ATI INDUSTRIAL AUTOMATION, INC. v. APPLIED ROBOTICS, INC.
Filing
84
MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 7/12/11, that the parties' Joint Motion for Impoundment (Docket Entry 48 ) is GRANTED. FURTHER that the parties may file redacted copies of Exhibits 4, 28-29, 34, and 38-40 to the Annis Deposition, Exhibits E-N, U-V and X to the Boardman Affidavit, and the Boardman Affidavit on the docket and that unredacted copies of those documents shall remain under seal. (Law, Trina)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
ATI INDUSTRIAL AUTOMATION, INC.,
Plaintiff,
v.
APPLIED ROBOTICS, INC.,
Defendant.
)
)
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)
)
)
)
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)
1:09CV471
MEMORANDUM OPINION AND ORDER
This matter comes before the Court on the Joint Renewed Motion
for Impoundment (Docket Entry 48) filed by Plaintiff ATI Industrial
Automation, Inc. (“ATI”) and Defendant Applied Robotics, Inc.
(“ARI”).
For the reasons that follow, the Court will grant said
motion.
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.)
ARI filed a “Motion to Dismiss, or Alternatively, to
Transfer” (Docket Entry 24) and, in support thereof, a “Declaration
of Clifford Annis” (Docket Entry 26) and “Declaration of Steve
Listing” (Docket Entry 27).
ATI responded (Docket Entry 29) and
ARI replied (Docket Entry 30).
Via said motion, ARI sought 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 requested transfer
of this action to the Northern District of New York under 28 U.S.C.
§ 1406(a).
Court
(Docket Entry 24 at 1.)
find
personal
jurisdiction
ATI contended that, should the
lacking,
the
Court
should
nonetheless refrain from dismissing the case or transferring it to
the Northern District of New York (as ARI proposes); instead, ATI
asked 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.)
The Court granted ATI’s request for jurisdictional discovery
and deferred further action on ARI’s motion to dismiss.
Entry 35 at 15.)
(Docket
In addition, the Court approved a Consent
Protective Order to which both parties stipulated.
(Docket Entry
37.) Consistent with that protective order, ATI filed a 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).
In the Motion for Impoundment, ATI moved “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.)
Specifically, ATI sought
to file under seal three categories of documents:
(1) “[e]xcerpts from the Rule 30(b)(6) Deposition of Applied
Robotics with Clifford Annis as its designee (and associated
exhibits)” (id. at 1), in particular, Exhibits 4, 5, 7, 11, 14, 15,
19-26, 28, 29, 33, 34, 38-40 (id. at 2-3);
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(2) redacted portions of the Affidavit of Karen S. Boardman
and exhibits A, E-V, and X (id. at 3-4); and
(3) ATI’s Supplemental Memorandum (id. at 4).
The Court denied the foregoing motion for impoundment because:
(1) ATI failed to “fil[e] under seal the materials that it seeks to
keep secret” and sought to seal documents “which [did] not appear
to require such secrecy” (Docket Entry 46 at 11-12); (2) ATI did
not
indicate
that
certain
materials
were
“subject
to
any
confidentiality or non-disclosure agreements” (id. at 12); (3) ATI
failed to explain “why the public should be denied access to []
materials, despite the public filing of other apparently similar
documents” (id. at 13); (4) “ATI [did] not address how disclosure
of each document identified in the motion, could potentially harm
ARI” (id. at 14-15); and (5) “ATI [did] not discuss why less
drastic alternatives . . . would be inappropriate” (id. at 15).
Therefore, the Court 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.”
(Docket Entry 46
at 15 (emphasis added).)
The
parties
now
have
filed
a
Joint
Renewed
Motion
for
Impoundment (Docket Entry 48) and a supporting brief (Docket Entry
49).
The motion states that “the parties move the Court to seal
Exhibits 11, 26 and 35 to the Deposition of Clifford Annis (“Annis
Deposition”) and Exhibits A, O-Q and S to the Affidavit of Karen S.
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Boardman (“Boardman Affidavit”) . . . .”
(Docket Entry 48 at 1.)
