Wilkes v. Quicken Loans, Inc.
Filing
249
MEMORANDUM OPINION AND ORDER denying 218 , 228 , 234 & 240 MOTIONS to Seal. Signed by Judge Joseph R. Goodwin on 5/6/2014. (cc: attys; any unrepresented party) (tmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
ALISHA KINGERY,
Plaintiff,
v.
CIVIL ACTION NO. 2:12-cv-01353
QUICKEN LOANS, INC.,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending before the court are several motions to seal [Dockets 218, 228, 234, 240] filed by
Quicken Loans, Inc. (“Quicken”). Two of Quicken’s motions seek to seal or redact exhibits and
memoranda filed in connection to its motion for summary judgment [Dockets 218, 234]. The other
two relate to exhibits and memoranda filed in connection with Ms. Kingery’s motion for class
certification [Dockets 228, 240]. For the reasons discussed below, the motions are DENIED.
I.
Legal Standard
Generally, “all documents filed for the Court’s consideration in a civil case, even if not the
subject of a judicial decision, are subject to presumptive access.” Walker Sys. v. Hubbell, Inc., 188
F.R.D. 428, 429 (S.D. W. Va. 1999). According to our Local Rules, public inspection of court
documents “is necessary to allow interested parties to judge the court’s work product in the cases
assigned to it.” Loc. R. Civ. P. 26.4(b)(1). As a result, “[t]he rule may be abrogated only in
exceptional circumstances.” Id.
Pursuant to Local Rule of Civil Procedure 26.4(b)(2), a motion to seal must be
accompanied by a memorandum of law that contains:
(A) the reasons why sealing is necessary, including the reasons why alternatives
to sealing, such as redaction, are inadequate; (B) the requested duration of the
proposed seal; and (C) a discussion of the propriety of sealing, giving due regard
to the parameters of the common law and First Amendment rights of access as
interpreted by the Supreme Court and our Court of Appeals.
Loc. R. Civ. P. 26.4(b)(2).
“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 Dep’t of State
Police v. Washington Post, 386 F.3d 567, 575 (4th Cir. 2004) (citing Stone v. Univ. of Md. Med.
Sys. Corp., 855 F.2d 178, 180 (4th Cir. 1988)). The common law right affords presumptive access
to all judicial records and documents. Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 597 (1978);
Stone, 855 F.2d at 180. Materials that fall within the common law right may be sealed only if
“countervailing interests heavily outweigh the public interests in access,” and “[t]he party seeking
to overcome the presumption bears the burden of showing some significant interest that outweighs
the presumption.” Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253 (4th Cir. 1988).
“[C]lass certification documents are judicial records subject to the common law right of access.”
Cochran v. Volvo Grp. N. Am., LLC, 931 F. Supp. 2d 725, 728 (M.D.N.C. 2013).
“In contrast to the common law, ‘the First Amendment guarantee of access has been
extended only to particular judicial records and documents.’” Virginia Dep’t of State Police, 386
F.3d at 575 (quoting Stone, 855 F.2d at 180). Specifically, documents filed in connection with a
summary judgment motion in a civil case fall within the First Amendment analysis. Rushford, 846
F.2d at 253. When discovery materials are used as “part of a dispositive motion, they los[e] their
status as being ‘raw fruits of discovery,’ and that discovery, ‘which is ordinarily conducted in
private, stands on a wholly different footing than does a motion filed by a party seeking action by
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the court.’” Virginia Dep’t of State Police, 386 F.3d at 576 (quoting Rushford, 846 F.2d at 252).
The public’s First Amendment right of access can be overcome only when “the denial [of access]
is necessitated by a compelling governmental interest, and is narrowly tailored to serve that
interest.” Globe Newspaper Co. v. Superior Court, 457 U.S. 596, 606-07 (1982); Press–Enterprise
Co. v. Superior Court, 478 U.S. 1, 15 (1986); Virginia Dep’t of State Police, 386 F.3d at 573. “The
burden to overcome a First Amendment right of access rests on the party seeking to restrict access,
and that party must present specific reasons in support of its position.” Virginia Dep’t of State
Police, 386 F.3d at 575.
Whether the source arises from the First Amendment or the common law, it “may be
abrogated only in unusual circumstances.” Stone, 855 F.2d at 182. In Virginia Department of State
Police, the Fourth Circuit outlined the procedure I must follow in making a determination
regarding sealing:
When presented with a request to seal judicial records or documents, a district
court must comply with certain substantive and procedural requirements. As to
the substance, the district court first “must determine the source of the right of
access with respect to each document,” because “[o]nly then can it accurately
weigh the competing interests at stake.”
