Lomeli v. Midland Funding, LLC

Background

The Midland Defendants—Midland Funding, LLC and Midland Credit Management, Inc.—filed a motion asking the court to require arbitration. The H&H Defendants joined that motion and also filed their own motion to require arbitration. The defendants submitted redacted versions of several exhibits. After the court ordered them to file a motion to seal because parties may not unilaterally redact filings, the Midland Defendants filed the administrative motion addressed in this order.

The Midland Defendants sought to seal portions of two documents: a Purchase and Sale Agreement and a Bill of Sale. The court explained that court records generally carry a strong presumption of public access. For records connected to dispositive motions, a party must show specific, compelling reasons that outweigh public access. The Midland Defendants conceded that this stricter standard applied, so the court used it without deciding whether a motion to compel arbitration is dispositive or non-dispositive for sealing purposes.

Court’s Analysis

The court also applied Civil Local Rule 79-5, which requires a sealing request to show that the material is privileged, protected as a trade secret, or otherwise legally entitled to protection. The request must be narrowly tailored to cover only sealable material.

The court found the Midland Defendants’ request clearly overbroad because it sought to seal almost all of both exhibits, including material that was not legally sealable. Examples included definitions of generic terms, introductory sentences, the statement “Balance of Page Intentionally Left Blank,” and the signature of an identified affiant. The court noted that certain business information, such as business strategy, financial projections, and confidential sales data, may be sealable, but concluded that much of the redacted material did not fall within those categories.

The court also found that the Midland Defendants’ statement that confidentiality was critical to Midland’s continuing business interests was general and conclusory. Under the governing standard, the defendants needed to provide a specific compelling reason for each redaction rather than rely on a general assertion of confidentiality.

Disposition

The court denied without prejudice the Midland Defendants’ administrative motion to seal. It permitted the Midland Defendants to submit a renewed request that was narrowly tailored to material legally eligible for sealing. The court stated that any renewed motion had to be filed by October 11, 2019.