Lipocine Inc. v. Clarus Therapeutics, Inc.

LIPOCINE INC., Plaintiff, v. CLARUS THERAPEUTICS, INC., Defendant.

C.A. No. 19-622 (WCB)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

August 7, 2020

MEMORANDUM OPINION AND ORDER

Before the Court is a motion by plaintiff Lipocine Inc. to seal certain portions of a Memorandum Opinion and Order recently entered by the Court. Dkt. No. 141. The motion is denied.

BACKGROUND

The dispute that gave rise to Lipocine's sealing motion involved a claim of attorney-client privilege by Lipocine regarding certain discovery materials. The parties' papers addressing that dispute were filed under seal. I ruled that the materials in dispute were privileged. Dkt. No. 138. In order to avoid inadvertently disclosing sensitive information, I filed the Memorandum Opinion and Order on that issue under seal, but I directed the parties to advise me if the Memorandum Opinion and Order could be unsealed or if any portions of the Memorandum Opinion and Order were so sensitive that they needed to remain sealed. Dkt. No. 139. I explained that if either party wished for any portion of the Memorandum Opinion and Order to remain sealed, that party should explain, with specificity, why sealing that portion or portions of the Memorandum and Order is necessary and justified.

In response to that order, Lipocine filed a motion requesting that 11 portions of the Memorandum Opinion and Order remain under seal. Lipocine stated that defendant Clarus Therapeutics, Inc., did not oppose the motion.

Lipocine acknowledges that redaction of a judicial opinion is appropriate only when redactions are "necessary and justified" to protect a party's legitimate interests. Dkt. No. 141, at 1 (citing Pansy v. Borough of Stroudsburg, 23 F.3d 772, 786 (3d Cir. 1994)). However, Lipocine argues that several passages in the Memorandum Opinion and Order are subject to sealing under that standard and that those passages should remain sealed because they contain information that is "confidential to Lipocine and could harm Lipocine competitively if the information became public." Dkt. No. 141,. at 2.

Lipocine's explanation of why the 11 passages are so sensitive that they need to remain sealed is quite summary. In fact, Lipocine devotes only a single page to explaining why all 11 portions of the order should be redacted.

DISCUSSION

A. Governing Legal Principles

The common law recognizes a "general right to inspect and copy public records and documents, including judicial records and documents." Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 (1978); see also In re Cendant Corp., 260 F.3d 183, 194 (3d Cir. 2001); Littlejohn v. BIC Corp., 851 F.2d 673, 678 (3d Cir. 1988); Uniloc 2017 LLC v. Apple, Inc., 964 F.3d 1351, 1358 (Fed. Cir. 2020); In re Violation of Rule 28(d), 635 F.3d 1352, 1356 (Fed. Cir. 2011). That right is implemented through "a strong presumption of openness" that "does not permit the routine closing of judicial records to the public." In re Avandia Mktg., Sales Practices and Prods. Liability Litig., 924 F.3d 662, 672 (3d Cir. 2019); see also LEAP Sys., Inc. v. MoneyTrax, Inc., 638 F.3d216, 220 (3d Cir. 2011); Leucadia, Inc. v. Applied Extrusion Techs., Inc., 998 F.2d 157, 161 (3d Cir. 1993); In re Violation of Rule 28(d), 635 F.3d at 1356.

As the Third Circuit explained in Littlejohn, the right of access strengthens confidence in the courts:

The public's exercise of its common law access right in civil cases promotes public confidence in the judicial system by enhancing testimonial trustworthiness and the quality of justice dispensed by the court. As with other branches of government, the bright light cast upon the judicial process by public observation diminishes possibilities for injustice, incompetence, perjury, and fraud. Furthermore, the very openness of the process should provide the public with a more complete understanding of the judicial system and a better perception of its fairness.

851 F.2d at 678 (citations omitted). Thus, access to the records of court proceedings "promotes 'public respect for the judicial process' and helps assure that judges perform their duties in an honest and informed manner." Leucadia, 998 F.3d at 161 (citations and internal quotations omitted).

To be sure, the "right to inspect and copy judicial records is not absolute," Nixon, 435 U.S. at 598, and the presumption in favor of public access to court records can be overcome in certain instances. For example, as the Supreme Court recognized in the Nixon case, courts have denied public access to court records when necessary to ensure that those records "are not 'used to gratify private spite or promote public scandal,'" or to ensure that court records are not used "as sources of business information that might harm a litigant's competitive standing." Id. (citations omitted).