A district court must then weigh the appropriate competing interests under the
following procedure: it 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.
386 F.3d at 576 (citations omitted). This framework also applies when a party seeks to redact a
document, i.e., seal a document in part. See United States v. Moussaoui, 65 F. App’x 881, 889 (4th
Cir. 2003).
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II.
Discussion
As an initial matter, Quicken’s four motions to seal were docketed on March 21, 2014,
April 4, 2014, April 11, 2014, and April 17, 2014. Since these dates, the public has not objected to
Quicken’s motions. Accordingly, I find that the procedural requirements of sealing have been met.
Because Quicken’s interests in sealing or redacting exhibits would be insufficient under the
common law or First Amendment standard, I find it unnecessary to distinguish between
documents filed in connection with Quicken’s motion for summary judgment and Ms. Kingery’s
motion for class certification.
In its motions, Quicken seeks to redact memoranda filed in support of Ms. Kingery’s
motion for class certification and her response to Quicken’s motion for summary judgment. In
addition, Quicken seeks to redact or seal exhibits filed in connection with its motion for summary
judgment and Ms. Kingery’s motion for class certification. This information falls into three
categories: (1) exhibits containing or describing communications between Quicken and its counsel
regarding its compliance with 15 U.S.C. § 1681g(g), (2) email correspondence, sworn testimony,
and other materials discussing Quicken’s interpretation of the statute, the procedures it would use
to implement that interpretation, and the policy reasons underlying those procedures, and (3)
sworn testimony and other documents describing the software Quicken uses to process loans and
deliver credit disclosures. I discuss each category in turn.
A. Communications Between Quicken and its Counsel Regarding Compliance
with 15 U.S.C. § 1681g(g)
Quicken moves to seal exhibits that include or describe communications between Quicken
and its counsel regarding its compliance with 15 U.S.C. § 1681g(g). Generally, communications
between a party and its counsel are confidential because attorney-client privilege covers these
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communications. However, as Quicken admits in its briefing, it “waived the attorney-client
privilege on the narrow subject matter of its compliance efforts in 2004 for the limited purpose of
this litigation[.]” (Mem. in Supp. of Mot. to Seal [Docket 241], at 5). Quicken does not offer any
other reasons as to why its interest in sealing these communications overrides the public’s
common law and First Amendment right to access judicial records. Accordingly, I DENY
Quicken’s motion to seal with respect to this category of information.
B. Exhibits Concerning Quicken’s Interpretation of 15 U.S.C. § 1681g(g), the
Procedures it Used to Implement that Interpretation, and the Rationale
Supporting those Procedures
Quicken also seeks to seal exhibits that it contends are trade secrets. According to Quicken,
these exhibits document Quicken’s “internal efforts to comply with the new credit score disclosure
requirement in § 1681g(g).” (Mem. in Supp. of Mot. to Seal [Docket 241], at 5). For example,
Quicken argues that exhibits 4, 5, and 6, attached to Ms. Kingery’s opposition to summary
judgment, and exhibits 1, 2, and 3, attached to Ms. Kingery’s motion for class certification,
“contain internal discussions between Quicken Loans’ compliance team and in-house counsel
about Quicken Loans’ procedures to provide credit score disclosures to consumers and its policy
rationale behind these procedures, which are protectable trade secrets.” (Mem. in Supp. of Mot. to
Seal [Docket 241], at 5; Mem. in Supp. of Mot. to Seal [Docket 235], at 4-5). Quicken claims that
it would be harmed by the disclosure of this information because competitors could adopt identical
policies and procedures.
For several reasons, I find Quicken’s arguments without merit. First, exhibits 2 and 4 focus
on Quicken’s speculation about what the statute means and what it requires. (See Ex. 2, Amy
Bishop’s 30(b)(6) Dep. Tr. [Docket 220-2]; Ex. 4, Email “Credit Score Notice” [Docket 230-4]).
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Although trade secrets are defined broadly, “they must still be a ‘formula, pattern, device or
compilation of information which is used in one’s business, and which gives [the owner] an
opportunity to obtain an advantage over competitors . . . .’” Minter v. Wells Fargo Bank, N.A., 258
F.R.D. 118, 122 (D. Md. 2009) (quoting 3 Jack B. Weinstein, Weinstein’s Federal Evidence §
508.04 (2d ed. 2009)). This language “suggests that trade secrets are more than ‘sensitive business
information,’ they are sophisticated, innovative methods or inventions that are the result of human
creativity and ingenuity.” Id. at 122-23. I can find no authority that suggests that a company’s
private interpretation of a statute is a trade secret.
