Judge: Elaine Lu, Case: 20STCV41200, Date: 2022-12-12 Tentative Ruling

Case Number: 20STCV41200    Hearing Date: December 12, 2022    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Background

            On June 27, 2022, Plaintiff CE-GH Urbanite Fund 2, LLC (“Plaintiff”) filed the instant fraud action against Defendant David Belford (“Defendant”).  The complaint asserts three causes of action for (1) Intentional Misrepresentation, (2) Fraudulent Concealment, and (3) Negligent Misrepresentation. 

            On September 2, 2022, Defendant filed a motion to compel arbitration and the instant motion to seal portions of the motion to compel arbitration.  On October 27, 2022, the Court advanced the instant motion to seal from May 1, 2023 to December 12, 2022.  (Minute Order 10/27/22.)  On November 16, 2022, the parties filed a stipulation to file the documents sought to be sealed by the instant motion under seal.  No opposition or reply has been filed.

The Parties Cannot Stipulate to File Documents Under Seal

            As a preliminary matter, the stipulation filed on November 16, 2022 agreeing to seal the sought documents is ineffective to support the instant motion to seal.

            As noted by the Rules of Court, “no record may be sealed without a court order.”  (H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 888; Cal. Rules of Court, Rule 2.551.)  “Nor may a court ‘permit a record to be filed under seal based solely on the agreement or stipulation of the parties.’ (Rule 2.551(a).)”  (B. Fuller Co., supra, 151 Cal.App.4th at p.888.)            Accordingly, the parties’ stipulation to grant the motion to seal is DENIED.

Legal Standard

            “The public has a First Amendment right of access to civil litigation documents filed in court and used at trial or submitted as a basis for adjudication. [Citation.] Substantive courtroom proceedings in ordinary civil cases, and the transcripts and records pertaining to these proceedings, are ‘ “presumptively open.” ’ [Citation.]” (Savaglio, supra, 149 Cal.App.4th at pp.596–597.)  As explained by the Supreme Court, “the public has an interest, in all civil cases, in observing and assessing the performance of its public judicial system, and that interest strongly supports a general right of access in ordinary civil cases.” (NBC Subsidiary, Inc. v. Superior Court (1999) 20 Cal.4th 1178,1210.)  “Openness is a presumption; it is not an absolute. The ‘presumption of openness can be overcome upon a proper showing’ compatible with the constitutional standards. [Citation.]”  (McNair v. National Collegiate Athletic Assn. (2015) 234 Cal.App.4th 25, 31.) 

California law authorizes the sealing of court records containing confidential information.  (NBC Subsidiary, Inc., supra, 20 Cal.4th at p.1222, Fn.46.)  California Rules of Court, Rule 2.551(a) provides that a record may not be filed under seal without a court order and the court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties.  (Cal. Rules of Court, Rule 2.551(a).)  The party requesting a record be filed under seal must file a motion or an application for an order sealing the record that is accompanied by a memorandum or declaration containing facts to justify the sealing.  (Cal. Rules of Court, Rule 2.551(b)(1).)  “The court may order that a record be filed under seal” if it finds that there is an overriding interest in favor of maintaining the confidentiality of the information.  (Cal. Rules of Court, Rule 2.550(d).)

The court may order a record sealed if it finds that (1) an overriding interest exists 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 request is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest. (Cal. Rules of Court, Rule 2.550(d); See also Savaglio, supra, 149 Cal.App.4th at p.597 [ “Therefore, before a trial court orders a record sealed, it must hold a hearing and make findings that (1) there is an overriding interest supporting sealing of the records; (2) there is a substantial probability that absent sealing, such interest will be prejudiced; (3) the sealing order is narrowly tailored to serve the overriding interest; and (4) a less restrictive means of meeting that interest is not available.”].)

“As the party seeking an order sealing appellate court records, [the moving party] has the burden to ‘justify the sealing.’”  (McNair, supra, 234 Cal.App.4th at p.32.)

