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Inc. v. Lee

United States District Court, N.D. California

July 17, 2019

C2 EDUCATIONAL SYSTEMS, INC., Plaintiff,
v.
SUNNY LEE, et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART ADMINISTRATIVE MOTIONS TO SEAL RE: DKT. NOS. 78, 81

          SUSAN ILLSTON, UNITED STATES DISTRICT JUDGE.

         The parties have each filed administrative motions to seal various documents filed in relation to defendants' motion for summary judgment. Dkt. Nos. 78, 81. The Court has issued a separate order on the summary judgment question and now rules here on the motions to seal.

         With the exception of a narrow range of documents that are “traditionally kept secret, ” courts begin their sealing analysis with “a strong presumption in favor of access.” Foltz v. State Farm Mut. Auto. Ins., 331 F.3d 1122, 1135 (9th Cir. 2003). When applying to file documents under seal in connection with a dispositive motion, the submitting party bears the burden of “articulating 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 and County of Honolulu, 447 F.3d 1172, 1178-79 (9th Cir. 2006) (internal quotations and citations omitted). The Ninth Circuit has explained:

Under this stringent standard, a court may seal records only when it finds a compelling reason and articulates the factual basis for its ruling, without relying on hypothesis or conjecture. The court must then conscientiously balance the competing interests of the public and the party who seeks to keep certain judicial records secret. What constitutes a “compelling reason” is best left to the sound discretion of the trial court. Examples include when a court record might be used to gratify private spite or promote public scandal, to circulate libelous statements, or as sources of business information that might harm a litigant's competitive standing.

Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1096-97 (9th Cir. 2016) (citations, internal quotation marks, and alterations omitted). In addition, all requests to file under seal must be “narrowly tailored, ” such that only sealable information is sought to be redacted from public access. Civil L.R. 79-5(b).

         I. Defendants' Motion to Seal Exhibits C and O

         Defendants move to seal Exhibits C and O filed in support of their motion for summary judgment because plaintiff designated these documents as confidential during discovery. Dkt. No. 78. Plaintiff has filed a declaration from Andrew Lobo, C2's Chief Human Resources Officer, in support of sealing these exhibits. Dkt. No. 80.

         Exhibit C contain excerpts of Lobo's Rule 30(b)(6) deposition transcript, which the parties seek to seal in its entirety. In his declaration, Lobo states that the “excerpts contain confidential information about the criteria C2 uses to evaluate district managers and center managers, particularly Defendants, and C2's compensation criteria.” Dkt. No. 80, Lobo Decl. ¶ 8. Exhibit O, Lobo explains, “contains a student contract and a true and correct copy of C2's refund and payment policies.” Id. ¶ 9. Lobo states that “C2 does not publicly disclose the information in the student contract and addendum attached as Exhibit O . . . [n]or does it disclose details of particular employee compensation or its incentive criteria contained in Exhibit C. It does not disclose the details of how it evaluates employees for incentive payment or details about particular employees, including assessments of its managers.” Id. ¶ 10. Citing the competition in the Bay Area for managers and clients of tutoring centers, Lobo states that these two exhibits “especially when considered collectively, contain competitively sensitive information related to the manner and means by which C2 contracts with and provides refunds to clients and also the way it evaluates its managers and compensates employees.” Id. ¶ 11.

         Having reviewed the two exhibits, the Court finds that they fail to meet the standard for filing under seal. First, neither document is narrowly tailored such that only sealable material is sought to be redacted. Defendants move to file both documents under seal in their entirety, and plaintiff has made no subsequent corrections to redact those documents more narrowly. Each exhibit contains information that can hardly be characterized as sealable, such as numerous “I don't recall” responses in the Lobo deposition and blank spaces on the student contract that request the student's first name and last name. Second, none of the information in either exhibit appears to be information that plaintiff took steps to safeguard or that another party privy to the information could not disclose. For instance, Exhibit O is a blank form of C2's student contract and refund policies. Presumably, any student who signs up with C2 receives a copy of these policies and is at liberty to share them as he or she wishes. Exhibit O does not contain the private information of any particular student; it is simply a blank contract form. Similarly, Exhibit C contains information such as defendant Lee's annual salary at ¶ 2, which Lee could presumably share publicly if she so wished. The deposition also contains information that defendants received “incentive compensation” tied to the sales performance of the centers they managed, but it lacks any specific detail about how this compensation is structured. It can hardly be considered a trade secret that a tutoring business provides some form of compensation to its managers on the basis of sales levels. None of the remaining information in the excerpts of the Lobo deposition could be construed as sealable, particularly where a substantial portion of the responses in the excerpts consist of “I don't recall.”

         The Court DENIES defendants' motion to seal Exhibits C and O. Defendants must publicly file these exhibits on the docket within seven days of the date of this Order.

         II. Plaintiff's Motion to Seal

         Plaintiff has filed a motion to seal various exhibits filed in support of its opposition brief. Dkt. No. 81. These are: portions of the declaration of Pam Dhillon; Exhibit 1 attached to the Dhillon declaration; and Exhibits 16-20, 26-28, and 36-37 attached to the declaration of David Thatcher. Defendants have filed a declaration in support of sealing Exhibits 16-20, 26-28, and 36-37 attached to the Thatcher declaration. Dkt. No. 83. The Court hereby rules as follows.

         Portions of the declaration of Pam Dhillon: DENIED. Plaintiff seeks to redact the portions of the Dhillon declaration that contain the dollar amounts of refunds given to clients in a given month. This information is relevant to plaintiff's claim for intentional interference with contractual relations, for part of that claim involves the theory that defendants set C2 up to issue full refunds to clients so that the clients could then leave C2 and go to Core. Plaintiff is the party who has put this information at issue in the case. Plaintiff says nothing specific in support of sealing this particular information besides the general statement that “C2 does not publicly disclose the information in the Dhillon Declaration . . ., including the amount of sales and refunds for its centers.” Dkt. No. 81-1, Lobo Decl. ¶ 9. This does not meet the “compelling reasons” standard for sealing. Additionally, the amount of each refund is known to a third party (i.e., the student who received the refund) and nothing prohibits them from disclosing the amount of the refund. Nor does the declaration contain confidential student information; only one student is referenced individually and he or she is referred to as “a student” or “the student.” Plaintiff shall publicly file an unredacted version of the Dhillon declaration on the docket within seven days of the date of this Order.

         Portions of Exhibit 1 to the Dhillon declaration:GRANTED. This is a C2 spreadsheet showing, student by student, the students who signed up for services or received refunds at the Cupertino Center during certain months in 2017 and 2018. It contains information, by student, on the amount of payment they made (or refund they received) and for how many hours of services. Plaintiff provides this document as support for the figures given in the Dhillon declaration. The public's interest in accessing this document is lessened by the Court's above ruling that the Dhillon declaration shall be publicly filed, particularly when balanced against the confidential student information that the ...


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