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Rust-Oleum Corp. v. NIC Industries, Inc.

United States District Court, D. Oregon, Medford Division

June 24, 2019

Rust-Oleum Corporation, Plaintiff,
v.
NIC INDUSTRIES, INC., Defendant.

          OPINION AND ORDER

          CLARKE, Magistrate Judge.

         This case comes before the Court on Defendant's Motion to Seal Portions of the Pleadings (#44). For the reasons stated below, Defendant's motion is GRANTED in part and DENIED in part.

         BACKGROUND

         Prior to the parties entering the Stipulated Protective Order, Defendant NIC Industries, Inc. ("NIC") served a third-party supplier[1] with a subpoena requesting documents. Plaintiff Rust-Oleum filed a Motion to Quash and attached three exhibits: (1) NIC's subpoena; (2) NIC's preliminary set of responses to Rust-Oleum's first set of discovery requests; and (3) a Mutual Confidentiality Agreement between Rust-Oleum and the third-party supplier.

         Subsequently, NIC filed a motion to seal the entire case, which the Court denied on February 21, 2019, because NIC had not provided compelling reasons supported by specific factual findings to justify sealing the entire case and had not explained why compliance with the protective order was insufficient to protect its confidential information.

         Now, NIC moves this Court for entry of an order placing the following portions of the pleadings filed before entry of the protective order under seal: Exhibit A (#1-1), Exhibit B (#1-2), and Exhibit C (#1-3) attached to the Complaint; NIC's Answer (#12); and Rust-Oleum's Motion to Quash NIC's Subpoena to the third-party supplier (#25). Plaintiff Rust-Oleum does not agree that any of these documents need to be placed under seal, but formally objects to sealing only its Motion to Quash NIC's Subpoena (#25).

         DISCUSSION

         Historically, courts have recognized a "general right to inspect and copy public records and documents, including judicial records and documents." Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 & n. 7 (1978)). This right is justified by the interest of citizens in "keep[ing] a watchful eye on the workings of public agencies." Id. at 598. Such vigilance is aided by the efforts of newspapers to "publish information concerning the operation of government." Id. Unless a particular court record is one "traditionally kept secret, "[2] a "strong presumption in favor of access" is the starting point. Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003) (citing Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9th Cir.1995)). A party seeking to seal a judicial record bears the burden of overcoming this strong presumption by meeting the "compelling reasons" standard. Id.

         Under the "compelling reasons" standard, the party must "articulate[ ] compelling reasons supported by specific factual findings," id. (citing San Jose Mercury News, Inc. v. U.S. Dist. Ct., 187 F.3d 1096, 1102-03 (9th Cir.1999)), that outweigh the general history of access and the public policies favoring disclosure, such as the "'public interest in understanding the judicial process."' Hagestad, 49 F.3d at 1434 (quoting EEOC v. Erection Co., 900 F.2d 168, 170 (9th Cir. 1990)). In turn, the court must "conscientiously balance[ ] the competing interests" of the public and the party who seeks to keep certain judicial records secret. Foltz, 331 F.3d at 1135. The mere fact that the production of records may lead to a litigant's embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court to seal its records. Foltz, 331 F.3d at 1136. Additionally, the Ninth Circuit has held that reliance on a blanket protective order is not a "compelling reason" that rebuts the presumption of access. Id. at 1138; Becbnan Indus., Inc. v. Int'l Ins. Co., 966 F.2d 470, 475-76 (9th Cir. 1992) (noting that "[t]he extent to which a party can rely on a protective order should depend on the extent to which the order induced the party to allow discovery" and that reliance on a "stipulated ... blanket protective order" does not justify sealing court records).

         Finally, the Court treats judicial records attached to dispositive motions differently from records attached to non-dispositive discovery motions. Kamakana, 447 F.3d at 1180. Those who seek to maintain the secrecy of documents attached to dispositive motions must meet the high threshold of showing that "compelling reasons" support secrecy. Id. (citing Foltz. 331 F.3d at 1136). A "good cause" showing under Rule 26(c) will suffice to keep sealed records attached to non-dispositive discovery matters. Id. Under Local Rule of Civil Procedure 26-4, the "good cause" standard for non-dispositive discovery matters requires the moving party to show with respect to each particular material or category of materials that specific prejudice or harm will result if no order is granted. Further, the showing must articulate why, as an alternative to filing under seal, the information sought to be protected could not be redacted. Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the requirements of this rule. LR 26-4 (See Fed. R. Civ. P. 26(c)). The Court has broad discretion to consider all of the competing interests, including the presumption of public access and whether or not a party has made a particularized showing of harm or specific prejudice that will result from unsealing such records. Kamakana, 447 F.3d at 1187 (affirming the district court's order to unseal documents attached to non-dispositive motions).

         In this case, the judicial documents that NIC seeks to have sealed are not dispositive. However, amongst the documents that NIC seeks to seal is its own Answer to Plaintiffs Complaint, which contains the trade secret counterclaim that has become the heart of the dispute in this case. Therefore, while NIC need not show a "compelling reason" to seal the documents at issue, the Court will consider the strong presumption in favor of public access when it evaluates whether NIC has shown "good cause" under LR 26-4.

         i. Exhibits A, B, & C Attached to Plaintiffs Complaint

         NIC moves for an order sealing Exhibit A (#1-1), Exhibit B (#1-2), and Exhibit C (#1-3) attached to Rust-Oleum's Complaint because the exhibits "disclose the identity of the products NIC sold to Rust-Oleum as well as confidential price information, the identity of the parties and their business relationship." NIC's Memo in Support of Motion at 2 (#47). The parties agreed to keep this information confidential by written contract. After review of these documents, the Court finds that NIC showed good cause to have these exhibits sealed.

         ii. ...


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