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Continental Automotive Systems, Inc. v. Avanci, LLC

United States District Court, N.D. California, San Jose Division

December 5, 2019

CONTINENTAL AUTOMOTIVE SYSTEMS, INC., Plaintiff,
v.
AVANCI, LLC, et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S ADMINISTRATIVE MOTION TO FILE UNDER SEAL RE: DKT. NO. 156

          LUCY H. KOH United States District Judge

         On July 31, 2019, a subset of the defendants in this case (the “Moving Defendants”) filed a motion to transfer the case to the Northern District of Texas pursuant to 28 U.S.C. § 1404(a). ECF No. 110. Plaintiff Continental Automotive Systems, Inc. (“Plaintiff”) filed its Opposition to the motion to transfer venue (“Opposition”) on August 28, 2019. ECF No. 157. Before the Court is Plaintiff's administrative motion to seal portions of the Opposition and certain materials attached thereto. ECF No. 156. Having reviewed Plaintiff's submissions and the applicable sealing law, the Court GRANTS in part and DENIES in part the administrative motion to seal.

         I. LEGAL STANDARD

         “Historically, courts have recognized a ‘general right to inspect and copy public records and documents, including judicial records and documents.'” Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 & n.7 (1978)). As the Ninth Circuit has explained, this is a “common law right, ” United States v. Doe, 870 F.3d 991, 996 (9th Cir. 2017), reflecting the American judicial system's longstanding commitment to “the open courtroom, ” Oliner v. Kontrabecki, 745 F.3d 1024, 1025 (9th Cir. 2014). The public policy favoring public access to judicial proceedings applies equally to court records because “court records often provide important, sometimes the only, bases or explanations for a court's decision.” Id. Accordingly, when considering a sealing request, “a strong presumption in favor of access is the starting point.” Id. (internal quotation marks omitted).

         To be precise, the strong presumption of access to judicial records applies fully to filings that are “more than tangentially related to the underlying cause of action.” Ctr. for Auto Safety v. Chrysler Grp., 809 F.3d 1092, 1099 (9th Cir. 2016). That presumption can only be overcome by a showing of “compelling reasons” that “outweigh the general history of access and the public policies favoring disclosure.” Kamakana, 447 F.3d at 1178 (internal quotation marks omitted). The party seeking to seal a judicial record bears the burden of “articulat[ing] compelling reasons supported by specific factual findings.” Id. (internal quotation marks omitted). Compelling reasons justifying the sealing of court records generally exist “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.” Id. at 1179 (quoting Nixon, 435 U.S. at 598). By contrast, “[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. at 1178-79.

         However, the Ninth Circuit has “carved out an exception” to the presumption of access for materials filed in connection with motions that are not “more than tangentially related to the underlying cause of action.” Ctr. for Auto Safety, 809 F.3d at 1099. Because “the public has less of a need for access” to documents that are “unrelated, or only tangentially related, to the underlying cause of action, ” parties moving to seal such documents need only meet the lower “good cause” standard of Rule 26(c) of the Federal Rules of Civil Procedure. Kamakana, 447 F.3d at 1179. Still, the “good cause” standard requires a “particularized showing” that “specific prejudice or harm will result” if the information is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210-11 (9th Cir. 2002) (citation omitted); see Fed. R. Civ. P. 26(c). “Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning” will not suffice. Beckman Indus., Inc. v. Int'l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (citation omitted).

         The Court begins, as it must, with the question of what test to apply to Plaintiff's motion- "the presumptive ‘compelling reasons' standard or the ‘good cause' exception.” Ctr. for Auto Safety, 809 F.3d at 1097.

         In determining whether the good cause exception covers a particular filing, the Ninth Circuit has previously distinguished between “dispositive” and “nondispositive” motions. Ctr. for Auto Safety, 809 F.3d at 1097; see, e.g., In re Midland Nat. Life Ins. Co. Annuity Sales Practices Litig., 686 F.3d 1115, 1119 (9th Cir. 2012) (“This exception is ‘expressly limited to” judicial records filed under seal when attached to a non-dispositive motion.”). Based on this case law, Plaintiff contends that the “good cause” exception applies to the documents at issue in the instant sealing motion, which were filed in connection with a motion to transfer venue. See ECF No. 156 at 1 (quoting Kamakana, 447 F.3d at 1180 (“A ‘good cause' showing under Rule 26(c) will suffice to keep sealed records attached to non-dispositive motions.”)). A motion to transfer venue pursuant to 28 U.S.C. § 1404(a) is indisputably nondispositive.

