Commercial Division Blog

Posted: September 30, 2022 / Written by: Jeffrey M. Eilender, Samuel L. Butt, Christopher R. Dyess, Joshua Wurtzel, Hillary S. Zilz / Category Commercial

Sealing of Proprietary Business Information Permitted When Disclosure Would Threaten Party's Competitive Advantage

On August 9, 2022, Justice Robert R. Reed of the New York County Commercial Division issued a decision in Linkable Networks v. Mastercard Inc., 2022 NYLJ LEXIS 1007, granting a motion to seal information that one of the parties claimed contained sensitive financial information concerning business strategies, licensing agreements and fees of nonparties, and proprietary materials reflecting commercial interests, business strategy, and legal planning, explaining: 

Those portions of the proposed redactions to the memorandum of law in support of summary judgment" (NYSCEF doc. no. 55) as well as the statement of material facts (NYSCEF doc. no. 056) defendants seek to have redacted as they relate to those exhibits subject to the Protective Order (i.e., NYSCEF doc. no. 58 and as discussed herein), comport with the applicable sealing standards as set forth in Mosallem (76 AD3d at 348-350). Likewise, the confidentiality agreement between the parties (NYSCEF doc. no. 60) falls within these parameters (id.). As to exhibits 2 & 4 (NYSCEF doc. nos. 59, 61), the court finds the documents contain sensitive financial information concerning business strategies, licensing agreements and fees of nonparties such that protection is warranted (see id.; Mancheski v. Gabelli Group Capital Partners, 39 AD3d at 502 ["disclosure could impinge on the privacy rights of third parties who clearly are not litigants herein"]; Catalyst Investors III, L.P. v. The We Co., 2022 NY Slip Op 31581[U] [Sup Ct, NY County May 13, 2022, No. 654377/2020]).

With respect to NYSCEF Doc. Nos 73 through 80, those documents contain various correspondence and emails between the parties' counsel as it concerns proprietary materials reflecting commercial interests, business strategy, legal planning and other categories of information traditionally [*10] shielded from public access. As there is no compelling public interest in the documents at issue, and as there is no opposition, the court finds that these records should be sealed (see e.g. Offshore Brazil II Hotel Investors Fund, LP v. GP Investments, Ltd, 2018 NY Slip Op 32004[U], *2 [Sup Ct, NY County 2018], citing Feffer v. Goodkind, Wechsler, Labaton & Rudoff, 152 Misc 2d 812, 815-816 [Sup Ct, NY County 1991] ["'the internal finances' of a party are not a matter of public interest"], affd 183 AD2d 678 [1st Dept 1992]).

Courts generally conduct an exacting analysis before granting a sealing motion. And just because the parties agree that a document is confidential does not mean that the court will permit that document to be filed under seal. But when good cause for sealing certain documents or information exists, the court will grant a party's sealing motion. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have a question concerning sealing motions.