Discussion

            Defendant seeks to seal a partnership agreement attached to a declaration in support of Defendant’s motion to compel arbitration and references to the partnership agreement in the motion to compel arbitration and the instant motion.   Specifically, Defendant seeks to seal:

a.       Exhibit 1 to the Declaration of Ronald M. Sanders in Support of Defendant David Belford’s Motion to Compel Arbitration and Stay Proceedings;

b.      Notice of Motion to Compel Arbitration and Stay Proceedings, line 8;

c.       Motion to Compel Arbitration and Stay Proceedings, Table of Contents, line 6;

d.      Memorandum ISO Motion to Compel Arbitration and Stay Proceedings, page 1, line 5; page 2 lines 7, 17-20, 25-28; page 3 lines 1-6; page 7 lines 10-11; page 8 lines 9, 27

e.       Declaration of Ronald M. Sanders ISO Motion to Compel Arbitration and Stay Proceedings, page 1 line 13;

f.        Motion to Seal Certain Portions of Exhibit 1 at page 2 lines 19-20; and

g.      Declaration of Ronald M. Sanders ISO Motion to Seal page 1 line 13.

Failure to Lodge the Unsealed Documents with the Court

            As a preliminary matter, the Court notes that no unredacted documents have been lodged with the Court conditionally under seal as required.

            “The moving party must lodge the record in question with the court, which will hold it ‘conditionally under seal’ pending determination of the motion.”  (H.B. Fuller Co., supra, 151 Cal.App.4th at p.888; Cal. Rules of Court, Rule 2.551(b)(4), [“The party requesting that a record be filed under seal must lodge it with the court … when the motion or application is made, unless good cause exists for not lodging it or the record has previously been lodged … Pending the determination of the motion or application, the lodged record will be conditionally under seal.”].) 

            Here, Defendant filed a notice of lodging on September 2, 2022 stating that Defendant “hereby manually lodges the following document conditionally under seal pending the Court’s ruling on the concurrently-filed Motion to Seal Portions of Exhibit 1 to Sanders Declaration and [Proposed] Order:”.  (Notice of Lodgment filed 9/2/22.)  However, the notice does not list any documents filed conditionally under sealed.  Rather, the notice of lodgment just lists the records Defendant sought to be sealed.  Moreover, the Court is not in possession of any physical documents filed in a container or envelope clearly identifying the materials as “CONDITIONALLY UNDER SEAL” as required.  (Cal. Rules of Court, Rule 2.551(d)(2), [“The materials to be lodged under seal must be clearly identified as ‘CONDITIONALLY UNDER SEAL.’ If the materials are transmitted in paper form, the envelope or container lodged with the court must be labeled ‘CONDITIONALLY UNDER SEAL.’”].)  Nor does the Court otherwise have such unredacted copies of the physical documents.  The Court further notes that Defendant has not electronically filed the documents under seal.  (Cal. Rules of Court, Rule 2.5511(d)(3).)  This issue is compounded as Defendant has also improperly filed the redacted versions of the various documents they seek to seal without identifying them as publicly redacted materials from conditionally sealed record, as required.  (Cal. Rules of Court, Rule 2.551(b)(5).)  Thus, its unclear whether Defendant even intended to file the unredacted records as required.

            Without the filing of these required unsealed documents, the Court cannot grant the instant motion.  For example, the Court cannot review the documents to see if the redactions are narrowly tailored as required.  (Cal. Rules of Court, Rule 2.550(d)(4).)  Accordingly, the instant motion to seal is DENIED. 

            The Court additionally notes that the instant motion fails on the merits as well.

Defendant Fails to Show an Overriding Interest

Defendant contends that there is an overriding interest in sealing the records identified above because the “[t]he Partnership Agreement contains a ‘Confidentiality’ clause in Section 14.14 that requires Limited Partners to maintain the confidentiality of various information, including but not limited to the identity of Limited Partners to the agreement, and any other ‘Non-Public Information’ or ‘Limited Partner Information.’”  (Sanders Decl. ¶ 4.) 