The decision whether to allow public access to court records is left to the "sound discretion of the trial court . . . to be exercised in light of the relevant facts and circumstances of the particular case." Nixon, 435 U.S. at 599. The exercise of that discretion is not unguided, however. "In determining whether to restrict the public's access to court documents, the court must 'weigh[] the interests advanced by the parties in light of the public interest and the duty of the courts.'" In reViolation of Rule 28(d), 635 F.3d at 1357 (quoting Nixon, 435 U.S. at 602). And in making a decision as to whether to limit public access to court records, a judge must be cognizant of the fact that public access to judicial records "serves to promote trustworthiness of the judicial process, to curb judicial abuses, and to provide the public with a more complete understanding of the judicial system, including a better perception of its fairness." SEC v. Van Waeyenberghe, 990 F.2d at 845, 849 (5th Cir. 1993); see also id. at 850 ("The real focus of our inquiry is on the rights of the public in maintaining open records and the 'check[] on the integrity of the system.'") (quoting Wilson v. Am. Motors Corp., 759 F.2d 1568, 1571 (11th Cir. 1985)). For that reason, the courts have held that a district court's "discretion to seal the record of judicial proceedings is to be exercised charily," Van Waeyenberghe, 990 F.2d at 848, that the court "must use caution in exercising its discretion to place records under seal," United States v. Holy Land Found. for Relief & Dev., 624 F.3d 685, 689 (5th Cir. 2010), and that the decision to seal or redact public records "must be made in light of the 'strong presumption that all trial proceedings should be subject to scrutiny by the public,'" id. at 690 (citation omitted).

Courts have uniformly held that the party seeking to have court documents restricted from public access has the burden of establishing that the presumption of public records should be overcome, and that the burden is a heavy one. LEAP Sys., 638 F.3d at 221-22; In re Cendant Corp., 260 F.3d at 194; Miller v. Indiana Hosp., 16 F.3d 549, 551 (3d Cir. 1994); Publicker Indus., Inc. v Cohen, 733 F.2d 1059, 1071 (3d Cir. 1984); Romero v. Drummond Co., 480 F.3d 1234, 1245 (11th Cir. 2007); Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006); Va. Dep't of State Police v. Wash. Post, 386 F.3d 567, 575 (4th Cir. 2004); United States v. Ladd, 218 F.3d 701, 704 (7th Cir. 2000). The moving party "can overcome the strong presumption of access by providing 'sufficiently compelling reasons' that override the public policies favoringdisclosure." Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214, 1221 (Fed. Cir. 2013) (citation omitted). In order to do so, however, "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.

Specificity in the showing of harm is essential. In re Avandia, 924 F.3d at 673; In re Cendant Corp., 260 F.3d at 194; Pansy, 23 F.3d at 786; Publicker, 733 F.2d at 1071. Lipocine concedes that a showing of "good cause" is necessary to justify an order withdrawing judicial records from the public domain. However, the Third Circuit has defined "good cause" in this context very restrictively; it is not enough simply to articulate some justification for the sealing or redacting of judicial materials. As the court has explained, "'good cause' is established when it is specifically demonstrated that disclosure will cause a clearly defined and serious injury. . . . Broad allegations of harm, unsubstantiated by specific examples . . . will not suffice." Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995); see also In re Avandia, 924 F.3d at 672; LEAP Sys., Inc., 638 F.3d at 222; Shingara v. Skiles, 420 F.3d 301, 307 (3d Cir. 2005) (a "broad, unsubstantiated allegation of harm . . . does not support a showing of good cause"); Pansy, 23 F.3d at 786 ("Good cause is established on a showing that disclosure will work a clearly defined and serious injury to the party seeking closure. The injury must be shown with specificity.") (quoting Publicker, 733 F.2d at 1071).

Finally, the courts have made clear that the interest in ensuring that judicial records remain open to the public applies with special force to judicial opinions. As Judge Garland stated recently, writing for the D.C. Circuit:

Court decisions are the "quintessential business of the public's institutions." And the issuance of public opinions is core "to the transparency of the court's decisionmaking process." Indeed, at least since the time of Edward III, judicial decisions have been held open for public inspection.

In re Leopold to Unseal Certain Electronic Surveillance Applications and Orders, 964 F.3d 1121, 1128 (D.C. Cir. 2020) (citations omitted); see also In re United States for an Order Pursuant to Section 2703(d), 707 F.3d 283, 290 (4th Cir. 2013) ("it is commonsensical that judicially authored or created documents are judicial records");...