Opinion
1:23-CV-629
04-04-2024
NATERA, INC., Plaintiff, v. NEOGENOMICS LABORATORIES, INC., Defendant.
MEMORANDUM OPINION AND ORDER
Catherine C. Eagles, Chief District Judge.
This matter is before the Court on numerous motions to seal directed to evidence that either the plaintiff, Natera, Inc., or the defendant, NeoGenomics Laboratories, Inc., contends is confidential business information. The motions are granted in part and denied in part as reflected in the chart appended to this Order.
I. Public Notice
Before sealing judicial records, the district court must give the public notice and a reasonable opportunity to challenge the request to seal. Va. Dep 't of State Police v. Wash. Post, 386 F.3d 567, 576 (4th Cir. 2004). Here, the public has had adequate notice of the motions to seal; the most recent motion, Doc. 195, has been on the docket since January 11, 2024, and the others have been docketed longer. See Mears v. Atl. Se. Airlines, Inc., No. 12-CV-613, 2014 WL 5018907, at *2 (E.D. N.C. Oct. 7, 2014) (holding that the filing of a motion to seal provides adequate public notice and opportunity to be heard) (citing In re Knight Publ'g Co., 743 F.2d 231, 235 (4th Cir. 1984)). No objections have been filed.
After the Court denied Natera's first motion to seal, Doc. 15, as overbroad and unsupported by evidence, Natera filed a motion for reconsideration on February 20, 2024. See Doc. 219 (order denying motion to seal); Doc. 221 (motion for reconsideration). The Court granted the motion for reconsideration on March 18, Doc. 250, and will issue a ruling on the motion to seal at Doc. 15 in this Order. The public has had plenty of time to consider the motion for reconsideration as well as the others motions to seal.
II. Legal Standard
The public has a qualified right of access to judicial records. Doe v. Pub. Citizen, 749 F.3d 246, 265 (4th Cir. 2014) [Doe I\;M.G.M. ex rel. Mabe v. Keurig Green Mountain, Inc., No. 22-CV-36, 2022 WL 6170557, at *1 (M.D. N.C. Oct. 7, 2022). “Documents filed with the court are judicial records if they play a role in the adjudicative process or adjudicate substantive rights.” In re Application of the U.S. for an Ord. Pursuant to 18 U.S.C. Section 2703(D), 707 F.3d 283, 290 (4th Cir. 2013) (cleaned up) [2703(D) Order Application].
The public right of access derives “from the First Amendment and the common law tradition that court proceedings are presumptively open to public scrutiny.” Doe I, 749 F.3d at 265. The common law presumes a right of access to all judicial records and documents, but this presumption can be rebutted if “the public's right of access is outweighed by competing interests.” Knight, 743 F.2d at 235, accord United States v. Doe, 962 F.3d 139, 145 (4th Cir. 2020) [Doe II]. The First Amendment right of access extends only to particular judicial records and documents and can only be restricted if there is a compelling governmental interest, Doe I, 749 F.3d at 266, or in limited circumstances, a compelling private interest. See Fortson v. Garrison Prop, and Cas. Ins. Co., No. 19-CV-294, 2022 WL 824802, at *2 n.l (M.D. N.C. Mar. 18, 2022); Doe II, 962 F.3d at 147-48. The compelling interest must be “narrowly tailored,” and the moving party must present “specific reasons that justify restricting access to the information; conclusory assertions are not sufficient.” See Syngenta Crop Prot., LLC v. Willowood, LLC,No. 15-CV-274, 2017 WL 6001818, at *3 (M.D. N.C. Dec. 4,2017) (cleaned up); see also Doe I, 749 F.3d at 270 (holding district court erred by relying on unsupported statements of potential reputational harm to moving party); Wash. Post, 386 F.3d at 575 (holding moving pally must “present specific reasons in support of its position”).
When a party asks to seal judicial records, the court “must determine the source of the right of access with respect to each document,” and then “weigh the competing interests at stake.” Wash. Post, 386 F.3d at 576 (cleaned up). The public right of access to documents filed in connection with a preliminary injunction motion stems from the First Amendment. See, e.g, Bayer v. Cropscience Inc. v. Syngenta Crop Prot., LLC, 979 F.Supp.2d 653, 656 (M.D. N.C. Oct. 17, 2013); RLI Ins. Co. v. Nexus Servs., Inc., No. 18-CV-66, 2018 WL 10602398, at *1 (W.D. Va. Oct. 30, 2018) (holding First Amendment access applies to “motion for preliminary injunction and its supporting memorandum, declarations, and exhibits”). Thus, a motion to seal must be supported by a compelling governmental or private interest that is narrowly tailored. See discussion supra. Additionally, there must be “a substantial probability that, in the absence of closure, the compelling interest will be harmed” and “no alternatives to closure will adequately protect the compelling interest.” Doe II, 962 F.3d at 146 (cleaned up).