“Under the common law right of access, court records are presumed to be ‘“open to the public unless they are specifically exempted from disclosure by statute or are protected by the court itself due to the necessity of confidentiality.”’”  (In re Marriage of Tamir (2021) 72 Cal.App.5th 1068, 1078.)  “Public access to civil proceedings serves to (i) demonstrate that justice is meted out fairly, thereby promoting public confidence in such governmental proceedings; (ii) provide a means by which citizens scrutinize and check the use and possible abuse of judicial power; and (iii) enhance the truthfinding function of the proceeding.”  (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1219.)  Thus, documents may only be sealed if “(i) there exists an overriding interest supporting closure and/or sealing; (ii) there is a substantial probability that the interest will be prejudiced absent closure and/or sealing; (iii) the proposed closure and/or sealing is narrowly tailored to serve the overriding interest; and (iv) there is no less restrictive means of achieving the overriding interest.”  (Id. at p.1218.) 

“In terms of the overriding interest requirement of a closure or sealing order, NBC Subsidiary identifies two separate elements. The first element requires the identification of an overriding interest.”  (Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273, 1283.)  “The second element of the overriding interest analysis is there must be a substantial probability that it will be prejudiced absent closure or sealing.”  (Ibid.) 

“[C]ontractual obligation not to disclose can constitute an overriding interest[.]”  (Id. at  p.1283.)  Thus, “Defendant has identified such a potential overriding interest—a binding contractual agreement not to disclose.”  (Ibid.)  However, Defendant fails to show a substantial probability that the overriding interest will be prejudiced absent closure or sealing.        

“[T]he mere agreement of the parties alone is insufficient to constitute an overriding interest to justify sealing the documents.”  (McNair v. National Collegiate Athletic Assn. (2015) 234 Cal.App.4th 25, 36.)  “There must be ‘a specific showing of serious injury.’ [Citation.]”  (Id. at p.35.)  “‘[S]pecificity is essential. [Citation.] Broad allegations of harm, bereft of specific examples or articulated reasoning, are insufficient.’ [Citation.]”  (Universal City Studios, Inc., supra, 110 Cal.App.4th at p.1282.)

Here, the only harm identified is that the Partnership Agreement “can be used by competitors or other investors to undermine the Partnership’s business efforts.”  (Sanders Decl. ¶ 6.)  Defendant also references that some financial information is present throughout the Partnership Agreement.  (Sanders Decl. ¶ 4.)  However, there is no indication of what this financial information consists of.  Defendant claims that if the Partnership Agreement and references to it are unsealed this will cause unspecified “competitive harm”.  (Sanders Decl. ¶ 7.)  This is not a specific showing of serious injury as required to warrant sealing.  At best, Defendant merely identifies that competitors would be able to look at the Partnership Agreement and be able to somehow undermine unspecified interests of the Partnership. 

“[T]he public has an interest, in all civil cases, in observing and assessing the performance of its public judicial system, and that interest strongly supports a general right of access in ordinary civil cases.” (NBC Subsidiary, supra, 20 Cal.4th at p.1210, [bold added].)  Defendant fails to overcome this presumption.

The Proposed Redactions are Clearly Not Narrowly Tailored

Even if the Court found that Defendant had an overriding interest in sealing the court records, the proposed redactions are plainly overbroad.  Here, Defendant seeks to seal the entire Partnership Agreement and all references to the Partnership Agreement except as to the arbitration agreement in section 14.15 of the Partnership Agreement.  This is clearly not narrowly tailored.  Defendant seeks to seal even the name of the Partnership and the confidentiality clause.  The name of the Partnership is public record as Plaintiff stated such name in the Complaint – i.e., CNI Century Plaza Partners, L.P.  (Complaint ¶ 2.) 

Conclusion and ORDER

            Based on the foregoing, Defendant David Bernson’s motion to seal is DENIED.

            On the Court’s own motion, the redacted documents – i.e., the Declaration of Ronald M. Sanders in Support of Defendant David Belford’s Motion to Compel Arbitration and Stay Proceedings; the Notice of Motion to Compel Arbitration and Stay Proceedings; and the Motion to Compel Arbitration and Stay Proceeding filed on September 2, 2022 – are stricken as improperly redacted documents.  Defendant may publicly refile the motion and supporting documents unsealed.

Moving Party is to provide notice and file proof of service of such.

DATED: December 12, 2022                                                 ___________________________

                                                                                          Elaine Lu

                                                                                          Judge of the Superior Court