Judge Helen Zukin, Case 22SMCV00231 2023-01-30 Tentative Ruling

Judge: Helen Zukin, Case: 22SMCV00231, Date: 2023-01-30 Tentative Ruling

Case Number: 22SMCV00231 Hearing Date: January 30, 2023 Dept: 207

Background

Plaintiffs Shohreh Iman, as trustee of the Iman Family Trust dated June 26, 2022, and the Estate of Mehrdad Iman (“Plaintiffs”) bring this action against several defendants stemming from the operation of the architectural design firm PlusArch, Inc. (“PlusArch”). Before passing away, Mehrdad Iman (“Iman”) was a 50% shareholder in PlusArch, and Defendant Shabab Ghods (“Ghods”) owned the remaining shares in PlusArch. Defendants Ben Karimi and Karimi & Associates (“Defendants”) provided accounting services to PlusArch. Plaintiffs bring this action asserting Iman was improperly denied profits and distributions from the operation of PlusArch during his life. Defendants bring this motion to seal the stipulation and order regarding good faith settlement filed by Defendants on January 11, 2023.

Sealing Standard

Unless confidentiality is required by law, court records are presumed to be open to the public, pursuant to a potent “open court” policy undergirded by the First Amendment and favoring the public nature of court proceedings. (Cal. Rules of Court, rule 2.550(c); see NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1199-10.) Consequently, pleadings, motions, discovery documents, and other papers may not be filed under seal merely by stipulation of the parties; filing under seal requires a court order. (Cal. Rules of Court, rule 2.551(a); see H.B. Fuller Co. v. Doe¿(2007) 151 Cal.App.4th 879, 888.)

In order to issue a sealing order, the Court must expressly find that: (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)(1)-(4), (e); see McGuan v. Endovascular Techs., Inc.¿(2010) 182 Cal.App.4th 974, 988.) The constitutional policy favoring for disclosure must be balanced against other factors, e.g., privacy rights. (See People v. Jackson (2005) 128 Cal.App.4th 1009, 1026-27.) The Court acts within its discretion in making factual determinations on a motion to seal. (Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273, 1285.)

A sealing order must be sought by means of a motion (or application) and accompanied by a memorandum of points and authorities, as well as evidence and testimony containing facts sufficient to justify the mandatory findings required to support a sealing order. (Cal. Rules of Court, rules 2.550(d) and 2.551(b).) The proponent of the sealing order must also conditionally lodge the unredacted matter to be sealed with the court. (Id., rule 2.551(b)(4).)

Analysis

Defendants move to seal the stipulation regarding the good faith determination of their settlement with Plaintiffs. Defendants state such sealing is necessary to prevent disclosure of the financial terms of their settlement.

The California Supreme Court has recognized that “[r]outine public disclosure of private settlement terms would ‘chill the parties’ ability in many cases to settle the action before trial.” (Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 793.) Many cases have also recognized that redacting particular amounts from settlement documents is acceptable, even when sealing the entire document may not be. In Universal City Studios, for example, the Court held that the defendant had not shown any prejudice to its business interests if the parties’ settlement was revealed. (Universal City Studios, supra, 110 Cal.App.4th at 1284.) The court noted, however, that the “financial figures” in the settlement agreement had been “redacted.” (Ibid.) Thus, the defendant had “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.” (Ibid.) Thus, the court drew a distinction between disclosing the “routine settlement document” itself and the redacted financial information. (Ibid.)

The Court previously found Defendants had failed to file a redacted version of the stipulation which would remain accessible to the public, and thus were necessarily seeking to seal the entiry of the January 11 stipulation. The Court continued the hearing on Defendants’ motion to allow them to file a copy of the stipulation which redacted the confidential financial terms only, as such redaction would satisfy the requirements that sealing be narrowly tailored and no less restrictive means exist to protect the confidentiality of the settlement figures. In keeping with the Court’s prior order, Defendants filed a stipulation on January 25, 2023, which redacts only the confidential financial terms of the settlement. The Court therefore finds Defendants have sufficiently demonstrated good cause to seal the unredacted stipulation which was filed on January 11. Accordingly, Defendant’s motion to seal is GRANTED.

Conclusion

Defendant’s motion to seal the stipulation filed on January 11, 2023, is GRANTED.