Court Denies Motion to Seal Documents Because of Failure to Prove Their Sensitivity

On December 31, 2020, Justice Masley of the New York County Commercial Division issued a decision in Hobish v. AXA Equit. Life Ins. Co., 2020 NY Slip Op. 34378(U), denying a motion to seal documents because of the movant's failure to prove their sensitivity, explaining:

Section 216.1 (a) of the Uniform Rules for Trial Courts empowers courts to seal documents upon a written finding of good cause. It provides:

(a) except where otherwise provided by statute or rule, a court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof. In determining whether good cause has been shown, the court shall consider the interests of the public as well as the parties. Where it appears necessary or desirable, the court may prescribe appropriate notice and an opportunity to be heard.

(b) For purposes of this rule, court records shall include all documents and records of any nature filed with the clerk in connection with the action. Documents obtained through disclosure and not filed with the clerk shall remain subject to protective orders as set forth in CPLR 3103 (a).

Judiciary Law § 4 provides that judicial proceedings shall be public. The public needs to know that all who seek the court's protection will be treated evenhandedly, and there is an important societal interest in conducting any court proceeding in an open forum. The public right of access, however, is not absolute.

The party seeking to seal court records bears the burden of demonstrating compelling circumstances to justify restricting public access to the documents. Good cause must rest on a sound basis or legitimate need to take judicial action.

In the business context, courts have sealed records where trade secrets are involved or where the disclosure of documents could threaten a business's competitive advantage. Additionally, the First Department has affirmed the sealing of records concerning financial information where there has not been a showing of relevant public interest in disclosure of the financing. For instance, if Dawson v White & Case, the First Department stated that the plaintiff-appellant failed to show any legitimate public concern, as opposed to mere curiosity, to counter-balance the interest of defendant's partners and clients in keeping their financial arrangement private.

Preliminarily, good cause exists to seal and redact the Personal Information only to the extent it refers to the home address of a third-party. Although AXA indicates that it seeks to seal third party dates of births, it is unclear; Where in these submissions these dates of births appear. Accordingly, good cause does not exist to seal them at this time. AXA also fails to meet its burden of establishing good cause to seal the Proprietary Information - Experience Data and Proprietary in Information - Assumption Data. Failure to show how years old information will cause harm to the present-day business of a party is fatal on a motion to seal. Here, AXA . does not even address plaintiff's argument that this information is at least 5 years old. Without an affidavit by an individual with personal knowledge fleshing out how this 5-year old information still affects the present day business, the court cannot make an informed decision. Although AXA submitted the affirmation of its counsel, the affirmation is deficient. It merely provides in conclusory fashion that release of this information would allow competitors to analyze AXA's mortality experience and policyholder behavior in a manner that is likely to damage AXA's competitiveness in the marketplace or if revealed, this information could permit competitors to analyze this proprietary information in a manner likely to damage AXA's competitiveness in the marketplace. The affirmation is also conclusory in its suggestion that this information is proprietary and akin to a trade secret because it does not actually provide specifics. It simply states, without more, that the experience data has been gathered, analyzed, and maintained at great expense to AXA. Because the allegations here require the court to balance the public interest in the practices of a transnational insurance company with the need to protect the company's data, this affirmation is insufficient and rejected.

Because the affirmation of counsel is deficient, conclusory, and rejected, AXA has similarly failed to establish good cause to seal the Confidential Negotiated Rates. More information, at the very least, is required especially because plaintiffs assert that these fees concern AXA's expert in connection with this litigation.

(Internal quotations and citations omitted).

The scope of discovery in New York is broad. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client has a question regarding discovery obligations (and what to do if a litigant is not honoring those obligations).