Case Number: 19STCV26405 Hearing Date: December 17, 2019 Dept: 47

Chad Ruskey v. Jordan Hamburger, et al.

APPLICATION FOR ORDER SEALING DOCUMENTS LODGED CONDITIONALLY UNDER SEAL IN SUPPORT OF MOTION TO COMPEL BINDING ARBITRATION

MOVING PARTY: Defendant Manatt, Phelps & Phillips, LLP

RESPONDING PARTY(S): Plaintiff Chad Ruskey

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is a legal malpractice action. Plaintiff alleges that Defendants represented him and BrandRep, LLC in the sale of BrandRep, LLC to BrandRep Holdings, LLC. He alleges that Defendants never asked him to sign a conflict waiver or suggested they were acting in a capacity adverse to him, but he is now being sued by BrandRep, BrandRep Holdings, and others as a result of Defendants’ malpractice.

Defendant Manatt, Phelps & Phillips, LLP moves to seal documents lodged conditionally under seal in support of its motion to compel binding arbitration.

TENTATIVE RULING:

Defendant Manatt, Phelps & Phillips, LLP’s application for order sealing documents lodged conditionally under seal in support of motion to compel binding arbitration is DENIED.

Defendant may formally withdraw any of the documents lodged conditionally under seal within 10 days of this ruling. (CRC Rule 2.551(b)(6).) If there is no such withdrawal within this time period, all such documents shall be “unsealed” and placed in the public record. If the documents are unsealed, this Court will review and consider them, as relevant, for purposes of the pending motion to compel arbitration.

Unless Defendant Manatt, Phelps & Phillips, LLP’s counsel states unequivocally at the hearing, as to its intention on whether they will either withdraw the documents at issue or not, then the motion to compel arbitration will need to be continued for at least 3 weeks, so that the 10 day period can expire.

Any documents that are timely and formally withdrawn by the lodging party will not be considered for purposes of the pending motion to compel arbitration.

DISCUSSION:

Motion To Seal

Defendant moves to seal documents that it submitted conditionally under seal in support of its motion to compel arbitration.

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

A motion seeking an order sealing the record must be accompanied by “a declaration containing facts sufficient to justify the sealing.” (CRC Rule 2.551(b)(1).) A court may order that a record be filed under seal “only if it expressly finds facts that establish” all of the following:

(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).)

Here, the declarations submitted by Defendants do not satisfy this standard.

Whether there exists an overriding interest that overcomes the right of public access to the record.

Defendant cites attorney-client privilege (as to a third party), attorney work product (as to a third party), and the confidentiality of financial information contained in a document designated “confidential” as its overriding interests in preventing disclosure of its unredacted documents filed in support of its motion to compel arbitration. (Declaration of Corey E. Klein ¶¶ 3-9.)

Attorney-client privilege may be an overriding interest that overcomes the right of public access. (Huffy Corp. v. Superior Court (2003) 112 Cal.App.4th 97, 108 (dictum).) Likewise, one of the documents conditionally filed under seal is an engagement agreement, which is considered a “confidential communication.” (Bus. & Prof. Code § 6149.) A “contractual agreement not to disclose” information may also “constitute an overriding interest” under this Rule. (Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273, 1283 [discussing Rule 243.1(d), the predecessor to Rule 2.550].)

Thus, Defendant has articulated overriding interests that potentially overcome the right to public access to these records. As discussed below, however, Defendant has not shown that these overriding interests overcome the right to public access to the extent that they support sealing the record.

Whether the overriding interest supports sealing the record.

The Declaration of Corey E. Klein does not articulate any specific facts that establish that the overriding interests discussed above support sealing the record. Attorney Klein vaguely refers only to sealing these documents “to avoid waiver and improper public disclosure.” (Klein Decl. ¶ 9.) This is not a sufficient evidentiary showing to overcome the presumed right of public access to the documents. (CRC Rule 2.550(c); Huffy, supra, 112 Cal.App.4th at 108.)

Accordingly, this requirement is not satisfied.

Whether a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed.

Defendant has not presented admissible evidence that the overriding interest will be prejudiced if the record is not sealed. The Klein Declaration does not articulate any specific showing of serious injury to Defendant or a third party; nor that there is a substantial probability of such harm if the record is not sealed.