III. Compelling Private Interest in Confidential Business Information
In the appropriate case, “[t]he interest in preserving the confidentiality of sensitive business information” can override the public's First Amendment right of access. Warner v. Midland Funding, LLC, No. 18-CV-727, 2021 WL 3432556, at *7 (M.D. N.C. Aug. 5, 2021); Doe I, 749 E3d at 269 (“A corporation may possess a strong interest in preserving the confidentiality of its proprietary and trade-secret information, which in turn may justify partial sealing of court records.”); see, e.g, Silicon Knights, Inc. v. Epic Games, Inc., No. 7-CV-275, 2011 WL 901958, at *2 (E.D. N.C. Mar. 15, 2011) (collecting cases); Hutton v. Hydra-Tech, Inc., No. 14-CV-888, 2018 WL 1363842, at *9 (M.D. N.C. Mar. 15, 2018). The court may seal “sources of business information that might harm a litigant's competitive standing,” Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 598 (1978), including “confidential and proprietary commercial information” such as “highly sensitive financial and business information,” Silicon Knights, 2011 WL 901958, at *2, so long as the requirements for sealing are met. See discussion supra, at 2-3.
Courts deciding motions to seal based on claims of confidential business information first decide “whether the party has shown that the information sought to be sealed is confidential.” Put Corp. v. R. J. Reynolds Tobacco Co., No. 22-CV-881, 2023 WL 3892482, at *2 (M.D. N.C. Jan. 9, 2023). If it has, the court evaluates whether disclosure would harm the party's competitive standing or otherwise harm its business interests; whether the motion is narrowly tailored; and whether the interests in nondisclosure are compelling and heavily outweigh the public's interest in access to the information. See Willowood, 2017 WL 6001818, at *3; Sims v, BB&T Corp., No. 15-CV-732, 2018 WL 3466945, at *2 (M.D. N.C. July 18, 2018). In weighing these competing interests, courts consider, among other things, whether the public needs access to the evidence or briefing to understand the case and the degree of harm that disclosure would likely cause. See Willowood, 2017 WL 6001818, at *3; Huntley v. Crisco, No. 18-CV-744, 2020 WL 9815384, at *2 (M.D. N.C. Sept. 25, 2020).
Factual findings are required before sealing. See Ashcraft v. Conoco, Inc., 218 F.3d 288, 302 (4th Cir. 2000) (requiring “specific reasons and factual findings supporting [a court's] decision to seal the documents and for rejecting the alternatives”); Doe II, 962 F.3d at 147. Courts need evidence to make these factual findings. “Statements in a brief are not evidence and are insufficient to justify a motion to seal, at least in the absence of a stipulation or joint representation by all parties which details the confidential nature of the information.” Adjabeng v. Glaxo Smith Kline, LLC, No. 12-CV-568, 2014 WL 459851, at *3 (M.D. N.C. Feb. 5, 2014) (collecting cases). And “claims of confidentiality cannot be made indiscriminately and without evidentiary support, even in patent cases where such claims are highly likely to be valid.” Id. Courts do not guess about whether certain information is in fact confidential and proprietary or conjecture about how a party would be harmed by the disclosure of information. Parties are reminded of these requirements in the Local Rules, LR 5.4(c)(3), and the parties in this case were reminded again by court order. See Doc. 27 at ¶ 7(a).
Motions to seal must be narrowly tailored, and less drastic alternatives to sealing must not be available. See Bayer, 979 F.Supp.2d at 657; see also Doe 1, 749 F.3d at 268 (criticizing wholesale sealing of docket sheets as violative of public's right of access to judicial proceedings). When a party seeks to seal by redaction only the confidential information contained within an exhibit, the request is narrowly tailored. See, e.g., Willowood, 2017 WL 6001818, at *5 (finding narrow tailoring when information to be sealed included “only specific sales and pricing figures” rather than entire exhibits).
