Majority
I. INTRODUCTION
D
efendant, Universal City Studios, Inc., has filed a mandate petition which seeks to compel the respondent court to seal various documents pertinent to an arbitration dispute. We do not at this juncture decide the merits of defendant’s mandate petition. This is because in conjunction with the mandate petition, defendant has filed a motion with the clerk of this court to seal the aforementioned documents pursuant to California Rules of Court, rule 12.5(e).[1] As required by rule 12.5(e)(3), we permitted the aforementioned documents to be conditionally lodged under seal pending resolution of the merits of defendant’s sealing request. Additionally, after we issued several orders, defendant sought to narrow its sealing request to include only two documents. The two documents consist of an October 14, 1998, settlement agreement and a June 6, 2002, stipulation and sealing order in a federal case. We conclude the sealing requests pending before us should be denied. Hence, we will return the aforementioned documents to defendant as required by rule 12.5(e)(7).
Without the foregoing documents, the denial of defendant’s mandate petition is now foreordained because it will not be supported by the documents it seeks to have sealed. (Rule 56(c); Sherwood v. Superior Court (1979) 24 Cal.3d 183 , 186-187 [ 154 Cal.Rptr. 917 , 593 P.2d 862 ].) But we are required by rule 12.5(e)(7) to return the documents to defendant. We will allow defendant 10 days to file any supporting documents it wishes, but they must not be lodged under seal. We will defer final decision on the merits of the mandate petition for 11 days.
H. PROCEDURAL HISTORY
A. Proceedings in the Respondent Court
On November 5, 2002, plaintiff, Unity Pictures Corporation, filed its complaint for: rescission of the arbitration clause in the October 14, 1998, settlement agreement; fraud; and declaratory relief. The complaint, which is not sealed, alleged that the October 14, 1998, settlement agreement provided for strict confidentiality of its terms. Hence, the complaint indicated, further more specific facts would be alleged only when a sealing order had been secured. The first cause of action for rescission of the arbitration clause in the
1 All future references to a rule are to the California Rules of Court.
On November 27, 2002, plaintiff and Ram Ben Efraim filed a request pursuant to rule 243.2(d) to conditionally lodge under seal a motion to vacate certain “interlocutory arbitration orders” and for a preliminary injunction. Mr. Ben Efraim is not named as a party in the complaint. On December 23, 2002, defendant filed a motion to permit the filing of certain documents under seal pursuant to rules 243.1 and 243.2. The documents defendant sought to be sealed were: a motion to dismiss the present action; a motion to stay the present action pending the arbitrator’s ruling; and a judicial notice request. Further, defendant sought permission to file under seal its opposition to all of plaintiff’s motions. Also, defendant sought to permit plaintiff to file under seal its reply to the dismissal and stay requests. Defendant also sought the following sealing order: “The parties may also file under seal motions, briefs, declarations and/or other pleadings filed in this action that refer to any of the information contained in the Motion to Dismiss, Opposition and Reply, as well as other information or materials from the arbitration that the arbitrator may authorize the parties to file.” Finally, defendant requested that the respondent court order the parties and their counsel not to disclose the contents of any sealed documents to other persons or during any public court proceedings. Defendant asserted the following justification for sealing the foregoing documents: “An order sealing selected materials is necessary in order to preserve and protect the rights and obligations of the parties to the Arbitration Agreement, to maintain the confidentiality of certain information and to comply with the orders of the arbitrator in an arbitration currently
On March 6, 2003, the respondent court held a hearing on the sealing motions. The respondent court denied the sealing motions. The respondent court found: the only justification for sealing the various motions and papers was the contractual agreement of the parties; this understanding, by itself, did not constitute an overriding interest; and none of the other interests set forth in NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178 , 1222 [ 86 Cal.Rptr.2d 778 , 980 P.2d 337 ] footnote 46, warranted sealing the documents. The respondent court ordered the documents lodged conditionally under seal returned to the parties submitting the documents.
