Judge Stephen I. Goorvitch, Case Number: 20STCP01863, Date: 2024-08-21 Tentative Ruling

Judge: Stephen I. Goorvitch, Case: 20STCP01863, Date: 2024-08-21 Tentative Ruling

Department: 82 Wonderful Growers Cooperative, et al. Judge: Stephen I. Goorvitch

Respondents Wonderful Growers Cooperative (“WGC”), Wonderful Almond Cooperative (“WAC”), Cal Pure Produce, Inc. (“Cal Pure”), The Wonderful Company LLC, and Wonderful Pistachios & Almonds LLC (“WP&A”) (collectively, the “Respondents”) move for an order sealing portions of records filed by Petitioners in support of their motion to modify protective order and obtain on-site accounting filed September 14, 2023.[1] As modified in their reply brief, Respondents move to seal the following portions of two declarations filed by Petitioners:

· Declaration of Alexander Moore, filed September 14, 2023: (1) Exhibits B and C, the dollar amounts in the last five columns titled “Accounted_DR,” “Accounted_CR,” “Net_Amount,” “Beginning_Balance” and “End_Balance”; and (2) Exhibits E and F, the dollar amounts in the columns titled “Debit” and Credit.”[2]

· Declaration of Susan K. Thompson, filed September 14, 2023: the two dollar amounts in both paragraph 11, page 4, lines 2-4 and in paragraph 17, page 5, line 15. (See Reply 2-3.)

On February 2, 2024, the motion to seal came for hearing before the court (Beckloff, J.) After conferring with counsel, the court continued the hearing so that Respondents could file a supplemental declaration. On February 20, 2024, Respondents filed a supplemental declaration of Michael Hohmann in support of the motion to seal.

On April 8, 2024, this action was reassigned to this court (Goorvitch, J.). The court continued the hearing on the motion to seal to August 21, 2024, after the parties stated they were engaged in settlement discussions and requested a continuance. On August 7, 2024, the parties filed a Joint Case Management Conference Report stating that settlement negotiations did not reach a successful resolution. Accordingly, the court now rules on the motion to seal and grants that motion.

“[S]ubstantive courtroom proceedings in ordinary civil cases are ‘presumptively open.’” (NBC Subsidiary (KNBC-TV), Inc. v. Sup.Ct. (1999) 20 Cal.4th 1178, 1217.) To allow sealing of the record, including redactions thereof, the court must make the necessary findings under California Rules of Court, Rules 2.550 and 2.551.

California Rule of Court 2.550 authorizes the sealing of documents containing confidential and sensitive financial information. (See, e.g., Universal City Studios, Inc. v. Super. Ct. (2003) 110 Cal.App.4th 1273, 1286; Valley Bank of Nevada v. Super. Ct. (1975) 15 Cal.3d 352, 357.) California Rules of Court, Rule 2.550(d) provides that a court may order a record to 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 Court, rule 2.550(d).) “The Court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties.” (Cal. Rules Court, rule 2.551(a).)

Exhibits B and C to the Moore declaration are excerpts from Cal Pure’s and WGC’s general ledgers from the year 2020, respectively. Exhibits E and F are excerpts from WGC’s and WAC’s Account Analysis Reports, respectively. The records were produced in this action, pursuant to a protective order, in August 2023 after Judge Beckloff granted the writ petition and ordered Respondents to produce complete general ledgers for the years requested by Petitioners, among other corporate records. (Moore Decl. ¶¶ 9-11; Moran Decl. ¶¶ 4-5, 11; see Court’s Order, dated August 7, 2023.)

In his moving declaration, Michael Hohmann, the Chief Financial Officer of WGC, WAC, and Cal Pure, declares that “Exhibits B, C, E and F to the Moore Declaration are proprietary documents compiled in the course and conduct of WGC’s, WAC’s, and Cal Pure’s business”; that the exhibits “reflect WGC’s, WAC’s, and Cal Pure’s financial and competitive business information, disclosure of which to others and competitors would severely harm their business”; and that “if competing cooperatives determine the net return WGC and WAC distributes to its members, they would gain an unfair advantage and could try to use that information to compete against WGC and WAC for new members or to poach current members.” Hohmann also declares that these exhibits “are kept confidential” and that “WGC, WAC, and Cal Pure take significant measures to ensure these documents and information are not disseminated outside the companies…. For example, the financial documents are saved in a shared folder and anyone who is not authorized to access them is automatically blocked if they attempt to do so.” (Hohmann Decl. ¶¶ 4-5.)

