Charlotte B Milliner v. Mutual Securities, Inc.

Background

Charlotte B. Milliner and Joann Brem brought a putative class action against Mutual Securities, Inc. in 2015 based on their brokerage agreement. The parties settled their claims on June 1, 2018, and signed a written settlement agreement containing a confidentiality provision. The case was dismissed on September 11, 2018.

Mutual Securities later moved to enforce the settlement agreement and a protective order. In connection with that motion, Mutual Securities asked the court to seal the settlement agreement and references to it. The court granted the sealing request in a July 8, 2019 order and directed counsel to withdraw the agreement from a Financial Industry Regulatory Authority claim filed for Vincent F. Gilotti, a different client.

Gilotti then moved under Federal Rule of Civil Procedure 24 to intervene solely to seek unsealing of the settlement agreement. The court had previously denied the motion without prejudice because an appeal had temporarily removed the relevant matter from the district court’s control. After the United States Court of Appeals for the Ninth Circuit dismissed that appeal for lack of jurisdiction, the district court considered Gilotti’s motion.

Judicial-notice request

Gilotti asked the court to take judicial notice of two Financial Industry Regulatory Authority BrokerCheck reports concerning Thomas Herbert Bock and Mary C. Evans. Judicial notice allows a court to accept certain facts without requiring ordinary proof when those facts are not reasonably disputable. The court denied the request because the reports were not authenticated by someone with personal knowledge or explained in a declaration. The court also noted that one report appeared to contain unexplained redactions.

Intervention and sealing standards

The court applied Rule 24(b), which governs permissive intervention. For a nonparty seeking intervention solely to unseal a court record, Ninth Circuit law does not require proof of an independent basis for jurisdiction or a common legal or factual question with the original case. The court instead considered whether the motion was timely, whether intervention would delay or prejudice the original parties, and whether the interests opposing public disclosure outweighed the public’s presumptive right of access.

The court found Gilotti’s motion timely. The case had already been dismissed, Gilotti filed the motion less than three weeks after the sealing order, and Mutual Securities did not explain how the motion would prejudice it. The court also found that intervention would not unduly delay or prejudice the original parties, so it proceeded to consider whether the agreement should remain sealed.

Because the settlement agreement was attached to a motion concerning enforcement of the agreement’s confidentiality provision—not to a motion addressing the merits of the underlying litigation—the court applied the less demanding “good cause” standard. Under that standard, the party seeking secrecy must show specific harm or prejudice from disclosure, after which the court balances private and public interests.

Ruling

The court found good cause to keep the settlement agreement sealed. The agreement’s confidentiality provision showed that the parties intended the agreement to remain confidential. The court also credited Mutual Securities’ stated concerns that disclosure could cause the settlement to be treated as an admission of liability in future litigation and could undermine the settlement process.

The court concluded that Gilotti’s and the public’s interests in disclosure did not outweigh Mutual Securities’ interests in maintaining confidentiality. It therefore denied Gilotti’s motion to intervene to unseal the settlement agreement. The court also denied Gilotti’s request for judicial notice. The opinion text does not identify the judge by name.