Ever.Ag, LLC v. Milk Moovement, Inc.

8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- DAIRY, LLC, a Delaware Limited No. 2:21-cv-02233 WBS AC Liability Company, Plaintiff, 14 ORDER RE: REQUESTS TO SEAL v. MILK MOOVEMENT, INC., a foreign Corporation, and MILK MOOVEMENT, LLC, a Delaware Limited Liability Company, 18 Defendants.

20 ----oo0oo---- 21 Dairy, LLC initiated this action against Milk Moovement, Inc. and Milk Moovement, LLC alleging trade secret misappropriation under federal and California law, and intentional interference with contractual relations. (First Am. Compl. (Docket No. 48).) On February 14, 2023, the court denied various requests to seal without prejudice. (Docket No. 237.)

27 Before the court are (1) Dairy’s renewed request to seal portions of the parties’ briefing related to Milk Moovement’s motion for leave to amend counterclaims (Dairy Req. to Seal (Docket No. 248)), and (2) Milk Moovement’s request to seal certain materials filed in connection with its now filed Second Amended Counterclaims (Milk Moovement Req. to Seal (Docket No. 250)).1 5 A party seeking to seal a judicial record bears the burden of overcoming a strong presumption in favor of public access. Kamakana v. City & County of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006). The party must “articulate compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure, such as the public interest in understanding the judicial process.” Id. at 1178-79 (citation omitted); see also Ctr for Auto Safety v. Chrysler Group, LLC, 809 F.3d 1092, 1098- 99 (9th Cir. 2016) (explaining that the compelling reasons standard should apply to all motions which are correlated to the underlying cause of action). In ruling on a motion to seal, the court must balance the competing interests of the public and the party seeking to keep records secret. See Kamakana, 477 F.3d at 1179.

20 The Ninth Circuit has recognized that an example of a compelling reason for sealing records includes “sources of business information that might harm a litigant’s competitive standing.” Ctr. For Auto Safety, 809 F.3d at 1097 (quoting Nixon v. Warner Commc’ns, Inc., 435 U.S. 539, 598 (1978)); see also Smith v. United States, 2022 WL 3578568, *1 (E.D. Cal. Aug. 19, 27 1 On February 23, 2023, the court granted Milk Moovement’s motion for leave to amend counterclaims. (Docket No. 244.)

1 2022) (explaining that business information may include “pricing, profit, and customer usage information kept confidential by a company that could be used to the company’s competitive disadvantage”).

5 I. Dairy’s Renewed Request to Seal 6 Dairy identifies three categories of information it seeks to protect: (1) discussion of its “at-issue trade secrets”; (2) terms of business arrangements in confidential contracts with United Dairymen of Arizona (“United Dairymen”), California Dairies, Inc. (“California Dairies”), and Borden Dairy; and (3) internal analyses and strategies. (See Dairy Req. to Seal.)

12 To protect its alleged trade secrets, Dairy seeks to seal portions of the declaration of Duane Banderbob, Dairy’s Chief Operating Officer, which is attached as exhibit N to the Patchen declaration.2 (Patchen Decl., Ex. N (Docket No. 224-15).)

16 (See Dairy Req. to Seal at 3-4.) Specifically, Dairy seeks to seal the portions of the declaration which “discuss the details and functionality of Dairy’s producer payroll application, its pooling methodology, and a confidential report . . . that reveals the logic of Dairy’s pooling methodology.” (Id. at 4.) The request to seal appears to sufficiently show that sealing is necessary to protect Dairy’s alleged trade secrets. Accordingly, Dairy’s request to seal the identified portions of exhibit N will be granted.

25 To protect the terms of its business arrangements with 27 2 Dairy seeks to seal exhibit N at 71:19-23 fn.2, 72:3- 13, 73:24-26, 74:1-12, 74:21-22, 78:1, and 79:1-13. (Req. to Seal at 2.)

1 United Dairymen, California Dairies, and Borden Dairy, Dairy also seeks to seal seven documents in their entirety: (1) exhibit A to the Patchen declaration: the “Software Assignment and Grant-Back License Agreement” (the “Software Assignment Agreement”) (Patchen Decl., Ex. A (Docket No. 224-2)); (2) exhibit B to the Patchen Declaration: the “Nondisclosure Agreement” (Patchen Decl., Ex. B (Docket No. 224-3)); (3) exhibit 10 to the Hagey Declaration: a letter sent from Dairy’s CFO to United Dairymen’s CEO (the “UDA Letter”) (Hagey Decl., Ex. 10 (Docket No.204-12)); (4) exhibit 11 to the Hagey Declaration: an order form which contains descriptions of Dairy software solutions and confidential contract terms such as term length and monthly pricing (Hagey Decl., Ex. 11 (Docket No. 204-13)); (5) exhibit 13 to the Hagey Declaration: a user agreement between Dairy and CDI which governs Dairy’s commercial relationship with CDI (Hagey Decl., Ex. 13 (Docket No. 204-15)); (6) exhibit 14 to the Hagey Declaration: a user agreement (Hagey Decl., Ex. 14 (Docket No. 204-16)); and (7) exhibit 15 to the Hagey Declaration: a service level agreement (Hagey Decl., Ex. 15 (Docket No. 204-17).) (See Dairy Req. to Seal at 5-6.)

