Re: Dkt. Nos. 300, 302, 319, 321, 325, 336, 340, 342

The Court has before it multiple motions to seal, including supplemental motions and several errata, filed in conjunction with plaintiffs’ motion to strike defendant’s answer and for entry of default against defendant Xiamen 35.com Internet Technology Co., Ltd. (“35.CN”). See Dkt. Nos. 300, 302, 319, 321, 325, 336, 340, 342.

LEGAL STANDARD

The parties agree that because the underlying motion is a dispositive one,[1] the “compelling reasons” standard applies. In the Ninth Circuit, with the exception of a narrow range of documents that are “traditionally kept secret,” courts begin their sealing analysis with “a strong presumption in favor of access.” Foltz v. State Farm Mut. Auto. Ins., 331 F.3d 1122, 1135 (9th Cir. 2003). When applying to file documents under seal in connection with a dispositive motion, the submitting party bears the burden of “articulating compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process.” Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178-79 (9th Cir. 2006) (internal quotations and citations omitted). The Ninth Circuit has explained:

Under this stringent standard, a court may seal records only when it finds a compelling reason and articulates the factual basis for its ruling, without relying on hypothesis or conjecture. The court must then conscientiously balance the competing interests of the public and the party who seeks to keep certain judicial records secret. What constitutes a “compelling reason” is best left to the sound discretion of the trial court. Examples include when a court record might be used to gratify private spite or promote public scandal, to circulate libelous statements, or as sources of business information that might harm a litigant’s competitive standing.

Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1096-97 (9th Cir. 2016) (citations, internal quotation marks, and alterations omitted). In addition, all requests to file under seal must be “narrowly tailored,” such that only sealable information is sought to be redacted from public access. Civ. L.R. 79-5(c)(3).

DISCUSSION

The parties (plaintiffs, 35.CN, and the OnlineNIC defendants),[2] as well as third-party Internet Corporation of Assigned Names and Numbers (“ICANN”), have filed statements regarding the various sealing motions. To summarize, plaintiffs did not file a statement in support of sealing any material, explaining that 35.CN’s “Opposition and supporting declarations contain only conclusions abstracted from documents produced and designated by Plaintiffs in the course of discovery” and that “Plaintiffs do not believe that sealing those portions of the Opposition and supporting declarations purportedly containing Plaintiffs’ confidential information is necessary.” Dkt. No. 323 at 2. ICANN seeks to seal material that “reflect[s] personal identifiable information provided to ICANN.” Dkt. No. 309 at 1; Dkt. No. 326. ICANN, however, did not file a declaration in support of sealing material filed in connection with 35.CN’s opposition brief or plaintiffs’ objection to sur-reply evidence.[3] The OnlineNIC defendants have filed several declarations in support of sealing material, see Dkt. Nos. 312, 313, 334. OnlineNIC’s declarations go through lineby-line analysis of which portions of the materials the OnlineNIC defendants still wish to have sealed. They largely seek to seal information they say “is competitively sensitive, internal corporate financial information disclosing profitability.” See Dkt. No. 334 at 2-9.

35.CN has filed declarations in support of sealing essentially all of the material that 35.CN has designated as confidential. See Dkt. Nos. 310, 319-1, 328, 336-1, 344. The Court has reviewed the declarations and the material sought to be sealed. The Court will grant the motions requesting sealing of the materials for which ICANN filed a declaration in support of sealing. For the remainder of the material, the Court will seal only those portions of the filings that are financial figures or that disclose the names and contact information of rank-and-file employees. A party may move to seal confidential business and financial information that includes, among other items, financial terms of agreements, business strategies, and confidential negotiations. See Exeltis USA Inc. v. First Databank, Inc., 2020 WL 2838812 at *1-2 (N.D. Cal. June 1, 2020); In re Qualcomm Litig., 2017 WL 5176922, at *2 (S.D. Cal. Nov. 8, 2017). As to the remaining sealing requests, those are denied for failure to meet the legal standard and because the requests are not narrowly tailored.

The Court finds that 35.CN’s sealing motions in particular are overbroad and unsupported by compelling reasons. The Local Rules of this District caution that “overly broad requests to seal may result in the denial of a motion.” Civ. L.R. 79-5(f)(6). Looking at what 35.CN seeks to seal, almost none of the information could be construed as confidential. Rather, most of it involves the relationships among the parties that go to the very heart of the Court’s recent order on the question of alter ego. See Dkt. No. 351. For instance, 35.CN seeks to seal the portions of plaintiffs’ motion stating that Carrie Yu signed the Service Outsource Contracts on behalf of OnlineNIC at the same time that she was an employee of 35.CN, paid solely by 35.CN. See Dkt. No. 299, Pls.’ Mot. at 5:14-15. As another example, 35.CN—which is a publicly owned company—seeks to seal the identities of its wholly owned subsidiaries and its largest shareholders, officers, and directors. See Kroll Decl., Ex. A, App’x A at 5-6.

35.CN does not provide a targeted analysis of why sealing specific materials is warranted, but rather states, as to everything, that the documents “contain information concerning private financial transactions of Defendant, personal information about employees of Defendant and Defendant’s Chinese business partners, and the identities of employees of Defendant.” See, e.g., Dkt. No 310 ¶ 5. Relying “upon the analysis of Chinese outside counsel for Defendant,” 35.CN asserts that “Chinese law prohibits Chinese companies from disclosing a wide variety of data and personal information about Chinese residents to entities outside of China.” See id. ¶¶ 6, 9. 35.CN cites to outside counsel’s analysis, attached to a discovery dispute letter form June 2022. See id. ¶ 9 (citing Dkt. No. 247-11). The Court is not persuaded that this letter, written by a law firm that represents 35.CN in response to a discovery dispute, creates a compelling reason to seal from public view basic information such as who signed OnlineNIC and 35.CN’s outsourcing contracts. Moreover, the letter describes certain processes that Chinese companies may go through in order to validly disclose certain data. 35.CN has been on notice of the relevant issues in this case since at least August 2021 and should have taken steps to share the information necessary to support its litigation position. To the extent that 35.CN relies on the Court having granted “similar requests” earlier in this case, see Dkt. No. 328 ¶ 11, the Court reminds 35.CN that courts have “carved out an exception . . . for sealed materials attached to a discovery motion unrelated to the merits of a case[,]” applying a “good cause” standard. See Ctr. for Auto Safety, 809 F.3d at 1097 (citations omitted).

For the foregoing reasons, the Court hereby ORDERS that the motions to seal are granted or denied as follows:

Plaintiffs’ Motion to Strike and Related Documents:

35.CN’s Opposition and Related Documents:

Plaintiffs’ Reply and Related Documents:

35.CN’s Sur-Reply and Related Documents:

Plaintiffs’ Objections to Sur-Reply Evidence and Related Documents:

CONCLUSION

No later than December 1, 2023, plaintiffs and 35.CN shall re-file the motion to strike, opposition, reply, sur-reply, and objections to sur-reply evidence, along with the associated declarations and exhibits, on the public docket, sealing only those materials for which the Court has granted the sealing orders above. The parties may find it helpful to meet and confer about the re-filing of these more narrowly redacted documents.

IT IS SO ORDERED.

Footnotes