Opinion
Civil No. 3:04-CV-0605-H
April 12, 2004
MEMORANDUM OPINION AND ORDER
Before the Court are Defendants' Motion to Seal Exhibits and Attachments, filed April 5, 2004, and Plaintiff's Response, filed April 7, 2004. Defendants request the Court seal Exhibit 1 to Defendants' Emergency Motion for Protection of Certain Assets and Attachments A B filed with the Proposed Order Granting Emergency Motion for Protection of Certain Assets. Upon review of the pleadings, briefs, and relevant authorities, the Court is of the Opinion for the reasons stated below that Defendants' Motion to Seal Exhibits and Attachments should be DENIED.
I. BACKGROUND
Plaintiff Securities and Exchange Commission ("Commission") filed this case against Defendants J. Robert Dobbins; Dobbins Capital Corp.; Dobbins Offshore Capital, L.L.C.; Dobbins Partners, L.P.; and Dobbins Offshore, Ltd., on March 23, 2004, for violation of certain securities laws. The Commission alleges J. Robert Dobbins ("Dobbins"), an investment advisor, defrauded over 50 investors in two unregistered hedge funds-Dobbins Partners, L.P., and Dobbins Offshore, Ltd., after raising at least $50 million. The Commission also alleges that Dobbins Capital Corp., one of Dobbins's "investment advisers," wired Relief Defendant Tracey D. Dobbins, Dobbins's ex-wife, over $1.7 million of the fraudulently obtained funds.
Concurrently with the filing of the case, the Commission moved for entry of a preliminary injunction. On March 23, 2004, Defendants J. Robert Dobbins; Dobbins Capital Corp.; Dobbins Offshore Capital, L.L.C.; and Dobbins Offshore, Ltd. ("Defendants"), consented to the entry of the preliminary injunction on behalf of Dobbins and the named entities. The Court entered the Order of Preliminary Injunction and Other Relief at 11:10 A.M., March 23, 2004.
The Order of Preliminary Injunction and Other Relief enjoins Defendants from violating Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5; Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a); and Section 206 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-6. The Preliminary Injunction also freezes all assets of Defendants J. Robert Dobbins, Dobbins Capital Corp., Dobbins Offshore Capital, L.L.C., and Dobbins Offshore, Ltd., and orders Defendants J. Robert Dobbins, Dobbins Capital Corp., Dobbins Offshore Capital, L.L.C., and Dobbins Offshore, Ltd., to make an accounting of all assets, liabilities and investors' proceeds within 30 days.
Defendants J. Robert Dobbins, Dobbins Capital Corp., Dobbins Offshore Capital, L.L.C., and Dobbins Offshore, Ltd., filed the instant Motion to Seal Exhibits and Attachments on April 5, 2004, along with an Emergency Motion for Protection of Certain Assets. Defendants ask the Court to seal Exhibit 1 to their Emergency Motion for Protection of Certain Assets, and Attachments A and B to their Proposed Order granting the Emergency Motion for Protection of Certain Assets. Defendants argue that, because Exhibit 1 and Attachments A and B are financial records of J. Robert Dobbins, they should be sealed to maintain the privacy of information related to Dobbins's personal finances. They also argue that Exhibit 1 and Attachments A and B contain financial information of Dobbins Capital Corp., and should be sealed because Dobbins Capital Corp. "holds an interest in not disclosing its financial information to competitors and other third parties."
The Commission opposes sealing Exhibit 1 and Attachments A and B. The Commission argues that the financial records should be a matter of public record and "should be available in particular to the investors who were victims of the Defendants' fraudulent conduct."
II. ANALYSIS
"Courts have recognized that the public has a common law right to inspect and copy judicial records." SEC v. Van Waeyenberghe, 990 F.2d 845, 848 (5th Cir. 1993) (citing Nixon v. Warner Communications, Inc., 435 U.S. 589, 597 (1978); Belo Broadcasting Corp. v. Clark, 654 F.2d 423, 429 (5th Cir. 1981)). The right, although not absolute, should be exercised charily. Id. "[T]he Court must balance the public's common law right of access against the interests favoring nondisclosure." Id.
Defendants argue that release of their financial records "could cause undue harm to the Defendants." (Mot. at 2.) Defendants also argue that the public would not be uninformed about this proceeding simply because 26 pages of financial information is sealed. (Id.) Defendants give no specifics as to what harm would come to Defendants if this information, which the Court notes consists of monthly expenses such as rent, mortgage payments, car lease payments, and utilities, is not sealed. A bare assertion that information would harm a company or individual's reputation, however, is insufficient to overcome the presumption in favor of public access. See Brown Williamson Tobacco Corp. v. FTC, 710 F.2d 1165, 1179-80 (6th Cir. 1983), cert denied, 465 U.S. 1100 (1984).
In addition, if the Court uses Exhibit 1 to Defendants' Emergency Motion for Protection of Certain Assets as a basis to unfreeze certain of Defendants' assets, the public has a right to know the information upon which the Court based its decision. See United States v. Amodeo, 71 F.3d 1044, 1048 (2d Cir. 1995). This promotes the trustworthiness of the judicial process, helps curb judicial abuses, and provides "the public with a more complete understanding of the judicial system, including a better perception of its fairness." Van Waeyenberghe, 990 F.2d at 849.
The Commission argues that the victims of Defendants' allegedly fraudulent scheme are entitled to know Defendants' intended use of the funds acquired from the victims for personal and business expenses. ( See Resp. at 3.) The Court agrees. The Court concludes that interests favoring nondisclosure do not outweigh the public's common law right of access.
The Court, however, is mindful of the threat that can result from the disclosure of personal information. See Special Order No. 2-56 of the Northern District of Texas, entered March 2, 2004, Proposed Amendment to Local Rule 9.1(a) (requiring only the last four digits of the social security number for social security and black lung cases). Accordingly, the Court will redact all account numbers found in Exhibit 1 to Defendants' Emergency Motion for Protection of Certain Assets. The Court concludes that redacting the account numbers serves a legitimate purpose that is not outweighed by the public's common law right of access.
III. CONCLUSION
For the foregoing reasons, Defendants' Motion to Seal Exhibits and Attachments is DENIED. The Court will, however, REDACT all account numbers found in Exhibit 1 to Defendants' Emergency Motion for Protection of Certain Assets.
SO ORDERED.