Powers v. Duff & Phelps, LLC
Filing
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ORDER DENYING 28 Motion for Leave to File Sealed Document; DENYING 30 Motion to Preserve Confidential Designation; GRANTING IN PART AND DENYING IN PART 32 Motion for Leave to File Sealed Document. Signed by Judge David A. Ezra. (td)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
PIKE POWERS,
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Plaintiff,
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vs.
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DUFF & PHELPS, LLC,
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Defendant.
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________________________________ §
CV. NO. 1:13-CV-768
ORDER: (1) DENYING MOTION FOR LEAVE TO FILE SEALED
DOCUMENT; (2) DENYING MOTION TO PRESERVE CONFIDENTIAL
DESIGNATION; (3) GRANTING IN PART AND DENYING IN PART
MOTION TO FILE RESPONSE UNDER SEAL
Before the Court are three motions: (1) a Motion For Leave to File
Sealed Document filed by Duff & Phelps, LLC (“Defendant” or “Duff”) (Dkt.
# 28); (2) a Motion to Preserve Confidential Designation filed by Defendant (Dkt.
# 30); and (3) a Motion to File Response Under Seal filed by Plaintiff Pike Powers
(“Plaintiff” or “Powers”) (Dkt. # 32). Pursuant to Local Rule 7(h), the Court finds
this matter suitable for disposition without a hearing. For the reasons that follow,
the Court DENIES Defendant’s Motion for Leave to File Sealed Document,
DENIES Defendant’s Motion to Preserve Confidential Designation, and
GRANTS IN PART AND DENIES IN PART Plaintiff’s Motion to File
Response Under Seal.
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BACKGROUND
On September 4, 2013, Plaintiff filed a complaint against Defendant,
alleging breach of contract and quantum meruit claims against Defendant.
(“Compl.,” Dkt. # 1 at 5–6; “Am. Compl.,” Dkt. # 16 at 10–11.) According to
Plaintiff, Defendant recruited Plaintiff in 2010 to join its firm in a business
development role. (Am. Compl. at 3.) Plaintiff’s employment agreement provided
for a base salary and commissions of 10% to 20% of the revenue received by
Defendant from clients that Plaintiff recruited. (Id.) Plaintiff alleges that
Defendant has failed to provide him appropriate commission for his role in
securing a partnership between Defendant and Fulbright & Jaworski (“Fulbright”)
for litigation support in the “Duke Energy litigation.” (Id. at 4–5.)
On January 16, 2015, Defendant filed a Motion for Summary
Judgment (Dkt. # 26). On January 30, 2015, Defendant filed its Motion for Leave
to File Sealed Document (Dkt. # 28); Plaintiff did not respond. On February 6,
2015, Defendant filed its Motion to Preserve Confidential Designation (Dkt. # 30);
Plaintiff did not respond. On February 9, 2015, Plaintiff filed its Unopposed
Motion for Leave to File Sealed Document (Dkt. # 32).
LEGAL STANDARD
“Courts have recognized that the public has a common law right to
inspect and copy judicial records.” S.E.C. v. Van Wayenberghe, 990 F.2d 845,
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848 (5th Cir. 1993) (citing Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 597
(1978) and Belo Broad. Corp. v. Clark, 654 F.2d 423, 429 (5th Cir. 1981)).
However, the right is not absolute, and the court has discretion to seal records
when “files might . . . become a vehicle for improper purposes.” Id. (internal
quotation marks omitted). Accordingly, a motion to seal records requires the court
to “balance the public’s common law right of access against the interests favoring
nondisclosure.” Id. “The movant ‘may overcome the presumption of access by
providing sufficiently compelling reasons that override the public policies favoring
disclosure.’” Jeanbaptiste v. Wells Fargo Bank, N.A., No. 3:14-CV-264-K, 2014
WL 6790737, at *4 (N.D. Tex. Dec. 1, 2014) (quoting Bianco v. Globus Med.,
Inc., No. 2:12-CV-147-WCB, 2013 WL 3422000, at *2 (E.D. Tex. July 14, 2014)).
