Case Name: Machine Zone, Inc. v. Peak Web LLC
Case No.: 2015-1-CV-288498 (lead case)

These consolidated actions arise from a business dispute between Machine Zone, Inc., a Palo Alto-based developer of mobile games, and Peak Web LLC, which contracted to provide data hosting services to Machine Zone pursuant to agreements executed in March of 2015.

On January 19, 2016, in Case No. 2015-1-CV-288498, Peak filed applications for a temporary restraining order and order to show cause regarding a preliminary injunction (the “TRO Application”) and for a right to attach order and writ of attachment or, alternatively, a temporary protective order (the “Right to Attach Application”). The parties now move to file under seal various documents lodged in connection with those applications. In addition, Machine Zone moves to seal the unredacted version of Peak’s complaint in Case No. 2015-1-CV-288681.

All of the motions to seal are unopposed.

I. Legal Standard

“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.” (Cal. Rules of Court, rule 2.550(d).)

“Courts have found that, under appropriate circumstances, various statutory privileges, trade secrets, and privacy interests, when properly asserted and not waived, may constitute overriding interests.” (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 298, fn. 3.) In addition, confidential matters relating to the business operations of a party may be sealed where public revelation of the information would interfere with the party’s ability to effectively compete in the marketplace. (See Universal City Studios, Inc. v. Superior Court (Unity Pictures Corp.) (2003) 110 Cal.App.4th 1273, 1285-1286.)

Where some material within a document warrants sealing, but other material does not, the document should be edited or redacted if possible, to accommodate both the moving party’s overriding interest and the strong presumption in favor of public access. (Cal. Rules of Court, rule 2.550(d)(4), (5).) In such a case, the moving party should take a line-by-line approach to the information in the document, rather than framing the issue to the court on an all-or-nothing basis. (In re Providian, supra, 96 Cal.App.4th at p. 309.)

II. Peak’s January 19th Motion to Seal Portions of Pleadings Lodged in Support of its Applications

On January 19, 2016, Peak filed a motion to seal portions of the following unredacted documents lodged in support of its applications: (1) the declaration of Jeffrey Papen in support of the TRO Application; (2) the memorandum of points and authorities in support of the TRO Application; (3) the declaration of Jon Billow in support of the Right to Attach Application; and (4) the memorandum of points and authorities in support of the Right to Attach Application. The versions of these documents that were publicly filed with Peak’s applications are almost entirely redacted.

Peak indicated that it was “unable to provide the Court with” appropriately tailored “redacted copies of these pleading[s] at the time of filing this Motion to Seal because Peak Hosting has lodged other portions of those pleadings under seal to give Machine Zone and Epic War an opportunity to file their own motion to seal. Once Machine Zone and Epic War notify the Court which additional portions of those pleadings they are requesting be sealed, or the Court rules on this Motion to Seal, Peak Hosting will file redacted copies.”

Machine Zone’s motion to seal documents filed in connection with Peak’s applications, discussed in section V of this order, addresses the four documents at issue in Peak’s motion and is accompanied by appropriately redacted public versions of the memoranda at issue. However, Machine Zone provided redacted versions of certain exhibits to the declarations at issue only, and it does not appear that Peak has lodged or filed complete, appropriately redacted versions of these declarations with the Court.

Peak’s January 19th motion to seal is consequently CONTINUED TO JULY 8, 2016, and Peak is directed to file and serve appropriately redacted public versions of the declarations by June 23, 2016.

III. Machine Zone’s January 20th Motion to Seal Portions of Pleadings Lodged in Opposition to Peak’s Applications

On January 20, 2016, Machine Zone filed a notice of motion pertaining to the sealing of unspecified portions of the following documents: (1) Machine Zone and Epic War LLC’s memorandum of points and authorities in opposition to the TRO Application; (2) Machine Zone’s memorandum of points and authorities in opposition to the Right to Attach Application; (3) the declaration of Ed Lu “in support of Machine Zone’s papers”; and (4) the declaration of John Chau “in support of Machine Zone’s papers.” Machine Zone indicated that its motion would be supported by “a forthcoming Memorandum of Points and Authorities and declaration in support thereof,” but no such supporting papers appear to have been filed.

The documents at issue in this motion appear to be encompassed by Machine Zone’s subsequent motion to seal documents related to Peak’s applications, discussed in section V of this order. Consequently, the January 20th motion appears to no longer be necessary. The motion is accordingly deemed MOOT.

IV. Peak’s May 23rd Motion to Seal Portions of Pleadings Lodged in Opposition to the TRO Application

On May 23, 2016, Peak moved to seal portions of the following documents lodged in opposition to the TRO Application: (1) Exhibit B to the declaration of Michael Berta; (2) paragraphs 13-53 of and Exhibit A to the declaration of John Chau; (3) paragraph 23 of the declaration of Jeff Routledge; and (4) portions of the memorandum of points and authorities in opposition to the TRO Application. It appears that no public versions of the Berta and Chau declarations were ever filed. Presumably by mistake, Machine Zone and Epic War publicly filed the Routledge declaration without redactions at the time they filed their opposition. The version of the memorandum that was publicly filed is almost entirely redacted.

Peak’s founder and CEO declares that the confidential portions of these documents discuss Peak’s confidential and proprietary business information, including trade secrets, respecting its network architecture. (Decl. of Jeffrey Papen ISO Mot. to Seal, ¶¶ 6-10.) The information gives Peak an advantage over competitors in the design, build, and maintenance of complex network architecture needed to support online mobile gaming systems and is commercially valuable to Peak. (Id., ¶¶ 11-12.) The information is not known to the public, and Peak applies a number of security measures to preserve the confidentiality of its trade secrets in particular. (Id., ¶¶ 13-15.)

