CUTSFORTH, INC. v. LEMM LIQUIDATING COMPANY, LLC et al

Filing 620

ORDER. The Court, having reviewed the parties' Joint Response to Order to Show Cause (Doc. 596 ), finds that Plaintiff has shown good cause as to why its proposed redactions should remain under seal. Plaintiff shall file redacted versions of th e relevant documents pursuant to the Court's findings by 2/25/2020. Consistent with the foregoing, all of Defendants' materials previously filed under seal or with redactions will no longer be sealed or redacted. See contents of this filing. Signed by Judge Cathy Bissoon on 2/18/2020. (scl)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
CUTSFORTH, INC.,
Plaintiff,
v.
LEMM LIQUIDATING
COMPANY, LLC, et al.,
Defendants.

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Civil Action No. 17-1025
Judge Cathy Bissoon

MEMORANDUM ORDER
I.

Background
On November 16, 2019, this Court issued an Order to Show Cause (Doc. 593) to the

Parties to show cause as to why materials previously sealed or redacted in this matter should not
be unsealed or un-redacted pursuant to the Third Circuit’s ruling in In re Avandia Marketing
Sales Practices & Products Liability Litigation, 924 F.3d 662, 670-73 (3d. Cir. 2019). The
Parties filed a Joint Response to Order to Show Cause (Doc. 596, “Response”) on December 13,
2019.
In the Response, Defendants state that there is no longer a need for any materials filed
under seal or redacted to remain under seal or remain redacted. Plaintiff, however, argues that
certain materials, identified in Exhibit A attached to the Response, should remain under seal or
redacted. Specifically, Plaintiff states that these materials relate to its confidential financial or
customer information, such as costs, pricing, revenues, and profitability related to one of its
products. Response at 2. Plaintiff argues that “public disclosure of this information would cause
substantial harm to [its] competitive position in the marketplace, including harm to its

negotiating position with customers and its positioning with respect to competitors.” Id.
According to Plaintiff, this harm can rebut the presumption of public access to judicial materials
and the First Amendment right of access to civil trial materials, discussed in Avandia. Id.
II.

Applicable Standards
Based on Avandia, this Court must articulate “compelling, countervailing interests to be

protected” and “make specific findings on the record concerning the effects of disclosure” and
“provide an opportunity for interested third parties to be heard” in order to overcome the
common law right of access. 924 F.3d at 672-73 (internal quotations and citations omitted).
Further, while the Third Circuit in Avandia declined to extend the First Amendment right of
public access to summary judgment records when the common law right of access is sufficient,
it noted that if a district court determined that any documents should remain sealed under the
right of public access, that court must then consider whether the First Amendment right attaches.
Id. at 673, 680.
Neither party disputes that the documents in question constitute judicial records and are
subject to the common law of access. In determining whether the First Amendment right
attaches, a court must use a two-prong test:
(1) whether the place and process have historically been open to the press; and
(2) whether public access plays a significant positive role in the functioning of the
particular process in question.
Id. at 673 (internal quotations and citations omitted). The Court agrees with Plaintiff’s briefing
that the First Amendment right attaches here, and that the redactions it requests must also survive
the First Amendment right of public access, if the Court finds that the redactions must be
protected from the common law right of access.
2

The Court finds that Plaintiff’s requests for redactions are compelling enough to
overcome the common law right of public access. 1 Plaintiff has asked for specific data related to
product pricing (such as price differentials, average selling price and discounts), profit margins,
costs of manufacturing, number of units sold and customer lists to be redacted, as such
information is not disclosed to the public by Plaintiff, and disclosure of these specific pieces of
information would materially harm Plaintiff’s negotiating position in the marketplace. This, the
Court finds, is a “compelling, countervailing interest[] to be protected.” Avandia, 924 F.3d at
672. As the Court has found that Plaintiff’s requests for redactions meets the standard to remain
sealed under the common law right of access, the Court must now determine whether the
information should remain sealed under the First Amendment right of access.
When the First Amendment right attaches, “[a]ny restriction on the right of public access
is evaluated under strict scrutiny” and a party may only rebut the presumption in favor of access
by “demonstrat[ing] an overriding interest [in excluding the public] based on findings that
closure is essential to preserve higher values and is narrowly tailored to serve that interest.” Id.
The party seeking to seal the information, in this case Plaintiff, “bears the burden of showing that
the material is the kind of information that courts will protect and that there is good cause for the
order to issue.” Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1071 (3d Cir. 1984).
In this Circuit, “an interest in safeguarding a trade secret may overcome a presumption of
openness.” Publicker, 733 F.2d at 1073. While Plaintiff does not characterize the information
that it seeks to redact as trade secrets, that does not limit the Court’s ability to consider whether
that may be the appropriate method by which to analyze Plaintiff’s information.

