3B Associates, LLC v. eCommission Solutions, LLC

Background

The caption names 3B Associates, LLC and 3B Group, Inc. as plaintiffs, and eCommission Solutions, LLC, Paul Hoffman, and Gretchen Hoffman as defendants. The action had been removed from state court to federal court based on diversity of citizenship. The notice of removal did not list the names and states of citizenship of every member of the plaintiff LLC.

The court explained that an LLC’s citizenship is determined by the citizenship of each of its members. The fact that an LLC is organized under New York law or has offices in New York does not establish the citizenship information needed for diversity jurisdiction.

The papers also showed that the plaintiffs had sought permission in New York State Supreme Court to file a redacted amended complaint. A state-court justice had temporarily sealed the amended complaint and allowed the defendants until the end of September to address whether the sealing order should continue.

Orders and deadlines

The court ordered the plaintiffs to file an affidavit by the close of business on Monday, August 22, 2022. The affidavit must list every member of the plaintiff LLC, each member’s state or states of citizenship, and full addresses.

The federal court treated the plaintiffs’ application as a motion for leave to file a redacted version of the amended complaint in the public court file. The defendants had until 5:00 p.m. on August 31, 2022, to respond, and the plaintiffs had until 5:00 p.m. on September 7, 2022, to file a reply. The amended complaint would remain under seal until the court ruled on the motion.

Sealing discussion

Judge McMahon stated that she generally views requests to seal pleadings skeptically. She said a party seeking to file a document, or part of a document, under seal must be prepared to identify something that truly qualifies as a trade secret. The judge also stated that a private confidentiality agreement does not bind the federal court or override the public’s constitutional right of access to court documents.

The court further stated that it was not bound by a confidentiality order from another related lawsuit and that its preliminary review of the complaint did not suggest that any part should be sealed. The court nevertheless deferred a final ruling until the parties had an opportunity to respond.

Disposition

The order required the citizenship affidavit, established briefing deadlines for the redaction motion, and continued the seal on the amended complaint pending a ruling. It did not decide the merits of the underlying dispute or make a final ruling on whether the amended complaint could be filed in redacted form.