In their brief, the parties briefly discuss other exhibits:
[T]he parties have agreed to file Exhibits 4, 28-29, 34,
and 38-40 to the Annis Deposition, Exhibits E-N, U-V and
X to the Boardman Affidavit, and the Boardman Affidavit
on the public record, with some agreed redactions of
specific customer contacts and customers of Defendant ARI
that are unknown to Plaintiff ATI.
Defendant ARI
stipulates that the emails of Exhibits 4, 28-29, 38-39,
and 40 to the Annis Deposition and Exhibits E-N, U-V and
X to the Boardman Affidavit involve communications
between Defendant ARI and companies located in North
Carolina or having a plant in North Carolina. Regarding
the Boardman Affidavit, the redacted customer contacts
and customer names are the same names that were redacted
in the referenced exhibits.
(Docket Entry 49 at 3-4.)
In addition, ATI filed:
(1) a document titled “Notice of Filing” which includes ATI’s
unredacted Supplemental Memorandum (Docket Entry 50-1),1 excerpts
from the Annis Deposition (Docket Entry 50-2), and, in connection
with that deposition, unredacted copies of Exhibits 5, 7, 11, 14,
15, 19-25, and 33 (Docket Entries 50-4 - 50-17, 50-20), as well as
redacted copies of Exhibits 4, 28, 29, 34, and 38-40 (Docket
Entries 50-3, 50-18, 50-19, 50-21 - 50-24);
(2) a redacted copy of the Boardman Affidavit (Docket Entry
51), unredacted copies of Exhibits B, C, D, R, T, and W (Docket
Entries 51-1 - 51-3, 51-14, 51-15, 51-18),2 and redacted copies of
1
The Court refers to the exhibits in the Notice of Filing by the Case
Management/Electronic Case Filing (“CM/ECF”) system docket numbers which appear
in the footer of the document. (See Docket Entries 50, 50-1 - 50-24.)
2
For purposes of clarity, the Court refers to the exhibits attached to the
Affidavit of Karen S. Boardman by the CM/ECF system docket numbers which appear
(continued...)
-4-
Exhibits E-N, U, V, and X (Docket Entries 51-4 - 51-13, 51-16, 5117, 51-19); and
(3) Exhibits 11, 26 and 35 to Annis’s deposition (Docket
Entries 52, 53 & 54), which were filed under seal, and Exhibits A,
O, P, Q, and S to Ms. Boardman’s Affidavit (Docket Entries 55-59),
which were also filed under seal.
Thereafter, ATI filed Exhibits 4, 28-29, 34, and 38-40 to the
Annis
Deposition,
Exhibits
E-N,
U-V
and
X
to
the
Boardman
Affidavit, and the Boardman Affidavit, in an unredacted form, under
seal.
II.
(See Docket Entries 62-82 (filed under seal).)
DISCUSSION
In the Joint Renewed Motion for Impoundment, the parties move
“to seal certain business sensitive documents provided to Plaintiff
ATI by Defendant ARI under the terms of the Protective Order.”
(Docket Entry 48 at 1.)
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
2
(...continued)
in the footer of the document.
(See Docket Entries 50, 50-1 - 50-24.)
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(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.
of
documents
One body of case law relates to the protected status
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.”).
-6-
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).3
“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
documents.”
Stone v. University of Md. Med. Sys. Corp., 855 F.2d
178, 180 (4th Cir. 1988) (internal citation omitted).4
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
3
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,
846 F.2d at 253 & n.4.
4
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.
-7-
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
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,
-8-
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)).
The Fourth Circuit has recognized that the legal framework for
sealing documents, described above, applies to determine whether a
party may file a redacted document, i.e., a document sealed in
part.
See Moussaoui, 65 Fed. Appx. at 889 (“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.”).5
Thus, courts in the Fourth
Circuit apply the legal framework for sealing where a party moves
to file a redacted document.
See, e.g., Silicon Knights, Inc. v.
5
Federal Civil Procedure Rule 5.2, which governs redacted filings,
provides:
Unless the court orders otherwise, in an electronic or paper filing
with the court that contains an individual’s social-security number,
taxpayer-identification number, or birth date, the name of an
individual known to be a minor, or a financial-account number, a
party or nonparty making the filing may include only:
(1) the last four digits of the social-security number and
taxpayer-identification number;
(2) the year of the individual’s birth;
(3) the minor’s initials; and
(4) the last four digits of the financial-account number.
