To Seal, or Not to Seal? That is the Question

• Posted on: Aug 17 2020

Judicial protection of confidential information is often sought to shield highly sensitive information, trade secrets and financial information from the public. One way to achieve this objective is to obtain an order that seals the record from public view. In New York, the issue is governed by Section 4 of the Judiciary Law and Section 216.1(a) of the Uniform Rules for Trial Courts. 

Section 4 of the Judiciary law provides that judicial proceedings “shall be public, and [that] every citizen may freely attend the same.” There are exceptions, of course, such as those involving divorce, rape and criminal sexual acts. Id. But the presumption in favor of public access to court proceedings, both as a matter of constitutional law (Richmond Newspapers v. Virginia, 448 U.S. 555 (1980) and “statutory imperative” (Anonymous v. Anonymous, 158 A.D.2d 296, 297 (1st Dept. 1990)) is broad. Danco Lab, Ltd. v. Chemical Works of Gedeon Richter, Ltd., 274 A.D.2d 1, 7 (1st Dept. 2000). After all, “the public needs to know that all who seek the court’s protection will be treated evenhandedly” (Baidzar Arkun v. Farman-Farma, 2006 N.Y. Slip Op. 30724(U), at *2 (Sup. Ct., NY County 2006) (citation omitted)) and that judicial proceedings “are conducted efficiently, honestly and fairly.” Danco Lab, 274 A.D.2d at 7 (citations omitted). 

Pursuant to the foregoing policy objectives, New York promulgated Section 216.1(a) of the Uniform Rules for Trial Courts (22 N.Y.C.R.R.). This section provides that “[e]xcept where otherwise provided by statute or rule, a court shall not enter an order in any action … 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 of the parties.” 22 N.Y.C.R.R. § 216.1 (a). Although the rule does not define “good cause,” “‘a standard that is difficult to define in absolute terms,’ a sealing order should rest on a ‘sound basis or legitimate need to take judicial action.’” Danco Lab, 274 A.D.2d at 8 (quoting Coopersmith v. Gold, 156 Misc. 2d 594, 606 (Sup. Ct., Rockland County 1992) (quoting In re Alexander Grant & Co., 820 F.2d 352, 356 (11th Cir. 1987)). For this reason, the burden of proof is on the party seeking to seal the record. Mosallem v. Berenson, 76 A.D.3d 345, 348-349 (1st Dept. 2010) (citations omitted).

Since the public’s right of access is not absolute (Anonymous v. Anonymous, 263 A.D.2d 341, 297 (1st Dept. 2000); Danco Lab, 274 A.D.2d at 8), the determination of whether to seal the record “is best left to the sound discretion of the trial court, a discretion to be exercised in light of the relevant facts and circumstances of the particular case.” Matter of Crain Communications, Inc. v. Hughes, 135 A.D.2d 351, 351 (1st Dept. 1987) (citing Nixon v. Warner Communications, Inc., 435 U.S. 589, 598-599 (1978)). 

Notably, “[m]erely because some of the documents [are] marked ‘confidential’ or ‘private’ ‘is not controlling on the court’s determination whether there is good cause to seal the record.’” Mosallem, 76 A.D.3d at 350 (quoting Eusini v. Pioneer Elecs. (USA), Inc., 29 A.D.3d 623, 626 (2d Dept. 2006)).

In the business context, courts have sealed records where trade secrets are involved or where the disclosure of documents “could threaten a business’s competitive advantage.” Mosallem, 76 A.D.3d at 350-351 (citations omitted). Additionally, courts have permitted the sealing of records where there is no articulable public interest in the documents and materials. See, e.g., Dawson v. White & Case, 184 A.D.2d 246, 247 (1st Dept. 1992). 

Applying the foregoing principles, Justice Andrea Masley of the New York Supreme Court, Commercial Division, granted numerous motions to seal and redact various sensitive, financial documents from the public record. North Star Debt Holdings, L.P. v. Serta Simmons Bedding, LLC, 2020 N.Y. Slip Op. 32584(U) (Sup. Ct., N.Y. County Aug. 4, 2020) (here). Although the motions were unopposed, the Court weighed the competing interests of the movants and the public and held that disclosure of the information “could threaten [the movant’s] competitive advantage in the market going forward.” Slip Op. at *2.