This evidence establishes that the requirements of rule 2.550(d) are satisfied. Public versions of the documents at issue, with redactions that are narrowly tailored to maintain the confidentiality of the information discussed above, have been provided as exhibits to the Papen Declaration. The public interest in the redacted information is minimal since the documents at issue and the Court’s ruling on the TRO Application are easily understood without reference to this information.

Peak’s motion to seal the unredacted versions of these documents that were lodged in opposition to the TRO Application is GRANTED. Peak’s proposed redacted versions of these documents, attached as Exhibits 1-4 to the Papen Declaration, shall be publicly filed. The previously-filed version of the declaration of Jeff Routledge shall be removed from the public file.

V. Machine Zone’s May 23rd Motion to Seal Documents Related to Peak’s Applications

On May 23, 2016, Machine Zone moved to seal portions of the following documents related to Peak’s applications: (1) Machine Zone and Epic War LLC’s memorandum of points and authorities in opposition to the TRO Application; (2) Machine Zone’s memorandum of points and authorities in opposition to the Right to Attach Application; (3) the declaration of Ed Lu in opposition to the Right to Attach Application; (4) Exhibits S and T to the declaration of John Chau in opposition to the TRO Application; (5) Exhibit E to the declaration of Michael Berta in opposition to the TRO Application; (6) Peak’s memorandum of points and authorities in support of the TRO Application; (7) Peak’s memorandum of points and authorities in support of the Right to Attach Application; (8) Exhibit 1 to the declaration of Jon Billow in support of the Right to Attach Application; and (9) Exhibits 2 and 5 to the declaration of Jeffrey Papen in support of the TRO Application.

The versions of the memoranda in opposition that were publicly filed are almost entirely redacted. No public versions of the Lu, Chau, and Berta declarations appear to have been filed with the oppositions. The documents filed in support of Peak’s applications, discussed in section II above, are almost completely redacted.

Machine Zone’s counsel declares that the information at issue in its motion falls into three categories: (1) information regarding Machine Zone’s revenues and financial status, including specific bank account information, (2) details of the business and financial relationship between Machine Zone and its subsidiary Epic War LLC, and (3) non-public Machine Zone employee contact information. (See Decl. of Tracy Tosh Lane ISO Mot. to Seal Documents re: the TRO Application, ¶ 3.) Disclosing the financial and subsidiary information would allow competitors to gain insight into Machine Zone’s business strategies, and Machine Zone keeps its employees’ contact information confidential to ensure they do not experience unwanted contact from the tens of thousands of “passionate” players of Machine Zone’s video games. (Id., ¶¶ 4-7.)

Considering this evidence, the Court finds that the five requirements set forth in rule 2.550(d) are satisfied. Machine Zone submits new, redacted public versions of the documents at issue with its motion, and the Court finds that those versions of the documents are narrowly tailored to maintain the confidentiality of the information discussed above. The public interest in the redacted information is minimal as the redactions do not impede an understanding of matters adjudicated in this action.

Machine Zone’s motion to seal the unredacted versions of the above-identified documents related to Peak’s applications is GRANTED. Machine Zone’s proposed redacted versions of these documents, attached as Exhibits 2-3 and 6-9 to its proposed order granting the instant motion, shall be publicly filed.

VI. Machine Zone’s Motion to Seal the Unredacted Version of Peak’s Complaint

Finally, on December 3, 2015, Peak filed a redacted complaint in Case No. 2015-1-CV-288681 and lodged an unredacted version of the complaint under seal. The version of the complaint filed by Peak sets forth its general allegations under the headings “The Parties” and “Jurisdiction and Venue” only, with all other allegations and all three exhibits to the complaint redacted entirely. On December 14, 2015, Machine Zone moved to file the unredacted complaint under seal, submitting an alternative public version of the complaint that reflects much more limited redactions to portions of the complaint and its exhibits.

In support of its motion, Machine Zone provides a declaration by its counsel indicating that the information redacted from its proposed public version of the complaint constitutes confidential business information protected from disclosure under the parties’ contracts. (Decl. of Victoria Valenzuela ISO Mot. to Seal Complaint, ¶ 5.) The information includes specific pricing terms of the parties’ relationship; confidential information about Machine Zone’s revenues, users, and strategy, and the identity of a confidential business partners. (Ibid.) If this information were disclosed, it could cause Machine Zone substantial harm by affecting its ability to negotiate favorable contractual terms, giving its competitors advantageous information, and affecting public perception of the company. (Id., ¶ 6.) The information also includes private contact information of Machine Zone employees. (Id., ¶ 7)

In light of this evidence, the Court finds that the five requirements set forth in rule 2.550(d) are satisfied. While it is somewhat unusual to file portions of a complaint under seal, the Court finds sealing to be appropriate here because the public interest in the redacted materials—which are unnecessary to an understanding of Peak’s claims—is minimal at best. (See Mercury Interactive Corp. v. Klein (2007) 158 Cal.App.4th 60, 104, fn. 35 [pleadings and exhibits thereto may be filed under seal under appropriate circumstances, although pleadings should “as a general rule” be open to public inspection; noting that it is unnecessary to include evidence beyond allegations of ultimate facts in a complaint in any event].)

Machine Zone’s motion to seal the unredacted version of Peak’s complaint in Case No. 2015-1-CV-288681 is accordingly GRANTED. Machine Zone’s proposed redacted complaint, attached as Exhibit A to its proposed order granting the motion to seal, shall be publicly filed.