Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-00057/USCOURTS-casd-3_15-cv-00057-6/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 18:1030 Fraud &amp; Related Activity in Connection with Computers

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JEREMY L. KEATING ET AL.,

Plaintiffs,

v.

JOHN A. JASTREMSKI ET AL.,

Defendants.

AND RELATED CROSS-ACTIONS.

CASE NO. 3:15-cv-00057-L-AGS

ORDER DENYING 

PLAINTIFFS’/COUNTERDEFENDANTS’ MOTION TO SEAL 

(Doc. no. 438)

Pending before the Court in this action alleging misappropriation of trade secrets 

is an unopposed motion filed by Plaintiffs and Counter-Defendants Jeremy Keating, 

Richard P. Gigliotti, and Alexander J. Mele (collectively, the “Keating Group”) to seal 

portions of the Special Master’s report and recommendation. (Docs. no. 428, 440

(“Recommendation”).) For the reasons which follow, the motion is denied.

The Court appointed Hon. Ronald S. Prager (Ret.) as the Special Master 

pursuant to Rule 53 of the Federal Rules of Civil Procedure (docs. no. 316, 323) to 

prepare a report and recommendation on two motions for sanctions and related fee

applications. The subject of the Recommendation is the motion for terminating 

sanctions.

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Initially, Counter-Defendant Securities America, Inc. ("SAI") objected to the 

filing of the Recommendation and requested sealing because the Recommendation 

disclosed monetary terms of the settlement between SAI and Counterclaimant The 

Retirement Group, LLC ("TRG"), reached during the pendency of the Special Master 

proceedings (doc. no. 434). The Court construed the objection as a motion to seal the 

Recommendation to the extent it disclosed monetary terms of the settlement with 

respect to SAI as well as with respect to the Keating Group, who filed the instant

motion. (See doc. no. 437.) The Recommendation was sealed, and a redacted version 

was filed for public view. (See docs. no. 437, 440.) Accordingly, to the extent the

Keating Group requests sealing the financial terms of the settlement, their motion is 

denied without prejudice as moot.

The Keating Group further argues that the discussion of their conduct in the 

Recommendation deprives them of the benefit of the settlement, which was reached 

without admitting fault and included a confidentiality agreement. Specifically, they 

maintain that the disclosure of their conduct prejudices their business reputation, and 

contend sealing is warranted by Federal Rule of Civil Procedure 26(c) and Federal 

Rule of Evidence 408.

Rule 408 precludes admissibility of settlement information to prove a claim or 

impeach a witness but allows its admission for other purposes. Fed. R. Evid. 408. To 

the extent the settlement is referenced in the Recommendation, as currently redacted 

for public view, it is neither used to prove a claim nor impeach a witness, and the 

discussion of the Keating Group’s conduct does not disclose any information related to 

the settlement, such as its terms or the preceding negotiations. Instead, the 

Recommendation references the settlement to explain that the Keating Group and SAI 

are no longer parties to the case. Accordingly, Rule 408 precludes neither the 

reference to the settlement nor the discussion of the Keating Group’s conduct, and 

does not support sealing any part of the Recommendation.

/ / /

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Next, the Keating Group relies on a confidentiality agreement executed with the 

settlement as a reason to seal the references to their conduct. Even if their private 

confidentiality agreement stood on the same footing as a protective order, it would not 

be sufficient to warrant sealing. That a document is designated confidential pursuant 

to a stipulation is of little weight when it comes to sealing court filings. See San Jose 

Mercury News, Inc. v. U.S. Dist. Ct.(Saldivar), 187 F.3d 1096, 1103 (9th Cir. 1999); 

Beckman Indus. v. Int'l Ins. Co., 966 F.2d 470, 475-76 (9th Cir. 1992); Confederated 

Tribes of Siletz Indians of Or. v. Weyerhaeuser Co., 340 F. Supp. 2d 1118, 1121 (D. 

Or. 2003). 

Finally, the Keating Group members maintain that referencing their conduct 

reflects negatively on their business reputation, and that this establishes good cause for 

sealing under Federal Rule of Civil Procedure 26(c). Sealing court records implicates 

the "general right to inspect and copy public records and documents, including judicial 

records and documents." Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 & n.7 

(1978). The lack of opposition to the pending motion therefore does not automatically 

resolve it. See Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1128, 1130 & passim

(9th Cir. 2003).

Aside from “grand jury transcripts and warrant materials in the midst of a preindictment investigation,” a strong presumption applies in favor of public access to 

judicial records. Kamakana v. City and County of Honolulu, 447 F.3d 1172, 1178 (9th

Cir. 2006). “A party seeking to seal a judicial record then bears the burden of 

overcoming this strong presumption by meeting the ‘compelling reasons’ standard.” 

Id. (citation omitted). "Despite this strong preference for public access," an exception 

was carved out "for sealed materials attached to a discovery motion unrelated to the 

merits of a case. Under this exception, a party need only satisfy the less exacting 'good

cause' standard" articulated in Rule 26(c)(1).” Center for Auto Safety v. Chrysler Grp. 

LLC, 809 F.3d 1092, 1097 (9th Cir. 2016) (citations omitted). 

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The Keating Group assumes that the less exacting good cause standard applies

to its motion. The good cause standard is an exception, rather than the rule in the area 

of court-filed documents. Kamakana, 447 F.3d at 1179. The applicable standard 

“turn[s] on whether the motion is more than tangentially related to the merits of a 

case.” Center for Auto Safety, 809 F.3d at 1101. As is apparent on the face of the 

Recommendation, the motion for terminating sanctions is more than tangentially 

related to the merits of this case. Furthermore, underlying the strong presumption in 

favor of public access to judicial records is the public interest in understanding the 

judicial process. See id. at 1096. The dispositive nature of the motion for terminating 

sanctions therefore also counsels against applying the good cause standard. 

To meet the compelling reasons standard, the requesting party

must articulate 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. 

In turn, the court must conscientiously balance the competing interests of 

the public and the party who seeks to keep certain judicial records secret. 

After considering these interests, if the court decides to seal certain judicial 

records, it must base its decision on a compelling reason and articulate the 

factual basis for its ruling, without relying on hypothesis or conjecture.

In general, “compelling reasons” sufficient to outweigh the public's interest 

in disclosure and justify sealing court records exist when such court files 

might have become a vehicle for improper purposes, such as the use of 

records to gratify private spite, promote public scandal, circulate libelous 

statements, or release trade secrets. The mere fact that the production of 

records may lead to a litigant's embarrassment, incrimination, or exposure 

to further litigation will not, without more, compel the court to seal its 

records.

Kamakana, 447 F.3d at 1178-79 (internal quotation marks, brackets and citations 

omitted). The Keating Group’s argument that the discussion of their involvement 

prejudices their business reputation is insufficient to meet the compelling reasons 

standard.

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For the foregoing reasons, the motion to seal filed by the Keating Group is 

denied.

IT IS SO ORDERED.

Dated: April 9, 2020

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