Commercial Division Blog

Posted: February 12, 2024 / Written by: Jeffrey M. Eilender, Samuel L. Butt, Seth D. Allen, Joshua Wurtzel, Channing J. Turner /

Court Grants Partial Sealing of Documents Containing Confidential Business Information and Nonpublic Information about Agreements with Non-Parties

On December 28, 2023, Justice Joel M. Cohen of the New York County Commercial Division, issued a decision in Pearl Street Co-Invest I v. MAPR (ABC) LLC, Index No. 654461/2020, granting in part and denying a part a motion to seal certain documents.  The Court granted sealing of certain documents for which the Court found the moving party had adequately shown contained sensitive and confidential business information and/or nonpublic information about contracts or agreements with third parties.  The Court denied the motion as to other documents for which the Court found sealing was not adequately justified by showing good cause, but permitted the plaintiffs to propose more targeted redactions to those documents.  The Court explained:

The Appellate Division has emphasized that "there is a broad presumption that the public is entitled to access to judicial proceedings and court records" (Mosallem v Berenson, 76 AD3d 345, 348 [1st Dept 2010]). "Since the right [of public access to court proceedings] is of constitutional dimension, any order denying access must be narrowly tailored to serve compelling objectives, such as a need for secrecy that outweighs the public's right to access" (Danco Labs., Ltd v Chemical Works of Gedeon Richter, Ltd, 274 AD2d 1, 6 [1st Dept 2000] [emphasis added]; see also, e.g. Gryphon Dom. VL LLC v APP Intern. Fin. Co., B. V, 28 AD3d 322, 324 [1st Dept 2006]). "Furthermore, because confidentiality is the exception and not the rule, 'the party seeking to seal court records has the burden to demonstrate compelling circumstances to justify restricting public access"' (Maxim, Inc. v Feifer, 145 AD3d 516,517 [1st Dept 2016] [citations omitted]).

The Court has reviewed the parties' proposed sealing of the documents filed as NYSCEF Document Number 326, as well as the targeted redactions the proposed in the documents filed as NYSCEF Document Numbers 279, 321, 328, 329, 352, 355, 358, 363, 364, and 365, and finds that they comport with the applicable sealing standard as laid out in Mosallem, 76 AD3d at 348- 350, and its progeny, in that they contain sensitive and confidential business and financial information. Further, these Exhibits are properly sealed and/or redacted to the extent they contain nonpublic information about confidential contracts or agreements with non-parties to this instant case (Mancheski v Gabelli Grp. Capital Partners, 39 AD3d 499, 502 [2d Dept 2007] ["[D]isclosure could impinge on the privacy rights of third parties who clearly are not litigants herein[.]"]).

However, Plaintiffs' generalized assertions of good cause for the remaining Exhibits filed as NYSCEF Document Numbers 320, 322, 323, 324, 325, 327, 330, 331, 332, 333, 334, 336, 337, 338, 339, 340, 341, 342, 343, 344, 345, 346, 347, 348, 349, 350, 351, 353, 354, and 356 do not establish a compelling justification for the complete sealing that is proposed. While portions of these documents may include confidential business and financial information, the proposed sealing is not adequately explained or justified. Thus, Plaintiffs should propose and justify targeted redactions that satisfy the requirements of 22 NYCRR § 216 [a] and applicable case law.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning moving to seal sensitive or confidential business documents during litigation.