Presumption Against Confidentiality

An order sealing documents in high-profile litigation between Maxim and two former employees was reversed by the New York Appellate Division for the First Judicial Department

This appeal involves two related actions. In the first action, plaintiffs Maxim Inc. and Sardar Biglari brought claims for defamation, breach of contract, and fraudulent inducement against defendants Jason Feifer and Wayne Gross. In the second action, plaintiff Maxim sought, among other things, to enjoin defendants Feifer and Charna Sherman from disclosing confidential business information. In the first action, plaintiffs redacted several documents before filing them with the clerk’s office, and these documents remain redacted. In the second action, the motion court completely sealed the record based on a joint stipulation between the parties, which the court so-ordered. That stipulation did not fully explain the reasons for sealing or make reference to the standards in the applicable court rule. The proposed intervenors, Hearst Newspapers and Daily News, filed a motion to intervene in each action for the limited purpose of obtaining access to the sealed documents. The motion court denied the motions in identical one-sentence orders which contained no discussion of the press’s specific interest or analysis of whether the parties met their burden to justify sealing. These appeals followed, and we now reverse.

Holding

We conclude that there was no basis for the May 3, 2016 order, because the record contains many non-confidential items. For example, the motion court’s March 21, 2016 order, which among other things, directed the parties “to extend courtesy to each other” and set forth certain scheduling directions, was filed under seal. Nothing in that order involves trade secrets, confidential business information, or proprietary information. Another example of a document which was incorrectly sealed is a request for judicial intervention form, which clearly does not contain any information that would satisfy the good cause requirement. We recognize that it may be easier for the parties and the motion court to seal an entire court record, rather than make a determination on a document by document basis about sealing, but administrative convenience is not a compelling reason to justify sealing. In addition, although the parties might prefer there be no further publicity about this case, that is not a sufficient basis for sealing. While the second action seeks an injunction preventing defendants from making public confidential business information of Maxim’s parent company and releasing recordings of business meetings, that allegedly confidential information is not contained in the complaint.

…Therefore, as to the first action, to the extent that certain documents remain redacted, plaintiffs are directed to file unredacted copies of the above documents. As to the second action, the sealing order is vacated. While these appeals have been pending, we do not know if other documents have been filed in the second action that might contain confidential business or proprietary information.

A story on the litigation from Kate Dreis in Jezebel is linked here.