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Posted: April 1, 2016

Court Allows Filing of Redacted Complaint

On March 22, 2016, Justice Singh of the New York County Commercial Division issued a decision in SYNCORA Guarantee Inc. v. Alinda Capital Partners LLC, 2016 NY Slip Op. 30490(U), allowing the plaintiff to file a redacted amended complaint, explaining:

In New York, there is a strong presumption favoring public legal proceedings and against sealing files without good cause shown. The sealing of court records is governed by 22 NYCRR section 216.1, which provides as follows:

(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).

Although the term good cause is not defined, a sealing order should clearly be predicated upon a sound basis or legitimate need to take judicial action. A finding of good cause presupposes that public access to the documents will likely result in harm to a compelling interest of the movant.” The burden of establishing such good cause falls on the party seeking to seal the record, which must demonstrate compelling circumstances to justify restricting public access. A trial court must also consider less drastic alternatives to sealing the records which would adequately serve the competing interests.

In the business context, sealing orders have been permitted where trade secrets are involved, or where the release of documents could threaten a business’s competitive advantage. Here, . . . Macquarie proposes only to redact a limited amount of confidential information from publicly filed documents. Macquarie contends that the confidential information at issue derives from documents concerning Macquarie’s negotiation strategies, deal structuring strategies (including pricing), communications with consultants, internal reports and memoranda, and financial models. Macquarie asserts that such information relates not only to Macquarie’s internal practices, but also informs Macquarie’s present day practices within an industry in which Macquarie remains a participant. It is critical to note that Macquarie only seeks to redact sixteen of the 105 paragraphs of the proposed first amended complaint. Of the sixteen paragraphs, seven would only be partially redacted. Although the sealing of an entire record requires a compelling basis, it is not clear that there must be a compelling showing to redact limited personal or financial information.

Under the specific circumstances of this case, the Court in its discretion finds that the redaction adequately serves the competing interests of public access to judicial documents and Macquarie’s interest in not releasing confidential documents that could threaten the business’s competitive advantage.

(Internal quotations and citations omitted) (emphasis added).

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