Sciabacucchi et al v. Barton et al

Filing 42

ORDER granting Plaintiffs' #35 Motion to Seal. The Clerk shall maintain a copy of the verified consolidated shareholder complaint (Dkt. No. #37 ) under seal until further order of the Court. Signed by U.S. District Judge John C Coughenour. (TH)

THE HONORABLE JOHN C. COUGHENOUR

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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IN RE ZILLOW GROUP, INC.
SHAREHOLDER DERIVATIVE
LITIGATION.

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Master File No.: C17-1568-JCC
ORDER

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This matter comes before the Court on Plaintiffs’ motion to seal (Dkt. No. 35). Having

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thoroughly considered the parties’ briefing and the relevant record, the Court finds oral argument

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unnecessary and hereby GRANTS the motion for the reasons explained herein.

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I.

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BACKGROUND
This is a shareholder derivative action brought for the benefit of nominal defendant

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Zillow, Inc., against current and former members of Zillow’s board of directors and executive

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officers, seeking to remedy Defendants’ breaches of fiduciary duties and unjust enrichment. (See

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Dkt. No. 36-1 at 2.) The case is related to a parallel securities class action currently before the

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Court, in which the plaintiffs allege that Zillow and its executives made materially false and

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misleading statements regarding the legality of its “co-marketing” advertising program. See In re

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Zillow Secs. Litig., Case No. C17-1387-JCC, Dkt. No. 47 (W.D. Wash. 2018). In that case, the

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Court recently denied the defendants’ motion to dismiss the second amended complaint (Dkt.
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No. 54), and the defendants have since filed their answer. (Dkt. No. 55.)

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In this action, the parties entered into a non-disclosure agreement to allow Zillow to

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designate certain documents it was producing to Plaintiffs pursuant to a books and record

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demand as confidential. (Dkt. No. 35 at 1.) Plaintiffs subsequently included some of that

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designated confidential information in their verified consolidated shareholder complaint. (Id.; see

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Dkt. No. 36-1.) Plaintiff’s filed this motion pursuant to Local Civil Rule 5(g), asking the Court

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for permission to file and maintain an unredacted copy of the verified consolidated shareholder

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complaint under seal. (Dkt. No. 35 at 1.) Defendants have filed a brief in support of Plaintiffs’

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motion. (Dkt. No. 40.)

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II.

DISCUSSION

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A.

Legal Standard

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“There is a strong presumption of public access to the court’s files.” W.D. Wash. Local

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Civ. R. 5(g). When a party wishes to file a document under seal because it contains information

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that another party has designated as confidential, the parties “must meet and confer to determine

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whether the designating party will withdraw the confidential designation or will agree to redact

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the document so that sealing is unnecessary.” W.D. Wash. Local Civ. R. 5(g)(1)(A). If the parties

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are unable to agree to removal or redaction of the confidential material, the filing party may

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move to file and maintain the document under seal. See W.D. Wash. Local Civ. R. 5(g)(2)(B).

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To overcome the presumption of public access to the court’s files, there must be a

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“compelling reason” for sealing sufficient to outweigh the public’s interest in disclosure. Ctr. for

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Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1101 (9th Cir. 2016) (applying the

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“compelling reason” test to motions to seal documents that are “more than tangentially related to

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the merits of a case”). Courts in the Ninth Circuit have employed the “compelling reason”

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standard to motions to seal an unredacted copy of a complaint. See, e.g., Williams & Cochrane,

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LLP v. Quechan Tribe of the Fort Yuma Indian Reservation, 2017 WL 7362744, slip op. at 2

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(S.D. Cal. 2017) (“District courts generally conclude that the ‘compelling reasons’ standard
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applies because the complaint initiates the civil action.”).

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B.

Plaintiffs’ Motion to Seal

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The parties have complied with the procedural requirements for filing an unredacted copy

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of the verified consolidated shareholder complaint under seal. See W.D. Wash. Local Civ. R.

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5(g). Plaintiff has redacted a total of 4 paragraphs from the 133-paragraph complaint. (See Dkt.

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No. 36-1 at 19–20.) Defendants argue that this information should remain sealed because it is

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confidential business information provided to Zillow’s board of directors during a non-public

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meeting. (Dkt. No. 40 at 4.)

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Having reviewed the redacted information, the Court concludes that Defendants have

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demonstrated a compelling reason to file and maintain a copy of the unredacted complaint under

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seal. The redacted information is confidential business information presented to Zillow’s board

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of directors the disclosure of which could adversely affect future deliberations by the board.

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Moreover, the redacted information has little public value aside from the inherent value of

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allowing complete access to the Court’s records. See Hill v. Xerox Corp., Case No. C12-0717-

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JCC, Dkt. No. 113 (W.D. Wash. 2014). Finally, the Court finds that the redactions are a small

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portion of the overall complaint and will not impair the public’s ability to understand the nature

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or basis of Plaintiffs’ claims.

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III.

CONCLUSION

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For the foregoing reasons, Plaintiffs’ motion to seal (Dkt. No. 35) is GRANTED. The

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Clerk shall maintain a copy of the verified consolidated shareholder complaint (Dkt. No. 37)

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under seal until further order of the Court.

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DATED this 30th day of July 2019.

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John C. Coughenour
UNITED STATES DISTRICT JUDGE

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ORDER
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