Federal Trade Commission v. Lending Club Corporation

Background

The court addressed the parties’ administrative motions to file materials under seal. The materials had been submitted in connection with motions to exclude expert testimony, the Federal Trade Commission’s motion for summary judgment, LendingClub’s cross-motion for partial summary judgment, and the FTC’s motion for judgment on the pleadings. Oral argument on those underlying motions was scheduled for April 27, 2020.

Legal standard

The court explained that judicial records are generally presumed to be open to the public. For documents filed with motions related to the merits of a case, the party seeking secrecy must show “compelling reasons” supported by specific factual findings. That standard can apply when documents contain trade secrets or other competitively sensitive business information. The request must also be narrowly tailored to cover only material that is legally protectable, privileged, or otherwise entitled to protection.

LendingClub argued that a less demanding “good cause” standard should apply to attachments to summary-judgment motions that the court did not rely on in deciding those motions. The court rejected that argument. Relying on Ninth Circuit precedent, it held that the applicable standard depends on the motion to which the documents are attached and whether that motion is more than tangentially related to the merits—not on whether the court ultimately relies on a particular document. Because the documents were submitted with dispositive motions or motions more than tangentially related to the merits, the court applied the compelling-reasons standard to all of them.

Ruling

The court found that LendingClub’s earlier declarations generally made blanket assertions about competitive harm without explaining why the specific information was competitively sensitive. Although some later declarations provided more detail, LendingClub continued to assert that the good-cause standard applied and addressed the compelling-reasons standard only in a footnote. The court therefore declined to determine whether those declarations satisfied the compelling-reasons standard.

The court ordered LendingClub to submit supplemental declarations addressing the compelling-reasons standard by April 21, 2020. It stated that, because the standard was more demanding, LendingClub should be more selective about the designations it defended. If the supplemental declarations changed the proposed redactions in LendingClub’s briefing, LendingClub had to submit corresponding new unredacted and redacted versions. This order addressed the sealing process; the opinion text does not state a disposition of the underlying merits motions.