Judge: Teresa A. Beaudet, Case: 21STCV23520, Date: 2023-01-30 Tentative Ruling

Case Number: 21STCV23520    Hearing Date: January 30, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiffs C&M Investment Group, Ltd. (“C&M”) and Karlin Holdings Limited Partnership (jointly, “Plaintiffs”) filed this action on June 23, 2021 against Defendant Harvey Champlin (“Defendant”), asserting causes of action for (1) intentional interference with contractual relations, and (2) intentional interference with prospective economic benefit.

Plaintiffs now move for an order upholding Plaintiffs’ designation of a settlement agreement and deposition testimony excerpts as confidential. Plaintiffs also move to file certain documents in support of their motion to support confidentiality designation under seal. Defendant filed a consolidated opposition to Plaintiffs’ motion to support confidentiality designation and motion to seal records in support of confidentiality designation.

Plaintiffs also move for an order to seal excerpts of their consolidated reply in support of their motion to support confidentiality designation and motion to file under seal records. This motion is unopposed.

Defendant moves for an order sealing Defendant’s consolidated opposition to Plaintiffs’ motion to support confidentiality designation and motion to seal. Plaintiffs filed a Non-Opposition response to this motion. 

Plaintiffs’ Motion to Support Confidentiality Designation

Plaintiffs request that the Court uphold Plaintiffs’ designation of a certain October 13, 2020 settlement agreement and related deposition testimony excerpts as confidential. (Schweitzer Decl., ¶¶ 2-3, Exs. 1-2.) The deposition was conducted in the instant action. (Schweitzer Decl., 3, Ex. 2.) Plaintiffs indicate that they bring this motion pursuant to paragraph 6 of the parties’ stipulated protective order.

On January 17, 2022, the Court in this matter issued an order approving the parties’ “Stipulation and Protective Order – Confidential Designation Only.” Paragraph 6 of the Stipulation and Protective Order provides, inter alia, that “[i]n the event that counsel for a Party receiving Documents, Testimony or Information in discovery designated as ‘Confidential’ challenges, in good faith, such designation with respect to any or all of such items, said counsel shall advise counsel for the Designating Party, in writing, of such objections, the specific Documents, Testimony or Information to which each objection pertains, and the specific reasons and support for such objections (the “Designation Objections”). Counsel for the Designating Party shall have thirty (30) days from receipt of the written Designation Objections to either (a) agree in writing to de-designate Documents, Testimony or Information pursuant to any or all of the Designation Objections and/or (b) file a motion with the Court seeking to uphold any or all designations on Documents, Testimony or Information addressed by the Designation Objections (the “Designation Motion”)…The Designating Party shall have the burden on any Designation Motion of establishing the applicability of its “Confidential” designation…”

Paragraph 1(c) of the Stipulation and Protective Order defines “Confidential” as “any information which is in the possession of a Designating Party who believes in good faith that such information is entitled to confidential treatment under applicable law.”

Plaintiffs indicate that in October 2007, C&M filed a lawsuit in Los Angeles Superior Court entitled C&M Investment Group Ltd. & Karlin Holdings Limited Partnership v. Philip Richard Powers & Neil Campbell, Case No. BC378888, alleging that Philip Richard Powers (“Powers”) and his corporate entities defrauded C&M out of millions of dollars. (Schweitzer Decl., ¶ 4.) On November 17, 2008, Plaintiffs amended the complaint to include Campbell as a defendant based on Plaintiffs’ allegations that Campbell conspired with Powers in the fraudulent scheme. (Schweitzer Decl., ¶ 5.) Plaintiffs indicate that “in September 2021, Campbell was deposed in this action. [A] settlement agreement was marked as an exhibit to his deposition and he provided testimony about the agreement…” (Mot. at p. 3:24-26.) Plaintiffs assert that the settlement agreement and the related deposition testimony are appropriately designated confidential here. Plaintiffs note that the California Supreme Court in Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 793 found that “[t]he privacy of a settlement is generally understood and accepted in our legal system, which favors settlement and therefore supports attendant needs for confidentiality. Routine public disclosure of private settlement terms would chill the parties’ ability in many cases to settle the action before trial. Such a result runs contrary to the strong public policy of this state favoring settlement of actions.” (Internal quotations and citations omitted].)  

