Securities and Exchange Commission v. Ripple Labs Inc.

Background

The Securities and Exchange Commission (SEC) asked the court to seal or redact documents filed in connection with the parties’ motions to exclude expert testimony. The SEC said the proposed redactions would protect its expert witnesses’ identities and personal information, as well as the identity of a non-party and its representatives. The SEC also cited threats and harassment directed at one expert after that person’s name became public.

Ripple Labs Inc., Bradley Garlinghouse, and Christian A. Larsen also sought redactions. They identified five categories of information: Ripple’s nonpublic audited financial statements, confidential financial terms of Ripple’s business relationships, identities of certain non-parties, identities of current and former Ripple employees, and personal identifying and financial information. MoneyGram International, Inc. and Third-Party A separately sought redactions to protect confidential business information and privacy interests. The opinion identifies Third-Party A as a pseudonym for a non-party subpoenaed for documents and testimony.

Legal standard

The court explained that documents relevant to a court’s work and useful in the judicial process are “judicial documents” subject to a common-law presumption of public access. The strength of that presumption is generally lower for non-dispositive motions—motions that do not resolve the case—than for trial materials or documents filed with motions such as dismissal or summary judgment. A party seeking sealing or redaction must show specifically that disclosure would harm an important interest, and the requested protection must be narrowly tailored.

The SEC’s requests

The court found that the SEC’s documents were judicial documents because they included briefs, expert reports, and deposition transcripts that could influence the court’s decisions on the expert-testimony motions. The court found that most proposed redactions were necessary to protect witness safety and judicial efficiency. It allowed redaction of expert names and identifying information, including the experts’ personal and financial information. It also allowed redaction of the identity of a non-party and the non-party’s representatives.

The court rejected redaction of the names of consulting firms that assisted the SEC’s experts because the SEC had not explained how hiding those firm names would promote witness safety or judicial efficiency. The court did allow redaction of the names of employees of those firms because of their privacy interests. The SEC’s motions were therefore GRANTED in part and DENIED in part.

The defendants’ requests

The court found that Ripple’s financial documents were judicial documents but concluded that the defendants had provided specific facts showing that disclosure of the nonpublic audited financial statements and confidential contract information could seriously harm Ripple’s business. The court found the proposed redactions narrowly tailored because they covered limited financial information while leaving the documents’ substantive terms and the experts’ analyses available.

The court also found that privacy interests justified redacting the identities of certain non-parties and Ripple employees, along with personal identifying and financial information. The defendants’ request to redact the documents submitted with the expert-testimony motions was GRANTED.

The non-parties’ requests

The court found that MoneyGram’s requested redactions concerned highly confidential business information and that Third-Party A’s requested redactions concerned confidential contract terms, digital-wallet address information, and references to employees, representatives, and the non-party’s identity. Because innocent third parties’ privacy interests weighed heavily and the information had minimal relevance to the expert-testimony motions, the court granted the requested protections.

MoneyGram’s motion was GRANTED, and Third-Party A’s motion was GRANTED.

Disposition

Judge Torres directed the Clerk of Court to terminate the listed pending motions. The court emphasized that the order did not decide whether the same categories of information should be sealed or redacted in summary-judgment briefing, where the presumption of public access would be strongest.