Fed. R. Civ. P. 5.2(a). This Court’s Local Rules incorporate a substantially
similar rule. See M.D.N.C. R. 7.1(b) (providing for redaction of personal data
identifiers).
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Epic Games, Inc., No. 5:07-CV-275-D, 2011 U.S. Dist. LEXIS 26720,
at *3-7 (E.D.N.C. Mar. 15, 2011) (unpublished) (granting parties’
motions to seal documents or portions thereof containing alleged
trade secrets); Wolfe v. Green, Civil Action No. 2:08-01023, 2010
U.S. Dist. LEXIS 132929, at *6-7 (S.D. W. Va. Dec. 15, 2010)
(unpublished) (granting parties’ joint motion to redact filings
holding parties made necessary showing to address both common law
and First Amendment rights of access); Bethesda Softworks, LLC v.
Interplay Entertainment Corp., Civil Action No. DKC 09-2357, 2010
U.S.
Dist.
LEXIS
100769,
at
*26-29
(D.
Md.
Sept.
23,
2010)
(unpublished) (treating plaintiff’s motion to redact transcript as
a motion to seal).
B.
Trade Secret
Trade secret protection generally arises as a function of
state law.
Cf. Rohm and Haas Co. v. ADCO Chem. Co., 689 F.2d 424,
429 (3d Cir. 1982) (“A trade secret claim in the federal courts is
governed not by federal common law but by state law.”).6
Thus,
federal courts have referred to state law for purposes of defining
a trade secret in the context of orders addressing public access.
See, e.g., Pocht v. State Farm Mutual Auto. Ins. Co., Civ. 08-5015KES, 2008 U.S. Dist. LEXIS 100389, at *20 (D.S.D. Dec. 11, 2008)
(unpublished) (“Courts look to applicable state law to determine if
the requested documents qualify as trade secrets.” (citing In re
6
The Economic Espionage Act of 1996 provides for criminal penalties for
certain forms of trade secret misappropriation. See Pub. L. No. 104-294, § 1832,
110 Stat. 3489 (1996), codified at 18 U.S.C. §§ 1831-39.
-10-
Remington Arms Co., Inc., 952 F.2d 1029, 1033 (8th Cir. 1991)));
Myrda v. Swift Transp. Co., Inc., Case No. 2:06 cv 123, 2007 U.S.
Dist. LEXIS 51103, at *6 (N.D. Ind. July 13, 2007) (unpublished)
(“In making the first inquiry [into whether the information sought
to be protected is a trade secret or other form of confidential
information,] the court looks to substantive state law to define
trade
secret.”
(citations
omitted));
International
Assoc.
of
Machinists and Aerospace Workers v. Werner-Matsuda, 390 F. Supp. 2d
479, 484-85 (D. Md. 2005) (granting motion to seal and examining
state law to determine if proposed information constituted trade
secret).
North Carolina’s Trade Secrets Protection Act defines a trade
secret as:
“Trade secret” means business or technical information,
including but not limited to a formula, pattern, program,
device, compilation of information, method, technique, or
process that:
a.
Derives independent actual or potential
commercial value from not being generally known or
readily
ascertainable
through
independent
development or reverse engineering by persons who
can obtain economic value from its disclosure or
use; and
b. Is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy.
N.C. Gen. Stat. § 66-152(3).
The North Carolina Court of Appeals
has identified six factors to “consider when determining whether an
item is a trade secret”:
(1) the extent to which information is known outside the
business; (2) the extent to which it is known to
employees and others involved in the business; (3) the
extent of measures taken to guard secrecy of the
-11-
information; (4) the value of information to business and
its competitors; (5) the amount of effort or money
expended in developing the information; and (6) the ease
or difficulty with which the information could properly
be acquired or duplicated by others.
Sunbelt Rentals, Inc. v. Head & Enguist Equip., L.L.C., 174 N.C.
App. 49, 53, 620 S.E.2d 222, 226 (2005) (quoting State ex rel.