In his opposition, Defendant asserts that no grounds exist for Plaintiffs’ proposed confidentiality designation. Defendant contends that a particular provision does not exist that warrants designating the subject documents confidential. (Opp’n at p. 4:21-22.) Defendants also assert that the documents at issue contain no confidential, proprietary, or scandalous information, and that Plaintiffs’ argument as to why the documents should be sealed is speculative.[1] Plaintiffs counter that though Defendant argues that the risk is speculative, he does not dispute the facts that spell out the risk and offers nothing in the way of facts that would mitigate the risk. Moreover, as discussed above, “[t]he privacy of a settlement is generally understood and accepted in our legal system, which favors settlement and therefore supports attendant needs for confidentiality.” (Monster Energy Co. v. Schechter, supra, at p. 793.)

Based on the foregoing, the Court finds that Plaintiffs have demonstrated good cause for the Court to uphold Plaintiffs’ designation of the subject settlement agreement and the related deposition testimony excerpts as confidential.

Motions to Seal

Generally, court records are presumed to be open unless confidentiality is required by law. (California Rules of Court, rule 2.550(c).) If the presumption of access applies, the court may order that a record be filed under seal “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 of Court, rule 2.550(d).)

Plaintiffs’ Motions to Seal

            Plaintiffs seek to seal (1) excerpts of the Memorandum of Points and Authorities in support of Plaintiffs’ motion to support confidentiality designation, (2) Exhibit 1 to the Declaration of Lauren Schweitzer in support of Plaintiffs’ motion to support confidentiality designation (a settlement agreement), and (3) excerpts of Exhibit 2 to the Declaration of Lauren Schweitzer in support of Plaintiffs’ motion to support confidentiality designation (excerpts of deposition testimony relating to the subject settlement agreement) (collectively, the “Sealed Documents”).

Plaintiffs assert that the Sealed Documents are sensitive, nonpublic information because they pertain to a settlement agreement, because making this information public could have ramifications for Plaintiffs pertaining to potential similar future deals, and for the reasons discussed in Plaintiffs’ Memorandum of Points and Authorities in support of Plaintiffs’ motion to support confidentiality designation. (Schweitzer Decl., ¶ 5.) Plaintiffs cite to Monster Energy Co. v. Schechter, supra, at page 793, where the California Supreme Court noted, as set forth above, that “[t]he privacy of a settlement is generally understood and accepted in our legal system, which favors settlement and therefore supports attendant needs for confidentiality. Routine public disclosure of private settlement terms would chill the parties’ ability in many cases to settle the action before trial. Such a result runs contrary to the strong public policy of this state favoring settlement of actions.” (Internal quotations and citations omitted.)

Defendant filed a consolidated opposition to Plaintiffs’ motion to support confidentiality designation and motion to seal. Defendant argues that no grounds exist for Plaintiffs’ sealing request for the same reasons that no grounds exist for the confidentiality designation. As set forth above, the Court finds that Plaintiffs have demonstrated good cause for the Court to uphold Plaintiffs’ confidentiality designation. The Court also finds that Plaintiffs have demonstrated that they have an overriding interest that supports sealing the Sealed Documents, and that a substantial probability exists that the overriding interest will be prejudiced absent sealing. Plaintiffs also note that if the Sealed Documents are not sealed then the relief that Plaintiffs seek by way of their motion to support confidentiality designation would be rendered moot.  

In addition, Plaintiffs assert that the proposed sealing is narrowly tailored, as Plaintiffs have only redacted portions of the Memorandum of Points and Authorities and Exhibit 2 to

Ms. Schweitzer’s declaration. Plaintiffs assert that this approach represents the least restrictive means of ensuring that the right to confidentiality of the settlement agreements is preserved. Defendant contends that the proposed sealing is not narrowly tailored and is not the least restrictive means of achieving the overriding interest because Plaintiffs seek to seal the existence of the settlement agreement, not just its content. Plaintiffs respond to this point in their reply, and the Court finds that Plaintiffs have demonstrated that the proposed sealing is narrowly tailored and that no less restrictive means exist to achieve the overriding interest.