Second, the other exhibits, 1, 3, 5, and 6, only discuss in general terms how Quicken would
implement the disclosure requirement and its policy rationale for providing a disclosure at a
particular time. (See Ex. 1, Email “VMP Compliance E-Letter 8-27-2004” [Docket 220-1]; Ex. 3,
Email “New Form required by FTC for compliance with Fair and Accurate Credit Transactions
Act” [Docket 220-3]; Ex. 5, Email “New Client Disclosure” [Docket 230-5]; Ex. 6, Email “New
Client Disclosure” [Docket 230-6]). Even if such information constituted a trade secret, it is
unlikely that a competitor could take this generic information and duplicate the procedures used by
Quicken. Moreover, Quicken does not provide any evidence that suggests its fear of harm is
warranted. See Adjabeng v. GlaxoSmithKline, LLC, No. 1:12-cv-568, 2014 WL 459851, at *3
(M.D.N.C. Feb. 5, 2014) (“In this case, it is not apparent from looking at the information that it is
obviously confidential, nor is it obvious that disclosure would harm GSK. While GSK contends in
its brief that its competitive and financial interests would be harmed by public disclosure of this
information because intellectual property is core to its business and would be valuable to its
competitors, there is no evidence supporting these contentions. Statements in a brief are not
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evidence and are insufficient to justify a motion to seal, at least in the absence of a stipulation or
joint representation by all parties which details the confidential nature of the information.”
(citations omitted)). Accordingly, I DENY Quicken’s motion with respect to these exhibits.
C. Exhibits Describing Software Quicken Uses to Process Loans and Deliver
Credit Disclosure
Finally, Quicken seeks to seal certain exhibits that “describe Quicken Loans’ proprietary
software applications that Quicken Loans built to support lead development and loan origination.”
(Mem. in Supp. of Mot. to Seal [Docket 241], at 6). These exhibits include (1) sworn testimony
that describe the functions, features, and programming logic of Quicken software and (2)
screenshots of the Loan Origination and Lead Allocation’s (“LOLA”) interface and LOLA audit
reports of Ms. Kingery’s lead. Quicken argues its “proprietary software applications, and the
programming logic behind these applications, are protectable trade secrets that should be sealed.”
(Id.). Quicken further claims that other companies could use this information to create competitive
software and thus put Quicken at a competitive disadvantage.
The sworn testimony that Quicken seeks to seal contains only generalized descriptions of
how a loan is processed through Quicken’s software applications. It is unlikely that this testimony
would divulge trade secrets. See Zahran v. Trans Union Corp., No. 01-cv-1700, 2002 WL
31010822, at *3 (N.D. Ill. Sept. 9, 2002) (finding in FCRA action that the general description of
how to “access consumer dispute history or similar screens” and “the function commands,
keystrokes, data entry instructions, and general computer codes” in training manual was not trade
secret information). Like the court in Zahran, I do not see “how a competitor will be advantaged if
information relating to which keystrokes access which screens in the database is disclosed[.]” Id.
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Moreover, Quicken’s arguments are belied by its public filing of Kevin Lang’s declaration,
which describes Quicken’s software applications in even more detail than the sworn testimony.
(See generally Ex. G, Kevin Lang’s Decl. [Docket 216-7]). As a result of this filing, the basic
function of Quicken’s software has been in the public record since Quicken filed its motion for
summary judgment on March 21, 2014. “There is no compelling governmental interest in
protecting information that is already public.” VCA Cenvet, Inc. v. Chadwell Animal Hosp., LLC,
No. JKB-11-1763, 2013 WL 1818681, at *2 (D. Md. Apr. 29, 2013). Finally, it is unlikely that a
competitor, without LOLA’s source code, could replicate LOLA based on the LOLA screenshots
and reports. Accordingly, I DENY Quicken’s motion to seal with respect to these exhibits. 1
III.
Conclusion
For the reasons discussed above, Quicken’s motions to seal [Dockets 218, 228, 234, 240]
are DENIED.
The court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER:
1
May 6, 2014
Quicken also argues that these documents and exhibits should be sealed because on two prior occasions the
Magistrate Judge permitted the sealing of similar information. (See Order [Docket 181]; Order [Docket 182]).
However, those orders are distinguishable because Quicken’s motions were unopposed and the merits of the motions
were not examined.
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