Opinion
Index No. 651964/2019
08-03-2022
Linkable Networks, Inc., Plaintiff, v. Mastercard Incorporated, Mastercard International Incorporated, Defendant.
Unpublished Opinion
Robert R. Reed, J.
The following e-filed documents, listed by NYSCEF document number (Motion 003) 83, 84, 85, 86 were read on this motion to/for SEAL.
The following e-filed documents, listed by NYSCEF document number (Motion 005) 103, 104, 105 were read on this motion to/for SEAL.
The following e-filed documents, listed by NYSCEF document number (Motion 006) 112, 113, 114, 115 were read on this motion to/for SEAL.
Motion sequence nos. 003, 005 and 006 are consolidated herein for disposition.
In this commercial action, defendants Mastercard Incorporated and Mastercard International Incorporated (collectively Mastercard or defendants), move, by order to show cause, for an order pursuant to 22 NYCRR 216.1(a): (1) sealing for good cause the unredacted versions of defendants memorandum of law in support of their motion for summary judgment (NYSCEF doc. no. 55), accompanying exhibits (NYSCEF doc. nos. 58, 59, 60, 61, 73, 74, 75, 76, 77, 78, 79, 80), and statement of material facts (NYSCEF doc. no. 56) (collectively "summary judgment materials"); (2) restricting access to the sealed, unredacted version of the summary judgment materials to the parties; (3) restraining the Chief Deputy Clerk, Chief Clerk of Law and Equity, and/or the Chief Judgment Clerk from publicly publishing the unredacted summary judgment materials; and (4) directing that the redacted summary judgment materials (NYSCEF doc. nos. 81 and 82) remain on the public docket in their redacted form (motion seq. no. 003).
In motion sequence no. 005, defendants move, by order to show cause, for an order pursuant to 22 NYCRR 216.1(a): (1) sealing for good cause the unredacted versions of plaintiff Linkable Networks, Inc.'s ("Linkable") memorandum of law in opposition to Mastercard's motion for summary judgment (NYSCEF doc. no. 88), accompanying exhibits (NYSCEF doc. nos. 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102), responses to defendants' statement of material facts (NYSCEF doc. no. 89), and counterstatement of material facts (NYSCEF doc. no. 90)("summary judgment opposition materials"); and (2) ordering Linkable to file publicly redacted versions of its memorandum of law in opposition to Mastercard's motion for summary judgment, responses to defendants' statement of material facts, and counterstatement of material facts.
In motion sequence no. 006, defendants move by order to show cause for an order, pursuant to 22 NYCRR 216.1(a): (1) sealing for good cause the unredacted versions of defendants reply memorandum of law in support of their motion for summary judgment (NYSCEF doc. no. 107) and their response to plaintiff's counterstatement of material facts (NYSCEF doc. no. 111) (together Mastercard reply); (2) restricting access to the sealed, unredacted version of the Mastercard reply to the parties; (3) restraining the Chief Deputy Clerk, Chief Clerk of Law and Equity, and/or the Chief Judgment Clerk from publicly publishing the unredacted Mastercard reply; and (4) directing that the redacted version of the reply memorandum of law in support of defendant's motion for summary judgment (NYSCEF doc. no. 108) remain on the public docket in its redacted form (motion sequence no. 006).
For the reasons set forth below, the motions are granted.
Protective Order
On May 30, 3019, the parties entered into a stipulation to seal documents, which was so ordered by the court on June 4, 2019 (protective order) (NYSCEF doc. no. 14). According to the protective order, the parties stipulated and agreed that there was good cause to seal "the confidential document" which is a copy of the MasterCard Rewards System Value Network Services Agreement (services agreement) entered into by the parties that is referenced in the complaint in the instant action (id., ¶ 1). "Defendants maintain that the services agreement contains deal terms that are not available to the public or to its competitors, disclosure of which would harm defendants' business advantage" (id., ¶ 3). As "the parties agreed to keep the services agreement confidential when entering into the agreement," "good cause exists to maintain the agreement as confidential and to file it under seal in connection with this action" (id., ¶¶ 4, 5).
Discussion
Under New York law, there is a presumption that the public is entitled to access to judicial proceedings and court records (Mancheski v Gabelli Group Capital Partners, 39 A.D.3d 499, 501 [2d Dept 2007]). The public's right to access, however, is not absolute, and a court is empowered to seal or redact court records pursuant to section 216.1 (a) of the Uniform Rules for Trial Courts upon a showing of "good cause" (Danco Labs v Chemical Works of Gedeon Richter, 274 A.D.2d 1, 8 [1st Dept 2000]).
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."
Thus, sealing has been found to be appropriate to preserve the confidentiality of materials which involve internal finances of a party which are of minimal public interest (see D'Amour v Ohrenstein & Brown, LLP, 17 Misc.3d 1130 [A], 2007 NY Slip Op 52207[U] [NY Sup Ct. NY County 2007]). In the business context, courts permit records to be sealed when trade secrets are involved or when disclosure of information contained in documents "could threaten a business's competitive advantage" (Mosallem v Berenson, 76 A.D.3d 345, 350-351 [1st Dept 2010]). Moreover, sealing has been allowed in the absence of "any legitimate public concern, as opposed to mere curiosity, to counterbalance the interest of [a business's] partners and clients in keeping their financial arrangement private" (Dawson v White & Case, 184 A.D.2d 246, 247 [1st Dept 1992] [internal quotation marks and citation omitted]).
