Convergen Energy LLC v. Brooks

Background

The plaintiffs moved to seal an arbitration demand that defendants had filed as an exhibit to a letter opposing plaintiffs’ request to have an earlier opinion and order declared final and appealable under Federal Rule of Civil Procedure 54(b). The demand concerned a pending arbitration about the Acquisition Agreement brought by certain defendants against the plaintiffs and other parties.

The plaintiffs argued that the demand included highly proprietary information about Libra’s business operations, finances, and payroll, including what they described as false allegations. They also argued that Steven J. Brooks’s employment agreement with Libra barred public disclosure of the information. Defendants opposed the motion.

The court also considered defendants’ motion to seal an exhibit titled “smoking gun.txt,” which had been submitted with their opposition to plaintiffs’ motion for a preliminary injunction. The exhibit had been filed under seal while the court considered the sealing request. Plaintiffs did not oppose that motion.

Legal standard

The court applied the presumption of public access to judicial documents. Under that standard, sealing must be narrowly tailored, and the party seeking secrecy must show a specific reason that outweighs public access. Privacy interests and business information that could harm a party’s competitive position can sometimes justify sealing, but broad or unsupported claims of harm are not enough.

Rulings

The court denied plaintiffs’ motion to seal the arbitration demand. After reviewing the challenged paragraphs, the court concluded that they contained little or no proprietary information. Most of the paragraphs were allegations rather than facts about the plaintiffs or their business operations. The paragraphs discussing business transactions concerned past or completed transactions, and plaintiffs did not show how public disclosure might harm their competitive standing. The court also noted that plaintiffs waited more than a month after the demand was publicly filed before seeking to seal it.

The court further held that the employment agreement did not provide a sufficient basis for sealing. Although the agreement may have restricted Brooks from sharing certain proprietary, trade-secret, and confidential information, the parties’ agreement to confidentiality, by itself, did not overcome the presumption of public access. The court expressly declined to decide whether filing the demand violated the employment agreement.

The court granted defendants’ motion to seal the “smoking gun.txt” exhibit. It contained two pages of personal notes about a private relationship between two nonparties. The court found that disclosure might embarrass both the third-party author and the third-party subject, and that the exhibit likely could not be adequately redacted. The final order therefore denied plaintiffs’ motion to seal at Dkt. No. 173 and granted defendants’ motion to seal at Dkt. No. 135.