Kroy IP Holdings, LLC v. Safeway, Inc.,

Filing 223

MEMORANDUM OPINION AND ORDER. Signed by Judge William C. Bryson on 1/30/2015. (ch, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION

KROY IP HOLDINGS, LLC,
Plaintiff,
v.
SAFEWAY, INC.,
Defendant.

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Case No. 2:12-CV-00800-WCB

MEMORANDUM OPINION AND ORDER
Before the Court is Safeway, Inc.’s Unopposed Motion to Redact Portions of November
14, 2014 Transcript. Dkt. No. 222. The Court DENIES the motion without prejudice to
Safeway’s right to refile the motion within 10 days, with a particularized showing as to the
justification for redacting the transcript with respect to each item for which Safeway seeks
redaction.
Safeway requests redaction of the transcript of a hearing that took place in open court. In
its motion, Safeway seeks to justify its redaction requests by stating, without elaboration: “The
information subject to this request is believed to be confidential, sensitive business information
of Safeway, all of which could provide an advantage to a business competitor if known.” Dkt.
No. 222, at 1. The motion adds that sealing the excerpts in question “will not affect the public’s
ability to understand the issues at stake in this litigation or how the judicial process operated in
this matter. Safeway’s interest in protecting its confidential, sensitive information outweighs any

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conceivable public interest in the specific data that Safeway asks be redacted from the public
record.” Id. at 2.
The seven items that are the subjects of the motion relate to Safeway’s incentive
program, which is known as the “Just for U” program. Three of the seven refer, respectively, to
the number of redemptions of “personalized deals” in a particular year, Dkt. No. 219, at 214, the
percentage of redemptions that consisted of “personalized deals,” id. at 221, and the amount
spent and the return on investment from the “personalized deals” program, id. at 238. The first
of those three was a number provided by Safeway’s counsel in the course of argument at the
hearing. The other two were numbers provided by Kroy’s counsel.
The remaining four items are quite different in character. They all relate to a discussion
of evidence from Kroy’s damages expert regarding the percentage of Safeway’s profits on the
“personalized deals” program that should be allocated to Kroy. Dkt. No. 219, at 239-41. Each
of the recited numbers relates to the expert’s conclusion that Kroy should receive one-eighth of
Safeway’s profits from the accused program.

Those numbers reveal something about the

expert’s calculations, but not about Safeway’s program.
I
The common law recognizes a “general right to inspect and copy public records and
documents, including judicial records and documents.” Nixon v. Warner Commc’ns, Inc., 435
U.S. 589, 597 (1978); see also In re Violation of Rule 28(d), 635 F.3d 1352, 1356 (Fed. Cir.
2011); S.E.C. v. Van Waeyenberghe, 990 F.2d 845, 848 (5th Cir.1993); Belo Broad. Corp. v.
Clark, 654 F.2d 423, 429 (5th Cir. 1981). That right is implemented, the Fifth Circuit has
explained, through “a strong presumption in favor of a common law right of public access to

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court proceedings.” United States v. Holy Land Found. for Relief & Dev., 624 F.3d 685, 690
(5th Cir. 2010); In re Violation of Rule 28(d), 635 F.3d at 1356.
To be sure, the “right to inspect and copy judicial records is not absolute,” Nixon, 435
U.S. at 598, and the presumption in favor of public access to court records can be overcome in
certain instances. For example, as the Supreme Court recognized in the Nixon case, courts have
denied public access to court records when necessary to ensure that those records “are not ‘used
to gratify private spite or promote public scandal,’” or to ensure that court records are not used
“as sources of business information that might harm a litigant’s competitive standing.” Id.
The decision whether to allow public access to court records is left to the “sound
discretion of the trial court . . . to be exercised in light of the relevant facts and circumstances of
the particular case.” Nixon, 435 U.S. at 599. The exercise of that discretion is not unguided,
however. “In determining whether to restrict the public’s access to court documents, the court
must ‘weigh[] the interests advanced by the parties in light of the public interest and the duty of
the courts.’” In re Violation of Rule 28(d), 635 F.3d at 1357 (quoting Nixon, 435 U.S. at 602).
And in making a decision as to whether to limit public access to court records, a judge must be
cognizant of the fact that public access to judicial records “serves to promote trustworthiness of
the judicial process, to curb judicial abuses, and to provide the public with a more complete
understanding of the judicial system, including a better perception of its fairness.”

Van

Waeyenberghe, 990 F.2d at 849; see also id. at 850 (“The real focus of our inquiry is on the
rights of the public in maintaining open records and the ‘check[] on the integrity of the
system.’”) (quoting Wilson v. Am. Motors Corp., 759 F.2d 1568, 1571 (11th Cir. 1985)). For
that reason, the courts have held that a district court’s “discretion to seal the record of judicial

