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Recent Decisions from the District of Arizona Illuminate Ninth Circuit Record Sealing Standards

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Litigation often involves information that a company wants to protect from disclosure in public court records, such valuable technical, financial, and business information that is otherwise kept confidential.  One way of protecting this type of information is to seal court records.  Although courts generally are leery to impede the public’s interest in open access to the courts (and its records), they remain willing to seal records if litigants can demonstrate a genuine risk of harm from disclosure.  In the Ninth Circuit, a party wishing to seal a judicial record must set forth “compelling reasons supported by specific factual findings” of the harm that would arise.  See Kamakana v. City & County of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citations omitted).  But “[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. (citation omitted).      

 Two recent decisions from the District of Arizona provide specific examples of how courts apply these standards.  In TriQuint Semiconductor, Inc. v. Avago Tech. Ltd., No. CV 09-1531-PHX-JAT, 2011 U.S. Dist. LEXIS 120627 (D. Ariz. Oct. 18, 2011), the district court found the “generic assertion that the exhibits are ‘highly confidential’” and generally protected by the party seeking sealing to be insufficient.  Id. at *12.  “[E]nvelop[ing] whole categories of information into the domain of trade secrets without providing an explanation as to how they constitute trade secrets or why they need to be protected” didn’t work.  Id. (refusing to seal documents relating to communications about customers, developments of new products and technology, corporate acquisitions, business strategy and performance, expert reports and depositions, competitive market analysis, customer sales information, and organizational charts insufficient where plaintiff “failed to articulate compelling reasons accompanied by a specific factual basis specifically identifying why [the] documents should be sealed”). 

Similarly, in St. Clair v. Nellcor Puritan Bennett LLC, No. CV-10-1275-PHX-LOA, 2011 U.S. Dist. LEXIS 129152 (D. Ariz. Nov. 7, 2011), the court found insufficient a defendant’s attempt to seal documents.  The defendant “offer[ed] little information or justification other than a one-sentence-fits-all explanation why the so-called confidential information deserves trade secret status and should be sealed.”  Id. at *3.   A trade secret is a “formula, pattern, device, or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.”  Id. at *5 (citation omitted). “[C]onfidentiality alone,” opined the court, “does not transform business information into a trade secret.”  Id. at **4-5. 

Faced with specific evidence of harm resulting from public disclosure of the documents, however, district courts remain willing to seal documents.  In Tri-Quint, for instance, the court sealed documents relating to the terms of a draft patent license agreement, a customer list previously kept secret, third party personnel records and other employment records, and documents concerning a party’s business relations including purchase agreements and confidential settlement documents.  Id. at **9-11, 16-19.  The party seeking to have the document sealed demonstrated specific information within the document that would subject it to harm, if broadcasted, id. at **8-9; demonstrated the prior confidence in which the sensitive information previously was kept, id. at *10; explained the privacy interest of third parties in the information contained in the documents, id. at *11; or specifically identified the trade secrets that would be released if the documents were made public.  Id. at *17.

 In summary, while district courts remain skeptical of requests to seal entire categories of documents, they are willing to seal key documents upon a showing of genuine need.  In the TriQuint case, the court went out of its way to note it appreciated that the party requesting sealing “carefully reviewed each document and diligently limited its redactions only to information that it deems to be the most competitively sensitive.”  Id. at *8.  Partially redacting a document might be better received than simply trying to redact the document in full.  Id. at *18-19.  But, as TriQuint and St. Clair demonstrate, there is no automatic right to seal documents.