21 Dairy argues that, because these documents reflect Dairy’s “business strategies, negotiating positions, and agreed- to commercial terms,” Dairy argues that they could “harm Dairy’s position vis-à-vis competitors and counterparties in future similar negotiations.” (Id.) 26 The request to seal exhibit 11 appears to sufficiently show that sealing is necessary to protect Dairy’s business information. Accordingly, Dairy’s request to seal exhibit 11 will be granted. By contrast, with the exceptions of the purchase price and license fee in the Software Assignment Agreement (see Ex. A at 2) and the term length in the Nondisclosure Agreement (see Ex. B at 3), the other documents appear to be standard, almost “boilerplate” contracts which would not disclose any protected information and thus Dairy’s concerns do not outweigh the history of access and public policies favoring disclosure to the public. Therefore, the court must deny Dairy’s request to seal the entirety of the Software Assignment Agreement, Nondisclosure Agreement, UDA Letter, and exhibits 13, 14, and 15 without prejudice. The court will consider a more tailored request that seeks to seal only the protected information within these documents, rather than the entirety of the documents.

15 To protect its internal analyses and strategies, Dairy also seeks to seal: (1) the entirety of an email from Dairy investor, Banneker Partners, to Dairy’s CEO, Scott Sexton, which discusses Milk Moovement as a then new entrant to the market (the “Banneker Email”) (Hagey Decl., Ex. 1 at 65-66); (2) an internal email in which a Dairy employee provides notes from a call with CDI and makes recommendations to the Dairy team (Mot. for Leave at 46:16-19 and 46:21-22); and (3) an internal email in which a Dairy employee provides notes from a call with California Dairies and recommended next-steps and strategies (Mot. for Leave at 46:25-27 and 47:1-10). (See Dairy Req. to Seal at 6-8.) The request to seal these portions of Milk Moovement’s motion appears to sufficiently show that sealing is necessary to protect Dairy’s business information. Accordingly, Dairy’s request to seal Exhibit 2 and the two emails will be granted.

2 II. Milk Moovement’s Request to Seal 3 Milk Moovement seeks to seal certain materials filed in support of its Second Amended Counterclaims which were designated as “CONFIDENTIAL” or “HIGHLY CONFIDENTIAL -- ATTORNEYS' EYES ONLY” under the stipulated protective order (Docket Nos. 54 61).

7 (See Milk Moovement Req. to Seal at 1.) As Milk Moovement acknowledges, a confidentiality agreement between the parties does not per se constitute a compelling reason to seal documents outweighing the interests of public disclosure and access. There needs to be an independent basis for sealing or redacting a document beyond the fact that material is within the purview of a stipulated protective order.

14 While Milk Moovement does not provide an independent basis, many of the materials it seeks to seal are the same as those which Dairy seeks to seal. Specifically, Milk Moovement seeks to seal portions of its Second Amended Counterclaims as well as the attached exhibits: exhibit 1 (the UDA Letter) and exhibit 2 (the Banneker Email). (Milk Moovement Req. to Seal at 1.) For the same reasons discussed above, the request to seal the Banneker Email and portions of the Second Amended Counterclaims which reference Dairy’s business information and internal emails will be granted. The request to seal the UDA Letter and all other portions of the Second Amended Counterclaims for which there is no independent basis for sealing will be denied without prejudice.3 This includes the request to seal the Second Amended Counterclaims at 30:20-23, 32:11, 33:16-19, 33:21-22, 33:25-27, 1 IT IS THEREFORE ORDERED that the requests to seal (Docket Nos. 248, 250) be, and the same hereby are, GRANTED in part and DENIED in part. Milk Moovement’s motion for leave to amend counterclaims at 43:20-24, 46:16-19, 46:21-22, 46:25-27, and 47:1-10 (Docket No. 204-1); exhibit 1 of the Hagey Declaration at 65-66 (Docket No. 204-3); the entirety of exhibit 11 of the Hagey Declaration (Docket No. 204-13); exhibit N of the Patchen Declaration at 71:19-23 fn.2, 72:3-13, 73:24-26, 74:1-12, 74:21-22, 78:1, and 79:1-13 (Docket No. 224-15); and the Second Amended Counterclaims at 30:20-23, 32:11, 33:16-19, 33:21-22, 33:25-27, 34:1-9, 34:21-22, and exhibit 2 (Docket No. 249) are ordered SEALED.

13 The requests to seal exhibits A and B of the Patchen Declaration (Docket Nos. 224-2, 224-3); exhibits 10, 13, 14, and 15 of the Hagey Declaration (Docket Nos. 204-12, 204-15, 204-16, 204-17); Milk Moovement’s motion for leave to amend counterclaims at 6:19-23, 9:27, 11:11-13, 16:25-27, 17:1-3, and 18:24 (Docket No. 204-1); exhibit 1 to the Hagey Declaration at 29:18-24, 45:11, 47:22-23, 48:21-28, 49:1-3, and 61-63 (Docket No. 204-3); Dairy’s opposition to the motion for leave at 9:22-24, 22:10-11, 24:8-9, 36:2-4, and 36:6-17 (Docket No. 224); Milk Moovement’s reply at 8:18-19 (Docket No. 233); and the Second Amended Counterclaims at 16:18-26, 27:5-22, 28:6-8, 28:21-23, 32:9-10, 32:12-26, 33:1-15, 33:20, 33:23-24, 34:12-18, 35:21-27, 36:1-2, 36:7-16, and exhibit 2 (Docket No. 249) be, and the same hereby are, DENIED WITHOUT PREJUDICE.

28 34:1-9, and 34:21-22. nnn nen nee EI IE II IEEE EE IIE OIE IIE DE 1] Dated: March 9, 2023 eh hha A hh bee WILLIAM B. SHUBB 2 UNITED STATES DISTRICT JUDGE , g