Demartini v. Microsoft Corporation

Background

The court addressed multiple requests by parties and nonparties to seal portions of the plaintiffs’ first amended complaint, filings concerning the plaintiffs’ motion for a preliminary injunction, exhibits to Microsoft’s motion to dismiss, replies, and a joint letter brief concerning Exhibit K. The order also addressed the plaintiffs’ request to remove the confidential designation from Exhibit K.

The court stated that judicial records are presumptively open to the public. For records more than tangentially related to the merits, a party seeking secrecy must show compelling reasons supported by specific facts that outweigh the public’s interest in understanding the judicial process. Requests also must comply with Civil Local Rule 79-5, be narrowly tailored, explain the harm from disclosure, and address why less restrictive alternatives would not suffice.

Rulings on the First Amended Complaint

The court held that the complaint was closely related to the merits and applied the compelling-reasons standard. It ruled on the plaintiffs’ motions to seal the materials designated by Microsoft and Sony as granted in part, denied in part.

For Microsoft-designated material, the court:

- Denied with prejudice sealing of the specified portions of paragraphs 40 and 310 because Microsoft did not address them; those portions were unsealed. - Granted sealing for specified portions involving confidential business strategy, business information, confidential contracts, and competitive analysis. - Denied without prejudice sealing of other specified portions because Microsoft did not show compelling reasons outweighing the public’s right of access.

For Sony-designated material, the court granted sealing of specified portions containing nonpublic information about Sony’s services, internal business data, console-competition research, consumer behavior and engagement, and strategic decisions. The court found Sony’s proposed redactions sufficiently narrow.

Microsoft’s Motion-to-Dismiss Materials

The court granted Microsoft’s motion to seal the identified exhibits to its motion to dismiss. It found that the exhibits contained confidential contract terms and discussions that could harm negotiating positions if disclosed.

Plaintiffs’ Preliminary-Injunction Materials

The court ruled on the plaintiffs’ motions concerning Microsoft- and Sony-designated material as granted in part, denied in part.

For Microsoft-designated material, the court:

- Granted sealing of specified portions of the preliminary-injunction motion and related exhibits involving business information, strategy, confidential contracts, and competitive analysis. - Denied without prejudice sealing of other specified portions because Microsoft did not provide compelling reasons sufficient to overcome public access. - Granted sealing of the specified portions of several exhibits to the Seidel declaration. - As to Exhibit K, denied as moot sealing of the December 17, 2019 email from Matt Booty and granted sealing of the remainder. The court explained that the email had been disclosed in another proceeding and Microsoft had not shown competitive harm from its disclosure. - Denied without prejudice sealing of Exhibit U.

For Sony-designated material, the court:

- Denied with prejudice sealing of the specified portions of the preliminary-injunction motion because Sony did not address them; those portions were unsealed. - Granted sealing of other specified portions containing Sony’s confidential business information. - As to the expert report in Exhibit A to the Seidel declaration, denied without prejudice sealing of the cover page, table of contents, Sections 1 through 3, and Section 6.6, while granted sealing of the remainder. The court found that the expert’s qualifications and conclusions concerned the merits and posed limited competitive harm, but that other portions could reveal confidential business information and strategy.

Microsoft’s Opposition and Related Exhibits

The court granted Microsoft’s motions concerning specified portions of its opposition to the preliminary-injunction motion and related exhibits. It found compelling reasons to protect Microsoft’s merger valuation, confidential agreements, business strategy, and competitive analysis.

The court also granted sealing of specified portions related to Activision’s confidential contract terms, negotiating strategy, proposed agreement terms, and business decisions. For three identified exhibits, it granted as redacted and denied with prejudice as to the remainder, based on the scope of Activision’s supported request.

Plaintiffs’ Reply Materials

The court granted the plaintiffs’ motions to seal the identified portions of the plaintiffs’ reply and corrected reply. It found that Microsoft provided a compelling factual basis for protecting merger-valuation information because disclosure could harm Microsoft’s competitive standing and future negotiations, while the information was not central to the court’s analysis.

Joint Letter Brief and Exhibit K

The court denied as moot sealing of the quotation in the parties’ joint letter brief because it concerned information already publicly disclosed. As to Exhibit K, the court denied as moot sealing of the December 17, 2019 Booty email and granted sealing of the remainder. The court declined to find that Microsoft waived its confidentiality designation merely because the discovery-dispute joint letter was unnecessary.

Further Filings and Effect of the Order

The court allowed any party or nonparty to submit a narrowly tailored motion within 14 days if it believed that material not ordered sealed should be protected under the compelling-reasons standard and the local rules. If no such motion was filed, the parties were directed to file versions of the documents consistent with the order within 21 days. The order disposed of the identified sealing and related motions. Judge Jacquelyn Corley signed the order.