Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-md-02087/USCOURTS-casd-3_09-md-02087-20/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

IN RE HYDROXYCUT MARKETING

AND SALES PRACTICES LITIGATION

Case No. 09md2087 BTM (AJB)

ORDER GRANTING IN PART AND

DENYING IN PART EX PARTE

APPLICATION TO FILE UNDER

SEAL CERTAIN EXHIBITS

Defendant Kerr Investment Holding Corp. f/k/a Iovate Health Sciences Group Inc.

(“Defendant”) has filed an ex parte application to file under seal certain exhibits to Plaintiff’s

Memorandum of Points and Authorities in Opposition to Defendant’s Consolidated Motion

to Dismiss for Lack of Personal Jurisdiction. For the reasons discussed below, Defendant’s

motion is GRANTED IN PART and DENIED IN PART.

I. GOVERNING LAW

The courts in this country recognize a “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 (1978). Unless a court record falls within the limited

category of records “traditionally kept secret,” a “strong presumption in favor of access is the

starting point.” Kamakana v. City and County of Honolulu, 447 F.3d 1172, 1178 (9th Cir.

2006). The strong presumption of access to judicial records applies fully to discovery

documents attached to dispositive motions. San Jose Mercury News, Inc. v. U.S. Dist. Ct.,

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187 F.3d 1096, 1102 (9th Cir. 1999). 

The party seeking to seal a judicial record bears the burden of overcoming this strong

presumption by articulating compelling reasons supported by specific factual findings. Foltz

v. State Farm Mutual Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003). As explained by

the Ninth Circuit:

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. Nixon, 435 U.S. at 598, 98 S.Ct. 1306; accord Valley

Broadcasting Co., 798 F.2d at 1294.

Kamakana, 447 F.3d at 1172. “[T]he common-law right of inspection has bowed before the

power of a court to insure that its records are not used . . . as sources of business

information that might harm a litigant’s competitive standing.” Nixon, 435 U.S. at 598.

However, “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 1172.

II. DISCUSSION

Defendant seeks to file under seal Exhibits 1-7, 9-12, 14, 15, 19-23, 25-59, 61-243,

253 and 254. The Court has carefully reviewed each of the exhibits and concludes that

there are compelling reasons to file some, but not all, of the exhibits under seal.

The Court GRANTS the motion to seal as to the following exhibits, or portions thereof,

because they reveal: private information that could cause injury upon being made public;

trade secrets; and information akin to trade secrets that could cause competitive harm if

publicly divulged.

• Exhibit 1 - p. 138:3, because it reveals the work e-mail address of Jo-Ann Heikkila

which could expose Ms. Heikkila to unnecessary harassment. Plaintiff shall redact this

portion of the deposition and electronically file the redacted exhibit on the public docket.

• Exhibit 2 - pp. 63:19-64:2, which discuss information on a tax return (information that

is confidential under 26 U.S.C. § 6103); pp. 100:22 & 101:19-24, which reveal the e-mail

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address of Fernando Pica and others employed by the Iovate group of companies; pp.

147:13-169-11, which discuss specific information on tax returns and related filings; pp.

170:3-23, which reveal pricing terms in distribution agreements; pp. 174:5-196:9; 199:6-

202:10; 210:17-229:23, which reveal detailed information about wages and compensation

of officers and directors, profit-sharing plans, company profit and loss, and company assets

and liabilities. Plaintiff shall redact the portions of Pica’s deposition identified above and

shall file the redacted exhibit on the public docket.

• Exhibits 30-33. These are agreements between Iovate entities and retailers who sell

their products. The agreements include pricing and marketing information.

• Exhibits 40-52. These are state, federal, and T2 Corporation income tax returns.

• Exhibits 55-56. These banking agreements reveal account numbers. Plaintiff shall

redact the account numbers and file the redacted exhibits on the public docket.

• Exhibit 63. This is a services agreement between Iovate Health Sciences U.S.A.,

Inc. and Kuene & Nagel, which includes details regarding their business arrangement

including the pricing of services.

• Exhibit 64. Schedule II of the Distribution Agreement between the Iovate entities

reveals pricing information. Plaintiff shall redact Schedule II and file the redacted exhibit on

the public docket. 

• Exhibits 69-74. These consolidated financial statements reveal detailed financial

information about Iovate Health Sciences Group Inc.

• Exhibit 75. This employee roster contains private employment information regarding

various individuals employed by the Iovate entities.

• Exhibits 77-81; 85-111; 120-121; 136-139; 141-144; 153-155; 158-163; 165-166;

168; 170-176; 179-189; 191-203; 205; 207-211; 214-218; 220-222; 224-225; 229-234; 236-

237; 239-243. These exhibits are e-mails which reveal business and marketing strategy,

information regarding product development, sales and pricing information, financials, internal

troubleshooting, and information regarding the businesses of clients.

• Exhibit 254. This is a pricing proposal by a manufacturer of products sold by Iovate

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Health Sciences, Inc. The proposal sets forth terms and conditions including pricing

adjustments and required annual purchases.

The Court DENIES the motion to seal with respect to the remainder of the exhibits,

specifically, Exhibits 1 and 2 (except the portions identified above), 3-7, 9-12, 14-15, 19-23,

25-29, 34-39, 53-54. 55-56 (except for the account numbers), 57-59, 61-62, 64 (except

Schedule II), 65-68, 76, 82-84, 112-119, 122-135, 140, 145-152,156-157, 164, 167, 169,

177-178, 190, 204, 206, 212-213, 219, 223, 226-228, 235, 238, and 253. These documents

reveal information such as corporate structure, identity of officers and directors, insurance

policies, agreements among Iovate entities that do not reveal information of competitive

value, the existence of bank accounts, and the scheduling of various meetings with vendors

and within the company (without revealing the substance of the meetings). Defendant has

not satisfied its burden of establishing a compelling reason for sealing these exhibits.

In the future, the Court expects that the parties will carefully narrow their requests to

file documents under seal. The Court would rather not spend its time reading through

deposition transcripts when not any or very little of the testimony meets the standard for

sealing. It is not enough that the parties would prefer to keep certain business information

confidential. Compelling reasons must be shown. 

III. CONCLUSION

For the reasons discussed above, Defendant’s ex parte application [Doc. No. 354] is

GRANTED IN PART and DENIED IN PART. Within 10 days of the filing of this Order,

Plaintiff shall electronically file all of the exhibits that are not to be sealed and the redacted

versions of Exhibits 1, 2, 55-56, and 64.

IT IS SO ORDERED.

DATED: March 11, 2011

Honorable Barry Ted Moskowitz

United States District Judge

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