B. Defendant’s Mandate Petition and Current Sealing Motion
On April 3, 2003, defendant filed a mandate petition seeking to set aside the respondent court’s March 6, 2003, order denying its rule 243.2(b)(1) sealing motion. Plaintiff has not challenged the respondent court’s order denying the sealing motions. Accompanying defendant’s mandate petition is a motion to seal various documents. In this opinion, we only resolve the issue of the current motion before us to seal the documents which have been lodged conditionally under seal by defendant. Defendant requests we seal the October 14, 1998, settlement agreement which includes an arbitration clause; a dismissal motion; a motion to stay the present civil suit pending resolution of certain issues by the arbitrator; and a judicial notice request.
The judicial notice request contains numerous documents other than the October 14, 1998, settlement agreement which includes an arbitration clause. Because the documents attached to the judicial notice request have been conditionally lodged under seal, we will refer to them genetically or only by title. We will however refer to factual matters which are revealed in unsealed documents. Defendant has lodged the first amended complaint in the case of Ben Efraim v. Universal City Studios (Super. Ct. L.A. County, Feb. 23, 2001, No. BC243368) (the Ben Efraim action) and its attached exhibits. The attached exhibits to the February 23, 2001, Ben Efraim first amended complaint consist of: a movie agreement; a cross-complaint filed by defendant in the case of Kirchmedia GmbH & Co. v. Universal Studios (Super. Ct. L.A. County, Feb. 3, 2000, No. BC221645); a judgment on the pleadings
In support of the foregoing sealing request, defendant relies upon the following facts. On October 14, 1998, plaintiff entered into a settlement agreement with defendant. Because the October 14, 1998, settlement agreement has been conditionally lodged under seal, we will only generally describe its contents. As will be noted, publicly filed documents have revealed much about the nature of the October 14, 1998, agreement. A portion of the October 14, 1998, agreement required that certain disputes between plaintiff and defendant be arbitrated. Further, the agreement required that its terms remain confidential except certain disclosures could be made to an arbitrator. Attached to the October 14, 1998, settlement agreement were exhibits which consisted largely of four pages which reflect monetary payments to be made between the parties. Every one of the monetary sums set forth in the four pages conditionally lodged with us and the respondent court were redacted. Also, attached to the October 14, 1998, agreement was a promissory note. The sums due under the promissory note are redacted. None of the financial specifics in the October 14, 1998, agreement as executed by the parties appear in any documents filed in the respondent court and with us. A total of 88 separate redactions, all of which involve financial figures, have been made to the October 14, 1998, agreement. Finally, attached to the October 14, 1998, agreement was a letter from Mr. Ben Efraim to a vice-president of defendant.
Additionally, defendant relies on a series of sealing orders in related litigation. On June 26, 2001, a superior court judge signed a sealing order in the Ben Efraim lawsuit On an uncertain date in October 2001, a different Court of Appeal division issued an order sealing the entirety of any document which refers to the October 14, 1998, agreement. A second sealing order was issued by that Court of Appeal division on February 6, 2002. Further, defendant relies on a November 27, 2001, order issued by a superior court judge in the Ben Efraim litigation compelling arbitration and staying the civil
in. DISCUSSION
A. Disclosure Principles
In NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at pages 1217-1218, the California Supreme Court identified the constitutional requirements applicable to a request to seal court records as follows: “[B]e-fore substantive courtroom proceedings are closed or transcripts are ordered sealed, a trial court must hold a hearing and expressly find that (i) there exists an overriding interest supporting closure and/or sealing; (ii) there is a substantial probability that the interest will be prejudiced absent closure and/or sealing; (iii) the proposed closure and/or sealing is narrowly tailored to serve the overriding interest; and (iv) there is no less restrictive means of achieving the overriding interest.” (Italics & fns. omitted.) In terms of trial courts, the Judicial Council promulgated rules 243.1 and 243.2, which govern sealing requests in the trial courts in order to comply with the constitutional standards set forth in the NBC Subsidiary decision. (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292 , 298, fn. 3 [ 116 Cal.Rptr.2d 833 ]; Jud. Council of Cal., Advisory Com. com., reprinted at 23 pt. 1 West’s Ann. Codes, Rules (2003 supp.) foll, rule 243.1, pp. 285-286.) For reviewing courts, the Judicial Council promulgated rule 12.5.[2] As in the case of rules 243.1 and 243.2, rule 12.5 was adopted in response to the NBC Subsidiary