Defendant has not demonstrated any prejudice to its business interests if it is revealed the parties entered into the October 14, 1998, settlement agreement. No admissible evidence has been presented showing defendant will be harmed if the October 14, 1998, agreement or any of its nonfinancial terms are made public particularly in light of the 88 redactions which have deleted any reference to financial data. The fact the parties entered into the October 14, 1998, settlement agreement is a matter of public record. It is discussed in the complaint which is not sealed. It is discussed at length in the mandate petition filed in this case which is unsealed. Defendant has expressly indicated it is not seeking to seal its mandate petition. The mandate petition: refers 49 times to the October 14, 1998, arbitration and settlement agreement; by doing so, defendant identifies the parties to the agreement; explicitly states that a confidential arbitration has been going on before retired Superior Court Judge Eli Chernow since January 1999; on five different pages identifies the motion picture which gave rise to the dispute, “Private School”; explains Mr. Ben Efraim’s relationship to the dispute; and identifies a relative of Mr. Ben Efraim who has knowledge of some of the facts. Apart from the financial figures which have been redacted, the October 14, 1998 agreement is a routine settlement document. Defendant has presented no evidence that disclosure of any of the substantive provisions as distinguished from the redacted financial terms of the October 14, 1998, agreement will prejudice any legitimate confidential business practice. Finally, the arbitration which has been conducted in secret since January 1999, can continue out of the public eye.

To sum up, no substantial prejudice to the contractual obligation not to disclose has been proven. The heavily redacted October 14, 1998, agreement is not the same document presented to us. Defendant has failed to make any showing of prejudice to any of its legitimate commercial interests if the heavily redacted October 14, 1998, agreement is unsealed.

(Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273, 1284 (bold emphasis added).)

“In delineating the injury to be prevented, specificity is essential. [Citation.] Broad allegations of harm, bereft of specific examples or articulated reasoning, are insufficient.” (In re Cendant Corp., supra, 260 F.3d at p. 194.) We have been unable to find any appellate court decision which construes Publicker to permit sealing of court documents merely upon the agreement of the parties without a specific showing of serious injury. We therefore, with respect, reject defendant’s broad reading of the citation to Publicker in footnote 46 of NBC Subsidiary.

The Third Circuit analysis is consistent with the NBC Subsidiary holding. In NBC Subsidiary, the trial court ordered closure of proceedings where the jury was not present in order to protect the litigants’ fair trial rights. (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at p. 1222.) The Supreme Court agreed that the protection of a fair trial right can be an overriding interest which would justify closure. However, the Supreme Court noted in NBC Subsidiary that the mere assertion of a fair trial cannot support a closure order. The Supreme Court held: “We believe that the trial court’s stated justification—protection of the underlying civil litigants’ right to a fair trial—is, in the abstract, an overriding interest, and that the First Amendment (and hence [Code of Civil Procedure] section 124) do, in an appropriate case, permit closure to protect that interest. The trial court, however, made no finding supporting the proposition that prejudice to that interest was substantially probable absent closure and temporary sealing.” (Ibid., italics & fns. omitted.) The first of the two omitted footnotes in the quoted portion from NBC Subsidiary in the immediately preceding sentence is footnote 46, which refers to Publicker and the right to closure or sealing in furtherance of the potential overriding interest of enforcement of a binding contractual obligation not to disclose. NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at p. 1222, fn. 46; see Publicker Industries, Inc. v. Cohen, supra, 733 F. 2d at p. 1073.) Nonetheless, once it is established there is a potential overriding interest, the party seeking closure or sealing must prove prejudice to that interest is substantially probable. (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at p. 1222.)

(Universal City Studios, supra, 110 Cal.App.4th at 1280-1283 (bold emphasis and underlining added).)

This requirement is not satisfied.

Whether the proposed sealing is narrowly tailored.

The proposed sealing is narrowly tailored to include documents subject to a confidentiality agreement and confidential attorney-client communications. This requirement is met.

Whether any less restrictive means exists to achieve the overriding interest.

A less restrictive means to achieve the overriding interest would be to redact all information pertaining to anyone other than the Plaintiff. To present the arbitration language to which Plaintiff purportedly agreed, for example, Defendant should not need to present any facts pertaining to third parties. If it does, the least restrictive means to accomplish that would be to obtain the third parties’ permission to disclose that information for this narrow purpose and only to the extent necessary to demonstrate Plaintiff’s agreement to arbitrate.

In sum, Defendant has not demonstrated by way of its factual declarations that all of the CRC Rule 2.550(d) requirements for sealing have been met.

Accordingly, the motion to seal the record is DENIED.

Moving party to give notice, unless waived.

IT IS SO ORDERED.

Dated: December 17, 2019 ___________________________________

Randolph M. Hammock

Judge of the Superior Court