1

The Court makes its specific findings in the chart that follows in Section III of this Order.
3

The Court finds the reasoning in another case in this District cited by Plaintiff to be
informative in determining what constitutes a trade secret or may overcome the presumption of
the First Amendment right of access. In Cole’s Wexford Hotel, Inc. v. Highmark, Inc., the
Special Master found that disclosure of a party’s customer lists would cause the company to
suffer “irreparable harm” sufficient to override any compelling public interest in the materials.
2019 WL 7606242, at *25 (W.D. Pa. Dec. 19, 2019) adopted by and modified by 2020 WL
337522 (W.D. Pa. Jan. 21, 2020) (adopting the Special Master’s recommendation in full, subject
to the insertion of two sentences to a portion of the recommendation unrelated to sealing). As in
Cole’s Wexford, the Court finds here that disclosure of Plaintiff’s customer’s list would
“materially harm [its] competitive position in the marketplace” by providing its competitors with
a list “to compete with or to contact for potential competition.” Response at Ex. A, p. 12.
The Court next addresses Plaintiff’s redaction request as to information related to the
pricing of its product, which include the following: the price differential between its product and
Defendant’s product, the average selling price of its product, pricing discounts on the product,
cost of manufacturing the product, other revenue or profit information on the product and
number of sales of the product. 2 The Court again finds the analysis in Cole’s Wexford
informative. There, the Special Master found that data such as claims data constituted trade
secrets. 3 Claims data, in that context, meant details about pricing and rates for services for each

2

The Court notes that, after careful review of each of Plaintiff’s proposed redactions, that the
type of information requested can be categorized in this way and thus can receive the same type
of analysis, although the actual numbers may differ. As noted in Footnote 1, this is detailed in
the attached chart.
3
Pennsylvania Uniform Trade Secrets Act, 12 Pa. C.S.A. §§ 5302 defines trade secrets as:
Information, including a formula, drawing, pattern, compilation including a customer list,
program, device, method, technique or process that:
4

of one of the party’s payors. Cole’s Wexford, 2019 WL 7606242, at *26. The party requesting
sealing noted that it used this data in negotiations in contracts and that it would be “severely
prejudice[d]” if the information were made publicly available, as its competitors could use that
data to “extract a better deal and increased rates from payors” and also that its insurance
company payors could use that information to negotiate lower rates in their contracts. Id. The
Special Master also found that negotiated reimbursement rates are highly negotiated and
confidential and are individualized from customer to customer, making them the type of
confidential commercial information that courts protect. Id. at 26-28. As a result, disclosure of
these rates would cause serious injury, inflicting a significant threat to each company’s
negotiating abilities.
Similarly, Plaintiff argues that it does not public disclose pricing information on its
product, and that it sells its product at different rates to different customers and customer groups.
See, e.g., Response at Ex. A, p. 6. Further, disclosure of the number of units sold or the price
differential between Plaintiff’s product and Defendant’s product would enable competitors to
discover the average price sold. Id. at 7, 9. Plaintiff argues that disclosure of this information
would harm its negotiating position in the marketplace with its customers and also give its
competitors an advantage when seeking to sell their products to Plaintiff’s customers. Id.
Plaintiff also argues that it does not publicly disclose information about manufacturing costs, as

(1) Derives independent economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use.
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its
secrecy.
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that would provide competitors insight into its profit margins, which would again harm
Plaintiff’s negotiating position in the market and provide its competitors with an unfair
advantage. Id. at 10-11.
The Court finds that this information derives independent economic value from not being
generally known by others who can obtain economic value from its disclosure, and is subject to
efforts that are reasonable under the circumstances to maintain its secrecy. Plaintiff has shown
that this information is the type of information that courts seek to protect, demonstrated its
overriding interest in excluding the public from this information because of the potential harm it
may suffer and narrowly tailored its objections by seeking only to redact or seal the specific
information that would cause the harm. As the Court has found that the requested redactions
constitute confidential information that courts seek to protect, such as trade secrets, they may be
safeguarded against the First Amendment right of access.
III.