2 Rule 12.5(e) states in its entirety: “(e) Record not filed in the trial court; motion to file under seal [IQ (1) A record not filed in the trial court may be filed under seal in the reviewing court only by order of that court; it must not be filed under seal solely by stipulation or agreement of the parties, [f] (2) To obtain an order under (1), a party must serve and file a motion in the reviewing court, accompanied by a declaration containing facts sufficient to justify the sealing. With that motion, the party must lodge the record under (3), unless good cause is shown not to lodge it. [j[] (3) To lodge a record, the party must put the record in a manila envelope or other appropriate container, seal it, and attach a cover sheet that complies with rule 44(d) and labels the contents as ‘CONDITIONALLY UNDER SEAL.’ [ffl (4) If necessary to prevent disclosure, the motion, any opposition, and any supporting documents must be filed in a public redacted version and lodged in a complete version conditionally under seal, [f] (5) On receiving a lodged record, the clerk must note the date of receipt on the cover sheet and retain but not file the record. The record must remain conditionally under seal *1280 pending determination of the motion, [f] (6) The court may order a record filed under seal only if it makes the findings required by rule 243.1(d)-(e). [][] (7) If the court denies the motion, the clerk must not place the lodged record in the case file but must return it to the moving party.”
Once documents are lodged conditionally under seal, the justices rule whether the papers may be sealed. Rule 12.5(e)(6) requires the Court of Appeal to make the findings set forth in rule 243.1(d) through (e) before documents may be sealed. If the sealing motion is denied, the conditionally lodged documents must be returned to the moving party by the court clerk. (Rule 12.5(e)(7).) Rule 243.1(d) through (e), which sets forth the findings we must make in order to seal the conditionally lodged records, states: “(d) [Express findings required to seal records] The court may order that a record be filed under seal only if it expressly finds that: [][] (1) There exists an overriding interest that overcomes the right of public access to the record; [f] (2) The overriding interest supports sealing the record; [][] (3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; [f] (4) The proposed sealing is narrowly tailored; and [|] (5) No less restrictive means exist to achieve the overriding interest, [f] (e) [Scope of the order] [][] (1) An order sealing the record must (i) specifically set forth the factual findings that support the order, and (ii) direct the sealing of only those documents and pages—or, if reasonably practicable, portions of those documents and pages—that contain the material that needs to be placed under seal. All other portions of each document[] or page must be included in the public file.”
The issue we confront at present is whether to allow the conditionally lodged documents to be sealed pursuant to rule 12.5(e)(6). In order to seal the papers offered by defendant, we must make the findings in rule 243.1(d) through (e). Defendant argues that sealing is warranted because of its binding contractual obligation with plaintiff not to disclose the contents of the October 14, 1998, agreement. In NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at page 1222, footnote 46, the Supreme Court explained that closure of a court hearing and, by inference, sealing of documents may be justified if necessary to protect a civil litigant’s fair trial rights. The Supreme Court then identified other examples of where an
3 Rule 12.5(c)(1) states: “If a record sealed by the trial court is part of the record on appeal: [T (1) The sealed record must be filed under seal in the reviewing court and remain sealed unless that court orders otherwise under (f).”