Utils. Comm’n v. MCI, 132 N.C. App. 625, 634, 514 S.E.2d 276, 282
(1999)).
The North Carolina Court of Appeals has also observed
that, in “[a]pplying these factors, [North Carolina’s] courts have
found the following to constitute a trade secret: cost history
information; price lists; and confidential customer lists, pricing
formulas and bidding formulas.”
Id. (citations omitted).
This
Court also has recognized that “courts have found that special
knowledge of customer needs and preferences is a trade secret.”
Philips Elec. N. Am. Corp. v. Hope, 631 F. Supp. 2d 705, 721
(M.D.N.C. 2009) (Schroeder, J.) (citing SunBelt, 174 N.C. App. at
54-56, 620 S.E.2d at 226-28).
C.
Analysis
The parties identify eight exhibits that they seek to seal
including: “Exhibits 11, 26 and 35 to the [Annis] Deposition . . .
and exhibits A, O-Q and S to the [Boardman] Affidavit . . . .”
(Docket Entry 48 at 1.)
They explain that “[t]he trade secret and
other confidential information contained in the documents at issue
. . . include customer information, specific customer product
pricing and customer preferences.”
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(Docket Entry 49 at 1-2.)
They describe the exhibits as follows:
(1) “Exhibit 11 to the Annis Deposition is a spreadsheet
containing all of [] ARI’s customers in North Carolina, including
names, contact phone numbers, emails and addresses” and “pricing
information about ARI products” (id. at 11);
(2) “Exhibit 26 to the Annis Deposition is an internal ARI
email that lists customer names, specific ARI products purchased by
the customers and the location of the customer and the specific
product purchased” and “pricing information about ARI products”
(id. at 12);
(3) “Exhibit 35 to the Annis Deposition is an email between
ARI and an ARI customer” which “contains a specific proposal,
including pricing, from ARI to one of its customers for specific
products” and “ARI’s specific consumer strategy” (id. at 13);
(4) “Exhibit A to the Boardman Affidavit is a spreadsheet
identifying ARI’s sales by customer” and “customers in North
Carolina, prices for specific products sold to each customer, and
total revenue made from these customers” (id.);
(5) “Exhibit O to the Boardman Affidavit is a specific sales
order to a customer of ARI identifying pricing, customer names and
consumer preferences” (id. at 14);
(6) “Exhibit P to the Boardman Affidavit is a spreadsheet
identifying the return sales by part number and quantity shipped to
ARI’s customers in North Carolina” and “includes customer names and
the quantity of the products purchased by ARI’s customers in North
Carolina” (id. at 15);
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(7) “Exhibit Q to the Boardman Affidavit is a spreadsheet
identifying payment and compensation to companies located in North
Carolina” and “includes customer names and payment amounts to
specific companies located in North Carolina” (id.); and
(8) “Exhibit S to the Boardman Affidavit is a list of ARI’s
customers in North Carolina” which “includes contact names, titles,
addresses,
phone
numbers
and
email
addresses
of
ARI’s
North
Carolina customers” (id. at 16).
Initially, the Court observes that the instant joint motion to
seal exhibits has been publicly docketed since June 1, 2011.
(Docket
Entry
48.)
Any
interested
party
therefore
has
had
sufficient time to seek intervention to contest any sealing order,
but no opposition has been filed (see Docket Entries from June 1,
2011 to present). Accordingly, the Court concludes that, as to the
motion at issue, the “public notice” prerequisite to entry of a
sealing order has been satisfied.
See Stone, 855 F.2d at 181
(discussing use of docketing to comply with procedural requirements
for sealing).
Next, the Court must determine what, if any, public access
right
attaches
requests.
to
the
items
covered
by
the
instant
sealing
See Virginia Dept. of State Police, 386 F.3d at 576;
Moussaoui, 65 Fed. Appx. at 889; In re Policy Mgt. Sys. Corp., 1995
WL 541623, at *4.
The more rigorous First Amendment standard
applies to attachments to dispositive motions.