DISCUSSION
I.
Motion for Leave to File Sealed Document
In its Motion for Leave to File Sealed Document, Defendant requests
leave to file the following materials under seal, “For Counsel Eyes Only,” pursuant
to the March 24, 2014 Protective Order (“Protective Order”): (1) Deposition
Testimony of Gregory Thomas Higgins (“Higgins”), lines 41:7–44:6, 45:6–48:3,
111:17–127:7, 128:16–19, and 145:7–147:18; and (2) Deposition Exhibits 5, 9, 10,
and 28. (Dkt. # 28, Ex. 3 at 2.) Defendant does not provide a specific factual basis
for sealing these items individually, but states more generally that the information
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would “reveal significant technical or business advantages” because it includes
“trade secrets, confidential or proprietary information, operational data, business
plans, and competitive analysis, personnel files, personal information that is
protected by law, and other sensitive information that . . . may subject the
producing or disclosing person to competitive or financial injury or potential legal
liability to third parties.” (Id. at 1–2.) Defendant concludes that sealing is
necessary “to protect personal, confidential, and proprietary information.” (Dkt.
# 28 at 2.) Although the documents do not underlie Defendant’s Motion for
Summary Judgment, Plaintiff relies on some of the said documents in its Response
to Defendant’s Motion for Summary Judgment.
At the outset, the Court notes that, pursuant to the protective order,
sealing documents “For Counsel Eyes Only” is only appropriate for “information
of the most sensitive nature which, if disclosed to persons of expertise in the area,
would reveal significant technical or business advantages of the producing or
designating party, and which includes as a major portion subject matter which is
believed to be unknown to the opposing party or parties, or any of the employees
of the corporate parties.” (“Prot. Order,” Dkt. # 15 ¶ 10.)
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A.
Deposition Testimony of Gregory Higgins
1.
Lines 41:7–44:6
Lines 41:7 through 44:6 of Gregory Higgins’s (“Higgins”) testimony
address whether Higgins reprimanded Andrew Capitman (“Capitman”) for urging
Plaintiff to obtain business with Fulbright on the Duke Energy litigation before the
company ran a conflicts check, as well as the company’s policy for reprimanding
that type of conduct. (“Higgins Dep.,” Dkt. # 28, Ex. A at 41:3–44:6.)
It is unclear how information regarding conflict checks reveals any
significant technical or business advantages of the Defendant, and therefore
Defendant has failed to advance a compelling reason to seal this statement as “For
Counsel Eyes Only.”
2.
Lines 45:6–48:3
Lines 46:25–48:3 of Higgins’s testimony address whether Capitman
received a bonus for the Duke Energy litigation recruitment effort. (Id. at
46:25–48:3.) There is no specific information as to the amount of that bonus or the
method by which that bonus was calculated. It is unclear how this information
could constitute “information of the most sensitive nature.” Accordingly,
Defendant has failed to advance a compelling reason to seal this statement as “For
Counsel Eyes Only.”
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3.
Lines 111:17–127:7
Lines 111:17 through 127:7 concern the profits that Defendant
generated for its work on the Duke Energy litigation, as well as its general method
of tracking profitability related to particular clients. (Id. at 111:17–127:7.)
Plaintiff cites to the profits disclosed therein in his Response to the Motion for
Summary Judgment to support his claims that “By July 15, 2013, collections on the
Duke engagement were $6,404,642.58” and “By the end of the engagement,
collections were over $8 million.” (Dkt. # 32, Ex. 2 at 13.)
As the Seventh Circuit has aptly observed: “[M]any litigants would
like to keep confidential the salary that they make, the injuries they suffered, or the
price they agreed to pay under a contract, but when these things are vital to claims
made in litigation, they must be revealed.” Baxter Int’l, Inc. v. Abbott Labs., 297
F.3d 544, 547 (7th Cir. 2002); see also In re Sealing & Non-Disclosure of
Pen/Trap/2703(d) Orders, 562 F. Supp. 2d 876, 890 (S.D. Tex. 2008) (citing
Baxter). The total revenue obtained over the course of the litigation and when that
revenue was earned is one of the major factual issues underlying Defendant’s
Motion for Summary Judgment and Plaintiff’s Response. Accordingly, the public
interest in disclosure outweighs the interest Defendant has in confidentiality, and
the Court does not find that a “For Counsel Eyes Only” designation is warranted.