         In Center for Auto Safety, however, the Ninth Circuit clarified its doctrine in this area. There, the Ninth Circuit rejected the proposition that the compelling reasons test is limited “to only those cases in which the motion at issue is literally dispositive.” 809 F.3d at 1098. The Ninth Circuit held that the appropriate sealing standard instead turns on whether “the motion at issue is more than tangentially related to the underlying cause of action.” Id. at 1099. As the Ninth Circuit pointed out, it had crafted the “good cause” standard for “sealed materials attached to a discovery motion unrelated to the merits of a case.” Id. at 1097 (citing Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1213-14 (9th Cir. 2002)). Indeed, “the ‘good cause' language comes from [Federal] Rule [of Civil Procedure] 26(c)(1), which governs the issuance of protective orders in the discovery process.” Id. The Center for Auto Safety court went on to explain that “[a]pplying the good cause standard from Rule 26(c) as an exception for discovery-related motions makes sense” because “‘much of the information that surfaces during pretrial discovery may be unrelated, or only tangentially related, to the underlying cause of action.'” Id. (citing Phillips, 307 F.3d at 1213). Consequently, “the private interests of litigants are ‘the only weights on the scale'” when sealing a discovery-related motion. Id.

         By contrast, most other litigation in a case “is not literally ‘dispositive,' but nevertheless involves important issues and information to which our case law demands the public should have access.” Id. at 1098. For that reason, said the Ninth Circuit, such nondispositive litigation implicates the “long held interest in ensuring the public's understanding of the judicial process and of significant public events.” Id. (internal quotation marks omitted). The Ninth Circuit's opinion relied in part on the First Circuit's approach, under which “the public has a right of access to ‘materials on which a court relies in determining the litigants' substantive rights' which are ‘distinguished from those that relate merely to the judge's role in management of the trial.'” Id. (quoting United States v. Kravetz, 706 F.3d 47, 54 (1st Cir. 2013). Accordingly, in finding that the compelling reasons standard applies to a motion for a preliminary injunction, the Ninth Circuit emphasized that preliminary injunctions “may certainly affect litigants' substantive rights” and “invoke important Article III powers.” Id. at 1100.

         The upshot of the Center for Auto Safety decision is that nondispositive motions that are “more than tangentially related to the underlying cause of action” remain subject to the compelling reasons standard. Id. at 1101; see Intel Corp. v. Tela Innovations, Inc., No. 3:18-CV-02848-WHO, 2018 WL 4501146, at *3 (N.D. Cal. Sept. 18, 2018). Hence, Plaintiff's argument that the “good cause” standard applies to the instant sealing motion because it concerns a motion to transfer venue is based on an outdated statement of Ninth Circuit law.

         The Ninth Circuit has not decided the specific issue presented by the instant motion- namely, whether a motion to transfer venue pursuant to 28 U.S.C. § 1404(a) falls within the “good cause” exception. Based on the principles in Center for Auto Safety, the Court concludes that the motion to transfer venue is more than tangentially related to the underlying cause of action and therefore applies the compelling reasons standard. A motion to transfer venue under 28 U.S.C. § 1404(a) requires the Court to find that “the transferee district has personal jurisdiction over all of the Defendants.” Ponomarenko v. Shapiro, 287 F.Supp.3d 816, 834 (N.D. Cal. 2018); Hoffman v. Blaski, 363 U.S. 335, 344 (1960). Personal jurisdiction, of course, implicates a litigant's due process rights. Myers v. Bennett Law Offices, 238 F.3d 1068, 1072 (9th Cir. 2001). Thus, although the motion to transfer turns in part on “convenience of parties and witnesses, ” 28 U.S.C. § 1404(a), the motion also “affect[s] [the] litigants substantive rights, ” Ctr. for Auto Safety, 809 F.3d at 1098.

         A motion to transfer may also be closely related to the underlying cause of action where, as here, personal jurisdiction is based on specific jurisdiction-i.e., “jurisdiction for a cause of action that arises out of the defendant's forum-related activities.” Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006). That is because the specific jurisdiction inquiry requires the Court to analyze the underlying cause of action to determine whether it “arises out of the defendant's forum-related activities.” Id. The instant case involves, inter alia, allegations of anticompetitive behavior under the federal antitrust laws. Specific jurisdiction therefore turns in part on whether Defendants' “allegedly anticompetitive behavior is targeted at a resident of the forum, or at the forum itself.” In re Cathode Ray Tube (CRT) Antitrust Litig., 27 F.Supp.3d 1002, 1011 (N.D. Cal. 2014). Hence, unlike “information that surfaces during pretrial discovery” that ultimately proves irrelevant to the suit, see Phillips, 307 F.3d at 1213, the materials sought to be sealed here cannot be said to be merely tangential to the underlying cause of action.

         For these reasons, the Court holds that the “good cause” exception is inappropriate and that the presumptive compelling reasons ...


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