Motions to Seal in the Commercial Division Require Specificity
May 07, 2021
Under the Commercial Division Rules, a court may seal court records “upon a written finding of good cause.”[1] So, what led Justice Robert R. Reed to deny two unopposed motions to seal in a recent decision in the New York Commercial Division? Lack of specificity.
In Cortlandt St Recovery Corp v Bonderman, Plaintiffs Cortlandt Street Recovery Corp. (“Cortlandt”), and Wilmington Trust Company (“WTC”) sought the enforcement of a €268,000,000 judgment. Defendants, a series of firms, funds, partners, and individual members of private equity fund groups, moved to dismiss. In opposing Defendants’ motion, Plaintiffs redacted certain portions of its memorandum of law and used placeholder pages for over 60 documents and deposition transcripts filed as exhibits (“Exhibits”) on New York State Courts Electronic Filing System (“NYSCEF”) because the documents purportedly contained private, confidential financial information, and certain business and proprietary information.
WTC then moved to seal the Exhibits.[2] Defendants cross-moved, similarly seeking to seal six deposition transcripts attached as Exhibits to Plaintiffs’ opposition. Neither party opposed the other’s motion. Nevertheless, Justice Reed explained “the court is required to make its own inquiry to determine whether sealing is warranted.”
Many of the Exhibits WTC and Defendants sought to seal included reports prepared by Plaintiffs’ experts and transcripts of the deposition of those experts. However, in its moving brief, other than generally claiming that the Exhibits “cited to, relied on or disclosed ‘Confidential Information’” as defined by a confidentiality agreement entered into by the parties, WTC offered little, to no additional information as to the particular documents, and what portions of those documents were deemed sensitive and confidential.
The court denied WTC’s motion on the grounds that WTC’s assertions were vague and conclusory, and thus, “insufficient to meet a movant’s burden to demonstrate compelling circumstances to justify restricting public access.” In commercial matters, the movant must demonstrate that the material it seeks to seal contains trade secrets, confidential business information, or proprietary information and that disclosure could be harmful to a party.[3] Specifically, the court found that WTC failed to address any particular document or transcript, or explain how or why public disclosure might cause potential harm. For example, concerning an Exhibit containing an expert’s opinion as to the alter ego status of certain entities, the Court found that WTC failed to indicate “what in the report requires sealing or why.” Similarly, WTC failed to address why certain Exhibits concerning foreign law and financial instruments from 2006 would need protection “so many years later.”
In their cross-motion, Defendants argued generally, that certain Exhibits contained confidential information concerning “business operations and internal practices and procedures” in which the public had no discernible interest in. The court denied Defendants’ cross-motion on the grounds it suffered similar conclusory infirmities as WTC’s motion. For example, certain deposition transcripts Defendants’ sought to seal involved transactions occurring prior to 2007 or other dated material and comments about general industry knowledge. The court found that Defendants did not sufficiently demonstrate what specific information was: (1) proprietary; (2) maintained in a confidential manner over the years; or (3) would lead to an unearned advantage for competitors if disclosed.
While Justice Reed denied WTC and Defendants’ motions in their entirety, he did so without prejudice, giving the parties an opportunity to make another motion to seal (which motion would concisely and specifically addresses each exhibit the party seeks to have sealed and/or redacted).
UPSHOT
Although the Commercial Division Rules permit the sealing of court records, motions to seal will not be granted based on conclusory or vague assertions of confidentiality. When asking the court to seal records, be ready to describe, with specificity, which documents need to be sealed and why.
[2] Prior to the Court’s decision, WTC reviewed the Exhibits further and eventually filed many, but not all, of the previously withheld Exhibits on NYSCEF.
[3] Vergara v Mission Capital Advisors, LLC, 187 AD3d 495, 496 (1st Dept 2020); Mancheski v Gabelli Group Capital Partners, 39 AD3d 499, 502 (2d Dept 2007).