Specific Findings
The Court makes an individualized analysis of each proposed redaction or seal request as

follows:

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THE COURT’S FINDINGS ON CUTSFORTH’S CONFIDENTIALITY DESIGNATIONS
Request
No.
1

Docket
No.
232

Description

Confidential Materials

Defendants’
Memo re Motion
for Summary
Judgment of No
Lost Profits

Price differential between
EASYchange and FC-101 (p.1,
13, 14); average selling price of
EASYchange (p. 13)

Rationale for Continued Sealing
The specific references to the price
differential between Plaintiff’s product
and Defendant’s product are
confidential information of the type that
courts seek to protect, and that Plaintiff
has demonstrated that it would suffer
specific harm to its negotiation position
in the marketplace from its disclosure.
The specific number provided by
Plaintiff’s expert on the average selling
price may be redacted because the
average selling price can be considered
a trade secret under the relevant
statutory authority in Pennsylvania, as
the information has independent
economic value from not being
generally known and is subject to efforts
reasonable under the circumstances to
maintain its secrecy, making it the type
of information that courts are likely to
protect and causing harm to Plaintiff if
disclosed.

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2

273, Exhibit W

Cutsforth Strategic
Sales/Marketing Plan

Selling price and units sold of The specific number provided on the
EASYchange (p. 15)
average selling price may be redacted
because the average selling price can
be considered a trade secret under the
relevant statutory authority in
Pennsylvania, as the information has
independent economic value from not
being generally known and is subject
to efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.
The specific number provided on the
units sold may be redacted because
that can be used to calculate the
average selling price of Plaintiff’s
product, which can be considered a
trade secret, making it the type of
information that courts are likely to
protect and causing harm to Plaintiff
if disclosed.

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3

277, Exhibit Y

Excerpts of Expert
Report of Elizabeth
Dean Regarding
Damages

Average selling price, profit The specific number provided on the
margin of EASYchange (p. average selling price may be redacted
39)
because the average selling price can
be considered a trade secret under the
relevant statutory authority in
Pennsylvania, as the information has
independent economic value from not
being generally known and is subject
to efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.
The specific number provided on
the profit margin may be redacted
because that can be used to
calculate the average selling price
of Plaintiff’s product, which can be
considered a trade secret, making it
the type of information that courts
are likely to protect and causing
harm to Plaintiff if disclosed.

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4

327

Cutsforth Memo in
Opposition to
Defendants’ Motion
for Summary
Judgment of No Lost
Profits

Selling price and average
price of EASYchange, price
differential between FC-101
and EASYchange (p. 16)

The specific numbers provided on the
average selling price or selling price
for different categories of sales may
be redacted because the average
selling price can be considered a
trade secret under the relevant
statutory authority in Pennsylvania,
as the information has independent
economic value from not being
generally known and is subject to
efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.
The specific references to the price
differential between Plaintiff’s
product and Defendant’s product
are confidential information of the
type that courts seek to protect,
and that Plaintiff has demonstrated
that it would suffer specific harm
to its negotiation position in the
marketplace from its disclosure.

10

5

339, Exhibit 12

Excerpts of Expert
Report of Elizabeth
Dean Regarding
Damages

Cutsforth’s pricing discounts
and average EASYchange
price (p. 31); Cutsforth profit
margin on brush sales and
installation fees (p. 32);
pricing/revenue/profit tables
for EASYchange (schedules
2-3)

The specific numbers provided on the
average selling price and pricing
discounts may be redacted because
they can be considered trade secrets
under the relevant statutory authority
in Pennsylvania, as the information
has independent economic value
from not being generally known and
is subject to efforts reasonable under
the circumstances to maintain its
secrecy, making it the type of
information that courts are likely to
protect and causing harm to Plaintiff
if disclosed.
The specific references to
Plaintiff’s profit margin, pricing,
revenue, and profit are confidential
information courts seek to protect,
and that Plaintiff has demonstrated
that it would suffer specific harm
to its negotiation position in the
marketplace from its disclosure.