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4.
Lines 128:16–19
Lines 128:16 through 128:19 address whether Higgins received a
bonus in 2012. (Higgins Dep. 128:16–19.) Higgins states that he received a
bonus, but provides no details about the amount of that bonus or how that bonus
was calculated. Again, the Court is unable to posit any reason why such a vague
statement amounts to “information of the most sensitive nature.” Thus, Defendant
has failed to advance a compelling reason to seal this statement as “For Counsel
Eyes Only.”
5.
Lines 145:7 through 147:18
Lines 145:7 through 146:3 concern Higgins’s salary and bonus. (Id.
at 145:7–146:1.) During the exchange, Plaintiff’s counsel assured Higgins “you
know, counsel for the company can designate these kind of things as confidential
under a protective order.” (Id. at 145:12–14.) After Higgins disclosed his
estimated bonus and base salary, he said to his attorney, “You want to designate
this as confidential?” to which his counsel replied, “We will.” (Id. at
145:24–146:3.) This information is highly personal information that is not cited to
in any of the summary judgment materials and was disclosed pursuant to a verbal
promise to confidentially designate the information. However, it does not reveal
significant technical or business advantages of Defendant, as required for the “For
Counsel Eyes Only” designation. Therefore, although there may well be good
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cause to seal the testimony—and the Court will seal that material, filed as part of
Plaintiff’s Response to Summary Judgment evidence, to prevent public disclosure,
as discussed in Part III—Defendant has failed to show a compelling reason to seal
the testimony as “For Counsel Eyes Only.”
Lines 146:4–147:18 discuss gross revenues and staff bonuses in broad
generalities. (Id. at 146:4–147:18.) Defendant is a publicly traded company,
whose quarterly revenues and expenses are available as information to the general
public. The Court is unable to determine why broad statements about
company-wide revenues and testimony that Higgins was unsure if a particular
individual received a bonus, but that there is a general bonus pool, is “information
of the most sensitive nature” sufficient to compel a designation of “For Counsel
Eyes Only.” Accordingly, Defendant has failed to meet its burden.
B.
Deposition Exhibits
1.
Deposition Exhibit 5
Deposition Exhibit 5 is a slide presentation for the Duke Energy
Litigation, outlining Defendant’s business and relevant experience, including
Defendant’s past clients. (Dkt. # 25, Ex. B at 2–35.) The slides are marked
“confidential.” (Id.) It is possible that the information disclosed on these slides
could reveal business advantages of the Defendant. However, Allen Pfeiffer, a
Managing Director of Duff, included Plaintiff on the distribution list of an email
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attaching the presentation and requesting comments. Since Plaintiff is certainly
familiar with the subject matter contained in Exhibit 5, Defendant cannot make the
second half of the showing required for “For Counsel Eyes Only” designation,
which requires that the subject matter is unknown to the opposing party.
Therefore, although there may well be good cause to seal the testimony, Defendant
has failed to show a compelling reason to seal the testimony as “For Counsel Eyes
Only.”
2.
Deposition Exhibit 9
Deposition Exhibit 9 is an invoice sheet detailing the invoices issued
to Fulbright on the Duke Energy litigation from 2011 to 2013. (Id. at 37–41.) It is
accompanied by an email from Defendant’s general counsel to Plaintiff’s attorney,
stating that the invoice was sent “as a courtesy subject to [Plaintiff’s attorney]
undertaking to keep it strictly confidential and not disclose it to any person other
than [Plaintiff].” (Id. at 36.)
