Nallapati v. Justh Holdings

637 F.Supp.3d 357

VAMSI NALLAPATI & IGM SURFACES, LLC, Plaintiffs, v. JUSTH HOLDINGS, LLC, and Hari Hara Prasad Nallapaty, Defendants, v. Vamsi Nallapati, Vinay Bharadwaj, Rohit Gangwal, Cosmos Granite Dallas, LLC,Cosmos Granite Charlotte, LLC, and Cosmos Granite Charleston, LLC, Counter-Defendants.

No. 5:20-CV-47-D

United States District Court, E.D. North Carolina, Western Division

Signed October 28, 2022

Heather Bell Adams, Le'Ron Anthony Byrd, Parry Law Firm, Chapel Hill, NC, Kirk Alan Parry, Jr., Parry Tyndall White, Chapel Hill, NC, Susan Freya Olive, Brian Jamison Crews, David McKenzie, Olive & Olive, P.A., Durham, NC, Andrew A. Kasper, United States Attorney's Office, Raleigh, NC, for Plaintiff Vamsi Mohan Nallapati.

David McKenzie, Brian Jamison Crews, Susan Freya Olive, Olive & Olive, P.A., Durham, NC, for Plaintiff IGM Surfaces, LLC.

David W. Sar, Daniel L. Colston, Brooks Pierce McLendon Humphrey & Leonard, L.L.P., Greensboro, NC, Charles E. Coble, Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, Raleigh, NC, for Defendant Justh Holdings LLC.

Charles E. Coble, Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, Raleigh, NC, Daniel L. Colston, Brooks Pierce McLendon Humphrey & Leonard, L.L.P., Greensboro, NC, for Defendant Hari Hara Prasad Nallapaty.

Christopher S. Edwards, Ward and Smith, P.A., Wilmington, NC, Jordan McCoy Spanner, Joseph A. Schouten, Ward and Smith, P.A., Raleigh, NC, Brian Jamison Crews, Olive & Olive, P.A., Durham, NC, for Counter-Defendants Rohit Gangwal, Vinay Bharadwaj, Cosmos Granite Dallas, LLC, Cosmos Granite Charlotte, LLC, Cosmos Granite Charleston, LLC.

Le'Ron Anthony Byrd, Parry Law Firm, Chapel Hill, NC, Kirk Alan Parry, Jr., Parry Tyndall White, Chapel Hill, NC, Susan Freya Olive, Durham, NC, David McKenzie, Brian Jamison Crews, Olive & Olive, P.A., Durham, NC, Joseph A. Schouten, Ward and Smith, P.A., Raleigh, NC, for Counter-Defendant Vamsi Mohan Nallapati.

ORDER

Robert B. Jones, Jr., United States Magistrate Judge

This matter is before the court on Defendants' motions to seal. [DE-141, -161, -186, -219, -226, -261]. Plaintiffs and Counter Defendants (collectively "Plaintiffs") responded to the motions, [DE-163, -165, -228, -269], and Defendants filed a reply, [DE-173]. For the reasons stated below, the motions to seal at Docket Entries 141, 161, 219, and 261 are allowed in part and denied in part, and the motions to seal at Docket Entries 186 and 226 are allowed.

I. Legal Standard

"[T]he courts of this country recognize 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, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978) (internal footnote omitted). The Fourth Circuit has directed that before sealing publicly-filed documents, the court must first determine if the source of the public's right to access the documents is derived from the common law or from the First Amendment. Stone v. Univ. of Md., 855 F.2d 178, 180 (4th Cir. 1988). "[T]he common law presumption in favor of access attaches to all 'judicial records and documents,' [while] the First Amendment guarantee of access has been extended only to particular judicial records and documents[,]" such as those filed in connection with a motion for summary judgment. Id. (quoting Nixon, 435 U.S. at 597, 98 S.Ct. 1306 & citing Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253 (4th Cir. 1988); In re Washington Post Co., 807 F.2d 383, 390 (4th Cir. 1986)). "[D]ocuments filed with the court are 'judicial records' if they play a role in the adjudicative process, or adjudicate substantive rights." In re Application of the U.S. for an Order Pursuant to 18 U.S.C. Section 2703(D) ("In re Application"), 707 F.3d 283, 290 (4th Cir. 2013) (citations omitted); see also United States v. Amodeo, 44 F.3d 141, 145 (2d Cir. 1995) ("[T]he item filed must be relevant to the performance of the judicial function and useful in the judicial process in order for it to be designated a judicial document.").

Courts apply the "experience and logic" test to determine whether there is also a First Amendment right to access, which provides more substantive protection to the public's interest in access than does the common law. In re Application, 707 F.3d at 291; Rushford, 846 F.2d at 253. Under this test, the court considers "(1) 'whether the place and process have historically been open to the press and general public,' and (2) 'whether public access plays a significant positive role in the functioning of the particular process in question.' " In re Application, 707 F.3d at 291 (quoting Baltimore Sun Co. v. Goetz, 886 F.2d 60, 64 (4th Cir. 1989)). The Fourth Circuit has determined that the more rigorous First Amendment standard should apply to documents filed in connection with a summary judgment motion in a civil case "[b]ecause summary judgment adjudicates substantive rights and serves as a substitute for a trial," which is generally open to the public. Rushford, 846 F.2d at 252-53.

