Reed Smith Client Alerts

Autoren: James C. Martin Anne M. Grignon

The recent decision of Oliner v. Kontrabecki, 745 F.3d 1024 (9th Cir. 2014) highlights the potential risks of filing sensitive documents under seal in court. In Oliner, the parties agreed to seal all documents related to the proceedings in order to avoid embarrassment, annoyance and a negative impact on the defendant’s business endeavors. Nevertheless, the district court denied the parties’ joint request to seal the record, and the 9th Circuit Court of Appeals affirmed.

Oliner shows that the final word on whether documents can be filed under seal or remain under seal rests with the courts, not the parties. It also underscores that the parties’ sensitivities in wanting court-filed materials kept confidential and out of public view are not determinative in whether sealing requests will be granted or upheld. A careful evaluation therefore must be made concerning the relevant statutory or substantive law dealing with sealed documents before a decision is made to file confidential or sensitive information with a court.

Background Legal Principles Courts expressly recognize the public’s First Amendment and common law right of access to public documents, including judicial records. See, e.g., Oliner, 745 F.3d at 1025-26; Universal City Studios, Inc. v. Super. Ct., 110 Cal. App. 4th 1273, 1280 (2003). Notably, even non-parties may intervene to challenge the propriety of a sealing order, provided they satisfy constitutional standing requirements. Company Doe v. Public Citizen, 2014 WL 1465728, at *14 (4th Cir. Apr. 16, 2014). Given the strong presumption of public access, even parties’ agreements to file documents under seal do not guarantee that a court will grant a request to seal. See Oliner, 745 F.3d 1024.

And, even if a request to seal is granted, a court may later order previously sealed documents to be unsealed. See, e.g., Company Doe, 2014 WL 1465728, at *23 (holding a district court sealing order violated the public right of access); see also In re Pradaxa (Diabigatran Etexilate) Products Liability Litigation, 2014 WL 321656, at *4 (S.D. Ill. Jan. 29, 2014) (ordering a German drug maker to de-designate 85 documents previously marked as confidential and ordering the court clerk to unseal the documents).

Similarly, courts may find that secret or confidential information becomes “stale” over time and thus rule that a previous confidential designation no longer applies. See Salomon Smith Barney, Inc. v. HBO & Co., 2001 WL 225040, at *2 (S.D.N.Y. Mar. 7, 2001) (although there may have been reasons to mark documents as confidential at the time they were generated, there was insufficient cause shown “for so treating them today”).

The presumption of public access is not absolute, but parties seeking a sealing order must do more than make conclusory assertions of harm. In the 9th Circuit, parties must demonstrate “good cause” or “compelling reasons” by making a particularized showing of harm. “Good cause” is generally required when the information to be sealed is attached to a nondispositive motion; information attached to dispositive motions, however, requires a higher showing of “compelling reasons.” See AmerGen Energy Company, LLC v. U.S., 115 Fed. Cl. 132, 137-38 (2014).

Broad, conclusory allegations of harm, without specific concrete examples, do not meet either standard. AmerGen Energy, 115 Fed. Cl. at 143. Instead, parties must “articulate the specific prejudice or harm that will flow from disclosure.” Id. at 147. Certain types of harm, like harm to company reputation, may not be sufficient to rebut the public right of access. Brown & Williamson Tobacco Corp. v. FTC, 710 F.2d 1165, 1179 (6th Cir. 1983).

Sealing Records in the Trial Courts The laws and rules governing requests to seal vary among jurisdictions. Those who are seeking to seal documents in state or federal court, whether trial or appellate, should be certain to check the rules in their jurisdiction, as they are sure to vary.

In California state court, unless “confidentiality is required by law, court records are presumed to be open.” California Rules of Court (“CRC”), Rule 2.550(c). Under California law, only certain narrow categories of information, like certain family law or juvenile records, or medical information, are automatically excluded from the public record. See, e.g., Cal. Fam. Code § 7643(a); Cal. Welf. & Inst. Code § 827(a)(1); Cal. Civ. Code § 56.10.

In deciding whether to file documents under seal, trial courts must make express findings of fact that establish that (1) there is an overriding interest supporting sealing the record that (2) overcomes the public’s First Amendment right to access the record; (3) there is a substantial probability of prejudice if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means to protect a party’s rights exist. CRC, Rules 2.550 and 2.551. Some trial courts have additional requirements for sealing requests. Be aware that any party, member of the public, or the trial court on its own motion, may move to unseal the record in the trial court. CRC, Rule 2.551(h).

In federal district court, a number of judicially developed rules govern sealing requests. Except for records that are “traditionally kept secret,” such as grand jury indictments, there is a strong presumption in favor of public access. This presumption may be overridden for “good cause” when a particularized harm such as embarrassment or expense will result from disclosure, and when the related private interests outweigh the public interests in access. Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178-80 (9th Cir. 2006); Phillips ex rel. Estates of Byrd v. General Motors Corp., 307 F.3d 1206, 1210 (9th Cir. 2002); see Fed. R. Civ. P., Rule 26(c).

