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A California court has granted an insurer's motion to file a redacted complaint, concluding that the insurer had articulated compelling reasons to seal certain portions of its complaint and its proposed redactions were narrowly tailored to remove only confidential information.

The Case

Following a dispute between Great Lakes Insurance SE and FTL Risk Innovations LLC over payment of premiums pursuant to an underlying insurance policy Great Lakes issued to Equidate Holdings, LLC (the “Insured”), Great Lakes filed a complaint against FTL with an administrative motion to file an unredacted version of the complaint under seal.

The parts of its complaint that Great Lakes sought to seal referred to specific terms of its policy. It contended that disclosure of the information could cause competitive harm.

The Court's Decision

The court granted Great Lakes' motion.

In its decision, the court explained that, historically, courts have recognized a general right to inspect and copy public records and documents, including judicial records and documents. Accordingly, the court continued, when considering a sealing request, the starting point was a “strong presumption in favor of access.”

The court then observed that parties seeking to seal judicial records relating to motions that were “more than tangentially related to the underlying cause of action” (such as a complaint) had the burden of overcoming the presumption in favor of access with “compelling reasons” outweighing the general history of access and the public policies favoring disclosure.

However, the court added, while protecting the public's interest in access to the courts, it had to remain mindful of the parties' right to access the courts on terms that would “not unduly harm their competitive interest.” Moreover, the court continued, parties moving to seal documents also had to comply with the procedures established by Civil Local Rule 79-5, which provides that a sealing order was appropriate only upon a request that established the document was “sealable,” or “privileged or protectable as a trade secret or otherwise entitled to protection under the law.” A request under the local rule, the court added, had to be “narrowly tailored to seek sealing only of sealable material.”

The court then decided that Great Lakes had stated “compelling reasons” for sealing portions of its complaint and had narrowly tailored its request. As to compelling reasons, it found that “[t]he specific terms [of the policy], including premium, transaction volume, limitations and other economics and conditions of the insurance solution” that Great Lakes sought to seal were “proprietary information.”

The court also pointed out that Great Lakes and the Insured had an “exclusive and long-term partnership,” and that publicly disseminating the terms of the policy would allow other insurers to develop similar insurance policies and threaten the exclusivity of Great Lakes' relationship with the Insured.

The court next addressed whether Great Lakes' request was narrowly tailored, and found that it was. According to the court, Great Lakes redacted “only the information as to the terms of the policy and the premiums” that were confidential, as required by Local Rule 79-5. It also excluded any confidential documents and information not necessary to its claims, such as a copy of the policy itself.

Therefore, the court concluded that Great Lakes had articulated compelling reasons to seal certain portions of its complaint and its proposed redactions were narrowly tailored to remove only the confidential information.

The case is Great Lakes Ins. SE v. FTL Risk Innovations LLC, No. 19-cv-03415-TSH (N.D. Cal. July 19, 2019). Attorneys involved include: For Great Lakes Insurance SE, a foreign corporation, Plaintiff: Mitchell James Popham, LEAD ATTORNEY, Locke Lord LLP, Los Angeles, CA; Jamie Mei Cheng, Locke Lord LLP, Los Angeles, CA.

Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. Mr. Meyerowitz is the Director of the Insurance Coverage Law Center and editor-in-chief of journals on insurance law, banking law, bankruptcy law, energy law, government contracting law, and privacy and cybersecurity law, among other subjects. He may be contacted at smeyerowitz@meyerowitzcommunications.com.