Signed, Sealed, Delivered
April 28, 2023
Under Section 216.1(a) of the Uniform Rules for Trial Courts (“Section 216.1(a)”), courts are authorized to seal documents “upon a written finding of good cause, which shall specify the grounds thereof.” Section 216.1(a) states that “whether good cause has been shown, the court shall consider the interests of the public as well as of the parties.” A recent decision from Justice Andrea Masley of the Manhattan Commercial Division in Aydus Worldwide DMCC v. Teva Pharmaceuticals Industries Ltd., serves as a gentle reminder that documents merely marked as “confidential,” “private,” or for “Attorneys’ Eyes Only” are not a sufficient to demonstrate “good cause,” triggering the court’s judicial discretion to seal the record.
Defendant Teva Pharmaceutical Industries Ltd. (“Defendant”) moved for an order, under Section 216.1 (a), to seal unredacted versions of Plaintiff Zydus Worldwide DMCC’s (“Plaintiff”) Interrogatory Responses and Plaintiff’s Memorandum of law. Defendant argued that because the documents contain nonpublic financial and business information that the Plaintiff, itself, designated as for “Attorneys Eyes Only,” those documents therefore should be sealed in their entirety. Defendant, in its moving papers, further argued that “private companies have a compelling interest in maintaining the confidentiality of information that if disclosed, would harm their competitive standing.”
The Aydus Court’s Holding
The Aydus Court acknowledged that, in a business context, courts have exercised their discretion in sealing the record, in circumstances where the disclosure of documents “could threaten a business’s competitive advantage.” In addition, the Aydus Court stated that records containing financial information may only be sealed when no showing has been made regarding relevant public interest in the event that such information will be revealed.
The party seeking to seal the records has the burden to show that “compelling circumstances [exist] to justify restricting public access” to the documents. The Aydus Court found that the Defendant failed to satisfy its burden. Defendant merely argued that the documents were “designated as Attorneys’ Eyes Only” by the Plaintiff and failed to explain how the information in these documents, if disclosed, would be damaging to the parties or nonparties.
As a result, the Aydus Court denied Defendant’s motion because Defendant did not demonstrate “good cause” to redact any of the information at issue or seal the records in their entirety. The Aydus Court further highlighted that the “mere the fact that [a party] has designated the documents at issue as “Attorneys’ Eyes Only” is not itself a basis for sealing them or redacting information from them.” Similarly, even though parties may have mutually agreed to seal the record, consent does not circumvent the “good cause” requirement of Section 216.1 (a).
Demonstrating that “good cause” exists for purposes of sealing records is a substantial burden for parties to overcome. Parties seeking to seal the records must look beyond how documents are designated and have a sufficient basis in making a motion to seal.