In his supplemental declaration, Hohmann provides a more detailed explanation of why the sealed information “constitutes competitively sensitive financial information of WGC, WAC and Cal Pure, disclosure of which to others and competitors would severely harm their business.” (Suppl. Hohmann Decl. ¶ 6.) As an example, with respect to the information at issue in Exhibits B and C, Hohmann declares:

Regarding Exhibits B and C, the last five columns contain information about loans made by Cal Pure and WGC to their members, distribution made by Cal Pure and WGC to their members, the cash position of WP&A, Cal Pure and WGC. At the heart of a coop’s performance is both its cash position and member loan capacity (e.g., the amount of money the coop has available to loan to its member) and disclosing such sensitive financial information to competitors puts the coops at a disadvantage. Moreover, distributions to members are a proxy for revenue, and the amount of revenue a coop generates is relevant to its overall business competitiveness (e.g. ability to attract new members and keep existing members). Therefore, if Cal Pure’ or WGC’s competitors gain access to competitive business information about the coops’ cash position, loan capacity or distributions to members, they would gain and unfair advantage because they would know whether WGC/Cal Pure is financially healthy or not, whether the competitors need to increase their member loans to stay competitive, by how much the competitors could decrease their member loans to stay competitive, and how they would need to adjust the returns (e.g., pricing) to attract new members who may be considering either joining WGC or Cal Pure (or selling to Cal Pure as a non-member) or poach Cal Pure’s and WGC’s current members. Moreover, if Cal Pure’s or WGC’s competitors determine their margins from the exhibits they could try to undercut the coops’ pricing, thus potentially poaching growers away from the coops.

Hohmann also explains that the Debit and Credit columns in Exhibits E and F contain information about WGC’s and WAC’s cash positions, WGC’s and WAC’s loans with WP&A, WAC’s distributions to its members, and the loans WGC and WAC make to their members. Hohmann declares that “[i]f this sensitive financial information were disclosed to WGC’s [and WAC’s] competitors that would result in those coops gaining an unfair advantage as they would learn about WGC’s [and WAC’s] financial strength or weakness, ability to make loans to members and ability to borrow from banks, which information the competitors otherwise would not have access.” (Id. ¶¶ 8-9.)

In their opposition, Petitioners point out that Judge Beckloff denied two prior motions to seal filed by Respondents and characterized Respondents’ evidence in support of those motions as “conclusory” and “boilerplate.” (Oppo. 2 and fn. 1.) Petitioners do not show, with citation to the record, that the prior sealing motions involved the same documents at issue in the instant motion. Further, Judge Beckloff permitted Respondents to file a supplemental declaration in support of the instant motion. The supplemental declaration of Michael Hohmann is substantially more detailed than the declarations submitted for the prior two motions, as characterized by Judge Beckloff.

Based upon the foregoing, the court finds as follows: (1) Given the confidential and commercially sensitive nature of the financial information, as explained in detail in Hohmann’s supplemental declaration, 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 to the sensitive information from the exhibits; and (5) No less restrictive means exist to achieve the overriding interest. (Cal. Rules Court, rule 2.550(d).) The court also finds that the public’s right to understand the proceedings would not be impacted by this limited sealing. Therefore, the motion is granted.[3]

Respondents move to seal the two dollar amounts in both paragraph 11, page 4, lines 2-4 and in paragraph 17, page 5, line 15 of the declaration of Susan K. Thompson, filed September 14, 2023. Those dollar amounts refer to financial information from Exhibits B and C that the court has ordered sealed above. For the same reasons discussed above as to the Moore declaration, the court makes the following findings for these portions of the Thompson declaration: (1) Given the confidential and commercially sensitive nature of the financial information, as explained in detail in Hohmann’s supplemental declaration, 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 to the sensitive information; and (5) No less restrictive means exist to achieve the overriding interest. (See Cal. Rules Court, rule 2.550(d).) Therefore, the motion is granted.

a. Declaration of Alexander Moore, filed September 14, 2023: (1) Exhibits B and C, the dollar amounts in the last five columns titled “Accounted_DR,” “Accounted_CR,” “Net_Amount,” “Beginning_Balance” and “End_Balance”; and (2) Exhibits E and F, the dollar amounts in the columns titled “Debit” and Credit.”[4]

b. Declaration of Susan K. Thompson, filed September 14, 2023: the two dollar amounts in both paragraph 11, page 4, lines 2-4 and in paragraph 17, page 5, line 15. (See Reply 2-3.)

3. The court orders Respondents to file redacted versions of the declarations that are consistent with this order.

5. The court sets no future dates, as there is no further action to be taken in this case.

[1] The Petitioners are Maricopa Orchards, LLC; Kamm Pistachios, LLC; Derrick Pistachios, LLC; Panache Pistachios, LLC; Three Rocks Pistachios, LLC; 104 Pistachios, LLC; ACDF, LLC; Granville Farms, LLC; Sommerville Farms, LLC; Tuscan Farms, LLC; Waterford Farms, LLC, Cantua Orchards, LLC; and Sageberry Farms, LLC (“Petitioners”).

[2] In reply, Respondents did not specify the page numbers from which sealing is requested for Exhibits B and C. The motion to seal was limited to information on page 1 of Exhibit B and pages 1-3 of Exhibit C. (See Mot. 2:13-16.) The court addresses this issue further below.

[3] The Moore declaration lodged conditionally under seal does not include an Exhibit F. Nonetheless, based on Hohmann’s supplemental declaration, the court infers that Exhibit F contains the same type of sensitive financial information as Exhibit E. Petitioners have not argued otherwise.

[4] In reply, Respondents did not specify the page numbers from which sealing is requested for Exhibits B and C. The motion to seal was limited to information on page 1 of Exhibit B and pages 1-3 of Exhibit C. (See Mot. 2:13-16.) The court addresses this issue further below.