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7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 ALLIANZ GLOBAL RISKS US Case No. 21-cv-1202-BAS-BGS 11 INSURANCE COMPANY, et al.,

ORDER GRANTING IN PART AND

12 Plaintiffs, DENYING IN PART PLAINTIFFS’ v. EX PARTE MOTION TO SEAL 13 COMPLAINT UNITED STATES OF AMERICA, et 14 al., (ECF No. 3) 15 Defendants. 16 17 Before the Court is Plaintiffs’ Ex Parte Motion to Seal the Complaint in this action 18 (“Motion” or “Motion to Seal”). (ECF No. 3.) Plaintiff seeks to seal the previously filed 19 Complaint in its entirety and file publicly a redacted version of the document. Because 20 Defendants have not yet been served in this action, Plaintiff seeks this relief ex parte. 21 I. BACKGROUND 22 Plaintiffs are subrogated property insurers who commenced this action under the 23 Federal Tort Claims Act (“FTCA”) alleging property damage and out-of-pocket expenses 24 incurred by their insureds as a result of a 2018 incident. Plaintiffs state that their 25 policyholders informed them after the Complaint was filed that they viewed some 26 information it contained “as business-confidential, trade-secret information.” (Mem. of P. 27 & A. in supp. of Mot. (“Mem. of P. & A.”) at 2, ECF No. 3-1.) Specifically, Plaintiffs state 28 that 1 policyholders deem the amount of the business interruption loss and other associated details, the amount of property damage loss and other associated 2 details, the total amount of insurance payments, and Plaintiffs’ view of the 3 case as it concerns NASSCO and General Dynamics, as business-confidential, trade-secret information, and have sought to maintain it as such. 4 5 (Id.; Decl. of Richard Johanson (“Johanson Decl.”) ¶¶ 4–8, ECF No. 3-4.) Plaintiffs state 6 that this information can be used to reverse engineer the costs of doing business “and might 7 be used by a competitor to estimate profits and margins.” (Mem. of P. & A. at 2.) They 8 state that subrogees “General Dynamics and NASSCO place actual and potential economic 9 value on the redacted information” which constitute trade secrets under California law. (Id. 10 at 3 (citing California’s Uniform Trade Secrets Act, Cal. Civ. Code § 3426.1(d)).) 11 II. LEGAL STANDARD 12 “[T]he courts of this country recognize a general right to inspect and copy public 13 records and documents, including judicial records and documents.” Nixon v. Warner 14 Commc’ns, Inc., 435 U.S. 589, 597 (1978). “Unless a particular court record is one 15 ‘traditionally kept secret,’ a ‘strong presumption in favor of access’ is the starting point.” 16 Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citing Foltz v. 17 State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). “The presumption 18 of access is ‘based on the need for federal courts, although independent—indeed, 19 particularly because they are independent—to have a measure of accountability and for the 20 public to have confidence in the administration of justice.” Ctr. for Auto Safety v. Chrysler 21 Grp., LLC, 809 F.3d 1092, 1096 (9th Cir. 2016) (quoting United States v. Amodeo, 71 F.3d 22 1044, 1048 (2d Cir. 1995)). 23 A party seeking to seal a judicial record bears the burden of overcoming the strong 24 presumption of access. Foltz, 331 F.3d at 1135. The showing required to meet this burden 25 depends upon whether the documents to be sealed relate to a motion that is “more than 26 tangentially related to the merits of the case.” Ctr. for Auto Safety, 809 F.3d at 1102. When 27 the underlying motion is more than tangentially related to the merits, the “compelling 28 1 reasons” standard applies. Id. at 1096–98. When the underlying motion does not surpass 2 the tangential relevance threshold, the “good cause” standard applies. Id. 3 III. DISCUSSION 4 “The Ninth Circuit has yet to specify whether a party seeking to seal a complaint . . 