Energy Transportation Group, Inc. v. Borealis Maritime Limited

Background

ETG’s amended complaint alleges that Borealis breached a revenue-sharing agreement by failing to pay ETG 7.5% of remuneration Borealis received, failing to provide co-investment opportunities, and frustrating ETG’s rights under the agreement’s implied duty of good faith and fair dealing. The agreement concerns financing connected to investment funds. In an earlier ruling, District Judge Analisa Torres denied Borealis’ motion to dismiss after finding that the agreement was ambiguous about which investment funds were covered.

After that ruling, Borealis produced more than 255,000 pages concerning three Embarcadero Maritime funds. Borealis sought a protective order under Federal Rule of Civil Procedure 26 to limit discovery to those funds. ETG sought additional documents concerning all KKR-Borealis financing transactions, including two later Stanley Maritime funds and subsequent transactions. Borealis argued that the additional discovery was irrelevant and unduly burdensome.

Discovery Ruling

The court found that information about later KKR-Borealis transactions was most relevant to damages and only minimally relevant to the agreement’s scope. Borealis estimated that producing the requested information would add at least six months to discovery and cost $400,000 to $500,000. The court concluded that the likely relevance did not outweigh the burden of production at that stage.

The court therefore granted in part Borealis’ motion for a protective order. It issued a temporary protective order providing that information about further KKR-Borealis funds would be discoverable only after a dispositive ruling determines that the agreement covers those funds. The court denied ETG’s cross-motion to compel discovery. This ruling did not decide the ultimate merits of ETG’s contract claims.

Motion to Strike

Borealis asked the court to strike exhibits and other materials that it alleged contained confidential settlement communications protected from use under Federal Rule of Evidence 408. The court held that Rule 12(f), which permits certain matter to be stricken from a pleading, did not properly apply to the motions and affidavit exhibits at issue. The court also found that sealing was sufficient to protect privacy interests. Borealis’ motion to strike was therefore denied.

The court declined to decide at this stage whether the challenged documents were in fact protected settlement communications. Instead, it did not consider the challenged materials when deciding the discovery motions and reviewed the redacted submissions.

Sealing Rulings

The court granted Seal Requests 1 through 10. Requests 3 through 6 concerned exhibits containing confidential business information, company-structure information, contact information, and business strategies. Requests 1, 2, and 7 through 10 concerned an unexecuted agreement addendum, emails alleged to reflect settlement communications, and a term sheet containing allegedly sensitive commercial information.

The court found that the settlement-related materials and the term sheet were not judicial documents entitled to a meaningful presumption of public access because they were not relevant or material to the discovery ruling. It also found that the other exhibits contained proprietary information whose confidentiality justified sealing.

Other Action

The court adjourned the previously scheduled December 20, 2023 conference and requested that the Clerk close the listed motions. The order was signed by United States Magistrate Judge Jennifer E. Willis.