ATI seeks to seal) (Docket
Entry 39 at 1-8).

Additionally, ATI has filed Exhibit 7 as an

attachment to the Notice of Filing Under Seal (Docket Entries 38-2,
38-3 & 38-4).3

However, the docket does not reflect filing of all

the proposed, sealed materials.
2011 to present.)4

(See Docket Entries from Mar. 18,

Without the ability to review the materials

that the parties wish the Court to seal, the Court cannot conduct
the necessary review.

3

The Court refers to this exhibit by CM/ECF system docket numbers which
are incorporated electronically in the footer of the document, because the
exhibit number attached to said document does not appear to refer its
incorporation into the pleading in which it was filed with the Court (see Docket
Entry 38-2).
4

As described in the next paragraph, to the extent that ATI has filed any
materials it has filed only Exhibit 7, and it has done so in a manner that makes
Exhibit 7 a public document.

-11-

In

addition,

ARI

has

labeled

documents

as

warranting

protection which do not appear to require such secrecy.

For

example, Exhibits 7, 19, 21, 22 and 24 appear to consist of public
information.

Exhibit 7 was disclosed in a public filing in the

Court’s Case Management/Electronic Case Filing (“CM/ECF”) system
(see Docket Entries 38-2, 38-3 & 38-4).

Additionally, Exhibits 19

and 22 include “press releases” and Exhibits 21 and 24 constitute
republication of press releases.

(Docket Entry 41 at 2.)5

The

Consent Protective Order does not safeguard material that “[w]as,
is, or becomes public knowledge . . . .”

(Docket Entry 37 at 2.)

Moreover, it “would serve no purpose” to restrict public access to
information that has already been disclosed.

Kinetic Concepts,

Inc. v. Convatec Inc., No. 1:08CV00918, 2010 U.S. Dist. LEXIS, at
*41 (M.D.N.C. Apr. 2, 2010) (unpublished).
Second, Exhibits 4, 5, 28, 29, 34 and 38-40 are described as
“communications

between

[ARI’s]

agent

and

North

Carolina

entities[;]” Exhibit 25 is a report produced by Google Analytics;
Exhibit 26 encompasses “email communications between [ARI] and a
potential client[;]” and Exhibit Q lists ARI’s payments to “North
Carolina entities.”

(Docket Entry 41 at 2-3.)

ATI has not

indicated that the materials in these exhibits are subject to any
confidentiality

or

non-disclosure

5

agreements.

If

non-party

ATI also moves to seal Exhibits 20 and 23, described as “analytics
performed on press releases[.]” (Docket Entry 41 at 2.) The description does not
demonstrate any basis to seal those exhibits. To the extent that ATI seeks to
seal information disclosed by a press release said information would not warrant
protection. Moreover, ATI has not described why a third party’s analysis of
those releases should be sealed. (See Docket Entry 41 at 1-4.)

-12-

entities possess and may freely distribute the material in the
exhibits, then the materials would not appear to qualify for
sealing.
Third, ARI publicly filed the “Declaration of Clifford Annis”
(Docket Entry 26) and “Declaration of Steve Listing” (Docket Entry
27).

The declarations each include an exhibit that constitutes

thirty pages of expense reports describing Steve Listing’s trips to
North Carolina and details such as: where Listing traveled; the
expenses incurred; individuals he met with; and the employers of
those individuals.

(See Docket Entry 26, Ex. A at 2-31; Docket

Entry 27, Ex. A at 2-31.)

ATI now seeks to seal Exhibit 11 which

constitutes ARI’s “contacts list for North Carolina[;]” Exhibit 14
which describes ARI’s “trips into North Carolina[;]” Exhibit 15
which lists ARI’s “North Carolina vendors[;]” Exhibit 33, an e-mail
regarding a “technical support trip to North Carolina[;]” Exhibits
R-S which discuss “travel arrangements to North Carolina and an
attachment listing contact information for several of Defendant’s
clients[;]” and Exhibit T, an expense report documenting one of
ARI’s trips to North Carolina.

