Lomeli v. Midland Funding, LLC
- Lucy Koh
- 3:19-cv-01141
- U.S. District Court · Northern District of California
- 8
In Lomeli v. Midland Funding, Judge Koh granted in part and denied in part a motion to seal business terms and public information in transaction documents.
The Midland Defendants, the public’s access to the court records, and competitors or potential creditor-sellers who might view the transaction information.
What happened
In Lomeli v. Midland Funding, LLC, the Midland Defendants asked to seal specific portions of a Bill of Sale and a Purchase and Sale Agreement filed with motions to compel arbitration. The documents concerned Midland Funding’s purchase of credit-card accounts from Citibank, N.A.
Judge Koh applied the requirement that the defendants show compelling reasons for sealing the records. She found that confidential transaction terms could harm Midland Funding’s position in future negotiations or provide useful information to competitors.
The court granted in part and denied in part the motion. It allowed sealing of specified transaction terms, account information, and other business information, but denied sealing for public or nonconfidential information, and ordered the Midland Defendants to refile the Purchase and Sale Agreement. Judge Koh did not decide the motions to compel arbitration in this order.
The detailed version
- Lomeli v. Midland Funding, LLC · No. 3:19-cv-01141
- Lucy Koh
- Nov. 1, 2019
Background
The Midland Defendants and the H&H Defendants had filed motions to compel arbitration. Exhibits to those motions included redacted versions of several documents. Because parties may not unilaterally redact filings, the court required the defendants to file motions to seal. The Midland Defendants’ earlier sealing motions were denied for being overbroad and not narrowly tailored. This order addressed their second renewed motion to seal.
The motion concerned specified portions of two documents: a Bill of Sale and a Purchase and Sale Agreement. The documents contained terms and conditions of a transaction in which Midland Funding purchased a portfolio of credit-card accounts from Citibank, N.A. The Midland Defendants argued that the requested portions contained closely negotiated terms that affected the transaction’s price and that disclosure could harm Midland Funding in future negotiations and competition in the consumer-credit-recovery industry.
Legal standard
The court explained that judicial records generally have a strong presumption of public access. Because the Midland Defendants had conceded that the higher “compelling reasons” standard applied, the court used that standard. Under it, a party must provide specific reasons showing that confidentiality interests outweigh the public’s interest in access. The court also required compliance with Civil Local Rule 79-5, including a narrowly tailored request that identifies only material entitled to protection.
Ruling
The court found compelling reasons to seal key terms in the agreements because disclosure could put Midland Funding at a disadvantage in future negotiations with potential creditor-sellers or give competitors information they could use to undercut it. The court therefore granted sealing for the listed portions of the Bill of Sale and Purchase and Sale Agreement, including specified sale-identification, sale-balance, account-number, and transaction-term information.
The court denied sealing for the Purchase and Sale Agreement’s page 19, paragraph 12.3 information concerning the locations of Citibank and Midland Funding; the title of Citibank’s signatory; the name and signature of Midland Funding’s signatory; page 22 file names; and page 22 sale rate. The court stated that this information was public, publicly disclosed elsewhere in the filings, or not proprietary or confidential business information.
The court granted in part and denied in part the administrative motion to file under seal. It ordered the Midland Defendants to refile the Purchase and Sale Agreement consistently with the order and Civil Local Rule 79-5(f). This order addressed sealing only and did not rule on the underlying motions to compel arbitration.
Read the full 8-page opinion on CourtListener, the free public archive maintained by the Free Law Project.