Judge James C. Chalfant, Case Number: 25STCV06241, Date: 2025-05-08 Tentative Ruling

Hidden Variable Studios vs. Autumn Games, 25STCV06241

Tentative decision on application to file under seal: denied

Plaintiff Hidden Variable Studios, LLC (“Hidden Variable”) applies to file under seal a written development agreement between Hidden Variable and Autumn Games, LLC (“Autumn”), including written amendments and a draft amendment.

The court has read and considered the moving papers (no opposition was filed) and renders the following tentative decision.

On March 5, 2025, Plaintiff Hidden Variable filed its Complaint against Autumn alleging causes of action for breach of contract, account stated, goods and services rendered, and breach of implied covenant of good faith and fair dealing. The Complaint alleges in pertinent part as follows.

Hidden Variable as developer and Autumn as publisher collaborated to develop and support Skullgirls Mobile (“Skullgirls”), a live service mobile game, beginning in December 2014 with the execution of the Development Agreement (“Agreement”). Compl., ¶¶ 8-10. Under the Agreement, Autumn published and held the rights to Skullgirls, and Hidden Variable developed and maintained Skullgirls. Compl., ¶11, Ex. A.

The parties periodically modified the Agreement, including by the Twelfth Amendment to the Agreement (“Twelfth Amendment”), executed on October 14, 2024. Compl., ¶14, Ex. B. The Twelfth Amendment provided for six months of additional services (“Services”) from October 1, 2024 through March 21, 2025, in exchange for payment according to an agreed-upon schedule. Compl., ¶15. The Services consisted of design, development, and community management as needed to continue supporting Skullgirls and Skullgirls 2nd Encore (a computer version of the game pre-dating Skullgirls Mobile) and continued regular updates to Skullgirls. Compl., ¶16. Hidden Variable worked diligently to fully perform the Services. Compl., ¶18.

Hidden Variable and Autumn held weekly telephone conferences to discuss the Services, including specific deliverables and planned updates. Compl., ¶19. The parties typically memorialized the conferences in writing, often through email or the Slack messaging application.

Hidden Variable performed its services through January 21, 2025. Autumn failed to make payments beginning on November 1, 2024, and also failed to reimburse Hidden Variable for expenses incurred in connection with ongoing support. Compl., ¶¶ 20-21. Autumn did not advise Hidden Variable to stop work before it failed to pay, and Autumn directed Hidden Variable to continue the Services even after it failed to pay. Compl., ¶¶ 22-23.

Autumn entered into the Twelfth amendment knowing that it would later refuse to pay Hidden Variable because Autumn was seeking an alternative developer. Compl., ¶25. Autumn has stated that it will not make upcoming payments. Compl., ¶27. Hidden Variable demanded payment for the balance due. Compl., ¶29.

On December 20, 2024, Hidden Variable gave written notice that it would stop Services on January 21, 2025 because Autumn had not paid. Compl., ¶¶ 30-31. Before stopping the Services, Hidden Variable provided Autumn the necessary credentials to continue supporting the game so as to avoid unnecessary damages. Compl., ¶31. Autumn owes and has failed to pay Hidden Variable at least $1,227,308.98. Compl., ¶33.

Hidden Variable seeks at least $1,227,308.98 in damages, pre- and post-judgment interest at the prevailing legal rate as permitted by law, and such other and further relief the court may deem just and proper.

According to proof of service on file, Defendant Autumn was personally served the Summons and Complaint, on March 12, 2025.

On March 25, 2025, Hidden Variable filed an application for a right to attach order and writ of attachment, and separately moved to file under seal certain exhibits to the supporting Declaration of David E. Marino.

The California Supreme Court has held that a court cannot seal a record without first finding an "overriding interest" in support of sealing. NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, (“NBC Subsidiary”) (1999) 20 Cal.4th 1178, 1217-18. Under appropriate circumstances, such interests may include protection of minor victims of sex crimes from further trauma and embarrassment; privacy interests of a prospective juror during individual voir dire; protection of witnesses from embarrassment or intimidation so extreme that it would traumatize them or render them unable to testify; of trade secrets, protection of information within the attorney-client privilege, and enforcement of binding contractual obligations not to disclose; safeguarding national security, ensuring the anonymity of juvenile offenders in juvenile court; and ensuring the fair administration of justice, and preservation of confidential investigative information. Id. at 1222, n. 46.

