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Obesity Research Institute, LLC v. Fiber Research International, LLC

United States District Court, S.D. California

November 2, 2017



          Hon.Cynthia Bashant United States District Judge

         Presently before the Court are a number of motions by the parties to file documents under seal. (See ECF Nos. 340, 346, 365, 392, 404, 418.) The motions were filed with many of the substantive briefs filed by the parties, including briefs related to Defendant Fiber Research International, LLC's (“FRI”) motion for partial summary judgment and Plaintiff Obesity Research Institute, LLC's (“ORI”) cross motion for summary judgment. Both of these motions were opposed and each party replied to the respective opposition. FRI also refiled its request for leave to file under seal documents filed in connection with ORI's motion to exclude Dr. Fahey as an expert witness.

         Due to the volume of the parties' requests, the Court will refer to each motion by its Electronic Case Filing number (“ECF No.”) on the docket for the purposes of this order.


         “[T]he courts of this country recognize a general 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). “Unless a particular court record is one ‘traditionally kept secret, ' a ‘strong presumption in favor of access' is the starting point.” Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citing Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). “The presumption of access is ‘based on the need for federal courts, although independent-indeed, particularly because they are independent-to have a measure of accountability and for the public to have confidence in the administration of justice.” Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1096 (9th Cir. 2016) (quoting United States v. Amodeo, 71 F.3d 1044, 1048 (2d Cir. 1995)).

         A party seeking to seal a judicial record bears the burden of overcoming the strong presumption of access. Foltz, 331 F.3d at 1135. The showing required to meet this burden depends upon whether the documents to be sealed relate to a motion that is “more than tangentially related to the merits of the case.” Ctr. for Auto Safety, 809 F.3d at 1102. When the underlying motion is more than tangentially related to the merits, the “compelling reasons” standard applies. Id. at 1096-98. When the underlying motion does ot surpass the tangential relevance threshold, the “good cause” standard applies. Id.

         “In general, ‘compelling reasons' sufficient to outweigh the public's interest in disclosure and justify sealing court records exists when such ‘court files might have 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.” Kamakana, 447 F.3d at 1179 (quoting Nixon, 435 U.S. at 598). However, “[t]he mere fact that the production of 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). The decision to seal documents is “one best left to the sound discretion of the trial court” upon consideration of “the relevant facts and circumstances of the particular case.” Nixon, 435 U.S. at 599.

         Federal Rule of Civil Procedure 26(c), generally, provides the “good cause” standard for the purposes of sealing documents. See Kamakana, 447 F.3d at 1179. The test applied is whether “‘good cause' exists to protect th[e] information from being disclosed to the public by balancing the needs for discovery against the need for confidentiality.” Pintos v. Pac. Creditors Ass'n, 605 F.3d 665, 678 (9th Cir. 2010) (quoting Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1213 (9th Cir. 2002)). Under Rule 26(c), only “a particularized showing of ‘good cause' . . . is sufficient to preserve the secrecy of sealed discovery documents[.]” In re Midland Nat. Life Ins. Co. Annuity Sales Practices Litig., 686 F.3d 1115, 1119 (9th Cir. 2012) (emphasis added); see also Kamakana, 447 F.3d at 1180 (requiring a “particularized showing” of good cause). “Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.” Beckman Indus., Inc. v. Int'l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992). Moreover, a blanket protective order is not itself sufficient to show “good cause, ” let alone compelling reasons, for sealing particular documents. See Foltz, 331 F.3d at 1133; Beckman Indus., 966 F.2d at 476; San Jose Mercury News, Inc. v. U.S. District Court, N. Dist., 187 F.3d 1096, 1103 (9th Cir. 1999).


