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Basaraba v. Greenberg

United States District Court, Ninth Circuit

August 26, 2013

Gloria Basaraba
Robert Greenberg, et al.


PHILIP S. GUTIERREZ, District Judge.

Proceedings: (In Chambers) Order DENYING Plaintiff's application to file Complaint under seal

Before the Court is Plaintiff Gloria Basaraba's application to file her Verified Shareholder

Derivative Complaint ("Complaint") under seal. See Dkt. # 1. The Court finds this matter appropriate for decision without oral argument. See Fed.R.Civ.P. 78(b); L.R. 7-15. After considering Plaintiff's unopposed submission, the Court DENIES Plaintiff's application.

I. Introduction

Plaintiff Gloria Basaraba ("Plaintiff") brings this shareholder derivative action against Defendants Robert Greenberg, Michael Greenberg, Jeffrey Greenberg, David Weinberg, Jennifer Weiderman, [1] Richard Siskind, Geyer Kosinski, Morton Erlich, Richard A. Rappaport, and Thomas Walsh (collectively, the "Individual Defendants"), and nominal defendant Skechers U.S.A., Inc. ("Skechers"), claiming that the Individual Defendants breached their fiduciary duties to Skechers' shareholders by, among other things, marketing Skechers' "Shape-ups" line of rocker-bottom shoes under the false pretense that "Shape-ups" would improve their wearers' physical fitness. Compl. ¶¶ 1-17. Plaintiff asserts causes of action for: (1) breach of fiduciary duty; (2) gross mismanagement; (3) waste of corporate assets; and (4) unjust enrichment. Id. ¶¶ 203-229.

On July 15, 2013, Plaintiff submitted an application to file her entire Complaint under seal, pursuant to Federal Rule of Civil Procedure 5.2(d) and Local Rule 79-5.1. See Dkt. # 1. Plaintiff states that her application "is being made to comply with the parties' Confidentiality Agreement, " Application 2:5-2:6, which counsel for Plaintiff and counsel for Skechers executed after Plaintiff demanded access to certain Skechers books, records, and company documents, including "certain of [Skechers'] Board of Director minutes, Audit Committee Minutes, Board materials, and promotional materials related to Skechers' Footware Toning' products." Id. 3:2-3:10. The Confidentiality Agreement (the "Agreement") designates all information produced by Skechers to Plaintiff in response to Plaintiff's demand as "Confidential Information, " with exceptions for information already generally available to the public and information available to the Plaintiff from certain other sources. Id., Ex. A at ¶¶ 1, 17. The Agreement further provides that:

Any document containing Confidential Information filed by the [Plaintiff] or on her behalf in a court proceeding shall be filed under seal subject to a confidentiality order consistent with the terms of this Agreement restricting access to such document and the information therein to the court in which such action is filed and court personnel. In the event that the [Plaintiff] or [Plaintiff's] Counsel files any document containing Confidential Information under seal, but the court requires a public version of the document to be made available, [Skechers] shall, within the time required by the applicable Court rules or order of the Court, file a redacted version of any such document, omitting only that information which the Company believes in good faith should remain confidential.

Id., Ex. A. at ¶ 10.

Neither Skechers nor the Individual Defendants have objected to Plaintiff's application.

II. Legal Standard

There is a strong presumption in favor of public access to court records, grounded in the common law right "to inspect and copy public records and documents, including judicial records and documents." Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 (1978); see 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)); San Jose Mercury News, Inc. v. United States District Court, 187 F.3d 1096, 1102 (9th Cir. 1999).

To overcome this presumption, "[a] party seeking to seal a judicial record... must articulate compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process." Kamakana v. City & County of Honolulu, 447 F.3d 1172, 1178-79 (9th Cir. 2006) (internal citations, quotations, and alterations omitted). Conclusory statements that documents are confidential do not satisfy this standard. Id. at 1182; see Foltz, 331 F.3d at 1130-31 (explaining that even under the more lenient "good cause" standard applicable to unfiled discovery materials, the movant "bears the burden... of showing that specific prejudice or harm will result if no protective order is granted").

The court hearing the application to seal must then "base its decision on a compelling reason and articulate the factual basis for its ruling, without relying on hypothesis or conjecture." Hagestad, 49 F.3d at 1434 (citing Valley Broad. Co. v. United States District Court, 798 F.2d 1289, 1294 (9th Cir. 1995)); see also In re Midland Nat'l Life Ins. Co. Annuity Sales Practices Litig., 686 F.3d 1115, 1119 (9th Cir. 2012) (per curiam) (citing ...

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