The Court cannot understand why such documents require sealing
“For Counsel Eyes Only,” since the email authorizes Plaintiff’s counsel to show
the invoices to Plaintiff. More importantly, as discussed above, Plaintiff’s
compensation for his role in recruiting the Duke Energy litigation is central to the
claims at issue in the present litigation. Accordingly, Defendants have failed to
advance a compelling reason to seal the document “For Counsel Eyes Only.”
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3.
Deposition Exhibit 10
Deposition Exhibit 10 is a services, revenue, and expenditure sheet
outlining the charges incurred for the Duke Energy litigation from 2010 to 2014.
(Id. at 42–54.) For the same reasons discussed with regard to Higgins’
corresponding testimony, the Court finds that the public interest in disclosure
outweighs the interest Defendant has in confidentiality. Therefore, a “For Counsel
Eyes Only” designation is not warranted.
4.
Deposition Exhibit 28
Deposition Exhibit 28 is an email chain discussing the likelihood of
receiving the Duke Energy litigation deal, the initial fee estimate, and whether
Plaintiff would be entitled to a commission on the deal and if that commission
would need to be split with Capitman. (Id. at 55–57.) Plaintiff’s commission on
the Duke Energy litigation is an integral part of the factual issues in the instant
litigation. For the same reasons discussed above, the Court finds that the public
interest in disclosure outweighs the interest Defendant has in confidentiality.
Therefore, a “For Counsel Eyes Only” designation is not warranted.
C.
Conclusion
Because the Court does not find that Defendant has met its burden to
show a compelling reason to seal the requested evidence as “For Counsel Eyes
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Only,” the Court DENIES the Motion for Leave to File Sealed Document (Dkt.
# 28.)
II.
Motion to Preserve Confidential Designation
In its Motion to Preserve Confidential Designation, Defendant asks
that the Court preserve the following documents as “For Counsel Eyes Only,”
pursuant to the Protective Order: (1) Deposition Exhibits 9, 10, 15, 16, and 21;
(2) Deposition Testimony of Chris Matteson Lines 27:1–31:8, 45:24–49:21, 71:17–
81:9, 83:6–85:2, and 94:21–96:20; and (3) Deposition Testimony of Andrew
Capitman Lines 17:3–17:15, 19:12–21:25, 50:1–55:5, and 55:9–56:10. (Dkt. # 30
at 2.) Again, Defendant does not provide individualized factual bases for
designating these items “For Counsel Eyes Only,” and instead states more
generally that they “contain sensitive information regarding billing to Duff clients,
internal Duff Policies on awarding bonuses, and confidential settlement
negotiations.” (Id.) Defendant further contends that the information is
“proprietary in nature and would give Duff’s competitors an advantage in an
extremely competitive market.” (Id.) Finally, Defendant maintains that the
information “constitutes trade secrets” and therefore the designation is appropriate.
(Id.) Defendant indicates that Plaintiff is opposed to designating the documents
“For Counsel Eyes Only.” (Id. at 1.)
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A.
Deposition Exhibits
1.
Exhibits 9 and 10
As discussed above, the Court does not find cause for designating
Exhibits 9 and 10 as “For Counsel Eyes Only.”
2.
Exhibit 15
Exhibit 15 is an email from Chris Matteson to Tom Nesbitt titled
“Pike Powers Analysis” with an identically named Excel Sheet attachment that
lists the cash collected on the Duke Energy litigation, Kabam, and Samsung
accounts from 2010 to 2012. (Dkt. # 33-2 at 26–27.) Because Plaintiff’s
commission on the Duke Energy litigation is an integral part of the factual issues in
the instant litigation, for the reasons discussed above, the Court finds that the
public interest in disclosure outweighs the interest Defendant has in confidentiality.
Therefore, a “For Counsel Eyes Only” designation is not warranted.
3.