Based on the foregoing, the Court finds that Plaintiffs have demonstrated good cause to seal the Sealed Documents.   

            Plaintiffs also move to file under seal excerpts of their consolidated reply in support of Plaintiffs’ motion to support confidentiality designation and motion to file under seal records (the “Reply Excerpts”). Plaintiffs note that the reply includes a discussion of the subject settlement agreement and related deposition testimony. For the reasons discussed above in connection with Plaintiffs’ motion to file under seal records in support of motion to support confidentiality designation, the Court finds that Plaintiffs have also demonstrated that there exists an overriding interest to seal the Reply Excerpts, and that a substantial probability exists that the overriding interest will be prejudiced if the Reply Excerpts are not sealed.

Plaintiffs also indicate that they have taken the step of redacting the sensitive portions of the Reply while allowing the public access to the remainder, and thus assert that the proposed sealing order is narrowly tailored and is the least restrictive means of protecting Plaintiffs’ overriding interest. The Court agrees.

Based on the foregoing, the Court finds that Plaintiffs have demonstrated good cause to seal the Reply Excerpts.  

Defendant’s Motion to Seal

Defendant moves for an order sealing Defendant’s consolidated opposition to Plaintiffs’ motion to support confidentiality designation and motion to seal.

Defendant notes that on November 9, 2022, the Court continued the hearing on Plaintiffs’ instant motion to support confidentiality designation and motion to seal, and that the November 9, 2022 Order provides, inter alia, that “Defendant’s consolidated opposition to the motions contains redacted information. Defendant has not filed a motion to seal the redacted portions of the opposition. Pursuant to California Rules of Court, rule 2.551, subdivision (a), ‘[a] record must not be filed under seal without a court order.’” In his instant motion to seal, Defendant asserts that he “does not, in actuality, believe that his opposition warrants sealing. In fact, [Defendant] opposes sealing and contends that, under the Order and C.R.C. 2.551, the onus of requesting and obtaining any requisite sealing order remains firmly on Plaintiffs. Nonetheless, to comply with the Court’s previous ruling and to expedite resolution of the underlying sealing dispute, [Defendant] hereby requests leave to file his October 25, 2022 opposition conditionally under seal.” (Mot. at p. 3:11-16.)

In their Non-Opposition Response to the motion, Plaintiffs note that “[t]he Sealed Opposition Documents include a detailed discussion of the settlement agreement and related testimony sought to be protected from public view,” and assert that the opposition documents should thus be filed under seal. (Plaintiffs’ Non-Opposition Response at p. 1:8-16.) For the reasons discussed above in connection with Plaintiffs’ motion to file under seal records in support of motion to support confidentiality designation, the Court finds that there also exists an overriding interest to seal Defendant’s consolidated opposition, and that a substantial probability exists that the overriding interest will be prejudiced if the opposition is not sealed.

The Court also agrees with Plaintiffs that the proposed sealing is narrowly tailored and is the least restrictive means of protecting Plaintiffs’ overriding interest, as the proposed sealing is to redact only those sensitive portions of the consolidated opposition. Plaintiffs also note that the relief Plaintiffs seek by way of their motion to support confidentiality designation would be mooted if the sensitive portions of Defendant’s consolidated opposition are not sealed.    

Based on the foregoing, Court finds that good cause has been shown to seal the redacted portions of Defendant’s consolidated opposition.

Conclusion

Based on the foregoing, the Court grants Plaintiffs’ motion to support confidentiality designation.

The Court grants Plaintiff’s motion to file under seal records in support of motion to support confidentiality designation. The Court grants Plaintiff’s motion to file under seal records in support of reply motion to support confidentiality designation. The Court grants Defendant’s motion to seal the redacted portions of Defendant’s consolidated opposition.  

Pursuant to California Rules of Court, rule 2.551, subdivision (e), the Court directs the clerk to file this order, maintain the records ordered sealed in a secure manner, and clearly identify the records as sealed by this order. The Court further orders that no person other than the Court is authorized to inspect the sealed records.

Plaintiffs are ordered to give notice of this order.

DATED:  January 30, 2023                            ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court