         A. ECF No. 340

         In ECF No. 340, FRI seeks leave to file under seal portions of its memorandum of points and authorities in support of its motion for partial summary judgment in addition to twenty-eight exhibits to the Fitzgerald Declaration (Exhibits 24-25, 36-37, 40, 48-49, 51-52, 56-58, 67-68, 70-78, 84-87). The parties are in agreement to seal Exhibits 48-49 and 51-52. (ECF No. 340 at 2-3; ECF No. 350 at 4.) FRI argues for sealing portions of its memorandum and Exhibits 40, 86-87, and 90 while ORI argues for sealing Exhibits 24-25, 36-37, 56-58, 67-68, 70-78, and 84-85. The parties oppose the sealing of each other's documents.

         The majority of the exhibits relates to proprietary product testing and formulation information. Both parties state that Exhibits 48-49 and 51-52 include proprietary information, such as testing methodologies and results and product specifications. (ECF No. 340 at 3-4; ECF No. 350 at 4.) They further argue that the information in these documents “could allow a competitor to reverse engineer” either Propol or Lipozene and “irreparably damage” the parties if made public. (ECF No. 340 at 3; ECF No. 350 at 4.) ORI states that Exhibits 25 and 57 contain “foundational formulas for various iterations ORI's KGM-based products, including Lipozene's precursors Fiberthin and Propolene.” (ECF No. 350 at 5.) Likewise, ORI argues that Exhibits 56 and 58 discuss propriety testing results and methodologies; Exhibits 67-68 reveal information relating to ORI's “proprietary KGM blend;” Exhibits 70-78 contain propriety information, such as “viscosity test results” and “technical product specifications;” and Exhibits 84-85 are certificates of analysis from ORI's supplier that reveals “proprietary KGM blend, which is the same material used in Lipozene.” (Id.) The parties' explanations appear to be consistent with the Court's assessment of the relevant exhibits.

         A handful of exhibits contain propriety or sensitive business information. Exhibit 24 is a 1998 distribution agreement between Shimizu and ORI's former supplier. ORI argues that disclosure of the agreement in its entirety “could pose significant competitive harm to ORI, ” though only a couple provisions relating to ordering and material specifications appear to have competitive value. (ECF No. 350 at 6.) Exhibits 36 and 37 are emails between ORI and its suppliers, and ORI argues that they contain proprietary information regarding its quality control process, product specifications, and pricing. ORI explains that the disclosure of this information could put ORI and its non-party supplier at a “competitive disadvantage.” (Id. at 6.) Likewise, Exhibit 87 is a document detailing specific pricing information of Shimizu's Propol that FRI argues a competitor could improperly use. (ECF No. 340 at 5-6; ECF No. 363 at 2.) Other than portions of Exhibit 24, the parties' explanations appear to be consistent with the Court's assessment of the relevant exhibits.

         FRI conclusively states that Exhibit 40 is a “confidential” business and marketing plan. The Court finds this reasoning inadequate and unsupported. Upon review, the document seems to contain general, vague marketing statements with publically available testing (e.g. FRO-0090-92), rather than internal or sensitive marketing plans or business strategies that warrant sealing. See, e.g., United States v. Celgene Corp., No. CV 10-3165 GHK (SS), 2016 WL 6609375, at *4 (C.D. Cal. Aug. 23, 2016) (sealing business and marketing plans reflecting “internal discussions and plans”); In re Lidoderm Antitrust Litig., No. 14-md-02521-WHO, 2016 WL 4191612, at *26-27 (N.D. Cal. Aug. 9, 2016) (finding “good cause” to seal portions of “business strategies” document that was supported by a sworn declaration).

         FRI does not provide any reasoning for sealing Exhibits 86 or 90 other than providing a conclusory, inadequate statement that the Court should seal these documents, which it then appears to abandon in its reply. (ECF No. 340 at 3-4; ECF No. 363 at 2 (“[T]he Court should find compelling reasons exist to seal at least Exhibits 40, 48-49, 51-52, and 87.”).)

         Lastly, FRI argues that the unredacted version of its memorandum should be sealed for the same reasons as above because it incorporates the same proprietary information contained in the related documents. (ECF No. 340 at 3-4.) FRI should assure the redactions in its memorandum are consistent ...

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