(Docket Entry 41 at 2-4.)

ATI has

not distinguished the information in the foregoing exhibits from
the declarations, and attached exhibits, that ARI already submitted
to the Court. Moreover, ATI does not explain why the public should
be denied access to these materials, despite the public filing of
other apparently similar documents.
Additionally, the Court observes that ATI’s motion fails to
demonstrate the “substantive and procedural requirements” discussed
-13-

in Virginia Dept. of State Police, 386 F.3d at 576.

ATI seeks to

seal: Exhibit A, described as “a spreadsheet disclosing [ARI’s]
confidential information[;]” Exhibits E-N, U-V and X which are
“communications between [ARI] and [its] customers[;]” Exhibit O
which constitutes a “communication requesting a repair[;]” and
Exhibit P which is “a spreadsheet disclosing returns and repairs
performed for [ARI’s] North Carolina clients.” (Docket Entry 41 at
3.)

However,

ATI’s

description

of

these

materials

as

“confidential” or as a type of business record is insufficient for
sealing the documents.

Cf. Hill Holiday Connors Cosmopulos, Inc.

v. Greenfield, C/A No.: 6:08-cv-03980-GRA, 2010 U.S. Dist. LEXIS
21015, at *9-10 (D.S.C. Mar. 8, 2010) (unpublished) (“The Parties’
generic statements that the information contains confidential
business records, even if true, is similarly unavailing.

That a

document

not

is

justification

confidential
for

the

to

a

particular

extraordinary

act

of

business
sealing

protected by the First Amendment’s right to access.”).

is

a

documents
The movant

of a motion to seal should address how public access to the subject
documents could possibly harm a party, cf. Walter Kiddie Portable
Equip., Inc. v. Universal Sec. Instruments, Inc., No. 1:05CV01031,
2008 U.S. Dist. LEXIS 3426, at *3-4 (M.D.N.C. Jan. 16, 2008)
(unpublished)

(Tilley,

J.)

(“[Plaintiff]

has

not

provided

sufficient reasons why its memorandum and each of the supporting
declarations and exhibits should be filed under seal; how public
disclosure of the memorandum and each supporting document could
potentially harm the parties . . . .”), however, ATI does not
-14-

address how disclosure of each document identified in the motion,
could potentially harm ARI.
Furthermore,

ATI

does

not

discuss

why

less

drastic

alternatives such as redacting sensitive information or sealing a
more limited number of documents would be inappropriate.

See

Virginia Dept. of State Police, 386 F.3d at 576 (stating that court
“must consider less drastic alternatives to sealing”); cf. Walter
Kiddie Portable Equip., 2008 U.S. Dist. LEXIS 3426, at *4 (ruling
plaintiff’s motion to seal inadequate where motion did not address
“why less drastic sanctions . . . would be inappropriate”).
III.

CONCLUSION
The Court recognizes that ATI filed the Motion for Impoundment

to meet its obligations under the Consent Protective Order, but
that ARI’s designations of confidentiality caused ATI to file the
motion.

ATI has failed to file relevant documents with the Court,

has moved to seal documents that appear to fall outside of the
scope of the Consent Protective Order, and has neglected to address
the “substantive and procedural requirements” discussed in Virginia
Dept. of State Police, 386 F.3d at 576.
IT IS THEREFORE ORDERED that ATI’s Motion for Impoundment
(Docket Entry 41) is DENIED without prejudice to the parties filing
a Joint Renewed Motion for Impoundment that addresses the matters
discussed in this Memorandum Opinion and Order for each document
identified in the motion as requiring sealing.
IT IS FURTHER ORDERED that, if the parties fail to file such
a Renewed Motion for Impoundment by June 1, 2011, ATI shall
-15-

publicly file unredacted copies of the documents identified in its
Motion for Impoundment (Docket Entry 41).

/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
May 11, 2011

-16-