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Nucal Foods, Inc v. Quality Egg LLC; et al

January 27, 2012

NUCAL FOODS, INC., PLAINTIFF,
v.
QUALITY EGG LLC; ET AL., DEFENDANTS.



ORDER

This matter comes before the court upon plaintiff's motion for modification of pretrial scheduling order and leave to file first amended complaint. (ECF 47.) This matter was decided without a hearing. For the following reasons, plaintiff's motion is hereby GRANTED.

I. FACTS AND PROCEDURAL HISTORY

Plaintiff filed its complaint on November 18, 2010 against three defendants -- Quality Egg LLC ("Quality Egg"), Wright County Egg, and Hillandale Farms of Iowa, Inc. ("Hillandale") -- alleging seven causes of action: 1) breach of implied warranty of merchantability against all defendants; 2) breach of implied warranty of fitness for particular purpose against all defendants; 3) fraud against Quality Egg and Wright County; 4) negligence against all defendants; 5) equitable indemnification against all defendants; 6) negligent interference with prospective economic advantage against all defendants; and 7) unfair competition against all defendants. (ECF 1.) Quality Egg filed its answer on December 14, 2010 (ECF 9) and Hillandale filed its answer on February 14, 2010 (ECF 24).

The status (pretrial scheduling) order was issued on June 13, 2011, setting February 3, 2012 as the discovery cutoff, June 6, 2012 as the deadline for hearing dispositive motions, July 25, 2012 as the date of the final pretrial conference, and September 10, 2012 as the trial date. (ECF 41.) It also scheduled a settlement conference for July 26, 2011 before Magistrate Judge Hollows. (Id.)

The present motion for modification of pretrial scheduling order and leave to file first amended complaint was filed on August 15, 2011. (ECF 47.) Plaintiff concurrently filed a notice of request to seal documents. (ECF 48.) Quality Egg and Hillandale (together, "defendants") filed their oppositions to plaintiff's motion on October 12, 2011 (ECF 50 & 51). Hillandale also filed a notice of request to seal documents on October 12, 2011. (ECF 52.) Plaintiff filed its reply to defendants' oppositions on October 19, 2011. (ECF 53.)

II. REQUESTS TO SEAL DOCUMENTS

A. Standard

There is a presumption in favor of public access to court records. See Phillips v. Gen. Motors Corp., 307 F.3d 1206, 1210 (9th Cir. 2002). However, "access to judicial records is not absolute." Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006). "[I]f the court decides to seal certain judicial records [after conscientiously balancing the competing interests of the public and the party who seeks to keep certain judicial records secret], it must 'base its decision on a compelling reason and articulate the factual basis for its ruling, without relying on hypothesis or conjecture.'" Id. at 1179 (quoting Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9th Cir. 1995)). "In general, 'compelling reasons' sufficient to outweigh the public's interest in disclosure and justify sealing court records exist when such 'court files might become a vehicle for improper purposes,' such as the use of records to gratify private spite, promote public scandal, circulate libelous statements, or release trade secrets." Id. (quoting Nixon v. Warner Communs., Inc., 435 U.S. 589, 589 (1978)). However, "'good cause' suffices to warrant preserving the secrecy of sealed discovery material attached to nondispositive motions." Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003) (citing Phillips, 307 F.3d at 1213).

B. Plaintiff's Request (ECF 48)

Hillandale does not address plaintiff's request and Quality Egg does not outright object to plaintiff's request to seal; however, Quality Egg does object to the procedures followed by plaintiff. (QE's Opp'n at 4-5.) Quality Egg misinterprets the protective order in its statement that "NuCal was required to file the material under seal, with the option of filing a redacted version in the Court's public file." (Id. at 5.) Rather, the protective order and Local Rule 141 expressly provide that documents may only be sealed by order of the court. (Protective Order at ¶ 12.3, ECF 28.)

Plaintiff's request "is based upon the fact that defendants have designated certain documents as "CONFIDENTIAL" or "HIGHLY CONFIDENTIAL" under the protective order in this case, or have claimed that certain portions of the proposed first amended complaint are subject to the Protective Order." (Pl.'s Notice of Req. to Seal at 1, ECF 48.) The documents and information concern "defendants' knowledge of Salmonella Enteritidis contamination at their Iowa farms in early 2010, their knowledge of Salmonella contamination at facilities that supplied chickens to the Iowa farms in 2010, and their dealings with regulators before and after the nationwide egg recall in August 2010." (Id. at 2.)

Plaintiff indicates that it does not believe these documents and information should be sealed. (Pl.'s Notice of Req. to Seal at 2.) As previously stated, defendants do not address whether a compelling reason exists to seal these documents. See Foltz, 331 F.3d at 1135 (citing Phillips, 307 F.3d at 1213) (finding "'good cause' [only] suffices to warrant preserving the secrecy of sealed discovery material attached to nondispositive motions."); see also CasasMontejano v. Holder, No. 1:11-cv-00670-LJO-SKO, 2011 U.S. Dist. LEXIS 82512, at *2-3 (E.D. Cal. Jul. 28, 2011) (applying compelling reasons standard to grant request to file complaint under seal); In re Nvidia Corp. Derivative Litig., No. C 06-06110 SBA, 2008 U.S. Dist. LEXIS 120077, at *10 (N.D. Cal. Apr. 23, 2008) ("[A] request to seal all or part of a complaint must clearly meet the 'compelling reasons' standard and not the 'good cause' standard." (citing Kamakana, 447 F.3d 1172)). The court finds no compelling reasons to file the complaint and attached exhibits under seal. These documents are not in danger of becoming "'vehicle[s] for improper purposes,' such as . . . to gratify private spite, promote public scandal, circulate libelous statements, or release trade secrets." Kamakana, 447 F.3d at 1179 (quoting Nixon, 435 U.S. at 589). Moreover, "[t]he mere fact that the production of [these] 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." Id. (citing Foltz, 331 F.3d at 1136).

Plaintiff's request to seal is hereby denied.

C. Hillandale's Request (ECF 52)

Hillandale has complied with Local Rule 141 in filing its request to seal. (See Notice of Request, ECF 52.) Neither plaintiff nor Quality Egg have filed oppositions.

Hillandale seeks to seal Exhibits A and B attached to the Declaration of Orland Bethel in opposition to plaintiff's motion to modify the scheduling order and file an amended complaint and Exhibits C and D attached to the Declaration of Gary Bartness in opposition to plaintiff's motion to modify the scheduling order and file an amended complaint. (ECF 51-1 & 51-2.) As described by Hillandale, "[t]hese documents contain purchase agreements, output agreements, pricing information, and other private organizational information about internal workings of the involved companies." (Hillandale's Points and Authorities in Support of Req. to Seal at 3, ECF 52-5.) Hillandale contends that, although the good cause standard applies, there are compelling reasons for sealing these documents. (Id.) Specifically, it contends that these documents "reveal information that could jeopardize the business of Hillandale. Disclosure of this financial information, business strategy, and confidential pricing and output agreements could give Hillandale's ...


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