Case Can’t Be Sealed Just Because Party Alleges There Are False Statements in Pleadings

Start at Continental Indemnity Co.Yesterday, Magistrate Judge James Wicks (E.D.N.Y.) ruled in favor of the petition.):

Timothy Coffey, the founder, president and owner of Defendant Coffey Nursery/Landscape (Coffey Landscape), and Ann Amiaga is Coffey Landscape’s office manager. When a tree fell upon Isaac Orellana, the tree trimmer and tree remover for Coffey Landscape, paralysis occurred in his lower extremities.

Plaintiff [insurance company]Plaintiff alleges that the Defendants never disclosed Defendant Orellana in their weekly payroll reports. Plaintiff was also not paid premiums. Plaintiff also claims that two days after the accident occurred, defendants submitted a payroll reporting indicating that Defendant Orellana had been employed. In reality, Orellana worked for the company 25 years. He was paid in cash. Plaintiff filed a workers’ compensation claim against Defendants based on the alleged false representation. Plaintiff asserts that the Defendants withheld information from Plaintiff about Coffey Landscaping’s tree-removal services, in an effort to avoid having to pay a higher premium. …

Fast a full year has passed since the case was filed. Now the defendants want to seal “the entire record.” The Plaintiff is not taking a position. Notwithstanding that the motion is uncontested, the court is obligated to consider whether public access to the court records should be denied….

The “entire” record, which includes the scheduling orders on the public docket and the Plaintiff’s complaint, Defendants’ Answer, Plaintiff’s motion for affirmative defenses to be struck, as well as the opposition of Defendants to the plaintiff’s strike motion, is here. These are quintessential judicial documents. Each document is pertinent to the exercise of judicial functions and could influence the court’s decision on a motion. The burden is on the defendants to overcome the presumption that public access can be obtained from these documents.

The defendants claim that documents filed include sensitive and personal information, such as statements about Defendants’ character and integrity and financial information, which could affect Coffey’s credit rating and threaten the survival of the company. Defendants cite to In re Allergan PLC Securities Litigation (S.D.N.Y. (S.D.N.Y. 2020), in which the court granted part of a motion for seal, as the documents contained trade secrets information. The subject documents here (including the one attachment—the workers’ compensation insurance policy) are qualitatively different as they do not contain details as to Defendants’ business practices or financial records, aside from allegations that Defendant Coffey Landscaping paid Defendant Orellana in cash. It isn’t the kind of information necessary to defeat the presumption that the public can access it. Furthermore, the general concerns of defendants that their reputation and business would be damaged are expressed in a conclusory manner and don’t satisfy their burden.

The defendants also depend on Eugene S. v. Horizon Blue Cross Blue Shield (N.J.) (10th Cir. (2011), another case that is noteworthy. The subject documents contained private and personal medical information about plaintiff’s minor child. The subject documents do not contain any medical information, nor documents related to a minor. Defendants’ reliance on U.S. v. Aref, 533 F.3d 72 (2d Cir. 2008) is also misplaced….

Arguments by the defense regarding trade libel or defamation remain unavailing. A pleading that contains a libelous assertion would not be sufficient to provide grounds for a defamation lawsuit. Statements in filed pleadings, however, are absolute privileged. It is not. Bernstein v. Bernstein Litowitz Berger & Grossmann LLP (2d Cir. 2016), the defendants also argued that it was unreliable, and not truthful. Second Circuit agreed that complaint often contained exaggerated and fabricated allegations. This is the nature of judicial proceedings. The court found that sealing a complaint based on Defendants’ logic “would create an untenable result—the sealing of all complaints in actions in which the plaintiff does not prevail…” Moreover, “[t]There is no way to determine if access will have a detrimental effect on future social or business status. You can also see Badinelli v. Tuxedo Club (S.D.N.Y. 2018. (reporting that the “[p]The presumption for public access does not change rotection against potential adverse employment effects in the future. …

[Moreover, t]Even if there is a confidentiality agreement, it does not preclude public access. Accordingly, the fact that the parties together anticipated or contemplated that the file would be sealed is unpersuasive….