Opinion
653357/2011
03-25-2021
CORTLANDT STREET RECOVERY CORP., Wilmington Trust Company, as Trustee, Plaintiff, v. David BONDERMAN, James Coulter, Martin Halusa, John Megrue, Giancarlo Aliberti, Matthias Calice, TPG Capital-Newyork., Inc., Apax Partners, L.P. d/b/a Apax Partners of New York, TPG Partners IV, L.P., TPG Advisors IV, Inc., TPG Genpar IV, L.P., TPG Advisors II, Inc., T3 Genpar II, L.P., T3 Partners II, L.P., T3 Parallel II, L.P., Apax Partners Europe Managers Limited, Apax Europe VI GP Co. Limited, Apax Europe VI GP, L.P., Apax Europe VI-A, L.P., Apax Europe VI-I, L.P., Troy, L.P. Inc., Apax WW Nominees Ltd., TPG Troy, LLC, T3 Troy, LLC, TCW HT-Co-Iinvest I L.P., TCW HT Co-Invest II L.P., TPG Capital, L.P., TPG Partners IV, L.P., T3 Partners II, L.P., Apax Partners LLP, Apax Partners, L.P., John and Jane Does No. 1-99, Defendant.
FOLEY & LARDNER LLP, By: Douglas E. Spelfogel, Peter N. Wang, Richard J. Bernard, Derek L. Wright, Alissa Nann, 90 Park Avenue, New York, NY 10016, (212) 338-3401, Attorneys for Plaintiff Wilmington Trust Company ROPES & GRAY LLP, By: Robert S. Fischler, Lisa H. Bebchick, Paul S. Kellogg, 1211 Avenue of the Americas, New York. New York 10036-8704, Tel: (212) 596-9000, Attorneys for Apax-related defendants KASOWITZ BENSON TORRES LLP, By: Paul M. O'Connor III, David J. Abrams, Jennifer McDougall, 1633 Broadway, New York. New York 10019, Tel: (212) 506-1700, Attorneys for TPG-related defendant
FOLEY & LARDNER LLP, By: Douglas E. Spelfogel, Peter N. Wang, Richard J. Bernard, Derek L. Wright, Alissa Nann, 90 Park Avenue, New York, NY 10016, (212) 338-3401, Attorneys for Plaintiff Wilmington Trust Company
ROPES & GRAY LLP, By: Robert S. Fischler, Lisa H. Bebchick, Paul S. Kellogg, 1211 Avenue of the Americas, New York. New York 10036-8704, Tel: (212) 596-9000, Attorneys for Apax-related defendants
KASOWITZ BENSON TORRES LLP, By: Paul M. O'Connor III, David J. Abrams, Jennifer McDougall, 1633 Broadway, New York. New York 10019, Tel: (212) 506-1700, Attorneys for TPG-related defendant
Robert R. Reed, J.
In this action, plaintiff seeks to enforce a judgment. In this motion, sequence No. 019, plaintiff seeks an order sealing the redacted portions of an opposition memorandum of law (OMOL) in motion sequence No. 18, and the entirety of many exhibits attached to plaintiff's attorney's opposition affirmation (Attorney Affirmation) in that motion. Defendants cross-move for an order sealing six deposition transcripts attached to the Attorney Affirmation.
Pursuant to 22 NYCRR § 216.1 (a), a court is empowered to seal court records "upon a written finding of good cause." "[B]ecause confidentiality is the exception and not the rule, ‘the party seeking to seal court records has the burden to demonstrate compelling circumstances to justify restricting public access’ " ( Maxim, Inc. v. Feifer, 145 A.D.3d 516, 517, 43 N.Y.S.3d 313 [1st Dept. 2016] [internal citation omitted], quoting Mosallem v. Berenson, 76 A.D.3d 345, 349, 905 N.Y.S.2d 575 [1st Dept. 2010] ) and must "overcome the broad presumption of public entitlement to judicial proceedings and court records" ( Norddeutsche Landesbank Girozentrale v. Tilton, 165 A.D.3d 447, 448-449, 86 N.Y.S.3d 12 [1st Dept. 2018] [affirming trial court's denial of sealing order for financial information which "[did] not involve trade secrets or information that could result in a competitive disadvantage"]; Applehead Pictures LLC v. Perelman, 80 A.D.3d 181, 191-192, 913 N.Y.S.2d 165 [1st Dept. 2010] [benefit of public access presumed and sealing allowed only for "compelling objectives"]). Sealing may be permissible if disclosure could be harmful to a party and would not serve a legitimate public purpose, and "no alternative to sealing can adequately protect the threatened interest" ( Mancheski v. Gabelli Group Capital Partners, 39 A.D.3d 499, 502, 835 N.Y.S.2d 595 [2d Dept. 2007] ; see e.g. Jetblue Airways Corp. v. Stephenson, 31 Misc. 3d 1241(A), 2010 N.Y. Slip Op. 52405(U) *7, 2010 WL 6781684 [Sup. Ct., N.Y. County 2010], affd 88 A.D.3d 567, 931 N.Y.S.2d 284 [1st Dept. 2011] [sealing permitted of "sensitive proprietary and business information" where "[t]he parties ha[d] an interest in protecting these documents and there [wa]s no countervailing public interest that would be furthered by their disclosure"]). "[N]either the potential for embarrassment or damage to reputation, nor the general desire for privacy, constitutes good cause to seal court records" ( Mosallem, 76 A.D.3d at 351, 905 N.Y.S.2d 575 ).