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6

343, Exhibit 14

7

344, Exhibit 15 Cutsforth customer list List of customers, pricing, and Plaintiff’s customer list is the type
and sales data
net value details
of confidential information of the
type that courts seek to protect,
and Plaintiff has demonstrated that
it would suffer specific harm to its
negotiation position in the
marketplace from its disclosure.

8

N/A

Cutsforth
EASYchange
manufacturing quote

Defendants’ Memo re
Motion for Summary
Judgment of No Lost
Profits

Cost information of
The specific references to
EASYchange holder and parts Plaintiff’s costs are confidential
information of the type that courts
seek to protect, and that Plaintiff
has demonstrated that it would
suffer specific harm to its
negotiation position in the
marketplace from its disclosure.

Price differential between
EASYchange and FC-101
(p.1, 11, 12); average selling
price of EASYchange (p. 11)

The specific references to the price
differential between Plaintiff’s
product and Defendant’s product
are confidential information of the
type that courts seek to protect,
and that Plaintiff has demonstrated
that it would suffer specific harm
to its negotiation position in the
marketplace from its disclosure.
The specific numbers provided on the
average selling price may be redacted
because the average selling price can

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be considered a trade secret under the
relevant statutory authority in
Pennsylvania, as the information has
independent economic value from not
being generally known and is subject
to efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.
9

N/A

Defendants’ SOF re
Motion for Summary
Judgment of No Lost
Profits

Average EASYchange selling The specific numbers provided on the
price (¶ 47)
average selling price may be redacted
because the average selling price can
be considered a trade secret under the
relevant statutory authority in
Pennsylvania, as the information has
independent economic value from not
being generally known and is subject
to efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.

13

10

N/A

Cutsforth Memo in
Opposition to
Defendants’ Motion
for Summary
Judgment of No Lost
Profits

Selling price and average
price of EASYchange, price
differential between FC-101
and EASYchange (p. 18)

The specific numbers provided on the
average selling price or selling price
may be redacted because the average
selling price can be considered a
trade secret under the relevant
statutory authority in Pennsylvania,
as the information has independent
economic value from not being
generally known and is subject to
efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.
The specific references to the price
differential between Plaintiff’s
product and Defendant’s product
are confidential information of the
type that courts seek to protect,
and that Plaintiff has demonstrated
that it would suffer specific harm
to its negotiation position in the
marketplace from its disclosure.

14

11

N/A

Cutsforth SOF in
Opposition to
Defendants’ Motion
for Summary
Judgment of No Lost
Profits

Average EASYchange
selling price (¶ 47)

The specific numbers provided on the
average selling price may be redacted
because the average selling price can
be considered a trade secret under the
relevant statutory authority in
Pennsylvania, as the information has
independent economic value from not
being generally known and is subject
to efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.

12

N/A

Defendants’ Daubert
Motion re Elizabeth
Dean

Price differential between
EASYchange and FC-101
(p. 3, 4, 5); average selling
price of EASYchange (p. 3)

The specific references to the price
differential between Plaintiff’s
product and Defendant’s product are
confidential information of the type
that courts seek to protect, and that
Plaintiff has demonstrated that it
would suffer specific harm to its
negotiation position in the
marketplace from its disclosure.
The specific numbers provided on the
average selling price may be redacted
because the average selling price can
be considered a trade secret under the
relevant statutory authority in
Pennsylvania, as the information has
independent economic value from not

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being generally known and is subject
to efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed
13

N/A

Exhibit W to
Defendants’ Lost
Profits Summary
Judgment Motion Cutsforth Strategic
Sales/Marketing Plan

Selling price and units sold of The specific number provided on the
EASYchange (p. 15)
average selling price may be redacted
because the average selling price can
be considered a trade secret under the
relevant statutory authority in
Pennsylvania, as the information has
independent economic value from not
being generally known and is subject
to efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.
The specific number provided on the
units sold may be redacted because
that can be used to calculate the
average selling price of Plaintiff’s
product, which can be considered a
trade secret, making it the type of
information that courts are likely to
protect and causing harm to Plaintiff
if disclosed.
16

14

N/A

Exhibit Y to
Defendants’ Lost
Profits Summary
Judgment Motion Excerpts of Expert
Report of Elizabeth
Dean Regarding
Damages

Average selling price, profit The specific numbers provided on the
margin of EASYchange (p. average selling price may be redacted
39)
because the average selling price can
be considered a trade secret under the
relevant statutory authority in
Pennsylvania, as the information has
independent economic value from not
being generally known and is subject
to efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.
The specific references to Plaintiff’s
profit margin are confidential
information courts seek to protect,
and that Plaintiff has demonstrated
that it would suffer specific harm to
its negotiation position in the
marketplace from its disclosure.

