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United Tactical Systems, LLC v. Real Action Paintball, Inc.

United States District Court, N.D. California

May 9, 2017

REAL ACTION PAINTBALL, INC., et al., Defendants.


          MARIA-ELFMA JAMES United States Magistrate Judge


         On April 27, 2017, Plaintiff and Counter-Defendant United Tactical Systems, LLC and related Counter-Defendants Advanced Tactical Ordnance Systems, LLC (“ATO”); Perfect Circle Projectiles LLC; Gary Gibson; Tactical Air Games, Inc.; Tyler Tiberius; United Tactical Systems Holdings, LLC; and United Tactical Systems Intermediate Holdings, LLC (collectively, “Plaintiff and Counter-Defendants”) filed a motion to file under seal documents filed in connection with their Motion for Summary Judgment (“MSJ”). Dkt. No. 378. Having considered the parties' arguments, the record in this case, and the relevant legal authority, the Court issues the following order.


         There is a “strong presumption in favor of access” by the public to judicial records and documents accompanying dispositive motions. Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178-79 (9th Cir. 2006) (citing Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). To overcome this presumption, a “party must articulate compelling reasons supported by specific fact[s].” Id. at 1178 (internal quotation marks and citation omitted); see also Apple, Inc. v. Samsung Elecs. Co., 727 F.3d 1214, 1223 (Fed. Cir. 2013) (finding sealing appropriate where companies “filed declarations from employees” that “explained the measures the two companies take to keep their product-specific financial information confidential” and “the harm they would suffer if their product-specific financial information were made public”). Indeed, such showing is required even where “the dispositive motion, or its attachments, were previously filed under seal or protective order.” Kamakana, 447 F.3d at 1179.


         The compelling reasons standard applies to documents filed in connection with the MSJ. Center for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1098 (9th Cir.), cert. denied sub nom. FCA U.S. LLC v. Ctr. for Auto Safety, 137 S.Ct. 38 (2016). Plaintiff and Counter-Defendants seek to seal in full or in part the MSJ (Dkt. No. 379) and several Exhibits thereto (Glaspy MSJ Decl., Dkt. No. 382), as well as portions of their Separate Statement of Undisputed Facts (SSUF, Dkt. No. 378-6).

         A. Exhibit 85 and Documents Discussing Exhibit 85

         Exhibit 85 consists of a Confidential Settlement Agreement between ATO and nonparty Conrad Sun. Glaspy Decl. ¶ 4, Dkt. No. 378-1. On April 2, 2015, the Court granted in part Plaintiff and Counter-Defendants' Motion to Seal the Settlement Agreement, which Plaintiffs Real Action Paintball, Inc. and K.T. Tran (collectively, “Real Action”) had filed as part of their Opposition to Counter-Defendants Michael Blumenthal and David Piell's[1] Motion to Dismiss. Sealing Order, Dkt. No. 135; Opp'n, Dkt. No. 131. Finding the Motion to Dismiss was non-dispositive, the Court applied the good cause standard applicable to such motions. Sealing Order at 4-5. The Court granted the motion to seal on the condition that Plaintiff and Counter-Defendants file a declaration showing good cause existed for their request. Id. at 7. Plaintiff and Counter-Defendants submitted two declarations in response (Blumenthal Decl., Dkt. No. 135; Suppl. Blumenthal Decl., Dkt. No. 137), and the Court redacted those portions on its Order Denying the Motion to Dismiss that discussed the Settlement Agreement (see Dkt. No. 138 at 13, 17-18).

         Because Plaintiff and Counter-Defendants now seek to file the Settlement Agreement as part of their Motion for Summary Judgment, the Court revisits the issue of sealing this document under the more stringent compelling reasons standard. Padraic Glaspy, Plaintiff and Counter-Defendants' counsel, declares that “[t]he Confidential Settlement Agreement is, by its own terms, confidential, and the information contained therein regarding the terms and financial structure of the settlement is confidential and competitively sensitive material as to, Plaintiff, Counter-Defendants, and third parties.” Glaspy Decl. ¶ 4; see Id. (describing Settlement Agreement as “trade secret[] and competitively sensitive material”). Glaspy further avers that publicly disclosing the Settlement Agreement would create a substantial risk of serious harm to Plaintiff and Counter-Defendants, as

Plaintiff anticipates that it may eventually have other disputes with third parties regarding its trademark and trade dress rights, and the public disclosure of the terms of the Confidential Settlement Agreement with Sun would put Plaintiff at a significant disadvantage in attempting to resolve any such disputes as the Sun agreement would, essentially, set a floor for any deal a future party would be willing to agree to.


         These arguments are largely the same as those Plaintiff and Counter-Defendants' asserted when they previously sought to seal the Settlement Agreement. See Blumenthal Decl. ¶ 3 (“A negotiated for term of the 'Confidential Settlement Agreement' was that it would be kept confidential by the parties.”); id. ¶ 4 (“UTS anticipates that it will eventually have other disputes over its trademark and trade dress rights. The public disclosure of the terms of the Confidential Settlement Agreement impedes UTS's ability to effectively negotiate settlements to resolve those disputes because the parties infringing on UTS's rights will be able to find, in the public record, the terms agreed to by ATO and Sun.”); id. ¶ 6 (“If made public, entities negotiating with UTS over trademark, trade dress and trade secret disputes would seek to leverage the terms of the settlement agreement to maximize the best possible outcome for them-at the expense of UTS.”). The Court redacted the information Blumenthal showed was sealable under the good cause standard; however, “[a] 'good cause' showing will not, without more, satisfy a 'compelling reasons' test.” Kamakana, 447 F.3d at 1180.

         That the Settlement Agreement “by its own terms” is designated confidential does not relieve Plaintiff and Counter-Defendants of their burden to show compelling reasons to seal the document. See Bernstein v. Target Stores, Inc., 2013 WL 5807581, at *3 (N.D. Cal. Oct. 28, 2013) (“The existence of a confidentiality provision [in a settlement agreement], without more, does not constitute good cause, let alone a compelling reason, to seal.”); Select Portfolio Servicing v. Valentino, 2013 WL 1800039, at *3 (N.D. Cal. Apr. 29, 2013) (The “motion to file under seal is supported by a sole declaration, which ...

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