Motion Sequence No. 003
On April 21, 2022, restricted versions of the summary judgment materials were filed on the docket and are available to the public. The summary judgment materials contain quotations, excerpts, and detailed discussion, as well as exact copies, of confidential agreements entered into by the parties to this litigation with each other and with nonparties.
Mastercard requests that the Court enter an order permanently sealing the summary judgment materials, restricting access to the parties only, and directing that the redacted versions of the documents remain on the public docket in their redacted form. Mastercard argues that good cause exists to seal the summary judgment materials because they contain information related to highly confidential business dealings of the parties with one another, as well as nonparties to the action with whom the parties may have obligations of confidentiality. It claims that the parties' competitive interests may be harmed by disclosure.
Mastercard further claims that disclosure of the summary judgment materials would impact the competitive business interests of both Mastercard and Plaintiff, as the agreements and transaction documents they discuss, cite, and append as exhibits are (in Mastercard's case) or are purported by plaintiff to be (in plaintiff's case) proprietary materials reflecting commercial interests, business strategy, legal and/or financial planning, and other categories of information traditionally shielded from public access. Mastercard has taken steps to avoid public disclosure of such sensitive agreements, as revealing them would provide competitors with knowledge of how Mastercard approaches and structures its commercial dealings. Moreover, there is no compelling public interest in the documents at issue, which concern only the private dealings of the commercial parties in this case with each other and with nonparties.
There is no opposition to the motion and no indication that the public or press would have an interest in this matter. Absent an order from this court, highly sensitive transaction documents implicating both the confidentiality obligations of the parties and the privacy interests of nonparties will remain unrestricted on the docket. A party "ought not to be required to make their financial information public... where no substantial interest would be furthered by public access to that information" and that "[s]ealing a court file may be appropriate to preserve the confidentiality of materials which involve the internal finances of a party and are of minimal public interest" (D'Amour, 17 Misc.3d 1130[A], 2007 NY Slip Op 52207[U] at *20). This court has discretion, on a case-by-case basis, to determine if good cause exists (Macheski v Gabelli Group Capital Partners, 39 A.D.3d 499, 502 [2d Dept. 2007]).
Those portions of the proposed redactions to the memorandum of law in support of summary judgment" (NYSCEF doc. no. 55) as well as the statement of material facts (NYSCEF doc. no. 056) defendants seek to have redacted as they relate to those exhibits subject to the Protective Order (i.e., NYSCEF doc. no. 58 and as discussed herein), comport with the applicable sealing standards as set forth in Mosallem (76 A.D.3d at 348-350). Likewise, the confidentiality agreement between the parties (NYSCEF doc. no. 60) falls within these parameters (id.). As to exhibits 2 & 4 (NYSCEF doc. nos. 59, 61), the court finds the documents contain sensitive financial information concerning business strategies, licensing agreements and fees of nonparties such that protection is warranted (see id.; Mancheski v Gabelli Group Capital Partners, 39 A.D.3d at 502 ["disclosure could impinge on the privacy rights of third parties who clearly are not litigants herein"]; Catalyst Investors III, L.P. v The We Co., 2022 NY Slip Op 31581[U] [Sup Ct, NY County May 13, 2022, No. 654377/2020]).
With respect to NYSCEF Doc. Nos 73 through 80, those documents contain various correspondence and emails between the parties' counsel as it concerns proprietary materials reflecting commercial interests, business strategy, legal planning and other categories of information traditionally shielded from public access. As there is no compelling public interest in the documents at issue, and as there is no opposition, the court finds that these records should be sealed (see e.g. Offshore Brazil II Hotel Investors Fund, LP v GP Investments, Ltd, 2018 NY Slip Op 32004[U], *2 [Sup Ct, NY County 2018], citing Feffer v Goodkind, Wechsler, Labaton & Rudoff, 152 Misc.2d 812, 815-816 [Sup Ct, NY County 1991] ["'the internal finances' of a party are not a matter of public interest"], affd 183 A.D.2d 678 [1st Dept 1992]).
Motion Seq. No. 005
On May 10, 2022, Linkable filed summary judgment opposition materials and concurrently filed a proposed order to show cause seeking an order sealing the materials for good cause pursuant to 22 NYCRR 216.1(a). According to Linkable, the summary judgment opposition materials quote from a confidential asset purchase agreement between Linkable and a nonparty. The summary judgment opposition materials also quote from documents Mastercard produced with the confidentiality designation "HIGHLY CONFIDENTIAL-ATTORNEYS' EYES ONLY" under the parties stipulated protective order in this matter. Linkable asserts that good cause exists to order the summary judgment opposition materials to be filed under seal, as it aims to protect the confidential, sensitive business information of a nonparty, as well as protect those interests set forth in the protective order to which the parties stipulated. Mastercard does not oppose the motion.