See Rushford, 846
F.2d at 252-53 (“Once the documents are made part of a dispositive
motion, such as a summary judgment motion, they lose their status
-14-
of being raw fruits of discovery. . . . We believe that the more
rigorous First Amendment standard should also apply to documents
filed in connection with a summary judgment motion in a civil
case.” (internal quotation marks and citations omitted)). See also
Scenera Research LLC v. Morris,
Nos. 5:09-Cv-412-FL, 5:09-CV-439,
2011 U.S. Dist. LEXIS 14668, at *1-2 (E.D.N.C. Feb. 14, 2011)
(unpublished) (“Because the documents sought to be sealed are
related to dispositive motions, they are subject to a
First
Amendment right of access by the public.” (italics in original)
(citing Rushford, 846 F.2d at 253)); Walter Kiddie Portable Equip.,
Inc. v. Universal Sec. Instruments, Inc., No. 1:05CV01031, 2008
U.S. Dist. LEXIS 3426, at *2 (M.D.N.C. Jan. 16, 2008) (unpublished)
(Tilley, J.) (“However, when this discovery rule is applied to seal
documents used . . . in dispositive motions . . . a ‘rigorous First
Amendment standard’ applies to protect the public’s right to
access.” (italics in original) (citing Virginia Dept. of State
Police, 386 F.3d at 576)).
The foregoing eight exhibits thus are
subject to the right of access granted by the First Amendment,
because they were filed in connection with a motion to dismiss.
The Court finds that the exhibits identified in the Joint
Renewed Motion for Impoundment constitute trade secrets.
In
general, the parties contend that all eight exhibits are “not
publicly available [and are] maintained confidentially by Defendant
ARI . . . .”
(Docket Entry 49 at 11-16.)
More specifically, each
exhibit constitutes the type of information protected under North
Carolina law: (1) Exhibit 11 is a confidential customer list (see
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Docket Entry 49 at 11; Docket Entry 52 at 1-11 (filed under seal));
(2) Exhibit 26 is an internal e-mail providing pricing information
and listing customers and their product choices (see Docket Entry
49 at 12; Docket Entry 53 at 1-8 (filed under seal)); (3) Exhibit
35 is a private e-mail exchange between ARI and a customer with a
pricing bid for products (Docket Entry 49 at 13; Docket Entry 54 at
1 (filed under seal)); (4) Exhibit A is another variation of a
secret customer list incorporating price lists and preferences for
ARI products (Docket Entry 49 at 13; Docket Entry 55 at 1-31 (filed
under seal)); (5) Exhibit O is a document which describes a
customer’s confidential order from ARI and lists prices that ARI
charged (Docket Entry 49 at 14; Docket Entry 56 (filed under
seal)); (6) Exhibit P is another internal customer list describing
their purchases of ARI products (Docket Entry 49 at 15; Docket
Entry 57 at 1-7 (filed under seal)); (7) Exhibit Q is yet another
confidential list of purchasers of ARI products (including amounts
paid for unidentified products) (Docket Entry 49 at 15; Docket
Entry 58 at 1-5 (filed under seal)); and (8) Exhibit S constitutes
a non-public ARI customer contact list (Docket Entry 49 at 16;
Docket
Entry
59
at
1
(filed
under
seal)).
North
Carolina
recognizes that trade secrets include confidential customer lists,
price lists and information connected with bids for goods, Sunbelt,
174 N.C. App. at 53, 620 S.E.2d at 226, and “special knowledge of
customer needs and preferences[,]” Philips Elec., 631 F. Supp. 2d
at 721 (citation omitted).
This description of trade secrets
encompasses the eight exhibits identified in the instant Motion.
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The Court finds that sealing is appropriate for the eight
exhibits, because the parties seek to protect ARI’s trade secrets.
The Fourth Circuit has recognized that:
One exception to the public’s right of access is where
such access to judicial records could provide a “source[]
of business information that might harm a litigant’s
competitive standing.” [Nixon, 435 U.S. at 598.] Other
courts have specifically recognized an exception to the
public’s right of access when a case involves trade
secrets. Valley Broadcasting v. United States District
Court, 798 F.2d 1289, 1294 (9th Cir. 1986); In re Iowa
Freedom of Information Council, 724 F.2d 658 (8th Cir.
