Filippini Wealth Management Inc et al vs Meister & Nunes PC
Case No: 19CV00164
Hearing Date: Fri May 24, 2019 9:30

Nature of Proceedings: Motion: Order Allowing Sealing I.E. Redactions to First Amended Complaint

Tentative Ruling: The court denies the motion of plaintiffs Filippini Wealth Management, Inc., Filippini Financial Group, Inc., Ian Filippini, and Alexandro Filippini to seal the unredacted proposed first amended complaint and to file a redacted version in the public record of the case. The court extends the time for plaintiffs to file an unsealed and unredacted first amended complaint to May 31, 2019.

Background: On January 10, 2019, Filippini Wealth Management, Inc., Filippini Financial Group, Inc., Ian Filippini, and Alexandro Filippini (collectively “Filippinis”) filed their complaint against Meister & Nunes, P.C. (“Meister”), alleging causes of action for (1) professional negligence, (2) breach of fiduciary duty, (3) constructive fraud, and (4) violation of B&P Code §§ 17200, et seq.

On February 25, 2019, Meister filed a demurrer and motion to strike. In the demurrer, Meister contended that the complaint fails to allege any factual allegations to support the claims that Meister acted wrongfully, or to support the claims of damage. Meister moved to strike the claim for attorneys’ fees. In their “opposition” to the demurrer and motion to strike, Filippinis acknowledged the insufficiency of the complaint and the impropriety of the fee request, and stated that they would file a partially redacted First Amended Complaint, with tax return and other private financial information filed under seal.

On April 3, 2019, the court sustained the demurrer and granted the motion to strike, with leave to amend on or before April 19, 2019. The court ordered: “To the extent that the Filippini parties believe that the filing of any portion of the FAC under seal is necessary, they may, pursuant to the terms of California Rules of Court, rule 2.551(b)(2) and (4), file a redacted version of the FAC and lodge an unredacted version of the FAC “conditionally under seal” with the Court, simultaneously with the filing and service of a properly constituted-motion permitting portions of the FAC to be filed under seal.”

Motion: Filippinis move to seal the first amended complaint and file a redacted version in the public file. Meister opposes the motion.

“Unless confidentiality is required by law, court records are presumed to be open.” CRC 2.550(c).

“The court may order that a record be filed under seal only if it expressly finds facts that establish: (1) There exists an overriding interest that overcomes the right of public access to the record; (2) The overriding interest supports sealing the record; (3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) The proposed sealing is narrowly tailored; and (5) No less restrictive means exist to achieve the overriding interest.” CRC 2.550(d).

Filippinis want to file the FAC with ¶¶12-17 redacted. They say this contains private financial information, including information on tax returns. As drafted, the proposed FAC does contain private information.

The right of privacy is “an ‘inalienable right’ expressly protected by force of constitutional mandate. (Cal. Const., art. I, § 1.)” Valley Bank of Nev. v. Superior Court, 15 Cal.3d 652, 656 (1975). “[T]he right of privacy extends to one’s confidential financial affairs as well as to the details of one’s personal life. Id. “The California Supreme Court has held that Revenue and Taxation Code section 19282, which prohibits disclosure of tax returns, implicitly creates a privilege against the disclosure of income tax returns. The privilege may be waived by an intentional relinquishment of it. In addition, it is inapplicable where the gravamen of the lawsuit is inconsistent with claiming the privilege, or where a public policy greater than the purpose of the privilege is involved.” Fortunato v. Superior Court, 114 Cal.App.4th 475, 479 (2003) [citations omitted].

While there is an overriding interest in maintaining the privacy of financial information, Filippinis have put their financial information and specifically their tax return information at the center of this case. The court cannot litigate the issues Filippinis raise without the financial information. So the overriding interest in privacy is not present here.

Filippinis argue that the right to privacy remains even when the information is relevant to the litigation. They cite City of Carmel-By-The-Sea v. Young, 2 Cal.3d 259 (1970). But that case is inapposite as the plaintiff attacked the constitutionality of a financial disclosure law. It is not a case where the plaintiff sued a defendant who prepared the plaintiff’s tax returns for professional negligence. Filippinis also cite Harris v. Superior Court, 3 Cal.App.4th 661 (1992), disapproved in Williams v. Superior Court, 3 Cal.5th 531, 557 n8 (2017). In that case, the court considered a subpoena to a third party, not a party to the litigation.

Even if the court found an overriding interest that overcomes the right of public access to the record, that supports sealing the record, and that will be prejudiced if the record is not sealed, the court cannot find the proposed redactions are narrowly tailored. Also, the court would find that there is a less restrictive means to achieve the interest.

The court has reviewed the unredacted proposed FAC. Filippinis have included evidentiary details, including specific dollar amounts that are unnecessary at the pleading stage. A plaintiff need only plead ultimate facts and need not plead probative or evidentiary facts. McCaughey v. H. C. Schuette, 117 Cal. 223, 224 (1897). Filippinis can state their case with ultimate facts. (Meister even suggests this approach, so they are unlikely to demur on the ground that Filippinis fails to allege any factual allegations to support the claims, thought it may demur for other reasons.) Filippinis could allege, for example, that they asked Meister to apply certain income amounts and/or expenses to certain entities/individuals and that Meister applied incorrect amounts or applied amounts to the wrong entities.

Filippinis have failed to make a case that would permit the court to make the findings required by CRC 2.550(d). The court denies the motion of plaintiffs Filippini Wealth Management, Inc., Filippini Financial Group, Inc., Ian Filippini, and Alexandro Filippini to seal the unredacted proposed first amended complaint and to file a redacted version in the public record of the case. The court extends the time for plaintiffs to file an unsealed and unredacted first amended complaint to May 31, 2019.