A good reason to seal documents activates answers to deposit questions | Schlam Stone & Dolan LLP

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On September 5, 2022, Judge Andrea Masley of the New York County Commercial Division issued a decision in BDO USA vs. FranzIndex No. 652816/2020, granting in part and denying in part a new motion to permanently seal court documents containing interviews with former employees about the development of proprietary tools in an action for breach of their employment contracts, explaining:

The “party seeking to seal the court records bears the burden of demonstrating compelling circumstances to justify the restriction of public access” to the documents. (Id. to 349 [citations omitted].) Good cause must “be based on a solid basis or a legitimate need to take legal action.” (Danco Lab Ltd. v. Chemical Works of Gedeon Richter, Ltd., 274 AD2d 1, 8 [1st Dept 2000] [internal quotations omitted].)

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Here, the court agrees with the defendants insofar as some of the defendants’ responses do not involve competitively sensitive information that requires the document to be fully sealed. There is no valid reason to seal non-proprietary information that does not reveal, among other things, trade secrets, business strategy and/or internal finances that could harm BDO’s competitive position in the industry. For example, there is no valid reason to seal the entire transcript, while many responses just say “I’m not sure”, “Sorry? », « Agree » or answers to this effect. (See, for example, NYSCEF 207, Transcript of Defendants” Interviews at 24; id. at 100 [“I would have to go back and look at my records and see exactly when I did that.”]; identifier. at 177-78 [“I do not ever want to deal with lawyers again because that was horrible.”].) These types of defendant responses reveal no confidential information by any standard, and therefore BDO will refile a narrowly tailored redacted version of NYSCEF 207 with redactions that only imply proprietary information that could cause harm if this information was disclosed. to the public. In doing so, BDO must also take into account that this transcript does not contain the questions posed to the defendants, which may mitigate the risk of harm that disclosure of this transcript might pose.

However, the defendants’ assertion that the information is publicly available or has been made public in previous proceedings and, therefore, should not be sealed is futile. The defendants’ responses in the transcript apparently contain confidential discussions of, among other things, business strategy and internal processes with respect to software, projects or business management. (See, for example, NYSCEF 207, Transcript of Defendants’ Responses at 143.) Defendants in the case cite Wegmans Food Markets, Inc. v. Tax Appeals Trib. of NY, has nothing to do with this seal motion. (33 NY3d 587, 595 [2019] [reviewing the statutory construction of Tax Law §1105 [c] [1].)

Therefore, the court disagrees with the defendants insofar as they argue that there is no confidential information or proprietary information. It is apparent from the transcript that the defendants’ responses reveal business strategy and discussions regarding development and work on these projects. (See, for example, NYSCEF 207, Transcript of Defendants’ Interviews at 102.) Therefore, and as discussed in more detail above, there is good cause to tightly redact those portions of Defendants’ Answers that reveal confidential information. and exclusive.

Courts will not seal documents that do not reveal, among other things, trade secrets, business strategy and/or internal finances that could harm the mover’s competitive position in the industry.

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