In Publicker Industries, the Third Circuit decision cited in footnote 46 of the NBC Subsidiary decision, the “enforcement of binding contractual obligation[]” justification for closure and inferentially sealing was described follows: “Unless such an overriding interest exists, there is a presumption that the proceedings will be open to the public. [Citation.] [][] The overriding interest can involve the content of the information at issue, the relationship of the parties, or the nature of the controversy. For example, an interest in safeguarding a trade secret may overcome a presumption of openness. See Zenith Radio Corp. v. Matsushita Electric Industrial Corp. [(E.D. Pa. 1981)] 529 F.Supp. [866,] 890.) The content of the information is critical in that context. However, in the situation where a plaintiff seeks an injunction to prevent his former lawyer from disclosing certain information arguably within the attorney-client privilege, it is the relationship between the parties not the content of the information which might overcome the presumption of openness. See [Du Pont Powder Co.] v. Masland (1917) 244 U.S. 100 [ 61 L.Ed. 1016 , 37 S.Ct. 575 ]. A similar situation would be presented where there is a binding contractual obligation not to disclose certain information which to the court seems innocuous but newsworthy; in that situation unbridled disclosure of the nature of the controversy would deprive the litigant of his right to enforce a legal obligation.” (Publicker Industries, Inc. v. Cohen, supra, 733 F.2d at pp. 1073-1074, italics added.)
Defendant quite obviously relies on the foregoing language in Publicker to support its contention that footnote 46 of NBC Subsidiary permits sealing of the documents at issue. However, a thorough reading of all of the Publicker opinion makes it clear that the Third Circuit requires more than a mere agreement of the parties to seal documents filed in a public courtroom. At
The Third Circuit analysis is consistent with the NBC Subsidiary holding. In NBC Subsidiary, the trial court ordered closure of proceedings where the jury was not present in order to protect the litigants’ fair trial rights. (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at p. 1222.) The Supreme Court agreed that the protection of a fair trial right can be an overriding interest which would justify closure. However, the Supreme Court noted in NBC Subsidiary that the mere assertion of a fair trial cannot support a closure order. The Supreme Court held: “We believe that the trial court’s stated justification—protection of the underlying civil litigants’ right to a fair trial—is, in the abstract, an overriding interest, and that the First Amendment (and hence [Code of Civil Procedure] section 124) do, in an appropriate case, permit closure to protect that interest. The trial court, however, made no
In terms of the overriding interest requirement of a closure or sealing order, NBC Subsidiary identifies two separate elements. The first element requires the identification of an overriding interest. (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at pp. 1217-1218; see In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 298, fn. 3.) Defendant has identified such a potential overriding interest—a binding contractual agreement not to disclose. The second element of the overriding interest analysis is there must be a substantial probability that it will be prejudiced absent closure or sealing. (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at p. 1218; Pack v. Kings County Human Services Agency (2001) 89 Cal.App.4th 821 , 832 [ 107 Cal.Rptr.2d 594 ].) As we will note, defendant has not shown a substantial probability any such interest in the present case will be prejudiced—the second element of overriding interest analysis identified in NBC Subsidiary. This analysis has now been promulgated by the Judicial Council as one of the findings that must be returned before a sealing order can be entered. (Rule 243.1(d)(3) [“A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed ....”].)
B. The Two Sealing Requests
1. The October 14, 1998, settlement agreement
Independent of its broader requests, defendant requests that we seal the October 14, 1998, settlement agreement. We agree with defendant that its contractual obligation not to disclose can constitute an overriding interest within the meaning of rule 243.1(d). (Publicker Industries, Inc. v. Cohen, supra, 733 F.2d at p. 1073; NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at p. 1222, fn. 46.) However, the confidentiality provisions of the October 14, 1998, settlement agreement involved a document which is materially different from the one conditionally lodged with us
To sum up, no substantial prejudice to the contractual obligation not to disclose has been proven. The heavily redacted October 14, 1998, agreement is not the same document presented to us. Defendant has failed to make any showing of prejudice to any of its legitimate commercial interests if the heavily redacted October 14, 1998, agreement is unsealed.
