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IBC Advanced Technologies v. Ucore Rare Metals Inc.

United States District Court, D. Utah

June 17, 2019

IBC ADVANCED TECHNOLOGIES, INC., and STEVEN R. IZATT Plaintiffs,
v.
UCORE RARE METALS INC., JIM MCKENZIE, and PETER MANUEL, Defendants.

          Howard C. Nielson, Jr. District Judge

          ORDER ON MOTIONS FOR LEAVE TO FILE UNDER SEAL

          DUSTIN B. PEAD, UNITED STATES MAGISTRATE JUDGE

         This matter was referred to Magistrate Judge Pead pursuant to 28 U.S.C. §636(b)(1)(A). Before the court are three non-dispositive motions (collectively the “Motions”): 1) Defendant Ucore Rare Metals, Inc.'s (“Ucore”) Motion for Leave to File Exhibit A of Notice of Removal Under Seal (“First Motion”, ECF No. 3); 2) Ucore's Motion for Leave to File Defendant Ucore Rare Metals Inc.'s Motion to Dismiss, or, in the Alternative, to Stay and Memorandum in Support Under Seal along with Exhibits D, E, G, and H (“Second Motion”, ECF No. 7); and, 3) IBC Advance Technologies, Inc.'s (“IBC”) Motion to File Under Seal Plaintiffs' Memorandum in Opposition to Defendants Ucore's Motion to Dismiss, or in the Alternative, to Stay (“Third Motion”, ECF No. 19).

         DISCUSSION

         This case was removed from Third District Utah State Court (“Kendall Action”). Id. The Utah State Courts have a record classification system that permits courts to designate filed documents as public, protected, private or sealed. See Utah Rules of Judicial Administration 4-202 et. seq. Prior to the removal from state court to federal court, the Honorable William Kendall, State of Utah Third District Judge, designated the Complaint (ECF No. 4) as a protected document thereby restricting who could obtain a copy from the state court. See ECF No. 2-4; see also Utah Rules of Judicial Administration 4-202 et. seq.

         In a separate yet related state court action that involves the same parties and similar disputes, Third District Court Judge Laura Scott issued orders in No. 190900129 (“Scott Action”) classifying most of the pleadings as protected. Ucore now seeks to seal those same pleadings in this action by virtue of Judge Scott's orders. The Scott Action was dismissed.

         Protected court records in state court actions may include attorney's work product, records that are subject to attorney client privilege, bids or proposals until the submission deadline has closed, court security plans, records that would impair government procurement, strategy about collective bargaining or records of the Children's Justice Center. See Utah Rules of Judicial Administration 4-202.02(5).

         The United States District Court for the District of Utah does not have an equivalent local rule that permits courts to classify documents as protected. Instead parties must move to seal a document pursuant to the District of Utah Rules of Practice. In general, “[t]he records of the court are presumptively open to the public.” DUCivR 5-3(a)(1). Furthermore, the sealing of “…pleadings, motions, memoranda, exhibits, and other documents or portions thereof [] is highly discouraged” unless a document contains privileged information, is protectable as a trade secret, or is otherwise protectable under the law. Id. The public shall have access to documents unless restricted by statute or court order. See Id. In addition, the court may seal a document upon a showing of good cause. See Id.

         A. First Motion.

         Ucore seeks to seal the entire Complaint based upon the prior ruling from Judge William Kendall classifying the document as protected. See First Motion at 1. In the Kendall Action, IBC sought to designate the Complaint as protected claiming information contained therein is confidential. Id. The request was made ex parte and before Ucore had accepted service. Id. at 2. This court, however, has not been provided a copy of IBC's ex parte motion that was filed in the Kendall Action.

         Separately, upon receipt of the First Motion, IBC has not lodged its own narrowly-tailored motion, consistent with the mandates of DUCivR 5-3(b)(2)(C)(i), explaining what specific information contained in the Complaint is truly deserving of protection. Likewise, the parties have not independently pointed the court to any privilege that would restrict the Complaint from access by the public. Even if such information had been filed, the court may embark on its own review to determine if the documents should remain sealed. See DUCivR 5-3(b)(3).

         Here, the Complaint contains facts that may give rise to causes of action for breach of contract, breach of implied covenant of good faith and fair dealing, negligent misrepresentation, fraud claims, breach of fiduciary duties, and unjust enrichment. The statements in support of these claims are generally not protected from the public pursuant to statute, rule or case law. Moreover, the parties have not identified a secret scientific process that if disclosed would jeopardize a company's competitive status in a market. Instead, in many paragraphs in the Complaint, IBC references information that was already contained in Ucore's public press releases or the notable public research or speeches of the parties involved in this action. Such details are undeserving of protection from public review.

         While some financial data does appear in the background section of the Complaint, it relates to Ucore's 2018 Financial Statements that are available on the Internet or data that Ucore had made public independent of its Financial Statements. Furthermore, the Complaint, which consists of approximately 38 pages and more than 180 paragraphs, contains only one sentence in paragraph 58 that is redacted. It is unclear why the sentence is redacted as the parties have not filed an unredacted copy of the Complaint with this court, despite the mandates of DUCivR 5-3(b)(1).

         Because some of the content contained in the Complaint is already in the public sphere, good cause is not present to seal the entire document. Balancing the mandates of DUCivR 5-3 with Judge Kendall's order protecting the contents of the Complaint, however, the court is unwilling to expose the entire Complaint to the public at this juncture. Therefore, pursuant to Fed.R.Civ.P. 5.2(d), the Court authorizes IBC to file a properly redacted version of ...


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