Exhibit 16
Exhibit 16 is an email from Chris Matteson to Tom Nesbitt titled “P
Powers – for settlement purposes only,” which states that Defendant is prepared to
offer Plaintiff $50,000 in compensation for his role in securing the Duke Energy
litigation. (Dkt. # 33-2 at 28.) The reasons supporting sealing this email as “For
Counsel Eyes Only” is unclear, since the settlement offer should have already been
communicated to Plaintiff. Additionally, as discussed above, Plaintiff’s
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compensation for his role in recruiting the Duke Energy litigation is central to the
claims at issue in the present litigation. Accordingly, Defendants have failed to
advance a compelling reason to seal the document “For Counsel Eyes Only.”
4.
Exhibit 21
Exhibit 21 is an email from Tab Weaver to Kleon Phili titled “FW:
feedback re Duke,” which contains an email thread indicating that Defendant had
likely secured Fulbright as a client on the Duke Energy litigation and that
management needed to discuss Plaintiff’s commission on the matter. (Dkt. # 33-2
at 28.) Again, Plaintiff’s commission on the Duke Energy litigation is an integral
part of the factual issues in the instant litigation. For the same reasons discussed
above, the Court finds that the public interest in disclosure outweighs the interest
Defendant has in confidentiality. Therefore, a “For Counsel Eyes Only”
designation is not warranted.
B.
Chris Matteson Deposition
1.
Lines 27:1–31:8
Lines 27:1 through 31:8 of Matteson’s testimony discuss financial
statements that show the total collections from the Duke Energy litigation, as well
as invoices for that litigation. The total revenue obtained over the course of the
litigation is one of the major factual issues underlying Defendant’s Motion for
Summary Judgment and Plaintiff’s Response. Accordingly, the public interest in
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disclosure outweighs the interest Defendant has in confidentiality, and the Court
does not find that a “For Counsel Eyes Only” designation is warranted.
2.
Lines 45:24–49:21
Lines 45:24 through 49:21 of Matteson’s testimony discuss a financial
report, including the meaning of the allocation categories, which reflects total
revenue generated by the Duke Energy litigation as $6.874 million. For the same
reasons discussed above, a “For Counsel Eyes Only” designation is not warranted.
3.
Lines 71:17–81:9, Lines 83:6–85:2, and Lines 94:21–96:20
Lines 71:17 through 81:9 of Matteson’s testimony discuss the email
that Matteson sent to Plaintiff offering him $50,000 in full satisfaction of any
potentially owed commissions on the Duke Energy litigation. Plaintiff’s counsel
characterizes this amount as 2.66% of the total $1.878 million collected. Lines
83:6–85:2 of Matteson’s testimony again discuss the $50,000 offer and mentions
an August 2013 invoice totaling $470,000. Lines 94:21–96:20 of Matteson’s
testimony again discuss the $50,000 offer. For the same reasons discussed above
with respect to this email offer and the total revenues collected from the Duke
Energy litigation, a “For Counsel Eyes Only” designation is not warranted.
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C.
Andrew Capitman Deposition
1.
Lines 17:3–17:15, Lines 19:12–21:25, and Lines 50:1–55:5
Lines 17:3 through 17:15 of Capitman’s testimony discuss a “cross
segment bonus program,” wherein managing directors who refer business outside
of their business segment can receive up to a 5% bonus after the business has
closed. Lines 19:12–21:25 of Capitman’s testimony discuss the cross segment
$25,000 award that Capitman received in recognition for his role in the Duke
Energy litigation recruitment. Lines 50:1–55:55 of Capitman’s testimony discuss
Capitman’s cross segment award for the Duke Energy litigation in more detail,
including Capitman’s understanding about the manner in which the bonus program
is administered.
Plaintiff cites to the cross segment bonus program testimony in his
Response to the Motion for Summary Judgment, and contends that the testimony is
relevant to resolution of the compensation issue central to this litigation.
Accordingly, the public interest in disclosure outweighs the interest Defendant has
in confidentiality, and the Court does not find that a “For Counsel Eyes Only”
designation is warranted.
2.