Federal courts also have imposed varying local rules that apply to sealing requests, such as the Central District of California’s rule that no document may be filed under seal without prior court approval, and that all sealed documents must be filed in paper format and cannot be filed electronically. See Central District Local Rules, Rule 79-5. The Northern District of California requires that a party file an administrative motion to file a document under seal, including a redacted and an unredacted version of any document sought to be sealed, unless the party is seeking to file the entire document under seal. See Northern District Local Rules, Rule 79-5.

Sealing Records in Appellate Courts On appeal, different procedures apply in California state court, depending on whether a party is requesting a sealing order in the first instance or seeking to continue a sealing order issued by the trial court. CRC, Rules 8.45 and 8.46. The Court of Appeal may, on its own motion, unseal any documents sealed by the trial court. See, e.g., Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc., 198 Cal. App. 4th 1366, 1387 (2011) (ordering unredacted versions of parties’ briefs to be unsealed and directing trial court to revisit its sealing orders on remand).

Parties requesting to seal documents in the federal Courts of Appeals must check the various circuit rules to determine what requirements apply. In the 9th Circuit, documents filed under seal must generally be filed under seal in paper format, together with an unsealed, separately captioned notification setting forth the reasons for sealing. 9th Circuit Rule 27-13.

Appealability and Review of Orders A state trial court’s decision regarding a motion to seal is appealable as a collateral order. Mercury Interactive Corp. v. Klein, 158 Cal. App. 4th 60, 77 (2007) (a sealing order is appealable “because it is a ‘final determination of a collateral matter in that it directs the performance of an act—i.e., unsealing—against defendants’”); In re Providian Credit Card Cases, 96 Cal. App. 4th 292, 297 n.2 (2002) (same). Typically, the trial court’s decision on a sealing order is reviewed for abuse of discretion. Providian, 96 Cal. App. 4th at 299-300. A court has broad discretion but must make express factual findings supporting sealing any documents. CRC, Rule 2.550; Providian, 96 Cal. App. 4th at 302-03 (confirming the same).

In the 9th Circuit, sealing orders are appealable under the collateral order doctrine, so long as the order conclusively decides the question, resolves the issue completely separate from the merits, and would be effectively unreviewable on appeal. In re Copley Press Inc., 518 F.3d 1022, 1025 (9th Cir. 2008). A party lacking standing to appeal directly may seek appellate review by a writ of mandamus; but in that case, the party must be able to demonstrate that failure to receive immediate review of the trial court’s order sealing documents will seriously injure the party’s First Amendment rights. Oregonian Pub. Co. v. U.S. Dist. Court for Dist. of Oregon, 920 F.2d 1462, 1465 (9th Cir. 1990).

As in state court, federal sealing orders are reviewed for abuse of discretion, Kamakana, 447 F.3d at 1178 n.3, but the reviewing court looks carefully at whether the trial courts are correctly applying the “good cause” and “compelling reasons” standards. See, e.g., Apple Inc. v. Samsung Elec. Co. Ltd., 727 F.3d 1214, 1222–23 (Fed. Cir. 2013) (holding the district court erred by requiring “compelling reasons” rather than “good cause” for documents attached to nondispositive motions).

Practical Tips Given the presumption favoring public disclosure, a party contemplating a sealing request should carefully consider whether the confidential documents are necessary to an in-court adjudication. If the answer is “yes,” review the rules related to sealing to determine whether the materials meet the statutory requirements. Also, a party should seriously evaluate whether any First Amendment rights weigh in favor of disclosure. Those rights will be part of the court’s consideration and likely could be determinative of its ruling.

Should a party decide to make a motion to seal, consider the following:

  • Make a particularized showing of harm supported by evidence showing the prejudice that will result if confidential information is disclosed. Be aware that harm to company reputation, embarrassment, and blanket assertions of “confidential” business information may be rejected as insufficient to overcome the presumption favoring the public right of access.
  • Narrowly tailor sealing requests. Courts look more favorably on requests to seal a small number of documents than multiple or voluminous documents. Do not group documents into broad categories, thereby forcing the court to hunt for the sensitive information.
  • If the information in documents subject to the sealing request is older, be prepared to demonstrate why it remains sensitive such that it should be sealed or remain sealed today.
  • Check the local rules in your jurisdiction, as they are sure to vary. Follow the intricate procedural requirements closely, particularly in the trial court if an appeal is contemplated, because any misstep may prevent sealing on appeal.
  • Be aware of the risks. A trial court can reject a request to seal and may also order that previously sealed documents be unsealed, upon the request of nonparty intervenors or on its own motion. Additionally, the appellate courts on their own motion or upon request by unrelated third parties may also unseal documents sealed by the trial court, even if your client is no longer part of the lawsuit.

Client Alert 2014-163