Federal Trade Commission v. Cleo AI, Inc.

Background

The Federal Trade Commission filed this matter with a publicly available redacted complaint and an unredacted complaint temporarily placed under seal. Cleo AI, Inc. later asked the court to permanently seal both the complaint and a declaration by Rahul Jain that Cleo submitted in support of its request. The FTC opposed permanent sealing.

Legal standard

The court stated that both common law and the First Amendment generally favor public access to judicial documents. Under the framework applied by the Court of Appeals for the Second Circuit, the court first determines whether a filing is a judicial document. If it is, the court evaluates the strength of the public-access presumption and balances it against countervailing interests, including privacy, law-enforcement concerns, and judicial efficiency.

The court found that the complaint was plainly a judicial document because it begins the case, invokes the court’s jurisdiction, and helps the public understand the court’s decisions. It also found that the declaration was a judicial document because it was relevant to the court’s decision on the sealing request. The presumption of access was stronger for the complaint than for the declaration, but the court still required specific and substantial reasons to seal the declaration.

Court’s analysis

Cleo argued that disclosure would give future market entrants and existing industry participants access to valuable competitive information. The court recognized that protecting specific business information and strategies can sometimes justify sealing. But the party seeking secrecy must make a particular, fact-based showing that disclosure would cause sufficiently serious harm.

The court concluded that Cleo had not made that showing. Although Jain’s declaration stated that the information reflected the development of Cleo’s artificial-intelligence systems and decision engines, Cleo did not explain why the historical, aggregated information in the complaint would put it at a competitive disadvantage. The court therefore found that Cleo’s broad allegations of potential harm did not overcome the presumption of public access.

Ruling

The court DENIED Cleo’s request to permanently seal the complaint and Rahul Jain’s declaration. It directed the Clerk of Court to terminate ECF No. 11 and directed counsel to refile the unredacted complaint and declaration by May 2, 2025.