CRC 2.550 and 2.551 are derived from NBC Subsidiary and set forth the standards and procedures for sealing court records. Unless confidentiality is required by law, court records are presumed to be open. CRC 2.550(c). The Advisory Committee Comment to CRC 2.550 provides that the rules recognize the First Amendment Right of Access to documents used at trial or as a basis of adjudication, but do not apply to records that courts must keep confidential by law.

A court may order records sealed only if it expressly finds 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).

CRC 2.551(b) provides the procedure for sealing: (1) a party requesting that a record be filed under seal must file a noticed motion for an order sealing the record. The motion must be accompanied by a memorandum of points and authorities and a declaration containing facts sufficient to justify the sealing; (2) the party requesting that a record be filed under seal must lodge it with the court under (d) when the motion is made, unless good cause exists for not lodging it. Pending the determination of the motion, the lodged record will be conditionally under seal; (3) if necessary to prevent disclosure, the motion, any opposition, and any supporting documents must be filed in a public redacted version and lodged in a complete version conditionally under seal; (4) if the court denies the motion to seal, the clerk must return the lodged record to the submitting party and must not place it in the case file.

A record filed publicly in the court must not disclose material contained in a record that is sealed, conditionally under seal, or subject to a pending motion to seal. CRC 2.551(c).

The party requesting that a record be filed under seal must put it in a manila envelope or other appropriate container, seal the envelope or container, and lodge it with the court. CRC 2.551(d)(1). The envelope or container lodged with the court must be labeled "CONDITIONALLY UNDER SEAL." CRC 2.551(d)(2). The party submitting the lodged record must affix to the envelope or container a cover sheet that: (i) contains all the information required on a caption page under rule 201; and (ii) states that the enclosed record is subject to a motion to file the record under seal. CRC 2.551(d)(3).

Upon receipt of a record lodged under this rule, the clerk must endorse the affixed cover sheet with the date of its receipt and must retain but not file the record unless the court orders it filed. CRC 2.551(d)(4).

The leading case for sealing orders is Universal City Studios, Inc. v. Superior Court, (“Universal City”) (2003) 110 Cal.App.4th 1273. To determine whether records should be sealed, the court must hold a hearing and expressly find that (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 1279.

Hidden Variable develops and maintains mobile and console video games. Marino Decl., ¶2. The Agreement is a written agreement between Hidden Variable and Autumn which the parties have amended. Marino Decl., ¶¶ 3-4. The Agreement contains a confidentiality provision, as well as confidential business and financial information, and therefore the parties are obligated not to disclose the Agreement (including its amendments and the draft amendments). Marino Decl., ¶¶ 5-6.

The information in the Agreement and its amendments are not publicly available. Marino Decl., ¶7. In particular, Hidden Variable would be less able to compete if its financial transactions and business operations were made public. Marino Decl., ¶9.

Plaintiff Hidden Variable applies to seal Exhibits 1, 2, 3, 4, and 6, all of which are the Agreement or amendments (or draft amendment) thereto.

Plaintiff’s showing is woefully short. Hidden Variable seems to think that sealing is required because the parties have contractually agreed to maintain the confidentiality of the Agreement. Universal City, supra, 110 Cal.App.4th at 1282, expressly holds to the contrary. The moving party must show that serious injury would result from failing to seal where there is a contractual obligation to maintain confidentiality. Id.

Hidden Variable’s showing of an overriding interest supporting closure and/or sealing, and a substantial probability of prejudice, are supported merely by conclusions that the exhibits contain confidential and sensitive information. Marino Decl., ¶¶ 6, 8. The application also clearly fails to show that the sealing is of narrowly tailored and that there is no less restrictive means of achieving the overriding interest because the entire exhibits are redacted. Hidden Variable has not even provided the court with a conditionally sealed version of the unredacted exhibits. CRC 2.551(d).

The application to seal is denied. As Hidden Variable failed to comply with CRC 2.551(d), there are no conditionally sealed unredacted exhibits to return. Hidden Variable will either have to file unredacted exhibits or elect to proceed without them. The application for a right to attach order is taken off calendar.