In moving, plaintiff sought to seal over 60 documents and deposition transcripts (the Exhibits or Exhibits) for which it initially filed placeholder pages on NYSCEF pending plaintiff's further review of those materials. Plaintiff acknowledged that it might not be necessary to seal all of the Exhibits, but requested a sealing order for the unspecified period of its review. Not long after, plaintiff filed unredacted copies of many of the Exhibits on NYSCEF, but did not update the court as to the status of its review.
Concerning commercial matters, the movant must demonstrate that the material it seeks to have sealed "contains trade secrets, confidential business information, or proprietary information" ( Vergara v. Mission Capital Advisors, LLC, 187 A.D.3d 495, 496, 133 N.Y.S.3d 243 [1st Dept. 2020] [reversing trial court sealing order]; Norddeutsche Landesbank,165 A.D.3d at 449, 86 N.Y.S.3d 12 ). Such materials and information generally would involve closely guarded information about current or future business plans or strategies, the disclosure of which likely would provide an advantage to a competitor (see Mancheski, 39 A.D.3d at 503, 835 N.Y.S.2d 595 ). Even though the motion and the cross motion are unopposed, the court is required to make its own inquiry to determine whether sealing is warranted (see Applehead Pictures, 80 A.D.3d at 181, 913 N.Y.S.2d 165 ).
Plaintiff's vague and conclusory assertions, which do not address any particular document or deposition transcript, or explain how or why public disclosure might cause potential harm, are insufficient to meet its burden on this motion. Review of several of the unfiled Exhibits reveals that they primarily involve transactions from as long as 15 years ago. One of the Exhibits indicate that information about certain of those transactions was provided to banks or rating agencies, so it is not clear what information was closely guarded. Plaintiff has not indicated what portions of the voluminous remaining withheld Exhibits it deems sensitive and confidential, and this is not self-evident from the materials, especially as many documents about this case have now been disclosed on NYSCEF.
For example, Exhibit 11 to the Attorney Affirmation is an expert's opinion as to the alter ego status of certain entities, but what in the report requires sealing or why is not addressed. Exhibit 84 to the Attorney Affirmation primarily addresses the law of Luxembourg and financial instruments relating to a 2006 transaction, but why this information would require protection so many years later is not sufficiently addressed. In addition, redacted portions of the OMOL rely on documents, or are quotes from documents, that plaintiff has now filed in unredacted form (see e.g. NYSCEF Doc. No. 536 at 16 [n 17], 17 [n 18], 19 [n 38], 20, 21, 45). Thus, there no longer appears to be a reason for such redactions in the OMOL. That the documents and testimony have been designated confidential by the parties, is not sufficient alone to demonstrate entitlement to sealing.
In cross-moving, defendants contend that deposition transcripts of current or former employees of two private equity firms should be sealed because they concern the business operations and internal practices and procedures of those firms. This assertion is conclusory, does not address whether information about such operations or internal practices has been closely guarded, and thus is insufficient to meet a movant's "burden to demonstrate compelling circumstances to justify restricting public access" ( Maxim, Inc., 145 A.D.3d at 517, 43 N.Y.S.3d 313 [internal quotation marks and citation omitted]; compare e.g. MBIA Ins. Corp. v. Countrywide Home Loans, Inc., 2013 N.Y. Slip Op. 30184(U), **11, **13, 2013 WL 450030 [Sup. Ct., N.Y. County 2013] ["revelation of the specific amounts spent by BAC could harm its negotiations with other vendors" and "[r]evelation of the formulas themselves, assumptions underlying the formulas, or other bases used to set reserves could cause competitive harm ... as this information could reveal BAC's financial ability to resolve certain claims"]; D'Amour v. Ohrenstein & Brown, LLP, 17 Misc. 3d 1130(A), 2007 N.Y. Slip Op. 52207(U), *20, 2007 WL 4126386 [Sup. Ct., N.Y. County 2007] [sealing income tax returns with schedules for individuals, some of whom were no longer associated with the firm, financial statements and non-public, confidential firm agreements and memoranda]).
As an example, in exhibit 7 to the Attorney Affirmation, a deposition transcript, the deponent discusses certain entities, but his testimony is primarily about transactions that occurred prior to 2007. The court cannot assume that this information has been guarded, or that disclosure of it, at this point, would cause harm. In exhibit 23 to the Attorney Affirmation, the information discussed also appears dated and/or, primarily, general industry knowledge. In exhibit 49, the deponent does not appear to extensively address internal business operations or practices and procedures in a specific manner. Defendants have not sufficiently demonstrated what information discussed in the depositions: (1) is proprietary; (2) was maintained in a confidential manner over the years; or (3) would lead to an unearned advantage for competitors if disclosed. There also has been no showing that selected redaction, or the sealing of attachments to deposition transcripts, would not suffice to provide genuinely needed protection. While it may be that some of the Exhibits, including the ones discussed above, contain information such that sealing or redaction would be permissible, this has not been sufficiently demonstrated here.
As neither party has met its burden, the motion and cross motion are denied, but denial is without prejudice to either party making another motion to seal which concisely and specifically addresses each exhibit that the party seeks to have sealed or redacted. Any currently unfiled Exhibits, or any portion of the OMOL, that is not the subject of a motion to seal made within 45 days of the date of this order shall be uploaded to NYSCEF, as described below.
In light of the foregoing, it is
ORDERED that the motion and cross-motion are denied without prejudice, in accordance with the decision above; and it is further
ORDERED that any exhibit to plaintiff's attorney's opposition affirmation in motion sequence No. 18, and any portion of NYSCEF Doc. No. 536, that has not already been filed in full on NYSCEF and that is not the subject of a motion to seal made within 45 days of the date of this order shall be uploaded to the NYSCEF system by the plaintiff within 45 days of the date of this order.