Calhoun v. Flrish, Inc.

Background

Gia Calhoun moved to file one paragraph of her amended complaint under seal based on a confidentiality designation by non-party Springbig, Inc. The same proposed redaction appeared in two administrative motions: one related to Calhoun’s motion for leave to amend, which had already been granted, and one related to the amended complaint filed separately.

Springbig submitted a declaration from its Chief Financial Officer, Paul Sykes. The declaration stated that the paragraph contained an allegation based on Springbig’s confidential deposition testimony about its trade-secret and confidential software and methodology. It also stated that Springbig competes in a highly competitive loyalty-software-services market, keeps its software and methods confidential, and could be harmed if the information were publicly disclosed.

Court’s analysis

The court explained that documents filed in judicial proceedings generally may be sealed only for “compelling reasons.” A lower “good cause” standard applies to documents connected only indirectly to the merits, such as discovery motions. The court rejected the suggestion that its earlier sealing of similar information in a discovery dispute established the required basis for sealing part of a complaint.

The court found that Sykes’s declaration did not meet the compelling-reasons standard. It was unclear whether Springbig considered the paragraph accurate, and inaccurate information could not disclose Springbig’s trade secrets. The paragraph also contained only two sentences describing Springbig’s alleged methods at a high level. Springbig had not explained whether those methods were common in the industry or unique to Springbig, whether they gave Springbig a competitive advantage, or whether Springbig took steps to keep the particular information confidential in its business.

Order

The court ordered Springbig to show cause—meaning to explain—why the two administrative motions to file under seal should not be denied. It required Springbig to file a more detailed declaration by September 13, 2021, addressing both the basic method described in the first sentence of paragraph 27 and the more specific process described in the second sentence. The opinion did not finally grant or deny either motion. The order was issued by Joseph Spero, Chief Magistrate Judge.