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Pyro Spectaculars North, Inc. et al v. Steven Souza

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA


March 8, 2012

PYRO SPECTACULARS NORTH, INC. ET AL., PLAINTIFFS,
v.
STEVEN SOUZA, DEFENDANT.

The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge

ORDER

On March 5, 2012, plaintiffs Pyro Spectaculars, Inc.; Pyro Spectaculars North, Inc.; and Pyro Events, Inc. ("PSI") filed a motion for a preliminary injunction along with a request to file documents under seal. (Dkt. No. 41.) In particular, plaintiffs request to seal excerpts and exhibits from the depositions of defendant Steven Souza and defendant's wife Sherry Souza, which constitute Attachments A and B to the Declaration of Jennifer M. Holly in support of plaintiffs' motion for a preliminary injunction. (Dkt. Nos. 39, 41.) These documents comprise 311 pages total and have been consecutively numbered from 1-311.

Based on the "strong presumption of access to judicial records," parties requesting to seal judicial records pertaining to dispositive motions bear the burden of overcoming the presumption by meeting the "compelling reasons" standard. Kamakana v. City and County of Honolulu, 447 F.3d 1172, 1179 (9th Cir. 2006); Pintos v. Pac. Creditors Ass'n, 605 F.3d 665, 678-79 (9th Cir. 2010). The Ninth Circuit explained that "the resolution of a dispute on the merits, whether by trial or summary judgment, is at the heart of the interest in ensuring the public's understanding of the judicial process and of significant public events." Kamakana, 447 F.3d at 1179 (internal quotations omitted). By contrast, "the public has less of a need for access to court records attached only to non-dispositive motions because those documents are often unrelated, or only tangentially related, to the underlying cause of action." Id. (internal quotations omitted).

The Ninth Circuit has not decided whether a motion for a preliminary injunction constitutes a dispositive motion for purposes of sealing court records, and district courts within the Ninth Circuit are divided on the issue. See Selling Source, LLC v. Red River Ventures, LLC, 2011 WL 1630338, at *4 (D. Nev. Apr. 29, 2011) (dispositive); Dish Network, LLC v. Sonicview USA, Inc., 2009 WL 2579052, at *1 (S.D. Cal. Aug. 20, 2009) (dispositive); In re Nat'l Sec. Agency Telecomm. Records Litig., 2007 WL 549854, at **3-4 (N.D. Cal. Feb. 20, 2007) (not dispositive). In In re Nat'l Sec. Agency Telecomm. Records Litig., the court drew a distinction between a motion that determines the "resolution of a dispute on the merits" and one that merely involves "consideration" of the merits. In re Nat'l Sec. Agency Telecomm. Records Litig., 2007 WL 549854, at *3. That court held that "a preliminary injunction motion is not dispositive because, unlike a motion for summary adjudication, it neither resolves a case on the merits nor serves as a substitute for trial." Id. at *4. However, in Dish Network, LLC, the court held that a motion for a preliminary injunction is dispositive for purposes of sealing court records, because it "directly addresses the merits of the action and seeks injunctive relief before trial." Dish Network, LLC, 2009 WL 2579052, at *1. It further noted that motions for injunctive relief are recognized as dispositive in other contexts. Id. (citing 28 U.S.C. § 636(b)(1)).

This court finds the reasoning in Dish Network, LLC persuasive. Indeed, requests for injunctive relief involve "significant discussion of the merits of the case and provide the public an insight into how the court evaluates the merits of the action." Selling Source, LLC, 2011 WL 1630338, at *5. Unlike non-dispositive motions, motions for a preliminary injunction usually do not involve documents that are unrelated or only tangentially related to the underlying causes of action. Accordingly, plaintiffs must show compelling reasons to seal materials attached to their motion for a preliminary injunction.

"Under the compelling reasons standard, a district court must weight relevant factors, base its decision on a compelling reason, and articulate the factual basis for its ruling, without relying on hypothesis or conjecture." Pintos, 605 F.3d at 679 (internal quotations omitted). "Relevant factors include the public interest in understanding the judicial process and whether disclosure of the material could result in improper use of the material for scandalous or libelous purposes or infringement upon trade secrets." Id. at n.6 (internal quotations omitted).

The court has reviewed the deposition transcripts and exhibits proposed to be sealed and finds that only document nos. 51, 79-81, 86-94, 96, 103-110, 113-17, and 308-311 may be sealed under the compelling reasons standard outlined above. These documents contain the names of customers, contact persons, passwords, and/or details about employee compensation and commission structure that are related to the parties' proprietary business operations and potential trade secrets. When such material is submitted, there are compelling reasons to seal it, because possible infringement of trade secrets or misuse of such proprietary information outweighs the general public interest in understanding the judicial process.

However, the court finds that the remaining documents do not warrant sealing, because they do not include trade secret or other proprietary business information. For example, PSI proposes to seal all versions of its employee handbook, which contains generic information regarding vacation, overtime, harassment in the workplace, etc., and is distributed to all employees upon hire. PSI also proposes to seal copious pages of deposition testimony without any specific reference to customers, customer contacts, specific financial information, etc. This is not the type of information for which compelling reasons to seal exist. Moreover, it is improper to simply designate all excerpts of a deposition transcript and exhibits for sealing without limiting the scope to specific pages and exhibits containing trade secret and proprietary information. This resulted in significant waste of the court's time and resources. The parties are hereby put on notice that any future requests to file documents under seal shall specifically and narrowly limit the exact pages and documents proposed to be sealed. Failure to do so will result in denial of the request to seal.

In light of the above, IT IS HEREBY ORDERED THAT:

1. PSI's request to file documents under seal (dkt. no. 41) is granted in part and denied in part. The request is granted with respect to document nos. 51, 79-81, 86-94, 96, 103-110, 113-17, and 308-311 and denied in all other respects.

2. PSI shall submit a PDF copy of the documents covered by this sealing order in accordance with E.D. Cal. L.R. 141(e)(2)(i) within three (3) days of this order. The Clerk of Court is hereby directed to file such documents under seal once received.

3. PSI shall file in the public record a supplemental declaration of Jennifer M. Holly in support of its motion for preliminary injunction, attaching the unsealed portions of the deposition transcripts and exhibits in accordance with this order, within three (3) days of this order.

4. Pursuant to E.D. Cal. L.R. 141(b), PSI should have submitted a self-addressed, stamped envelope to the Clerk of Court for the return of the paper documents previously submitted in regards to the request to file documents under seal, whereupon the Clerk of Court would return the paper documents to PSI's counsel via mail. Since no stamped envelope was presented, counsel for plaintiff shall make arrangements to pick up the documents in chambers.

20120308

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