IV. Application of Legal Standard
The documents the parties seek to seal are judicial records, as the Court considered them when deciding the motion for a preliminary injunction, the motion to stay the preliminary injunction, and the motion to modify the injunction. See 2703(D) Order Application, 707 F.3d at 290. To the extent that the Court did not rely on a paragraph or section of the document, that paragraph is not a part of the judicial record, and the Court will not require its unsealing.
As to the motions to seal directed to parts of briefs and pieces of evidence submitted in connection with the motion for preliminary injunction, Doc. 5; the motion to stay the preliminary injunction, Doc. 176; and the motion to modify the preliminary injunction, Doc. 178, the public has a First Amendment right of access. As to the motions to seal parts of briefs and evidence submitted in connection with the motions at Doc. 66, NeoGenomics' motion for a time extension, and Doc. 137, NeoGenomics' motion to bind Natera to a conception date, the common law right of access applies.
Motions to seal have been filed directed to NeoGenomics' brief in opposition to the preliminary injunction, Doc. 89, as well as toward exhibits attached to both parties' briefing on the preliminary injunction motion. See Doc. 15; Doc. 105; Doc. 142; see also Doc. 250 (order granting motion to reconsider the motion to seal at Doc. 15). NeoGenomics and Natera also seek to seal additional attachments related to NeoGenomics' motion to stay the injunction, Doc. 176, and motion to modify the injunction, Doc. 178. See Doc. 180; Doc. 187; Doc. 191; Doc. 195.
Motions to seal have been filed directed to Doc. 71-3, an exhibit attached to Natera's brief in opposition to the motion at Doc. 66, see Doc. 72 (motion to seal document at Doc. 71-3), and to portions of Natera's briefat Doc. 152, corrected at Doc. 155, submitted in opposition to NeoGenomics' motion at Doc. 137. See Doc. 244 at 13.
V. Results
The Court has applied the appropriate standards and taken into account the public interest in access to court records. Because of the number of items to rule on, for clarity the Court rules on the motions in the Appendix, in chart form.
The motions to seal will be granted in large part. As to all evidence and references to evidence sealed by this Order, the Court finds that:
1. The moving party has shown that the evidence is confidential business information about prices, contracts, studies and clinical trials in process or in design, clinical partners, or financial data, and it has shown that disclosure would harm its business and competitive interests.
2. Its requests were narrowly tailored to limited and discrete pieces of evidence.
3. For all materials subject to the First Amendment right of access, the parties have shown a compelling interest in confidentiality, there is a substantial probability of harm in the absence of sealing, and there are no alternatives to sealing that would adequately protect that interest. For all materials subject to the common law right of access, the interest in confidentiality of business information heavily outweighs the public interest.
There are some pieces of evidence and references to evidence as to which the motion to seal will be denied. In some instances, the Court was not satisfied that the evidence adequately showed that the designated material was truly confidential or that the designating party would be harmed by its disclosure or both. Some of the requests were not narrowly tailored, making overbroad requests to seal confidential and non-confidential information; for those, the Court either denied the motion to seal or, where it was not too complicated, the Court denied the motion in part and authorized sealing only as to the confidential information. As to each piece of evidence or briefing referenced, a short explanation is given in the Appendix.
V. Correcting the Record
Ordinarily the Court directs the Clerk to unseal materials when the Court denies a motion to seal. Here, however, the Court has granted motions in part, some of the motions have been withdrawn in part, and the parties are in a better position to remove the redactions of the material no longer under seal. The parties shall discuss the best way to do this with the Court Services Supervisor and shall present a plan to the Court within 10 business days.
It is ORDERED that:
1. The motion to seal, Doc. 15 is GRANTED in part and DENIED in part as shown on the attached chart.
2. The motion to seal, Doc. 72, is GRANTED in part and DENIED in part as shown on the attached chart.
3. The motion to seal, Doc. 105, is GRANTED in part and DENIED in part as shown on the attached chart.
4. The motion to seal, Doc. 142, is GRANTED in part and DENIED in part as shown on the attached chart.
5. The motion to seal, Doc. 180, is GRANTED in part and DENIED in part as shown on the attached chart.
6. The motion to seal, Doc. 187, is GRANTED as shown on the attached chart.
7. The motion to seal, Doc. 191, is GRANTED as shown on the attached chart.
8. The motion to seal, Doc. 195, is GRANTED as shown on the attached chart.
9. The parties shall consult with the Court Services Supervisor in the Clerk's office and then present a plan to the Court by April 18, 2024, for submitting the various documents making public those matters as to which the motions to seal have been denied or withdrawn.
Appendix
(Table Omitted)