Opinion
Index No. 653840/2020 Motion Seq. No. 006
09-28-2024
1101-43 AVE ACQUISITION LLC, Plaintiff, v. SONDER HOSPITALITY USA INC., SONDER HOLDINGS INC., SONDER USA, INC., and SONDER CANADA INC., Defendants.
Unpublished Opinion
DECISION + ORDER ON MOTION
HON. ANDREA MASLEY, JUDGE:
The following e-filed documents, listed by NYSCEF document number (Motion 006) 190,191,192,193, 194, 195, 196, 197, 198, 266, 269 were read on this motion to/for SEAL
In motion seq. no. 006, nonparty Taconic Capital Advisors L.P. moves to seal the Consolidated, Amended and Restated Mortgage, Assignment of Leases, Rents and Hotel Revenue, Security Agreement and Fixture Filing between borrower 101-43 Ave Acquisition LLC and lender Taconic (NYSCEF No. 194), a February 5, 2020 email from Adam Hochfelder to Eric Sitman attaching "Sonder - Z Hotel (NYC) Lease (FULLY EXECUTED) [1 ].pdf") (NYSCEF No. 195), a March 10, 2020 email from Chris Barbaruolo to James Jordan, Eric Sitman, and Erin Rota re: "FW: Z Hotel - Steps" (NYSCEF No. 196), and Exhibit 5 a transcript of the deposition of Eric Sitman, dated October 20, 2022 on the ground that these documents contain "highly sensitive, proprietary, and non-public commercial information about Taconic's assets, investments, liabilities, business strategies, and approach to contracts." (NYSCEF 191, Taconic MOL at 1-2.)
Section 216.1(a) of the Uniform Rules for Trial Courts empowers courts to seal documents upon a written finding of good cause. It provides:
"(a) [e]xcept where otherwise provided by statute or rule, a court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof. In determining whether good cause has been shown, the court shall consider the interests of the public as well as the parties. Where it appears necessary or desirable, the court may prescribe appropriate notice and an opportunity to be heard."
Judiciary Law § 4 provides that judicial proceedings shall be public. "The public needs to know that all who seek the court's protection will be treated evenhandedly," and "[t]here is an important societal interest in conducting any court proceeding in an open forum." (Baidzar Arkun v Farman-Farma, 2006 NY Slip Op 30724[U], *2 [Sup Ct, NY County 2006] [citation omitted].) The public right of access, however, is not absolute. (See Danco Lab, Ltd. v Chemical Works of Gedeon Richter, Ltd., 274 A.D.2d 1,6 [1st Dept 2000].)
The "party seeking to seal court records bears the burden of demonstrating compelling circumstances to justify restricting public access" to the documents. (Mosallem v Berenson, 76 A.D.3d 345, 348-349 [1st Dept 2010] [citations omitted].) The movant must demonstrate good cause to seal records under Rule § 216.1 by submitting "an affidavit from a person with knowledge explaining why the file or certain documents should be sealed." (Grande Prairie Energy LLC v Alstom Power, Inc., 2004 NY Slip Op 51156 [U], *2 [Sup Ct, NY County 2004].) Good cause must "rest on a sound basis or legitimate need to take judicial action." (Danco Labs., 274 A.D.2d at 8.)
Courts have sealed records where trade secrets are involved or where the disclosure of documents "could threaten a business's competitive advantage." (Mosallem, 76 A.D.3d at 350-351 [citations omitted].) Additionally, the First Department has affirmed the sealing of records concerning financial information where there has not been a showing of relevant public interest in disclosure of the financing. (See Dawson v White & Case, 184 A.D.2d 246, 247 [1st Dept 1992].)
However, wholesale sealing of the entire record is generally disfavored, even if both parties to the litigation request sealing. (See Applehead Pictures LLC v Perelman, 80 A.D.3d 181, 192 [citation omitted].) Taconic fails to meet its substantial burden of establishing good cause to entirely seal these documents. For example, there is no good cause to entirely seal the deposition transcript of Sitman as opposed to redacting the portions where negotiated terms of contracts and business models are discussed.
As far as the assertion that these documents were designated confidential, a confidentiality agreement by itself does not constitute a basis to seal and does not excuse a party from making a showing of good cause as to why certain information should be redacted or sealed. (See Eccles v Shamrock Capital Advisors, LLC, 2023 NY Slip Op 32730[U] ** 5 [Sup Ct, NY County 2023] [citation omitted].) At most such an agreement supports redaction. (Id.)
Taconic's motion to seal the above-listed documents is denied without prejudice, and leave is granted to refile an application to seal portions of those documents which contain sensitive business information. The movant shall comply with Part 48 procedures in this regard and any application shall also be accompanied by an affidavit from a person with knowledge explaining why portions of the documents should be redacted.
Taconic's motion is supported by its counsel's affirmation (NYSCEF 192, Schwartz aff) instead of an affidavit from a person with knowledge explaining why the file or certain documents should be sealed/redacted.
Accordingly, it is
ORDERED that the Taconic's motion to seal is denied without prejudice; and it is further
ORDERED that Taconic (or any party) has 10 days of receipt of this order to file a new Order to Show Cause in accordance with this decision, if so advised, or the County Clerk will be directed to unseal the documents at issue.