Here, the documents sought to be sealed were filed in conjunction with summary judgment briefing. Accordingly, the First Amendment right of access applies. However, "[t]he mere existence of a First Amendment right to access or a common law right of access to a particular kind of document does not entitle[ ] the press and the public to access in every case." Rushford, 846 F.2d at 253 (citation omitted). "To overcome the First Amendment standard, sealing must be 'essential' to preserve important, higher interests," BASF Plant Sci., LP v. Commonwealth Sci. & Indus. Research Organisation, No. 2:17-CV-503, 2019 WL 8108115, at *2 (E.D. Va. Aug. 15, 2019) (citation omitted), and "narrowly tailored to serve that interest," Rushford, 846 F.2d at 253. The "protection of a party's interest in confidential commercial information, such as a trade secret, where there is a sufficient threat of irreparable harm" is a recognized exception to the "presumptive openness of judicial proceedings." Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1071 (3d Cir. 1984) (citing Stamicarbon, N. V. v. American Cyanamid Co., 506 F.2d 532, 539-42 (2d Cir. 1974)). The party seeking to deny access bears the burden. Rushford, 846 F.2d at 253.

To determine whether records should be sealed, the court must follow the procedure established in In re Knight Publishing Company, 743 F.2d 231 (4th Cir. 1984). The court must first provide "public notice of the request to seal and allow the interested parties a reasonable opportunity to object." Id. at 235-36. Notice is sufficient where a motion is docketed reasonably in advance of its disposition. Id. at 235. Second, the court considers less drastic alternatives, such as redaction of any sensitive material. Id. at 235-36. Then, if the court determines that public access should be denied, the court must provide specific reasons and factual findings supporting the decision to seal. Id.

II. Discussion

A. Motions to Seal [DE-141, -161, -186, -261]

Defendants seek an order sealing (1) Prasad's Affidavit, [DE-131, -250]; (2) excerpts from Prasad's deposition testimony, [DE-134, -135, -155, -156, -185, -247, -248]; (3) three trademark licenses, [DE-136 to -138]; (4) a trademark assignment, [DE-139, -154]; (5) Defendants' memorandum of law, [DE-129], and statement of material facts, [DE-130]; (6) Defendants' responses to Requests for Admissions Nos. 52-59, [DE-153]; (7) Plaintiffs' responses to Requests for Admissions in the properties Case, [DE-251]; (8) Plaintiffs' memorandum of law, [DE-149], and statement of material facts, [DE-150]; (9) Defendants' memorandum of law in opposition to Plaintiffs' motion for partial summary judgment, [DE-183], and Defendants' response to Plaintiffs' statement of facts, [DE-184]; and (10) Plaintiffs' reply memorandum, [DE-245], and reply to statement of material facts, [DE-246].¹ Defendants contend that the excerpts from Prasad's deposition focus on his relations and financial information with his Indian company, Divyashakti Granites, Ltd. ("DSG"), and other sensitive financial information, including assignment and licensing of trademark rights and royalty rates; the public's interest in such matters is minimal compared to the sensitive financial information; Prasad's affidavit was filed under seal in the properties case; the information is subject to the protective order, where Prasad's deposition has been designated "confidential" with portions designated "attorney's eyes only"; and a prior deposition of Prasad's was used for an improper purpose. Defs.' Mem. [DE-140] at 3-5.

Plaintiffs contend the information does not qualify for sealing because the information is not confidential, much of the information is stale, and Defendants failed to utilize less drastic measures such as redaction. Pls.' Mem. [DE-163] at 7-10; Pls.' Mem. [DE-228] at 1, 4, 9-12. In response, Defendants prepared redacted versions of the exhibits and discussed with more specificity the sensitive nature of the redacted information. Defs.' Reply [DE-173] at 2-6.

1. Prasad's Affidavit and Deposition Excerpts

Prasad's affidavit and deposition excerpts contain both confidential and non-confidential information. Defendants' initial request to seal them in their entirety was, thus, overly broad. However, Defendants have provided redacted versions of these documents, which limit the amount of information withheld from the public. [DE-173-1 to -173-3]. Having reviewed these documents and the redactions, the court finds that while some of the redacted information is not confidential or its disclosure is unlikely to result in harm to business interests, the redactions are largely appropriate and the improperly redacted information is unnecessary to the public's understanding of the issues presented on summary judgment and does not bear on important matters of public interest. See Jones v. Lowe's Companies, Inc., 402 F. Supp. 3d 266, 291-92 (W.D.N.C. 2019) (keeping portions of...