5 . must meet the ‘compelling reasons’ or ‘good cause’ standard.” Harrell v. Cal. Forensic 6 Med. Grp., Inc., 2015 WL 1405567, *1 (E.D. Cal. Mar. 26, 2015). However, “courts have 7 held that the compelling reasons standard applies because a complaint is the foundation of 8 a lawsuit.” In re Google Inc. Gmail Litig., No. 13-MD-02430-LHK, 2013 WL 5366963, 9 at *2 (N.D. Cal. Sept. 25, 2013); see also Williams & Cochrane, LLP v. Quechan Tribe of 10 Fort Yuma Indian Rsrv., No. 3:17-CV-1436-GPC-MDD, 2017 WL 3600417, at *2 (S.D. 11 Cal. Aug. 17, 2017) (listing cases). Accordingly, the Court will apply the “compelling 12 reasons” standard here. 13 Plaintiffs seek to redact a minimal amount of information, including the amount of 14 insurance losses and insurance benefits paid. The Court finds that Plaintiffs’ argument that 15 the potential economic value of policyholders’ business ventures can be deduced from these 16 figures constitutes a compelling reason to seal these quantities. See Apple Inc. v. Samsung 17 Elecs. Co., 727 F.3d 1214, 1221 (Fed. Cir. 2013) (noting that “profit, cost, and margin 18 data” that could potentially be used against a litigant’s business interests to cause 19 competitive harm may be sealed); see also Cox v. Roadrunner Intermodal Servs., LLC, No. 20 1:17-cv-01056-DAD-BAM, 2019 WL 3202922, at *2 (E.D. Cal. July 16, 2019) (“Courts 21 have found it appropriate to redact ‘private financial information of competitive value.’”) 22 (citing cases). 23 However, Plaintiffs also seek to redact sporadic references to a policyholder and its 24 purported fault for the underlying incident giving rise to this case. The Court assumes that 25 these redactions concern “Plaintiffs’ view of the case as it concerns NASSCO and General 26 Dynamics” that Plaintiffs’ policyholders have identified as confidential business 27 information. (Mem. of P. & A. at 2.) However, Plaintiffs have not articulated specific facts 28 as to why public disclosure of these references reflect potential economic value that could 1 ||cause competitive harm. See Perry v. City & Cty. of San Francisco, No. 10-16696, 2011 2 || WL 2419868, at *86 (9th Cir. Apr. 27, 2011) (quoting See Foltz v. State Farm Mut. Auto. 3 || Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)) (“The First Amendment and common law 4 ||presumption of public access to judicial records is overcome only by a showing ot 5 || ‘compelling reasons supported by specific factual findings.’”’). As such, the Court finds nc 6 || compelling reasons specific to why this information should be redacted. 7 ||TIV. CONCLUSION AND ORDER 8 Accordingly, the Court GRANTS IN PART Plaintiffs’ Motion to Seal as to the 9 ||redacted quantities listed in 39, 40, 43, 44, and 51 of the Complaint, but DENIES 10 || WITHOUT PREJUDICE Plaintiffs’ Motion to Seal as to the redactions contained in 4§ 11 31, 48, and 49 of the Complaint. 12 On or before August 9, 2021, the Court ORDERS that Plaintiffs comply with one 13 || of the following actions: 14 (1) Plaintiffs may file a supplemental motion to seal providing compelling reasons 15 to redact the content in ¥] 26, 31, 48, and 49 of the Complaint; or 16 (2) Plaintiffs may file a notice with the Court that attaches, as an exhibit, an amendec 17 redacted Complaint that complies with this Order by redacting only {J 39, 40. 18 43, 44, and 51. The Clerk will seal the original unredacted Complaint (ECF No 19 1) and file the amended redacted Complaint on the public docket at that time. 20 || Unless and until Plaintiffs timely file either a supplemental motion or a notice, the original 21 || unredacted Complaint (ECF No. 1) will remain on the public docket. 22 IT IS SO ORDERED. 23 , [| 24 || DATED: July 27, 2021 Cyillig _| Hohe st 25 United States District Judge 26 27 28 _A-