Lines 55:9–56:10
Lines 55:9–56:10 of Capitman’s testimony discuss Capitman’s
understanding of the revenue generated from the Duke Energy litigation, which
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Capitman estimated at around $6 million. The total revenue obtained over the
course of the litigation is one of the major factual issues underlying Defendant’s
Motion for Summary Judgment and Plaintiff’s Response. Accordingly, the public
interest in disclosure outweighs the interest Defendant has in confidentiality, and
the Court does not find that a “For Counsel Eyes Only” designation is warranted.
D.
Conclusion
Because the Court does not find that Defendant has met its burden to
show a compelling reason to seal the requested evidence as “For Counsel Eyes
Only,” the Court DENIES the Motion to Preserve Confidential Designation (Dkt.
# 30.)
III.
Plaintiff’s Motion to File Under Seal
In his Motion to File Under Seal, Plaintiff asks for the Court’s leave to
file his Response to Defendant’s Motion for Summary Judgment. (Dkt. # 32.)
Plaintiff contends that the Response contains extensive discussions of documents
and deposition testimony that are designated as “Confidential” under the Agreed
Protective Order. (Id. at 1.)
Contrary to Plaintiff’s suggestion, the parties’ decision to designate
documents as confidential does not mandate that the Court seal the record. The
standard for sealing court documents is more stringent than standard for protecting
discovery materials under a protective order. See Udoewa v. Plus4 Credit Union,
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754 F. Supp. 2d 850, 882 (S.D. Tex. 2010) (comparing protective order standards
for discovery set out in In re Terra Int’l Inc., 134 F.3d 302, 306 (5th Cir. 1998) (per
curiam) with the standard for sealing documents set out in Van Waeyenberghe, 990
F.2d at 848). Accordingly, the mere fact that the parties have agreed to designate
the documents as confidential does not demonstrate that sealing those documents
as part of the court record is warranted.
Here, Plaintiff has not even presented a “bare assertion” or “naked
conclusion” of a compelling reason that warrants the sealing of the record. Cf.
Pamlab, L.L.C. v. Brookstone Pharm., L.L.C., No. Civ. A 09-7434, 2010 WL
4363870, at *3 (E.D. La. Oct. 22, 2010) (citing the Second and Sixth Circuits to
support the proposition that general statements that disclosure will harm a party are
insufficient to overcome the public’s common law right of access to court
documents). The Response details Plaintiff’s role in securing Fulbright as a client
on the Duke Energy litigation, the amount of revenue that project brought to
Defendant, and whether Defendant’s bonus scheme properly compensated Plaintiff
for his role in securing that business. The Court cannot locate anything in the
Response that is sufficiently proprietary or secret to warrant the sealing of the
Response.
To the extent that the underlying record materials contain confidential
information or personal information that is immaterial to the Court’s resolution of
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the Motion for Summary Judgment, those materials warrant sealing. As the Court
discussed above, Deposition Exhibit 5 fits in this category, as does Higgins’
deposition testimony regarding his salary. However, absent any additional briefing
from Plaintiff, the Court finds these are the only materials in the Response that
should be filed under seal. Accordingly, the Court GRANTS Plaintiff’s Motion to
File Response Under Seal, insofar as it pertains to Deposition Exhibit 5 and Lines
145:7–146:3 of Higgins’ deposition testimony. The Court DENIES Plaintiff’s
Motion as to the Response to the Motion for Summary Judgment and the
remainder of the accompanying materials.
CONCLUSION
For the aforementioned reasons, the Court DENIES Defendant’s
Motion for Leave to File Sealed Document (Dkt. # 28) and DENIES Defendant’s
Motion to Preserve Confidential Designation (Dkt. # 30). The Court DENIES
Plaintiff’s Motion to File Response Under Seal (Dkt. # 32), except as it relates to
Deposition Exhibit 5 and Lines 145:7–146:3 of Higgins’ deposition testimony,
which it GRANTS. The Court hereby ORDERS Plaintiff to file the Response
with those items redacted for the public record.
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IT IS SO ORDERED.
DATED: Austin, Texas, April 17, 2015.
_____________________________________
David Alan Ezra
Senior United States Distict Judge
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