Unreported / Non-Citable
Background
In this federal dispute between Pattern Inc. and Arlo Technologies, Inc., Defendant and Counterclaimant Arlo filed an application to file documents under seal in connection with a motion to intervene for the limited purpose of moving to disqualify counsel. Arlo sought to seal three categories of documents: information related to Denton US's negotiated fee arrangement with Arlo, the Wright Irrevocable Trust's engagement letter, and documents containing information designated as confidential by Pattern. Plaintiff and Counterdefendant Pattern responded and joined in part, requesting that two types of documents within the third category be sealed: Pattern's confidential financial information and Pattern's confidential internal business strategy.
The court applied the Ninth Circuit's framework for sealing judicial records, which begins with a strong presumption in favor of public access. Because the underlying motion to intervene for disqualification purposes was only tangentially related to the merits of the case, the court applied the less exacting 'good cause' standard rather than the 'compelling reasons' standard that applies to merits-related motions.
The Court’s Holding
The court found good cause to seal portions of the memorandum of points and authorities and declarations that disclosed the exact amounts, attorney time, and nature of Denton US's negotiated fee arrangement with Arlo, reasoning that disclosure of a law firm's negotiated rates could harm the firm by revealing nonpublic information to clients and competitors. The court also found good cause to seal the Wright Irrevocable Trust's engagement letter and related references, holding that a written fee contract is a confidential communication under California Business and Professions Code section 6149 and that such documents are traditionally kept secret. The court rejected Arlo's argument that Mr. Wright had waived privilege by placing the engagement agreement at issue, finding the substance of the agreement not dispositive to the motion to intervene, while expressly reserving the waiver question for the anticipated motion to disqualify counsel.
The court further found good cause to seal Pattern's Exhibits B, D, and G and to redact specific paragraphs of the Duvall declaration containing Pattern's confidential financial and business strategy information, noting that sealing business information that might harm a litigant's competitive standing is appropriate and that Pattern's request was narrowly tailored. However, the court denied sealing as to Exhibits A, H, I, K, and N of the Duvall declaration because neither party took a position on those exhibits beyond referencing the protective order, and an existing protective order is not itself automatic grounds for sealing. The court ordered the clerk to file the approved documents under seal, directed Pattern to file a redacted version of Exhibit J within seven days, allowed either party to file a renewed motion to seal within fourteen days, and ordered Defendant to file unredacted versions of the denied exhibits on the public docket upon expiration of the fourteen-day renewed-motion deadline.
Key Takeaways
- A party seeking to seal judicial records bears the burden of overcoming the strong presumption of public access, and the showing required depends on whether the underlying motion is more than tangentially related to the merits of the case.
- A motion to intervene for the limited purpose of moving to disqualify counsel is subject to the good cause standard rather than the compelling reasons standard.
- Attorney fee agreements and negotiated rate information may be sealed upon a showing of good cause because disclosure could harm law firms by revealing nonpublic information to clients and competitors.
- An existing protective order is not, by itself, automatic grounds for sealing documents; parties must make a specific showing of good cause for each document or category.
- The court reserved the question of whether Mr. Wright waived privilege in the engagement letter for the anticipated motion to disqualify counsel, leaving that issue open.
Why It Matters
This order illustrates the practical application of the Ninth Circuit's two-tier sealing framework in the context of a disqualification-related motion, confirming that even under the less demanding good cause standard, parties must articulate specific reasons for sealing each document rather than relying on blanket designations or protective orders. The decision also highlights the court's willingness to seal attorney fee arrangements and engagement letters as traditionally confidential materials while insisting on narrow tailoring and public access where no specific justification is offered.