17

15

N/A

Exhibit 2 to
Cutsforth’s Motion
to Exclude –
Expert Report of
Carl Degen on
Damages

Price differential between
EASYchange and FC-101 and
average selling price (p. 5, 39,
41, Figure 5, Figure 11);
Cutsforth profit margin
information (p. 42, 43, 44)

The specific references to the price
differential between Plaintiff’s
product and Defendant’s product are
confidential information of the type
that courts seek to protect, and that
Plaintiff has demonstrated that it
would suffer specific harm to its
negotiation position in the
marketplace from its disclosure.
The specific numbers provided on the
average selling price may be redacted
because the average selling price can
be considered a trade secret under the
relevant statutory authority in
Pennsylvania, as the information has
independent economic value from not
being generally known and is subject
to efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.
The specific references to Plaintiff’s
profit margin are confidential
information courts seek to protect,
and that Plaintiff has demonstrated
that it would suffer specific harm to
its negotiation position in the
marketplace from its disclosure.

18

16

N/A

Exhibit A to
Defendants’
Daubert Motion re
Elizabeth
Dean – Excerpts of
Expert Report of
Elizabeth Dean
Regarding
Damages

Cutsforth’s pricing discounts
and average EASYchange
price (p. 31); Cutsforth profit
margin on brush sales and
installation fees, and costing
information (p. 32-34)

The specific numbers provided on the
average selling price and pricing
discounts may be redacted because
they can be considered trade secrets
under the relevant statutory authority
in Pennsylvania, as the information
has independent economic value
from not being generally known and
is subject to efforts reasonable under
the circumstances to maintain its
secrecy, making it the type of
information that courts are likely to
protect and causing harm to Plaintiff
if disclosed.
The specific references to Plaintiff’s
profit margin and fees and costs are
confidential information courts seek
to protect, and that Plaintiff has
demonstrated that it would suffer
specific harm to its negotiation
position in the marketplace from its
disclosure.

19

17

N/A

Exhibit 1 to
Cutsforth’s Opposition
to Defendants’ Lost
Profits Summary
Judgment Motion –
Expert Report of
Elizabeth Dean
Regarding Damages

Cutsforth’s pricing discounts
and average EASYchange
price (p. 31, 39, 42, 47);
Cutsforth profit margin on
brush sales and installation
fees (p. 32-34, 39, 41, 47);
pricing/revenue/profit tables
for EASYchange (schedules
2-3)

The specific numbers provided on the
average selling price and pricing
discounts may be redacted because
they can be considered trade secrets
under the relevant statutory authority
in Pennsylvania, as the information
has independent economic value
from not being generally known and
is subject to efforts reasonable under
the circumstances to maintain its
secrecy, making it the type of
information that courts are likely to
protect and causing harm to Plaintiff
if disclosed.
The specific references to
Plaintiff’s profit margin,
pricing, revenue, and profit are
confidential information courts
seek to protect, and that Plaintiff
has demonstrated that it would
suffer specific harm to its
negotiation position in the
marketplace from its disclosure.

20

18

587

Sealed Summary
Judgment Order

EASYchange average sales
price (p. 24)

[The rest of this page is intentionally left blank]

21

The specific numbers provided on the
average selling price may be redacted
because they can be considered trade
secrets under the relevant statutory
authority in Pennsylvania, as the
information has independent
economic value from not being
generally known and is subject to
efforts reasonable under the
circumstances to maintain its secrecy,
making it the type of information that
courts are likely to protect and
causing harm to Plaintiff if disclosed.

IV.

Order
The Court finds that Plaintiff has shown good cause as to why the proposed redactions

should remain under seal. Plaintiff shall file redacted versions of the relevant documents
pursuant to the Court’s findings by February 25, 2020. Consistent with the foregoing, all of
Defendants’ materials previously filed under seal or with redactions will no longer be sealed or
redacted.
IT IS SO ORDERED.
February 18, 2020

s\Cathy Bissoon
Cathy Bissoon
United States District Judge

cc (via ECF email notification):
All Counsel of Record

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