Plaintiff seeks to seal those portions of the opposition papers, namely, the memorandum of law in opposition to the summary judgment motion, as well as the responses to defendant's statement of material facts and plaintiff's counterstatement of material facts which address those private confidential matters as it pertains to business strategies in connection with the asset purchase agreement and services agreement and any amendments thereto. The court finds that they comport with the applicable sealing standards as set forth in Mosallem (76 A.D.3d at 348-350).
Likewise with respect to the accompanying exhibits the court finds that finds the documents contain extensive sensitive, nonpublic financial information concerning business strategies, licensing agreements and agreements and fees of nonparties as well as legal planning and therefore such protection is warranted (see id.; Mancheski v Gabelli Group Capital Partners, 39 A.D.3d at 502 ["disclosure could impinge on the privacy rights of third parties who clearly are not litigants herein"]; Catalyst Investors III, L.P. v The We Co., 2022 NY Slip Op 31581[U]). The motion to seal shall be granted for the same reasons as set forth above (see discussion regarding motion seq. no. 003).
Motion Seq. No. 006
On May 16, 2022, Mastercard filed its reply memorandum of law and response to plaintiff's counterstatement of material facts (NYSCEF Doc. Nos. 107, 111), a redacted version of the reply memorandum of law (NYSCEF Doc. No. 108), and the instant motion.
Here, defendants assert that the Mastercard reply contains information related to highly confidential business dealings of the parties with one another, as well as with nonparties to this action to whom the parties may have obligations of confidentiality. They claim that good cause exists to seal these records because competitive interests may be harmed by disclosure and because there is no compelling public interest with respect to these purported private and sensitive commercial documents.
Specifically, defendants contend that portions of the Mastercard reply describe and contain quotations from sensitive agreements and transaction documents belonging to the parties herein as well as nonparties, agreements which reveal proprietary and nonpublic aspects of Mastercard's business and legal strategy and the way Mastercard approaches and engages in commercial relationships. Mastercard has taken steps to maintain the confidentiality of such documents as it believes disclosure to competitors would be damaging. Such protective measures include the protective order (NYSCEF Doc. No. 48), and stipulation between the parties and so ordered by the court (NYSCEF Doc. No. 14). Linkable does not oppose the motion.
As the reply and response to plaintiff's counterstatement of material facts refer to the same agreements referenced above, for the reasons set forth above, the motion is granted.
The court notes that going forward the parties are reminded that any such motions seeking a confidentiality order or sealing documents shall comply with this Part's rules, effective July 2022, as set forth in paragraph nine, particularly subsections (d) and (e). Failure to comply with the Part rules may result in denial of the motion.
Conclusion
Accordingly, it is
ORDERED that motion seq. no. 003 is granted. As redacted versions of NYSCEF Doc. Nos. 55 and 56 have already been filed publicly and unredacted copies have been filed under temporary seal, defendants need not refile duplicates; however, defendants shall file a redacted copy of NYSCEF Doc. Nos. 58, 59, 60, 61, 73, 74, 75, 76, 77, 78, 79 and 80 by August 15, 2022; and it is further
ORDERED that the New York County Clerk, upon service to him of this order by movant, shall seal NYSCEF Doc. Nos. 55, 56, 58, 59, 60, 61, 73, 74, 75, 76, 77, 78, 79 and 80; and it is further
ORDERED that the New York County Clerk shall restrict access to the sealed documents with access to be granted only to authorized court personnel and designees, the parties and counsel of record in the above-captioned action, and any representative of a party or of counsel of record upon presentation to the County Clerk of written authorization from counsel; and it is further
ORDERED that motion seq. no. 005 is granted. Plaintiff shall file a redacted copy of NYSCEF Doc. Nos. 88, 89, 90, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101 and 102 by August 15, 2022; and it is further
ORDERED that the New York County Clerk, upon service to him of this order by movant, shall seal NYSCEF Doc. Nos. 88, 89, 90, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101 and 102; and it is further
ORDERED that the New York County Clerk shall restrict access to the sealed documents with access to be granted only to authorized court personnel and designees, the parties and counsel of record in the above-captioned action, and any representative of a party or of counsel of record upon presentation to the County Clerk of written authorization from counsel; and it is further
ORDERED that motion seq. no. 006 is granted. As redacted versions of NYSCEF Doc. Nos. 107, 108 and 111 have been filed publicly and unredacted copies under temporary seal, defendants need not file duplicates; and it is further
ORDERED that the New York County Clerk, upon service to him of this order by movant, shall seal NYSCEF Doc. Nos. 107, 108 and 111; and it is further
ORDERED that the New York County Clerk shall restrict access to the sealed documents with access to be granted only to authorized court personnel and designees, the parties and counsel of record in the above-captioned action, and any representative of a party or of counsel of record upon presentation to the County Clerk of written authorization from counsel; and it is further
ORDERED that this order does not authorize sealing or redacting for purposes of trial.