2. The remaining papers except the financial records
In addition to the October 14, 1998, settlement agreement, defendant has requested we seal its motion to dismiss and stay as well as the judicial notice request, which were the documents lodged additionally under seal with the respondent court. At the outset, we emphasize the point we just made. Defendant has presented no admissible evidence as to how its legitimate confidential financial interests will be compromised or its competitive abilities adversely affected if the lodged documents are made available to the public. Disclosure will not affect whether the confidential arbitration will
One last observation is appropriate. Defendant correctly notes different courts have sealed documents, including the October 14, 1998, settlement agreement, in other cases. We respect those rulings. However, some of the documents in this case were not filed in the other matters. Also, in none of the other cases did any judicial officer purport to prohibit us from exercising our discretion based on the facts before us. Moreover, the facts in other cases are different from those in this one. Further, in none of the other cases is there any indication a thorough analysis was made of Publicker v. Industries, Inc. v. Cohen, supra, 733 F.2d at page 1073, and NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at page 1222, footnote 46. Additionally, rules 12.5 and 243.1 require that we exercise discretion based on the facts before us. Finally, in terms of the Court of Appeal sealing orders, rule 12.5(c)(1) required that any documents sealed in the trial court be filed at least initially under seal in the reviewing court. (See fin. 3, ante.) Those rulings, which involve in some cases different documents, are not binding on us.
C. The Financial Information
Included in the documents attached to the judicial notice request are 20 pages of financial and accounting data. The pages are largely blank except for specific entries relating to markets and certain financial data. The financial information includes proceeds in different markets for 25 different films. We asked defendant to brief the issue of whether these matters may involve
D. The Federal Court Order
As noted previously, defendant filed a second sealing motion which sought to seal only two documents—the October 14, 1998, settlement agreement and a June 6, 2002, federal court sealing order. We have already discussed the October 14, 1998, settlement agreement. As to the June 6, 2002, federal court sealing order, we decline to order that it be sealed based on the showing to date. The June 6, 2002, stipulated sealing order does not purport to compel any other court to file the order itself under seal.
E. The Return
On April 23, 2003, plaintiff filed a document entitled, “Unity Pictures Corporation Return To The April 11, 2003 Order To [Show] Cause Why The Relief Prayed For In The April 3, 2003 Petition For Writ Of Mandate Should Not Be Granted.” The return is unverified and consists principally of legal arguments in support of disclosure of the documents defendant seeks to have sealed. Defendant argues the return must be disregarded because it fails to
F. Defendant’s Options
Given our findings, the clerk is directed to return the exhibits lodged conditionally under seal to defendant. Within the next 10 days, defendant may file any documents it wishes. Upon refiling, if such occurs, all documents will be available to the public. If no records are refiled, the court will proceed to rule on the mandate petition.
T
he motion to seal is denied. The records are ordered returned to defense counsel. Defendant shall have 10 days to file any documents it desires but they are not to be filed under seal.
Grignon, J., and Armstrong, J., concurred.
Cases cited
- Sherwood v. Superior Court 24 Cal.3d 183 at 186-187 p. 1275
- NBC Subsidiary (KNBC-TV), Inc. v. Superior Court 20 Cal.4th 1178 at 1222 p. 1277
- In re Providian Credit Card Cases 96 Cal.App.4th 292 at 298 p. 1279
- Globe Newspaper Co. v. Superior Court for the Norfolk 457 U.S. 596 at 607 p. 1281
- Press-Enterprise Co. v. Superior Court of California 478 U.S. 1 at 9 p. 1281
- Press-Enterprise Co. v. Superior Court of California 464 U.S. 501 at 512 p. 1281
- E. I. Du Pont De Nemours Powder Co. v. Masland 244 U.S. 100 p. 1281
- Pack v. Kings County Human Services Agency 89 Cal.App.4th 821 at 832 p. 1283
- County of San Bernardino v. Superior Court 30 Cal.App.4th 378 at 382 p. 1287