The opinion of the court was delivered by: Lucy H. Koh United States District Judge
United States District Court For the Northern District of California
ORDER PERMITTING FILING OF AMENDED COMPLAINT; DENYING MOTION TO DISMISS AS MOOT; GRANTING IN PART AND DENYING IN PART MOTION TO FILE UNDER SEAL
On April 11, 2011, Defendants filed a motion to dismiss Plaintiff's Complaint which is set for hearing on July 21, 2011. Pursuant to the briefing schedule set by the Court, Plaintiff's opposition was due June 9, 2011. On that day, rather than filing an opposition, Plaintiff filed an administrative motion to file a First Amended Class Action Complaint ("FAC") under seal.
Because the request to file the amended complaint under seal was filed more than 21 days after Defendant's motion to dismiss, the Court requested clarification as to whether Defendants had 26 stipulated to the amendment. See Fed. R. Civ. P. 15(a) (permitting amendment of the pleadings 27 more than 21 days after service of a Rule 12 motion only with defendants' written consent or leaveof the court). In response, Plaintiff pointed to a stipulation filed by the parties on April 19, 2011, 2 and approved by the Court, in which the parties requested a continuance in order to permit Plaintiff 3 to file an amended complaint. See Stipulation and Order Regarding Stay of Discovery, Case Management, and ADR Deadlines, ECF No. 41. Considering the liberal standard for granting leave to amend under Rule 15, the Court agrees that this stipulation constitutes written consent by Defendants to the filing of an amended complaint. Accordingly, Defendants' motion to dismiss is 7 denied without prejudice as moot, and the July 21, 2011 hearing is vacated. the FAC, and (2) Exhibit A to the FAC. Generally, there is a strong presumption in favor of public 10 access to court records. Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 11 Next, the Court must determine whether Plaintiff should be permitted to file under seal (1) 2003). However, that presumption may be overcome, and court records may be sealed, upon a 12 showing of "compelling reasons."*fn1 Kamakana v. City and County of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006). Plaintiff moves to file the amended complaint and Exhibit A under seal on 14 grounds that certain financial information contained within them has been designed as "Highly Chancery in In re Atheros Communications, Inc. Shareholder Litigation, Case No. 6124-VCN.
Defendants have submitted a declaration, in compliance with Civil Local Rule 79-5(d), in support 18 of Plaintiff's motion. In the declaration, counsel for the Atheros Defendants explains that Exhibit A is a presentation by Atheros's investment advisor, Qatalyst, that contains sensitive and 20 confidential information, including long-term financial projections, discussions of business 21 strategy, and competitive analyses. See Decl. of David M. Furbush ¶¶ 3-5, ECF No. 48. Counsel 22 for the Atheros Defendants states that this document has been designated "Highly Confidential" pursuant to the confidentiality order in the Delaware action. Id. ¶ 3. The Court agrees that the 2 financial information and analysis contained in the Qatalyst Presentation appears to be highly 3 sensitive and confidential. Accordingly, the Court finds compelling reasons justifying sealing of 4 the presentation itself and GRANTS the motion to seal Exhibit A to the FAC.
In contrast, the redacted portions of Plaintiff's FAC merely reference sections of the Qatalyst Presentation and do not disclose any financial projections, business strategies, or 7 competitive analysis. Defendants suggest that this information should be sealed because the 8 protective order in the Delaware action requires sealing of any document that describes or 9 characterizes documents designated "Highly Confidential." However, under Ninth Circuit 10 precedent, a party seeking to seal documents must meet the "compelling reasons" standard even if 11 the documents were previously su bject to a protective order. See Kamakana, 447 F.3d 1179. In this case, the allegations contained in the redacted portions of the FAC appear to be critical to Plaintiff's claims. The "interest in ensuring the public's understanding of the judicial process and 14 of significant public events," id., is not served if the basis for Plaintiff's claim is redacted from his 15 complaint.*fn2 The redacted portions of the FAC appear to reference the Qatalyst Presentation 16 without actually disclosing any confidential information. Neither Plaintiff nor Defendants has 17 presented compelling reasons why these portions of the complaint must be filed under seal.
Accordingly, Plaintiff's motion to file the First Amended Complaint under seal is DENIED without 19 prejudice. If Defendants believe that there are compelling reasons to seal the references to the Rule 79-5(d), articulating "compelling reasons supported by specific factual findings" for sealing 22 the designated portions of the FAC. Kamakana, 447 F.3d 1178. Any amended declaration must be 23 filed by June 29, 2011. If no amended declaration is filed by that date, Plaintiff may file the First Amended Complaint without redactions.
Qatalyst Presentation in the FAC, they must file an amended
declaration, pursuant to Civil Local
Finally, Defendants have pointed out that Plaintiff's amended pleading
is a class action
2 complaint to which the provisions of the Private Securities
Litigation Reform Act ("PSLRA") 3 would seem to apply. Accordingly,
Plaintiff must comply with the notice requirements set forth in
15 U.S.C. § 77z-1(a)(3) within 20 days after the date on which the
FAC is filed. See 15 U.S.C.
§ 77z-1(a)(3)(A)(i) (requiring notice to the purported plaintiff class
"[n]ot later than 20 days after 6 the date on which the complaint is
filed"). If the parties disagree as to whether the notice 7
requirements of the PSLRA apply to this action, they shall meet and
confer and file a statement 8 with the Court outlining their
respective positions by June 29, 2011. 9
In sum, the Court orders as follows:
(1) Defendants' April 19, 2011 stipulation is deemed written consent
to the filing of an
For the Northern District of California
amended complaint. Accordingly, Plaintiff may file an amended
United States District Court
Defendants' motion to dismiss (ECF No. 26) is denied without prejudice
as moot. The July
21, 2011 hearing on Defendants' motion is vacated.
(2) Plaintiff's motion to file Exhibit A under seal is GRANTED. 15
(3) Plaintiff's motion to file the FAC under seal is DENIED without
prejudice. If Defendants
do not file an amended declaration by June 29, 2011, Plaintiff may
file the FAC without
(4) If the parties disagree as to whether the notice requirements of
the PSLRA apply to this 19
action, they must file a statement outlining their positions by June
29, 2011. Otherwise,
Plaintiff shall provide notice as required by 15 U.S.C. §