1983); Brown & Williamson Tobacco Co. v. FTC, 710 F.2d
1165, 1180 (6th Cir. 1983).
Woven Elec. Corp. v. Advanced Group, Inc., Nos. 89-1580, 89-1588,
1991 U.S. App. LEXIS 6004, at *17 (4th Cir. Apr. 15, 1991)
(unpublished)
(first
bracket
and
italics
in
original).
The
parties, utilizing variations on four arguments, contend that
making the exhibits public records would harm ARI in that: (1)
“[disclosure] would provide direct competitors . . . with a list of
specific personal contacts and customers developed by [] ARI
through the years” (Docket Entry 49 at 11, 13-16); (2) disclosure
would “provid[e] a competitive advantage to direct competitors in
the industry, and economic harm and unnecessary burden to ARI” (id.
at 12, 13-16); (3) “[w]ith this information direct competitors
could specifically target specific customer preferences based on
ARI products already purchased from ARI” (id. at 12, 13); and (4)
publicly
docketing
the
information
would
“provide
direct
competitors . . . with pricing information for specific customers”
(id. at 13-16). Therefore, the Court finds that ARI’s interests in
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maintaining the secrecy of trade secrets described in the exhibits
overcomes the public’s First Amendment right of access.
Alternatives to sealing the entirety of the eight exhibits do
not exist, because the secret information pervades each document.
Thus,
filing
impracticable,
redacted
copies
and
documents,
the
likewise be incomprehensible.
of
these
in
a
documents
redacted
would
form,
be
would
Therefore, the Court finds the
parties’ filing of the eight exhibits under seal is appropriate.
The parties explain Exhibits 4, 28-29, 34, and 38-40 to the
Annis
Deposition,
Exhibits
E-N,
U-V
and
X
to
the
Boardman
Affidavit, and the Boardman Affidavit have been redacted to remove
“specific customer contacts and customers of [] ARI that are
unknown to [] ATI” and the Boardman Affidavit has been redacted to
the same extent that “customer contacts and customer names are the
same names that were redacted in the referenced exhibits.” (Docket
Entry 49 at 3-4.) The Court construes the Joint Renewed Motion for
Impoundment as requesting to seal in part Exhibits 4, 28-29, 34,
and 38-40 to the Annis Deposition, Exhibits E-N, U-V and X to the
Boardman Affidavit, and the Boardman Affidavit.
The redacted portions of Exhibits 4, 28-29, 34, and 38-40 to
the Annis Deposition, Exhibits E-N, U-V and X to the Boardman
Affidavit, and the Boardman Affidavit constitute customer names,
portions of e-mail addresses and other contact information.
Docket Entries 62-82 (filed under seal).)
(See
For the same reasons
discussed above, this information warrants protection as an ARI
trade secret which overcomes the public’s First Amendment right of
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access.
Moreover, having examined the documents, the Court finds
that the parties’ limited redactions are narrowly tailored to
maintain the secrecy of only that information which constitutes a
trade secret.
Therefore, partial sealing of these documents
through the use of redactions is appropriate.
Accordingly, the Court orders that the parties’ Joint Motion
for Impoundment (Docket Entry 48) is granted and that the parties
may file redacted copies of Exhibits 4, 28-29, 34, and 38-40 to the
Annis
Deposition,
Exhibits
E-N,
U-V
and
X
to
the
Boardman
Affidavit, and the Boardman Affidavit.
III.
CONCLUSION
The Court observes that the public has had sufficient time to
intervene to oppose the Joint Motion for Impoundment.
Moreover,
the Court finds that the documents identified in the Joint Motion
for Impoundment incorporate trade secrets and that ARI’s interest
in protecting those trade secrets overcomes the public’s First
Amendment right to access those documents.
IT IS THEREFORE ORDERED that the parties’ Joint Motion for
Impoundment (Docket Entry 48) is GRANTED.
IT IS FURTHER ORDERED that the parties may file redacted
copies of Exhibits 4, 28-29, 34, and 38-40 to the Annis Deposition,
Exhibits E-N, U-V and X to the Boardman Affidavit, and the Boardman
Affidavit on the docket and that unredacted copies of those
documents shall remain under seal.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
July 12, 2011
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