The following e-filed documents, listed by NYSCEF document number (Motion 014) 263, 264, 265, 266, 267, 268, 269 were read on this motion to SEAL.
In this commercial action, Bankers Conseco Insurance Company and Washington National Insurance Company (plaintiffs), move by order to show cause for an order pursuant to section 216.1 of the Uniform Civil Rules, to seal the deposition testimony of Matthew Hall on page three (3) of the reply memorandum filed in support of KPMGs motion to compel deposition testimony (NYSCEF Doc. No. 257).
Background
On July 16, 2019, the Honorable O. Peter Sherwood signed and entered a Stipulation and Order for the Production and Exchange of Confidential Information (Confidentiality Order) (NYSCEF Doc. No. 25). The Confidentiality Order provides that all deposition transcripts are to be treated, in their entirety as confidential for the period of 15 days after the parties’ receipt of a transcript, to give the parties time to make confidentiality designations (id., ¶ 8). On December 5, 2021, the parties agreed to extend that period of confidentiality to 60 days (affirmation of Joseph L. Buckley in support of order to show cause, ¶ 5, NYSCEF Doc. No. 264).
On December 2, 2021, the parties received the deposition transcript of Matthew Hall (id., ¶ 10). On December 15, 2021, plaintiffs filed opposition to KPMGs motion to compel (NYSCEF Doc. Nos. 248 — 255). On December 21, 2021, KPMG filed a reply in support of its motion, which included verbatim deposition testimony from witness Matthew Hill (NYSCEF Doc. No. 257 at 3).
Two days later, on December 23, 2021, plaintiffs filed a notice to the County Clerk, pursuant to CPLR 8019, requesting removal of the unredacted version of the reply (NYSCEF Doc. No. 257). Plaintiffs requested that the reply be replaced by a version that includes Matthew Halls redacted deposition testimony (NYSCEF Doc. Nos. 261-262). At the time the instant motion was filed, the unredacted reply remained on the docket (Buckley affirmation, ¶12); however, a redacted version was uploaded to NYSCEF Doc. No. 257 and the document currently remains redacted (NYSCEF Doc. No. 257).
Discussion
Under New York law, there is a prsumption that the public is entitled to access to judicial proceedings and court records (Mancheski v Gabelli Group Capital Partners, 39 AD3d 499, 501 [2d Dept 2007]). The publics right to access, however, is not absolute, and a court is empowered to seal or redact court records pursuant to section 216.1 (a) of the Uniform Rules for Trial Courts upon a showing of “good cause” (Danco Labs. v Chemical Works of Gedeon Richter, 274 AD2d 1, 8 [1st Dept 2000]).
Section 216.1(a) of the Uniform Rules for Trial Courts empowers courts to seal documents upon a written finding of good cause. It provides:
“(a) [e]xcept 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.”
Thus, sealing has been found to be appropriate to preserve the confidentiality of materials which involve internal finances of a party which are of minimal public interest (see DAmour v Ohrenstein & Brown, LLP, 17 Misc 3d 1130[A], 2007 NY Slip Op 52207[U] [Sup Ct, NY County 2007]). In the business context, courts permit records to be sealed when trade secrets are involved or when disclosure of information contained in documents “could threaten a businesss competitive advantage” (Mosallem v Berenson, 76 AD3d 345, 350-351 [1st Dept 2010]). Moreover, sealing has been allowed in the absence of “any legitimate public concern, as opposed to mere curiosity, to counterbalance the interest of [a businesss] partners and clients in keeping their financial arrangement private” (Dawson v White & Case, 184 AD2d 246, 247 [1st Dept 1992][internal quotation marks and citation omitted]).
Here, plaintiffs argue that good cause exists to seal the deposition testimony of Matthew Hall because: (1) the testimony remains confidential pursuant to the courts order and parties December 5, 2021 agreement; and (2) because Halls deposition testimony refers to confidential and sensitive information concerning an affiliate of plaintiffs that could give rise to harm if disclosed to the public.
With respect to plaintiffs’ first argument, the court finds it to be moot as the time has well passed beyond the “60 days” of the agreement referenced by defense counsel. However, as to the Confidentiality Order, the Order requires that the parties redact any confidential information before making a public filing, in order to give the producing party the chance to make a motion to seal. Here, plaintiffs claim that KPMG denied them that opportunity.
Halls deposition testimony refers to an internal audit conducted in 2014 by plaintiffs’ parent company well after the alleged underlying fraud in this case occurred. Plaintiffs argue that the testimony contains confidential, competitively sensitive information that warrants protection because its public disclosure could give rise to harm to plaintiffs and their parent company, and that there is no relevant public interest in the disclosure of facts relating to an internal audit that occurred seven years ago.
The court, however, is unable to view the unredacted version of the testimony to ascertain the validity of plaintiffs’ arguments.
Accordingly, it is
ORDERED that the motion by plaintiffs to seal the reply memorandum in support of KPMGs motion to compel is denied without prejudice, with leave to renew upon submission of the unredacted reply affirmation.
Robert R. Reed, J.