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proceedings is to be exercised charily,” Van Waeyenberghe, 990 F.2d at 848, that the court
“must use caution in exercising its discretion to lace records under seal,” Holy Land, 624 F.3d at
689-90, and that the decision to seal or redact public records “must be made in light of the
‘strong presumption that all trial proceedings should be subject to scrutiny by the public,’” id. at
690.
The party seeking to seal court documents has the burden of establishing that the
presumption of public records should be overcome. Bianco v. Globus Med., Inc., 2014 WL
3422000, at *2 (E.D. Tex. July 14, 2014); Bankhead v. Gregg Cnty., 2013 WL 124114, at *2
(E.D. Tex. Jan. 9, 2013) (citing Torres-Montalvo v. Keith, 2011 WL 5023271, at *1 (S.D. Tex.
Oct. 17, 2011)); LEAP Sys., Inc. v. MoneyTrax, Inc. 638 F.3d 216, 221-22 (3d Cir. 2011);
Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006); Va. Dep’t of State
Police v. Wash. Post, 386 F.3d 567, 575 (4th Cir. 2004); United States v. Ladd, 218 F.3d 701,
704 (7th Cir. 2000). The moving party “can overcome the strong presumption of access by
providing ‘sufficiently compelling reasons’ that override the public policies favoring disclosure.”
Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214, 1221 (Fed. Cir. 2013). That is, “the party
must articulate compelling reasons supported by specific factual findings that outweigh the
general history of access and the public policies favoring disclosure, such as the public interest in
understanding the judicial process.” Id.; see also In re Terra Int’l, Inc., 134 F.3d 302, 306 (5th
Cir.1998) (district court’s entry of a protective order was “unsupported by a ‘particular and
specific demonstration of fact’” where movant made only conclusory allegations of harm).

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II
It is clear from the authority cited above that “compelling reasons” must be shown to
justify striking material that has been entered in the public record of a case. Because the
information at issue in this case was introduced in open court during a public court session, the
burden of showing that the information should be stricken from the public record is especially
high. See Bianco, 2014 WL 3422000, at *3; Warner Chilcott Co. v. Mylan Inc., Civil Action
No. 11-6844 (D.N.J. Dec. 10, 2014) (“Courts have generally denied requests seeking after-thefact sealing of a transcript of a proceeding that was held in open court.”); Pfizer, Inc. v. Teva
Pharm. USA Inc., 2010 WL 2710566, at *4 (D.N.J. July 7, 2010) (“Once a hearing is conducted
in open court, information placed on the record is just that: information that is on the record.”)
(emphasis in original); cf. TriQuint Semiconductor, Inc. v. Avago Techs. Ltd., 2012 WL
1432519, at *2 (D. Ariz. 2012) (“[I]t cannot be said that the parties are seeking to retain the
secrecy of any of the information disclosed in the transcripts, for this information has already
entered the public domain. There is thus an inherent logical dilemma underlying the parties’
requests because information that has already entered the

public domain cannot in any

meaningful way be later removed from the public domain.”). While the Court does not regard
the redaction request as wholly foreclosed by the fact that the information at issue was disclosed
in open court, the prior disclosure makes the burden of establishing a right to redaction harder to
meet.1

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Local Rule CV-5.2(b) provides a procedure for seeking redaction of a transcript of a
judicial proceeding, but such redactions are principally directed at disclosures of personal data
identifiers. See Fed. R. Civ. P. 5.2.
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In this case, Safeway has not made any particularized showing that any specific prejudice
or harm will result if the requested portions of the transcript are not redacted. The justification
for the requested redaction is simply the blanket assertion that the information is confidential and
sensitive, and that it could provide a business advantage to a competitor. Such general assertions
of prospective harm are not sufficient to satisfy the requirement that a compelling showing be
made to support a redaction or sealing order, particularly when the information has already been
disclosed in open court. See Pansy v. Borough of Stroudsburg, 23 F.3d 772, 786 (3d Cir. 1994)
(“[G]ood cause must be demonstrated to justify [an] order” redacting or sealing a judicial
transcript.” . . . The party seeking redaction must show that “disclosure will work a clearly
defined and serious injury to [that party]. The injury must be shown with specificity. Broad
allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not
support a good cause showing.”) (citations and quotations omitted); Jeanbaptiste v. Wells Fargo
Bank, N.A., 2014 WL 6790737, at *4 (N.D. Tex. Dec. 1, 2014) (a decision to seal or redact
judicial records “must be ‘supported by specific factual findings that outweigh the general
history of access and the public policies favoring disclosure, such as the public interest in
understanding the judicial process.’”) (citing Bianco, 2014 WL 3422000, at *2).
With respect to five of the seven items at issue, the case for redaction seems especially
weak. The first item on Safeway’s list was introduced into the record by Safeway’s counsel
without any suggestion that it was sensitive or confidential. That fact casts doubt on Safeway’s
present claim that failing to redact that material from the transcript would be significantly
damaging to Safeway. The last four items on Safeway’s list have nothing directly to do with
Safeway’s business. Instead, they relate simply to the opinion of Kroy’s damages expert as to

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what share of Safeway’s profits from the accused program should go to Kroy. It is not at all
clear to the Court how Safeway can show that information of that sort would be prejudicial to
Safeway’s business interests unless it were removed from the public record.
The remaining two items on Safeway’s list—the percentage of redemptions under the
Just For U program that resulted from “personalized deals,” and the return on investment from
the “personalized deals” program—might be shown to be sensitive information whose disclosure
could harm Safeway’s competitive standing, but no such showing has been made at this point.
All the Court has before it at this point is Safeway’s unelaborated assertion that all seven items
on its list “could provide an advantage to a business competitor if known.” As indicated by the
authorities cited above, that is not enough to overcome the presumption against redaction of
judicial records.
Because the conclusory statements made in Safeway’s motion are insufficient to support
a finding justifying the withdrawal of public record matters from judicial records, the Court
DENIES the motion to redact the transcript. However, the Court will allow Safeway to refile its
motion if it can provide the Court with sufficient details as to the reasons the material at issue is
regarded as sensitive, so that the Court can conduct the required balancing of the private and
public interests involved in any withdrawal of materials from public judicial records. Any such
refiling of the motion to redact must be made within 10 days of the date of this order.

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IT IS SO ORDERED.
SIGNED this 30th day of January, 2015.

_____________________________
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE

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